Sorry, Alex, Your Time Has Passed

Greg Cosell bears resemblance to Uncle Howard.

Football analyst and NFL Films producer Greg Cosell said on KNBR this morning that there is no question that the San Francisco 49ers think Colin Kaepernick today is a better quarterback than Alex Smith:

My guess is for people in the business this is not even a controversy. One guy is a significantly better passer than the other guy. To me there is not really an issue here. Kaepernick could obviously have a bad game anytime, because he's only played two games and he's inexperienced and there are things he hasn't seen.

Could he have a poor game? Sure. But you're talking about dimensions in a pass game. One guy has every dimension you want throwing the football, the other guy is limited. This is really not news.

Jim Harbaugh gets the job as the 49ers head coach. I guarantee that one of the first things he did in his preparation was he probably watched almost every throw Alex Smith has made in his career. That's what coaches do---they're nuts. This is the kind of stuff they do. So after doing that they draft Colin Kaepernick in the second round. That's step one.

Step two is they play a season. They play a season in which Alex Smith throws the fewest passes of any 16-game starter.

Step three: they try to get Peyton Manning in the off-season. Everything tells you that they believe Colin Kaepernick ultimately---and they didn't know if he could play until he played, but they know what his skill-set is, they know what his quarterback attributes are in relation to Alex Smith's quarterback attributes---Colin Kaepernick has the better quarterback attributes.

Nearly everyone feels bad for Alex Smith, who has finally become a good NFL quarterback who had a decent shot at winning the Super Bowl. Barring injury or a series of horrendous performances by Colin Kaepernick he won't get that chance with the 49ers.  © 2012 Stephen Yuen

Body language says it all: Alex and Colin (AP photo via SFGate)

'Tis the Season

Gift-giving, card-writing, tree-lighting, online-shopping.....the latest addition to the holiday list is delivery-scamming.

Do NOT click on the link to "Get Postal Receipt". (No, your humble observer has become less trusting in his old age and did not click.)

Maybe it's a good thing that Proposition 34 (ending the death penalty in California) didn't pass. I voted for it, but have reconsidered. A quick, painless death is too good for these predators... © 2012 Stephen Yuen

Not Titletown (Yet)

The San Francisco professional sports picture is markedly brighter than it was six years ago, when each of its major sports franchises had a losing record. The Giants have won two World Series in the past three years, and the 49ers are considered one of the favorites for this year's Super Bowl.

While the 49ers' success and their burgeoning quarterback controversy are the local focus of attention, the Golden State Warriors are quietly moving toward respectability. 20-year-old Harrison Barnes signaled that the winter months need not represent the cruelest season when he performed an electrifying dunk over 6'11" Timberwolves center Nikola Pekovic.



Harrison Barnes, Stephen Curry, and other young players will be in the prime of their careers when the Warriors move to San Francisco. By 2017 San Francisco could add Titletown to the many other names (most of them complimentary) by which it is known. © 2012 Stephen Yuen

Business: the Unforgivable Sin

Apple's stock seems to have bottomed, perhaps temporarily, at $525.62 on November 15th. Since then it's risen 11%. Knowledge of the Maps debacle (Apple discontinued Google Maps on September 19th) has not dampened enthusiasm for Apple's products:

In the past 12 weeks, Apple’s mobile operating system has grown to now make up 48.1 percent of the U.S. smartphone market, just ahead of [Google's] Android at 46.7 percent.

Despite the fact that customers have shrugged off the Maps problem, Apple's management hasn't been as forgiving:

Apple Inc. pushed out an executive responsible for its mapping service about two weeks ago, according to people briefed on the matter, as the company tries to recover from the map service's rocky debut.

The vice president, Richard Williamson, had been a senior leader with Apple's iOS mobile software team. During his tenure, he oversaw a variety of services, including at one point Apple's voice-activated assistant Siri.

Mr. Williamson's boss, iPhone software chief Scott Forstall, was pushed out of Apple in October, also on the heels of the maps imbroglio.

