First, some morning trading notes —
I’m trimming just a tiny bit of my FB common stock this morning. I told you guys that after that recent blow out quarterly report that the stock would become a “Must Own” for every growth and tech money manager on the planet. So it has come to pass. We’re now near the end of the 3rd quarter and I wouldn’t be surprised that the stock runs into resistance here near $50 a share and then might sell off some after the quarter is over. That said, this thing’s been a total juggernaut and making our largest position with common stock and call options back in the low $20s and teens was a huge winner of a move and trimming it occasionally on the way up has made me foolish anyway.
I’m buying back a few of the IEF puts I sold for big profits awhile ago. Rates are still likely headed higher into year-end no matter what the FED or the RepublicanDemocrat Regime decides to do with whatever crisis they decide we need to focus on next.
Apple and Google are in an all out battle for world domination. It’s true. These two companies are so far ahead of their competitors that there’s little chance that anybody catches these two tech behemoths.
I’ve talked on TV, given speeches and written many times over the years about why “Platforms” are so important to Revolution Investing and these two stocks clearly show why. Platforms are the many technologies that are the underlying framework for consuming content, information, data, entertainment, correspondence and so on. Once you get a critical mass of people locked into your platform, your reach and growth and potential is limitless. Think of the Postal Service as a very old communications platform, for example. Then came telegraph and the telephone platforms for communication. Radio and TV platforms came along for news and entertainment to compete with the age-old newspaper platform.
“Nanos gigantum humeris insidentes” is a Western metaphor with a contemporary interpretation meaning “one who discovers by building on previous discoveries”. Its most familiar expression is found in the letters of Isaac Newton: “If I have seen further it is by standing on the shoulders of giants.” However, the metaphor was first recorded in the twelfth century and attributed to Bernard of Chartres. – Wikipedia
The Internet platform, and its ubiquity and global standardization, is by far the single biggest and most functional platform the planet’s ever seen. On top of the original PC-centric Internet platform, you’ve got browser platforms, email program platforms, and so on. That was a huge market, with billions of people and organizations connecting over that those platforms.
Apple’s most important platforms include:
- The Mac platform
- The iOS platform
- The iPhone platform
- The iPad platform
- The iTunes platform
- The iLife Suite platform
- The Garageband platform
- The iCloud platform
- The App platform
- The Safari platform
Google’s most important platforms include:
- The Gmail platform
- The YouTube platform
- The Google Docs platform
- The Google Maps platform
- The Android platform
- The Adsense platform
- The Adwords platform
- The Google Search platform
- The Google Drive platform
- The Chrome platform
I use the word “platform” in each bullet point to drive the point home just how many platforms each company has locked you into. We’re talking about hundreds of millions of people around the planet that are consuming a large and growing part of their daily intake of EVERYTHING on these platforms. I’ve famously (or infamously, depending on whom you ask) owned Apple since the advent of the iTunes platform back in 2003 and bought Google the day it came public a year later.
Platforms and the value creation they drive are absolutely exploding in growth on top of all these huge aforementioned platforms owned by Apple and Google everywhere you look — Twitter, Facebook, Pinterest, App Review sites, and apps like Yelp, Zillow and Pandora are all worth billions of dollars in just a handful of years of existence because of the success they’ve had in driving critical mass to their own platforms built on top of the other platforms.
My own recently acquired Scutify.com and their iTunes app are platforms in their own right too. The key will be whether or not we can hit critical mass and lock people into continuing to use Scuttles to communicate, entertain, and market on the Scutify platform.
I’ve recommended shorting Blackberry for Revolution Investors since it was above $100 share and I repeatedly cited their shrinking platform as the primary reason the company was doomed. Microsoft has many platforms of their own, including the PC- and laptop-dominant Windows platform which will continue to generate billions of dollars in cash flow probably forever. But their Windows Mobile platform continues to suffer from lack of critical mass. It’s a matter of turning that vicious cycle of not enough users to drive demand for enough developers to create enough apps to drive more users into the virtuous anti-thesis of that cycle.
No stock goes straight up and I expect that we’ll see wild swings and huge drawdowns in both Google and Apple in coming years. Lord knows we’ve seen enough of both in years past, right? But I do think I’ll probably continue hold a core position in these two stocks for many years to come mainly because of the huge success and growth potential for their many platforms.