Archive for January 18th, 2011

The “Apple Effect” … What if Apple stock stalls? … or slides?

January 18, 2011

Steve Jobs’ announced leave of absence reminded me of a chat I had with one of my sons a couple of weeks ago.  He casually observed that Apple stock seemed to be the common denominator across mutual funds that were beating the market averages.

Point 1:  Apple stock is up nearly 80% since last February — and more than 400% since its 2009 low —the stock has single-handedly guaranteed that my portfolio has outperformed the major averages.

Point 2: A whopping 71% of Apple’s stock is owned by institutions.  That compares to 52% for GE and 49% for Exxon Mobil.  Fidelity & Vanguard own almost 10% of Apple’s stock.  Five institutions – adding State Street, TRP and Blackrock – push the number to almost 20%.

Point 3: For some big funds, Apple is a huge part of total holdings: it’s almost 12% of Janus 20 and almost 7% of Fidelity’s Contrafund.

Raises a couple of interesting questions:

1) How much of the market run-up the past year or so can be attributed to Apple – directly or indirectly?  It has to be statistically significant.

2) What happens if the funds that have ridden Apple’s stock rise decide it’s time to cash out?

Given the concentration among a few big hitters, things could  interesting …

Data from Yahoo Finance 

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Crime … it’s simple economics.

January 18, 2011

According to conservative economist Thomas Sowell, for some, a life of crime may be a series of rational economic choices:

  • Given the Low Educational and IQ levels of many who become career criminals, crime may well be their best paying option.
  • Crime is one of those occupations, like sports and entertainment, in which a relatively few at the top achieve very high incomes, while most of those who enter the occupation received very low incomes.
  • For example, many ordinary young sellers of drugs on the street live at home with their mothers, often in public housing projects — clearly not an indication of affluence — but the lavish lifestyles of drug kingpins attract many young people into the occupation, in hopes of rising to the lofty level.
  • Changes in crime rates reflect rational reactions to the cost of criminals expect to pay both in punishment inflicted by law enforcement system and the risk of being harmed by their intended victims.
  • Burglary rates tend to be affected by the proportion of homeowners who have guns in their homes. For example the burglary rate in Britain is much higher than it is in the United States. And, when the Atlanta suburb of Kennesaw passed an ordinance requiring households to keep a firearm in their homes, residential burglaries dropped by 89%
  • Another example of the Rationality of Criminals Is the Response to the unusual American Institution of the private bail bondsman a system used by only one other country, the Philippines. Criminals who use bail bondsman, usually show up for their court dates because they know the consequences can be severe.
  • When the criminals in a given area belong to a crime syndicate, their activities are restrained by the organized crime leaders who have to take a wider repercussions into account. A syndicate may restrict the amount of crime to keep law enforcement from ratcheting up their efforts.
  • Ironically both law enforcement and organized crime tend to reduce the total amount of crime in a specific area

 

Applied Economics, Thomas Sowall, Basic Books, 2010  Chapter 2

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Dial Puts Crystals in Your Laundry

January 18, 2011

TakeAway: Dial hit it big in 2009 with Purex Complete 3-in-1, which combines detergent, fabric softener and an antistatic treatment in a single laundry sheet. 

Now, for the new year, Dial is seeking to score a second success by bringing Purex Complete Crystals Softener to the United States.  The softener is in crystal form, meant to replace liquids and sheets.

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Excerpted from NYTimes, “Laundry Products Put Into Yet Another Form” By Stuart Elliott, January 5, 2011  

The product is being billed as “a purer way to get laundry that smells clean and fresh for weeks.” It is making its way this month onto the shelves of American grocery, drug and mass-merchandise stores, priced around $4 to $7 for a 28-ounce package that can be used for 32 loads of laundry.

The campaign will include, in addition to television and print advertising, discount coupons, online ads, ads in stores and an extensive presence in social media. For instance, a group of so-called mom bloggers, whom Dial describes as Purex Insiders, have received samples of Purex Complete Crystals to write about on their blogs.  To help sell consumers on the idea that Purex is more than just prosaic laundry products, the campaign for Purex Complete Crystals ends with a word, “Purextraordinary” that also appeared in the campaign to introduce the 3-in-1 laundry sheets.  “The idea is that there would be a brand story of continual innovation,” said Dan Fietsam, chief creative officer at Energy BBDO, “a substantial innovation story in a category that isn’t known for a lot of innovation.”  A commercial for Purex Complete Crystals plays up its distinctive differences, among them that the product is to be added to the washer with the laundry at the beginning of the wash cycle rather than placed in the dispenser for liquid softener.

“In this recession, we learned consumers are looking for value,” said Eric Schwartz, vice president for United States laundry care marketing at Dial, “but ‘value’ doesn’t mean just low price.”  The word “value” can also mean “products that work differently.”

Dial tested the laundry sheets under names besides Purex, in case consumers said they associated the brand only with lower-price mainstay products like liquid detergent.  But “we found our brand is more extendable than we expected,” Mr. Schwartz said, so 3-in-1 and Crystals are part of a new Purex Complete line.  It can cost less to market a new product under a familiar brand name than to try to make shoppers aware of a name they have not heard before.

Edit by AMW

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Full Article:
http://www.nytimes.com/2011/01/06/business/media/06adco.html?ref=media 

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Posted in Mktg - Brands, Mktg - Product & Innovation | Leave a Comment »