In Search of the Perfect Investment

The prevailing “wisdom” is that Apple is about to hit $300. After all, it’s sold one million iPads (already). Its earnings are exploding far faster than its P/E of 22 and its stock is skyrocketting — albeit with a little blip of the last few days:

What’s most amazing is Apple iPad is not just being bought by technie nerds but by normal people, like my beloved accountant, Brendan Smith, who emailed me why he bought his iPad:

I take the train in the morning.
I listen to a podcast on my ipad.
I check my emails on my ipad.
I read the newspaper on my ipad.
I read certain blogs on my ipad.
Now you will say that you can do the same thing on a laptop but the delivery on the iPad is unquestionably better.
Plus I provide Tech Support to Partners at the firm who bought 2  last week.  And they need me to teach them how to use their iPads.

I email  my favorite techie, Dan Good:

You have iPhones, iPods and Macs. What does the iPad do for you that’s not already being done by your other Apple gadgetry?

He replies:

Like a small computer or even a netbook, it is highly mobile, lightweight and intuitive to use through its touch screen technology. I will use it and take it along to quick trips ( next NY trip, of course) and to business meetings. It is very unobtrusive, unlike what you lug around. Hidden in a leather, protective case, most people won’t even realize I have full computer capability at my fingertips. I will let you try it when I visit — but only if you are nice to me. Also the iPad is a better ebook reader than Kindle.

The technical press is obsessed with the iPad and will find any excuse to write about their beloved iPad. My favorite is from Business Insider, who chose to illustrate their story with this wonderful picture:

My favorite quote: “We’re not sure if this is a good thing or a bad thing about having an iPad, but one of the most salient features of the iPad experience is that strangers constantly want to talk to you about it. That’s something that will no doubt change as tablets become more common, but for now, misanthropes beware: people will come up to you and ask for a review. If you have trouble meeting new people, maybe that’s a great perk.”

You can see more delicious Traveling with an iPad photos and read their story here.

Do I think Apple could reach $300? It’s conceivable. Momentum stocks were in vogue in the last 1990s, when we ranted about eyeballs and page clicks — anything but real profits. the nicest thing about the iPad is that Apple makes a handsome profit on each iPad it sells all my friends.

From Buffett, thought-out support for Goldman Sachs.  Read today’s piece by Andrew Ross Sorkin of the New York Times and author of  the book, “Too Big To Fail.” Click here.

Warren Buffett at the Berkshire Hathaway annual meeting, where he criticised those who made a ‘dumb credit deal.’

Australia versus the U.S. When I first planned to move to the U.S. in the 1960s, my boss told me “I’d love the Americans because, just like me, they substituted enthusiasm for intelligence.” In short, they got things done. My father encouraged me because he felt America’s currency would hold up better than Australia’s and America would be safer. Australia’s is now 92 cents (it was 55). Australia didn’t suffer the Sub-Prime Great Recession. Australia gets things. Recent samples:

+ Australia could become the first nation to ban brand images and colors on cigarette packages under a wide-ranging set of antismoking measures that the government unveiled last Thursday.

Starting July 1, 2012, tobacco products would have to be sold in the plainest of packaging — with few or no logos, brand images or colors. Promotional text would be restricted to brand and product names in a standard color, position, type style and size, rendering them not unlike the bland boxes that carry generic prescription drugs.

Restrictions on Internet advertising, a hefty increase in the tax on tobacco products and new antismoking campaigns are also among the initiatives.

Proposed new Australian cigarette packaging

The government said the moves would cut tobacco consumption and generate billions of dollars of revenue that would be plowed into the health system. The action won praise from the World Health Organization, which welcomed the measures as “a new gold standard for the regulation of tobacco products.”

The proposals would radically limit how tobacco companies can design packaging, and remove, in the words of the Australian government, “one of the last remaining frontiers for cigarette advertising.”

The measures announced on Thursday also include a 25 percent increase in the excise tax on tobacco products, which was to come into force as of midnight. That will increase the cost of a packet of 30 cigarettes by about 2.16 Australian dollars, to around 16.70 Australian dollars —  $US 15.40).

According to the government, that measure alone is expected to reduce tobacco use by about 6 percent. The government said that as of 2007, 16.6 percent of Australians over age 14 smoked.

The additional tax revenue, estimated to total 5 billion Australian dollars over four years, would be invested in the nation’s health system, the government said.

+ The Reserve Bank of Australia has raised its policy cash rate by a quarter percentage point to 4.5%. This means that people who save money in Australia will earn a little more. I have money in a CD with Australia’s largest bank, Westpac. It is earning 6%. Banks here in the U.S. pay bupkas (Yiddish word for nothing).

+ Australia’s government plans to reap billions of dollars more in tax from the country’s booming resource industry and use the extra revenue to cut corporate taxes to a more globally competitive level and offer more-generous tax concessions for smaller companies.

Unveiling a broad-based tax-system proposal Sunday, the government also said it will raise the mandatory pension-fund contribution to 12% of workers’ salaries in stages, from 9% now, with most of the tax-system changes taking years to implement.

Prime Minister Kevin Rudd and Treasurer Wayne Swan said that Australians had increasingly missed out on the benefits of the mining boom, and there was a danger of a two-speed economy developing where non-resource industries struggle to attract workers and investment.

From July 1, 2012, resource companies such as BHP Billiton Ltd. and Rio Tinto Ltd. will be liable for a 40% tax on profits made from the exploitation of nonrenewable resources. Combined with company taxes and after allowing for extraction costs and recouping capital investment, companies will pay a statutory rate of around 58%.

Currently, mining companies are taxed on their production, through royalties of between 2% and 10% imposed by state governments. Those royalties will remain, but companies will be refunded those payments by the federal government.

The new resources tax will be used to offset a A$2 billion decline in company tax receipts in fiscal 2013-14 as the company tax rate is lowered to 29%, from the current 30%, in that year and 28% in 2014 to 2015.

Favor recent New Yorker cartoons:

I played tennis last night. Everybody at the Club was pushing  against a wall stretching their legs. this cartoon appealed.

Harry Newton has resisted buying himself an iPad, so far. He’s actually been trying to buy a Lenovo Thinkpad X201 with the new, fast  Intel i7-620M processor. But Intel is so backordered on i7s that I went out and bought a few Intel shares.  Intel is paying a dividend yield of 2.71% at its present price of $23.26. More than I can earn at any bank. Meanwhile, Lenovo is quoting me a four month delivery, if I’m lucky. Can you believe  it’s so hard to buy something in the Great Recession?