Both Scott Forstall and Richard Williamson have been heavily involved in some of Apple's most important successes over the past ten years. Nevertheless, in the top echelons of business, like in sports and entertainment, the key question is "what have you done for me lately?" Both are gone because they committed the one unforgivable sin--no, not failure, but embarrassing their employer. © 2012 Stephen Yuen

Cliff Notes

After November 6th the indices dropped 5% but since have recovered most of their losses.

It's a reasonable supposition that the November 6 election results were disappointing to the investors who hoped that a Romney victory would continue the favorable tax treatment afforded to long-term capital gains and dividends. Instead, avoidance of the "fiscal cliff" will now probably entail higher tax rates on capital gains (from November 11th: "the prospect of higher taxes on capital gains is prompting many to unload some of their winning stocks") and possibly much higher rates on dividends.

Unsurprisingly, the equity indices fell for the ten days following the election but have since rebounded. The likely causes of this brightening outlook are favorable noises emanating from both sides in Washington, plus signs that growth has not stalled in China.

Meanwhile, what is the small investor to do? One great feature of capital gains is that the timing of income recognition is largely under the control of the individual taxpayer. Barring situations where one has to sell, it's not unusual to hold well-chosen stocks for many years. The patient investor may be able to hold off realizing gains for four more years, when the Republicans stand an excellent chance of capturing not only the Presidency but Congress as well (remember how everyone was so sick of George W. Bush after eight years that the Democrats didn't really need a platform in 2008? I wouldn't bet against the country feeling the same way about Barack Obama and the Democratic Party in 2016.)

Another strategy is to manage one's financial affairs to keep income below the levels where higher rates kick in. For example, one spouse may now choose to quit a good-paying job to stay at home with the kids and fill the traditional role of the wife to an executive (your humble observer is personally acquainted with many professional women and men who have opted for less money, less stress, and more time with their families).  Staying home is not a new phenomenon, but higher tax rates may finally sway some on-the-edge dual-income couples.

For gains on capital assets that are not securities there is every indication that tax-planning deferral tools, such as Section 1031 exchanges, will continue in their present form. While the tax regime will be a bit more unfavorable, take heart, investors, history shows that you will figure out ways to adapt.  Which means, of course, that the higher receipts that the government will collect will be far short of what higher-tax advocates will expect, a surprise to no one but themselves. © 2012 Stephen Yuen

Rejuvenation

Nine months ago

Today

My old college car is looking better after sanding and painting.  It still needs a lot of work; dozens of parts are unusable and need to be replaced.

Rejuvenation hasn't been quick or easy, but at least it's possible. Unfortunately, the same can't be said about the car's owner....

Why Does Senator Daniel Inouye Have Secret Service Protection?

Two old pros who worked on Watergate in 1974.

Answered via other questions and answers:

Q: who's next in the line of Presidential succession, after the Vice President and Speaker of the House?

A: The president pro tempore of the Senate.

Q: What does the president pro tempore do?

A: He* presides over the Senate in the absence of the Vice President, is the Senate's legal recipient of various reports, and serves on commissions and boards. (Obviously, the duties are largely ceremonial, but the office is third in line and it is in the Constitution.)

*Male singular pronoun used for convenience only.

Q: How is he elected?

A: "Since the mid-20th century, it has been traditional for the Senate to elect the senior member of the majority party as president pro tempore."

Q: Who is the current president pro tempore?

A. Daniel K. Inouye, 88-year-old Democratic Senator from Hawaii. We have posted about Medal of Honor recipient Senator Dan before (here and here).

Two sons of Hawaii grew up in the same middle-class neighborhood, albeit four decades apart, and are now important enough to be protected round-the-clock by the Secret Service. Last question: who would ever have believed it? © 2012 Stephen Yuen

The Less-Trafficked Road

Amazon customers can pick up their deliveries at
some Radio Shack locations in the Bay Area.

