Nick's Opinion on the Markets

I must admit, I've been keeping my eyes relatively shut with regards to my portfolio and watchlists. Yes, I have less time to spare, but I think that my ignorance is mostly the result of the bipolar nature of the markets. I've lost some patience: some days the markets are up 5%, the next, they're down 7%. Fortunately for me, as you might remember from my post "To Invest or not to Invest", a long-term investor  needn't look at the markets on a day-to-day basis. However, each day now, I seem to find new opportunities despite the market's negativity.

First, there are a few industries that have done well in the face of the European debt crisis and the inherent risk of terrible recession. These include utilities, telecommunications companies, and the bigger tech giants of the NASDAQ. I can't say for sure why these companies have performed so much better in the past few months. I'm led to believe that the product offerings of the telecom and utilities companies are perceived as being more essential to their consumers. Therefore, consumers' spending habits won't change as drastically, even if they have less discretionary income. Is this the case for a company like Apple as well? I certainly hope that if someone has lost their job, or was recently made the victim of some kind of company pay-cut, they do not feel the need to purchase a $700 iPad. Assuming this is logical reasoning, companies like Apple and Google must be doing well because investors are not convinced that their growth will stagger as a result of poor economic conditions.

Personally, I'm paying closer attention to companies in the financial industry. Banks and insurance companies have taken huge hits, are attractively priced, and offer high dividends. Poor market conditions have forced these companies to record huge losses on their financial statements, but these losses are unrealized. Therefore, these losses are almost misleading with regards to the companies' actual performance. For example, Sun Life Financial is down more than 30% in the last couple of months. This means that the stock is now trading at a very attractive P/E of around 6, and that what used to be a 5% dividend is now a 7.5-8% dividend. With a market cap over $10 billion, the company isn't invincible, but one might argue that it's "too big to fall". So while a company like Sun Life is subject to the extreme volatility of the markets, it also offers an extremely attractive dividend that compensates the investor for unrealized losses with actual fixed income.

High-paying dividend stocks are really attractive for me right now because they're the only aspect of the market that I can feel sure about. I understand that the Board of Directors can easily reduce the amount of dividends paid, or stop them altogether. However,  the uncertainty regarding the BOD's decisions to declare dividends is minuscule compared to the uncertainties of the markets in general.

The Power of Social Media

What is social media? Facebook? Twitter? These are the companies/websites most people think of when we ask them about social media. Although these sites are some of the most powerful mediums of social media, we often forget about blogs, YouTube, LinkedIn and so many other forms of social media. Furthermore, we forget what kind of influence they have on our lives, and how useful they can be to businesses around the world. 

Facebook is a website that brings millions of members together to socialize with friends, share pictures, interact on each other's walls, etc. But Facebook is also an extremely attractive medium for any company to reach out to its clients. It's free advertising and it has the potential to reach out to a company's entire target market. This is because Facebook has incredible network effects, which means that it gets exponentially more useful, and powerful for every additional member on the site. 

Twitter is very similar to Facebook in that it also has network effects and it's free. Tweeting information and notifications is an effective way of keeping your clients, and the general public informed about your company's product offerings and promotions. Compared to Facebook, Twitter is limited with regards to features. However, unlike Facebook, Twitter has the potential to reach out to both followers, and anybody else who happens to stumble upon your account page. 

Companies are also starting to leverage websites like blogger. Blogs are useful for publicizing longer bits of news, seeing as bloggers do not have the 140 character limit that "Tweeters" do. However, blogs might not get as much exposure as a Twitter account might. 

LinkedIn is similar to Twitter, in that you can add friends to your professional network. However, LinkedIn is very business/professional-oriented and is not as effective for reaching out to clients. Rather, it allows its users to keep in touch with its professional network, facilitating the search for employers/employees, or even professional services. 

There are many other forms of social media that I could write about, but the point is clear: social media has given businesses the opportunity to reach out to a huge amount of people..... for free! Keep your eyes open for ad agencies that specifically deal with social media consulting. 

Chilly weather... I can handle that

I was walking to my car last night at around 7:00 from the Bronfman building. It was pitch black outside, and absolutely freezing.... and I was wearing a good jacket. A lot of people might pout and frown had they been in my predicament, as they anticipate the short days and the freezing temperatures that come with long Montreal winters. Despite my intense shivering, however, I managed a smile. My anticipations of the winter are much different than most people. Yours' would be too if this is what you thought of:

Winter means:
1.)Skiing! Skiing is arguably the best part of my winter. I ski at Tremblant every weekend. There is close to nothing that's better than an intense day on the slopes with friends, followed by an apres-ski beer/hot chocolate (pretty different options, but equally pleasing).
2.)Pick-up hockey: Playing hockey on an outdoor rink with neighbours and friends is a Canadian tradition. I've never played hockey on a team, but these pick-up games my family and I enjoy during our Tremblant weekends make me regret never trying out the sport competitively.
3.)Relaxing by an open fire after an active day outside. I know it sounds corny, but you know you love it.
4.)Winter break! Last year, because of the longer CEGEP winter break, i had about 5-6 weeks in December and January. At McGill, my break is 2 weeks. Regardless, I'm so excited to have time to do absolutely nothing. My workload has prevented me from just lounging on my couch to enjoy movies, books, and let's face it, videogames!! Last winter, I relived my youth, and beat the entire Donkey Kong 64 game from the very beginning of the game. This year, my goal is to get more to date and play all of the popular new releases like Gears of War. I should really start using my XBox 360 a little more.

Video Games, where have you gone??

I have a Nintendo 64, a Nintendo Wii, Playstation2, and an XBOX 360. I haven't used any one of these in the past 4 months. I used to be a Guitar Hero addict, a Madden fanatic, and a daily-craver of Zelda and Donkey Kong. I'd like to convince myself that the reason I don't play anymore is because I've grown up, and such childish things don't appeal to me anymore. After seeing the picture below, I had a sudden urge to try them all out!

file://localhost/Users/nicholasdigiorgio/Downloads/collage.jpg

I realized that I'm not too old for video games, I just don't have the time for them. You can be sure that I'll be playing during the Christmas holidays though. Hopefully my brothers ask for video games because there's no way I'm wasting my Christmas wishes on games. I'm too old for that... I think.

When investors think about tech companies, the first ones that come to mind are Apple, Google, Microsoft, etc. People often forget about video-game companies. Obviously, companies like Ubisoft, Activision, and Treyarch don't fall into the same exact categories as Apple. Their profits, however, are similarly generated from technological innovation. These companies are not only trying to improve their video game content, but they are constantly looking to take down the walls that separate gamers from the top sports venues of the world, or the medieval streets of Europe, to their own boring living rooms. Video games have evolved from the fun, childish endeavours of the N64 to the near real-life wartime experience of the Call of Duty: Modern Warfare trilogy.