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2nd September 2007

Ushering in a New Tide

It has come to the conclusion of our writers that we should begin to write about a single company, rather than the broad perspective. This company has often been featured on the site and there are numerous times where MarketMatador.com were spot on, leading to tremendous gains from some of our readers.

While the stock market always offers a variety of companies to choose from, we’ve selected Apple Inc. (AAPL). By focusing in on Apple’s rumors, stock charts, and general news, we can clearly offer the best trading results in AAPL.

Some categories and portions of the site may be deleted, but for the most part, the site will stay very much the same and allow for a smooth transition to the one stock focus. We hope that our subscribers and readers can stick with us and follow in the site’s next step.

Without further ado, we’ll introduce Apple’s latest stock chart and show you what we think the next trade on the stock should be.

apple_rocky.png

Look for Apple to have a lackluster release of the latest iPod Nano on September 5th, if the rumored designs actually represent Apple’s next product release. Either way, it looks as though the stock will be at a crossroads on Tuesday. Part of the market buying into Apple’s release, and the other selling off and taking profits before the release. If the market sends AAPL down more than a couple of points, look to buy-in.

Disclosure: Long Apple Inc. (AAPL)

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10th August 2007

Humans are Duped into Thinking Price is Relative to Quality When Buying

Whether it’s Paul Frank or Ralph Lauren (RL) the temptation and desire to buy expensive clothing is programmed into many of us. A Nobel-prize winning economist, George Akerlof, studied the relationship that humans have between quality and price of goods sold. His studies ultimately were published as a part of a paper entitled, “The Market for Lemons.

george_akerlof.jpg

Dr. Akerlof determined that most consumers actually assess the quality of goods sold by the price of a product. Ultimately, this basic knowledge has fueled the continued success of designer retailers and upscale brands. In many instances, it’s irrelevant that the Polo costs $60. Instead, consumers looks at the pricey shirt and see potential and quality, regardless of the actual quality of the product.

p321617c.jpg“The paper by Akerlof describes how the interaction between quality heterogeneity and asymmetrical information can lead to the disappearance of a market where guarantees are indefinite. In this model, as quality is undistinguishable beforehand by the buyer (due to the asymmetry of information), incentives exist for the seller to pass off a low-quality good as a higher-quality one.

The buyer, however, takes this incentive into consideration, and takes the quality of the good to be uncertain. Only the average quality of the good will be considered, which in turn will have the side effect that goods that are above average in terms of quality will be driven out of the market. This mechanism is repeated until a no-trade equilibrium is reached.

As a consequence of the mechanism described in this paper, markets may fail to exist altogether in certain situations involving quality uncertainty. Examples include the market for used cars, the dearth of formal credit markets in developing countries and the unavailability of health insurance for the elderly (that is, in the absence of government programs such as Medicare).

However, not all players in a given market will follow the same rules or have the same aptitude of assessing quality. So there will always be a distinct advantage for some vendors to offer low-quality goods to the less-informed segment of a market that, on the whole, appears to be of reasonable quality and have reasonable guarantees of certainty. This is part of the basis for the idiom, buyer beware.

Ironically, there is no reciprocal danger of a market for a good product collapsing in this manner when the asymmetry is in favour of the buyer, that is to say, when the buyers can assess more accurately the quality of the products than the sellers. In this case, regular market forces of supply and demand will prevail, the sellers will get the highest price paid, and the trend will be to weed out products with prices in excess of their quality. This is likely the basis for the idiom that an informed consumer is a better consumer. An example of this might be the subjective quality of fine food and wines (beyond just safety and freshness issues). Individual consumers know best what they prefer to eat, and quality is almost always assessed in fine establishments by smell and taste before they pay. However, a definition of ‘highest quality’ for food and wine eludes providers. Thus, a large variety of better quality and higher priced restaurants are supported.” (SOURCE)

The truly brilliant part of the whole research paper is the very simple idea that consumers essentially ignore the goal of purchasing functional goods, in order to appease their want for apparently “upscale products.” Common throughout the report is the phrase, “asymmetric information.” Asymmetric information is when one party has more or better information than the other. When applying it to real life, retailers and designers have the key and knowledge of a certain goods quality, while the consumer is left in the dark.