The shopping center lots were full on Black Friday, so we headed to downtown San Mateo where there was only light traffic. We stopped at the 4th Avenue Radio Shack (disclosure: I own shares of RSH) and picked up some batteries and a $40 label-maker that was on sale for $10.

Radio Shack has been struggling like many other chains, and it's questionable whether it will survive the retail shake-out. One glimmer of hope is that Radio Shack can partner with companies who will view its 4,000+ North American locations as an exploitable asset. It's a dicey proposition, but perhaps the company's only path to survival.

Happy Thanksgiving

We sound like a broken record (what's that, grampa?) as we list the things that we have to be thankful for: our family, our health, our vocations and avocations, and our friends. But what we are most grateful for is that we were born in the greatest country in the world, where every person has the opportunity to seek his calling or worship as she pleases or speak his mind without fear of imprisonment.

On other days we can be complaining and critical, but not today. Cultivate the attitude of gratitude. Happy Thanksgiving!

Once More Into the Brine, Dear Fowl

It only took a few minutes of preparation to boil the brine solution (salt, sugar, vegetables, onion, garlic, and herbs). After cooling overnight on the stove, it was dumped into a bucket containing the 20-lb. turkey and three trays of ice cubes.

The turkey will be stored in the fridge until tomorrow morning, when it will be popped into the oven. It should be ready by halftime of the Cowboys game. Easy as (pumpkin) pie.

No Obvious Catalyst

Apple shares have given investors a wild ride over the past five days. The stock had continued its downward drift since September , then reversed course mid-Friday. On Monday it rose $38.05 (7.2%) from the previous week's close.

Sharp price adjustments are to be expected after new product announcements and earnings releases, but there was no obvious catalyst for Monday's action. Down 25% from the September high to last Friday's low, then snapping back almost 12%. If one is an Apple investor, one has grown accustomed to rapid price increases, and now decreases.

As Nassim Nicholas Taleb says, volatility is here to stay, and we may as well learn to love it.

For Want of a $10 Part

I didn't want our hot-waterless weekend to be extended any longer (see post below) and promptly called Noritz early this morning. It turned out that UPS was the culprit; despite the Saturday label the replacement part had sat in UPS' Anaheim distribution center over the weekend. Noritz refunded the surcharge for Saturday delivery, small compensation for the inconvenience of cold-water bathing.

I've heard other people complain about UPS and will use FedEx if there's a choice. Such anecdotal evidence is unscientific to be sure, but isn't word-of-mouth how many of us pick doctors, car repairmen, and other service providers?

The package arrived at 10 a.m., and Kevin was here by noon. It took him ten minutes to replace the igniter. He charged me only for the two hours that he spent diagnosing the problem on Friday. I told him I'll call him again if I need a plumber but I hoped I wouldn't have to. He laughed and was on his way.

City Boy

The igniter is the square black object in the middle

Indoor plumbing is one of modern life's necessities; right behind it in importance is HOT running water. Our four-year-old tankless water heater stopped heating on Friday. An emergency call to a local plumber diagnosed the problem as a faulty igniter. The manufacturer promised to send it overnight so we could be up and running on Saturday. Alas, the package didn't come.

We've made do with showers at the gym and boiling pots of water for lower-volume needs. The dishes and laundry are piling up. Overnight lows are in the 40's, and very cold water greets us in the morning. Monday, and the replacement igniter, can't come soon enough.

Peace, Just Not There

The Middle East once again threatens to boil over: Israel, Egypt, Syria, Libya, Iran, Iraq---there's no conflict-free zone. Elsewhere, however, there are nascent signs of peace.

Google and Apple are talking about resolving all litigation [bold added]:

The companies have been exchanging proposals on using binding arbitration to reach a licensing agreement over patents that are essential to comply with industry standards on how phones operate. Such an agreement could lead to a global settlement of all of their patent disputes, Apple said in a Nov. 15 filing.