621b1-cash-register.gifNext time you walk into Macy’s or Abercrombie & Fitch (ANF) and see a plethora of great fashions, understand that as the consumer, you’re duped into thinking that one product is better than another. Also, the extra money you save by not buying expensive goods can easily be put towards future investments. Here’s a little tip, stocks have a slightly higher return then that $60 polo.

Disclosure: No Conflicts.

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7th August 2007

Jim Cramer Explodes on CNBC over Fed [VIDEO]

Jim Cramer screaming and shouting. Seen it before, right? Never like this.

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6th August 2007

Better Business Knowledge Through UC Berkeley

UC Berkeley has been rated the #1 Public School by U.S. News and World Report. The school has one of the best business schools in the country and is also one of the most technically savvy college in the states. Berkeley has uploaded free videos of guest speakers complete speeches on campus. Each video brings an interesting aspect of the business world through the first-hand experiences of guest speakers. Each of these videos are exceptional viewing material and best of all, they’re all free.

Check out the videos here.

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3rd August 2007

Connecting with MarketMatador.com

Over the last four to five months, MarketMatador.com has grown into a major source for investment ideas and analysis for thousands of readers. For those of you who visit the site each and every day, thank you very much. For the first time visitors out there, thank you for visiting and we hope you come back for more. MarketMatador.com is consistently posting new information for both beginners and seasoned investors and we’d like to offer our readers the opportunity to stay connected and updated with the site.

Listed below are just some of the numerous ways to go about doing so.

  • Bookmark it - many of our readers simply bookmark the Market Matador or set it as their homepage so that every time they log on they see the latest post.
  • RSS Feed - one of the most popular ways that people follow what goes up on the blog is via a ‘news feed’ or our ‘rss feed’. This technology lets you subscribe to our site and be notified of updates on a variety of tools such as Google’s ‘Reader’ tool, iGoogle, MyYahoo and many other news aggregators and feed readers. If you want to use these to subscribe to MarketMatador.com you’ll need to add this feed. Around 100+ people subscribe to the Market Matador this way.
  • Daily E-Mail Updates - if you don’t use RSS you can still get updates sent to you once a day by subscribing to our feed via email. You can do this by entering your email address on this page.
  • Social Bookmarking - The last method that people are using to keep track of the latest posts on the site is through a variety of bookmarking tools. You’ll notice at the bottom of every singular post on the blog that there’s a little button with the word ‘bookmark’ on it (this button isn’t on the front page of the blog - just individual posts). If you click your cursor over this button a little window opens up that allows you to bookmark the post on one of a variety of ‘bookmarking’ sites. Some of the more popular ones are Digg, Delicious and StumbleUpon. In bookmarking our posts you have a way of finding them later when you need them but you also spread the news about the Market Matador a little and help us continue to grow.

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3rd August 2007

Futures Pointing to Negative Open

Looks like U.S. exchanges are pointing to a negative open this morning, but by no means is it a terrible decline. Oil futures are also selling off right now, which may ease tension and make way for another rally. As for foreign exchanges, most are somewhat neutral, but slightly lower overall. Investors should look for another large early morning sell off, followed by a snap back rally towards the end of the day.

Disclosure: No Conflicts.

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29th June 2007

How to Connect with MarketMatador.com

Over the last three to four months, MarketMatador.com has grown into a major source for investment ideas and analysis for thousands of readers. For those of you who visit the site each and every day, thank you very much. For the first time visitors out there, thank you for visiting and we hope you come back for more. MarketMatador.com is consistently posting new information for both beginners and seasoned investors and we’d like to offer our readers the opportunity to stay connected and updated with the site.

Listed below are just some of the numerous ways to go about doing so.

  • Bookmark it - many of our readers simply bookmark the Market Matador or set it as their homepage so that every time they log on they see the latest post.
  • RSS Feed - one of the most popular ways that people follow what goes up on the blog is via a ‘news feed’ or our ‘rss feed’. This technology lets you subscribe to our site and be notified of updates on a variety of tools such as Google’s ‘Reader’ tool, iGoogle, MyYahoo and many other news aggregators and feed readers. If you want to use these to subscribe to MM you’ll need to add this feed. Around 100+ people subscribe to the Market Matador this way.
  • Daily E-Mail Updates - if you don’t use RSS you can still get updates sent to you once a day by subscribing to our feed via email. You can do this by entering your email address on this page.
  • Social Bookmarking - The last method that people are using to keep track of the latest posts on the site is through a variety of bookmarking tools. You’ll notice at the bottom of every singular post on the blog that there’s a little button with the word ‘bookmark’ on it (this button isn’t on the front page of the blog - just individual posts). If you click your cursor over this button a little window opens up that allows you to bookmark the post on one of a variety of ‘bookmarking’ sites. Some of the more popular ones are Digg, Delicious and StumbleUpon. In bookmarking our posts you have a way of finding them later when you need them but you also spread the news about the Market Matador a little and help us continue to grow.

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8th June 2007

Exclusive Interview with the Founder of MacRumors.com

MacRumors LogoAlthough the Dot-Com boom led to the demise of thousands of online ventures, some sites made it past the rise and fall to amass an impressive following. In the latest craze of blogging and internet news, MacRumors.com, which delivers up to the minute rumors and news out of Apple (AAPL), is a perfect example of a successful, low cost start-up, which eventually evolved into one of the top sites on the internet.

This is the exclusive one-on-one interview with the Founder of MacRumors.com, Arnold Kim.

Market Matador: When did you start MacRumors.com?

Kim: The domain was registered February 24th, 2000 and the site went up probably a day or two later.

Market Matador: What was your inspiration and motivation to start the site?

Kim: The structure of the site was originally modeled off of Slashdot, and based on an early version of PHP Slash (port of Slashcode). The motivation behind it was just personal interest and I followed the mac rumor scene regularly. At the time, there were only a couple of true rumor sites around, and traditional mac media who tended to avoid all rumors. Somewhere in between, there would be patent applications, tidbits buried in news stories, etc., which would get a lot of discussion on user forums, but never much exposure. MacRumors sprang up to keep track of these sort of interesting tidbits and reports.

Market Matador: What kind of education do you have? Has the site become a full-time career?

Kim: I’m a college graduate, and went to medical school. I’m a physician in “real life,” this remains a side project.

Market Matador: Do you have a staff, or are you single-handedly working on the site?

Kim: There’s a group of dedicated moderators, admins and another editor that keeps the site running smoothly.

Market Matador: On average, how much time do you dedicate to the site per day?

Kim: Quite simply, the time varies. Obviously WWDC weeks tend to be busier. It generally just takes as much time as I give it. It’s also hard to draw the line. If I didn’t run MacRumors, I’m not sure how much of my day to day browsing would change.

Market Matador: When did you first feel that the site began to catch on?

Kim: That’s an interesting question, because in some ways I feel like its still catching on. Keynote periods are definitely reminders of how popular the site can be.

Market Matador: What kind of traffic does the site currently achieve? We’ve noticed that you’ve recently added DIGGing capabilities to the site. Has it made for large surges in traffic?

Kim: Stats are a funny thing, and hard to interpret. I guess it’s safest to say that we are well into the millions of page views a month and a Digg story doesn’t really make a noticeable strain on the server. I did add Digg buttons recently, and it certainly has driven a lot of traffic. But the reason for it wasn’t purely for the traffic. Digg has a large readership amongst other site owners and bloggers. Getting your story on Digg gives you “credit” for that story. It’s a bit of a game. Even if you break a story, if someone else’s story gets on the front page of Digg, they’ll get the “credit.”

Market Matador: We’ve noticed that you have been on CNBC at least once. How did you begin to get TV time?

Kim: They just called one day and I agreed. I guess it is a measure of how popular the site has become, but also a measure of how popular Apple has become in the mainstream media.

Market Matador: Do you have a Mac and any plans to buy an iPhone?

Kim: Yes, I have a Mac Pro 2.66GHz and yes, I will buy an iPhone as soon as possible.

Market Matador: You’ve heard of the possibility of a secret application that’s been unannounced inside the iPhone, any theories?

Kim: I think people have read too much into it. It’s not like the iPhone is necessarily a fixed set of applications. It’s already been said that some more Google apps are coming, and Apple has said they themselves are planning on releasing more apps down the line. So, whether there was an extra icon in place doesn’t tell us any more than we knew.

Market Matador: What do you hope to see for the future of Macrumors.com?

Kim: I think more of the same, and continued growth. On initial glance, MacRumors seems just a place for Apple news and rumors, but there’s a large and active Apple community behind it. I’d like that aspect of it to continue to grow and evolve.

Thank you very much Arn and we hope you all enjoyed the interview!

Digg!

Disclosure: Long Apple Inc. (AAPL)

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