Stocks rose on Friday after signals from both parties that the impasse over the "fiscal cliff" may be resolved:

the top lawmakers emerged from the White House meeting, which lasted more than an hour, with uncharacteristic optimism that they would reach a deal in coming weeks. [snip]

Leaders from both parties and aides to Mr. Obama said they agreed to make concessions to achieve a deal. For Democrats, that included a willingness to curb entitlement programs, such as Medicare. For Republicans that meant a willingness to raise tax revenue.

Of course, the devil is in the details, but at this point any deal is better than no deal. Let's hope that the emotion surrounding Thanksgiving next week is one of gratitude, not fear or disappointment. © 2012 Stephen Yuen

Almost the Apocalypse

It will be the end of the world when someone actually meets the starting bid (or more!).

Of course, if Twinkies are selling for anything close to this price, then Hostess wouldn't be going out of business:

Hostess Brands Inc., the 85-year-old maker of iconic treats such as Twinkies, Ding Dongs and pantry staples like Wonder Bread, on Friday said it would go out of business after failing to reach agreement on wage and pension cuts with its bakers' union.

Like works of art whose value appreciates when the artist dies, Twinkies prices might well follow a similar path (although $8,000 is a mite ambitious). At least with all the preservatives used in their manufacture, an investor will have years to make his speculation pay off. © 2012 Stephen Yuen

Why Not, Aubrey?

After the San Francisco Giants won the 2010 World Series, veteran Aubrey Huff advised then-rookie catcher Buster Posey.

Huff: Don't think this happens every year, kid.

Posey: Why not?

Mercury News photo

Buster Posey was the Rookie of the Year, suffered a season-ending injury in May, 2011 (the Giants missed the playoffs), then roared back in 2012 to start the All-Star game and lead the Giants to another World Series title.

Today Buster Posey was named the winner of the National League Most Valuable Player award. And where was 25-year-old Buster on this special day?

Posey, seeing the potential conflict on the award schedule, never asked if he could back out of the annual fundraiser for the Transitional Learning Center in Leesburg, Ga. His mother, Traci, teaches at the school for students with disciplinary and academic issues who haven't succeeded in other settings. Tickets for the dinner, billed "Come 'Steak' a Claim for Education," were $10. Raffle tickets were $1.

"I figured we could make it work one way or the other," Posey said. "It turned out great having more family and friends around."

Why not, indeed.

Late to the Party

I've been helping a friend of mine test an iPad business app. The process is fascinating: app screens are storyboarded like in film production, and each screen has to be tightly defined in order to minimize programming costs and keep to the schedule. My modest role is to test-drive the app and check some of the calculations. Typically, my setup uses two computers (one Mac and one PC) and an iPad.

I have been working in accounting and related areas for over three decades. This is a lot more fun. To be young again....

Benghazi: We Don't Know Anything

After the 9/11 murder of four Americans in Benghazi, U.N. Ambassador Susan Rice went on all the Sunday talk shows to lay the blame on an obscure video. The immediate reaction of many viewers was incredulity. Not only was the Innocence of Muslims hardly seen by anyone, the abundance of anti-Islam materials that has arisen since 2001 makes it hard to see why this particular low-budget excrescence was the catalyst for the widespread violence that roiled the Middle East, not just Benghazi.

However, your humble observer could not accept the explanation of some Republicans either--that the video was (falsely) blamed because the Obama Administration was reluctant to admit that its foreign policy had failed. Both explanations are too easily discredited after a few days of Congressional hearings.

One can believe the worst of one man's motives, but surely not everyone in the CIA or the State and Defense Departments would fall on their sword for the President unless there were good national security reasons. For example, there have been rumors that assassinated ambassador Chris Stevens was linked to arms shipments to Syrian rebels, or that the CIA was running a secret prison in Benghazi.

After the David Petraeus love triangle story took everyone by surprise less than a week ago, then mushroomed into a love-hexagon over the past few days, one thing is certain. We don't know anything.

Protection Racket

A family member clicked on an email attachment, and the computer screen exploded with pop-up boxes. The Family PC had become infected with malware.

The ironically named System Progressive Protection repeatedly warns that one's computer has been invaded by a virus. A credit-card payment to SPP would supposedly remove the "virus" but really just de-activates the bogus warnings. Worse, the protection payment itself opens up the victim to identity and credit-card theft.

There are various legitimate programs that would eradicate SPP, but I didn't feel like purchasing and adding yet another program to our creaky five-year-old Dell Vostro. Because we had been regularly backing up the Dell to an external hard drive, it was possible to fix the problem the hard and perhaps better way.

Erasing the internal drive and reloading Windows XP from a set of original 2002 CDs was fairly easy. However, it took three days to download and install the various updates, including lengthy "service packs", from Microsoft. After we reloaded other software, such as the Office (Word, Excel, PowerPoint) suite, the backup drive restored the data.

The whole episode is not something we would go through voluntarily, but at least by clearing away leftover code and unused programs the PC is working better than it has in a long time. We won't have to replace it this year after all.

[Note: Microsoft no longer supports Windows XP, and it's not clear how much longer the service packs and updates will be available for download. The Dell has maybe two more years of useful life.] © 2012 Stephen Yuen

Veteran's Day, 2012

2011: your correspondent pays
his respects at the National Cemetery
of the Pacific, Punchbowl

As the World War II generation leaves the scene, let's take every opportunity to honor their service. Give them a call, pay a visit, or buy them a coffee. Encourage them to talk about the old days, though maybe you'd rather be doing something else.

Because we don't know when we will die,
we get to think of life as an inexhaustible well.
Yet everything happens only
a certain number of times,
and a very small number really.
How many more times will you remember a certain afternoon of your childhood,
some afternoon that's so deeply a part of your being that you can't even conceive
of your life without it.
Perhaps four or five times more, perhaps not even that.
How many more times will you watch the full moon rise?
Perhaps twenty. And yet it all seems limitless.
--Paul Bowles, The Sheltering Sky

Still Going Strong

Eugene Fama on too-big-to-fail (H/T Tyler Cowen) [bold added]:

Basically, the institutions that are considered to be too big to fail have their debt priced as if it’s riskless, which gives them a low cost of capital and makes it very easy for them to expand and become an even bigger problem. Plus, everybody now accepts the assertion that they are too big to fail, which creates a terrible moral hazard for the management of these financial institutions. Business leaders won’t consciously tank their companies, but too big to fail will push them toward taking more risk, whether they realize it or not.

I don’t think Dodd–Frank (the Dodd–Frank Wall Street Reform and Consumer Protection Act) cures that moral hazard problem. Even if lawmakers could devise the perfect regulation for such a cure, the chance that it will be implemented by the regulators in the way designed is pretty close to zero.

The simplest solution would be to raise the capital requirements of banks. A nice place to start would be a 25% equity capital ratio, and if that doesn’t work, raise it more. The equity capital ratio needs to be high enough that a too-big-to-fail financial institution’s debt is riskless, not because of what is essentially a government guarantee but because the equity ratio is very high.

In 1969 Fama, Fisher, Jensen and Roll wrote the seminal article on the efficient-market hypothesis. Lesser lights have won the prize; as Tyler Cowen says, give the man his Nobel.

Now That the Election's Over

Now that the election's over we are likely, finally, to learn the truth about:

Benghazi

Obamacare's costs

End-of-year defense layoffs

FEMA's before-and-after performance on Hurricane Sandy

Unemployment statistics

Whether General Motors is really healthy

What the President meant when he said he would be "flexible" on missile defense

Your humble observer believes that the President will wind up unscathed on at least some of these issues, so this post is not a criticism of him.

The mainstream media turned a blind eye to these questions in the run-up to the election. Their neglect was a gross dereliction of its duty to help the electorate make informed choices.

Reporters sometimes have to choose between their professed responsibility to discover and disclose the truth (please, no sophistry about the subjectivity of knowledge) and their personal politics. CPAs tabulate inventory counts that could unexpectedly lower their clients' earnings. Scientists report the harmful side effects of experimental drugs and possibly negate millions of dollars and years of research. Even lawyers, who have a primary responsibility to their clients, have a duty to disclose material facts that could help the other side.

If the press had pursued these 2012 stories with even a fraction of the enthusiasm with which it pilloried the Bush Administration over Hurricane Katrina, Abu Ghraib, Guantanamo, and the 5.5% unemployment rate in 2004, then it would be deserving of the esteem with which we regard most of our venerable professions. After its performance in 2012, it's doubtful whether the press will ever recover, and we all will be the poorer. © 2012 Stephen Yuen

Big Data Wins the Biggest Prize

When Rush Limbaugh made fun of the Obama campaign dinner at Sarah Jessica Parker's townhouse, I laughed right along. It was the apotheosis of the Hollywood love-in for President Obama, ripe for mockery. It turns out that the Democrats were playing chess while the Republicans thought the game was checkers (the way things turned out a cute dog might have helped). Key to the President's re-election was

a massive data effort that helped Obama raise $1 billion, remade the process of targeting TV ads and created detailed models of swing-state voters that could be used to increase the effectiveness of everything from phone calls and door knocks to direct mailings and social media.

The dinner with Sarah, and its West Coast counterpart dinner with George Clooney, were not affectations but part of a well-thought-out strategy [bold added]:

For the general public, there was no way to know that the idea for the Parker contest had come from a data-mining discovery about some supporters: affection for contests, small dinners and celebrity. But from the beginning, campaign manager Jim Messina had promised a totally different, metric-driven kind of campaign in which politics was the goal but political instincts might not be the means. “We are going to measure every single thing in this campaign,” he said after taking the job. He hired an analytics department five times as large as that of the 2008 operation, with an official “chief scientist” for the Chicago headquarters named Rayid Ghani, who in a previous life crunched huge data sets to, among other things, maximize the efficiency of supermarket sales promotions.

Michael Scherer's article in Time is a fascinating read. Comments:

1) The Republicans undoubtedly will create, if they haven't done so already, a similar big-data operation.

2) The first important step, which began shortly after 2008, was the 18-month-long project to create a "mega" file that unified the many disparate Democratic databases. This means that work on 2016 has already begun (sigh).

3) Holding the Presidency confers an enormous advantage. The incumbent party--whether Democrat or Republican--will have access to oceans of data not necessarily available to its opponent. It is nigh impossible to enforce privacy rules, especially since enforcement is done largely through self-policing. [Flashback: Big Data is the new Plastics.]

San Francisco: Your Government on Display

Yesterday Americans voted on who is best equipped to lead them on matters of war and peace, jobs and the economy, health care, education, and public safety.

On the East Coast state and local governments were strained to the breaking point as millions tried to recover from the damage wrought by Hurricane Sandy. Thousands have no food, power, or water as winter approaches.

Meanwhile, in Baghdad by the Bay there are other priorities. The San Francisco Board of Supervisors met on Monday to consider whether to ban public nudity.

For two hours, speakers tussled over whether the Castro "naked guys" were a few harmless individuals just expressing themselves, or a growing public nuisance that San Franciscans should no longer have to tolerate. Supervisor Scott Wiener, who represents the Castro, is proposing legislation forbidding genital exposure on city sidewalks, plazas, parklets, streets and public transit while exempting street fairs, festivals and parades.

Comments:
1) These issues always seem to find politicians named Wiener (or Weiner)
2) Activists are right to take a stand. Let them take away your plazas and parklets, and parades will be right behind.
3) If the naked guys look anything like the sagging, pot-bellied specimens I see at the gym (hey, I'm not exempting myself), it's obvious why there's a public outcry.

Quote of the day: "when it's in my neighborhood and I can't enjoy lunch because a guy is spread-eagle near me, it's a problem."

Tuesday After the First Monday in November

Our voting machines are easy to use.

After I signed my name, the polling-place lady asked if I wanted a paper ballot.

No, I trust the machines, I said smilingly.

The machine is much faster, and there was little chance someone would risk vote tampering because the headline race was a foregone conclusion. Here in California a clear majority admire the President's governance, and we do our best to make sure his policies and results are replicated in Sacramento.

With one exception I adhered to my two general rules of not voting for lawyers (although some of my best friends, yadda yadda...) and not voting for propositions, regardless of how much I sympathize with their intent. Laws hastily drafted often have unintended consequences, and we pay legislators to resolve those problems in committees before laws are signed, not afterwards in the courts.

As for the exception, well, it's something I've wanted for a long time. © 2012 Stephen Yuen

Along the Bike Path

Redwood Shores Oracle HQ: as seen from Foster City

The synthetic turf soccer field was completed in September

This pond is a favorite with water skiers., but not after a dry summer.

Stubbornly Staying Put

Indefatigable California native and critic Victor Davis Hanson says he's not leaving because California has all the tools it needs to recover its past greatness:

The four-part solution for California is clear: don’t raise the state’s crushing taxes any higher; reform public-employee compensation; make use of ample natural resources; and stop the flow of illegal aliens. Just focus on those four areas—as California did so well in the past—and in time, the state will return to its bounty of a few decades ago. Many of us intend to stay and see that it does.

Too simple? Let's give it a try for a few years by concentrating on basic governmental services, e.g, education, transportation, and public safety, and by eliminating expensive trophy projects like $100 billion high-speed rail lines to nowhere.

Watch what animal spirits are unleashed. I hope I live long enough to see it.

Saturday Mass

Being more of a Sunday Christian than an everyday one, I find Holy Week (before Easter) and Christmas week to be taxing because of the multiple services that are shoehorned into an already crowded calendar.

This Saturday, however, I was receptive to an "extra" service. The setting was St. Paul's, a 100-year-old church on the Peninsula.

A group had gathered for the annual convocation of the Deanery--one of the organizations that I participate in and one of the many that are sprinkled throughout the Church. I was in a contemplative mood. The passage of another anniversaire will do that to you.

Apple, Bitten

Apple's market cap has fallen $118 billion since Google Maps was removed September 19th.

Other companies (GE, Microsoft, Cisco, AIG) have fallen further in market capitalization, but Apple's recent drop is nonetheless remarkable in a non-crisis year. A scant 44 days ago AAPL had been rising on the heels of the iPhone 5 announcement and the rumored iPad mini. Then the new operating system, IOS 6, was released.

The premature removal of Google Maps was one of the greatest blunders in Apple's 36-year history. Apple knew that it was taking a chance but underestimated the negative reaction:

in breaking with Google and giving iPhone users worse maps than before, Apple has gambled on three things. First, that users will like its maps’ embedded content. Second, that it will be able to improve fast. And third, that the allure of the iPhone and the loyalty of Apple’s fans will buy it time. After all, people do not buy smartphones for the maps alone, and queues for the iPhone 5 were every bit as long as for previous incarnations of the revered device. But Apple has more catching-up to do than it expected. In a market where brands can rise and fall fast, it may also have less time than it thought.

The removal of a single app, important as it may be, wasn't the reason that the market values Apple $118 billion less. Now that Steve Jobs is gone, Apple is beginning to look like just another good but not extraordinary company. The revolutionary product in the pipeline may well be a myth.

It's going to be an uphill slog back to $700 per share.

[Disclosure: I am long Apple.] © 2012 Stephen Yuen

Joy, Again

Pitcher Matt Cain & family (Chron photo)

Sometime this century we who live on the San Andreas Fault will be in the headlines. Our fair land will suffer destruction and death, comparable to or perhaps exceeding that visited upon our countrymen in the East. So while we do think about, pray for, and send help to the victims of Hurricane Sandy, one hopes that they will indulge us this moment of celebration.

Moments of widespread, unadulterated joy are rare. (By contrast, the upcoming elections will bring elation to only half of the population.) In the Bay Area the Giants have blessed us with two such occasions in 24 months through a magical mixture of teamwork, character, planning, cleverness, and yes, good luck.

On the morning of Halloween we ate, drank, and were merry.