As you know, I have recently been adding to my…

It’s an app world these days and it’s getting to be more of an app world  every day. Eventually we will hit a tipping point in the app revolution  that will drive us into an app stock bubble as the app world develops  into a full-fledged revolution of marketplace creative destruction.

And that creative destruction is already playing out in front of our eyes. We’ve seen Apple cannibalize its own hugely successful iPod with the iPhone, both of  which helped to destroy the Walkman, the CD, and radio and the business  of popular music in general. We’ve seen the iPhone and Android derail  the Research in Motion juggernaut and we’ve been on the right side of all those trends and helped guide you profitably through them for years now:

Apple, Google and RIMM over the last 10 years.

More recently, we’ve seen HTC, Samsung and yes, Apple, dismantle the Nokia empire, which just four quarters ago accounted for nearly 40% of all  phone sales. The company missed the first couple years of the  smartphone, touch glass interface revolution.

But as I pointed out a couple months ago when I initiated a long  position in my portfolio around $8 a share,  we’d seen Nokia ride these up and down marketplace cycles with  incredible success before, as the handset business has tug of war  between vendors with an occassional runaway hit form factor (say,  remember the Motorola Razr, which was the main marketshare stealer of  Nokia in the last cycle) and the other big vendors.

I tried to catch a bottom in Nokia. I was wrong. Mea culpa. I spent all  Memorial day weekend researching and deciding it was time to sell Nokia  in today’s newsletter — before Nokia blew itself up with today’s  preannouncement. That makes me doubly sick of seeing Nokia get crushed  10% like it did today after it confirmed Wall Street’s worst kept secret  — that it’s still getting killed by iPhone and Android and that it will  take at least a few more quarters before Nokia has any idea if they can  turn the tide back again.

I’ll be keeping my Microsoft long from the Softee/Nokia tag-team, and Softee, unlike Nokia, is  probably one of the safest tech stocks we can buy. If the  Nokia/Microsoft combination works out and the companies are able to sell  hundreds of millions of Windows handsets in 2014 and 2015, we’ll still  benefit huge from our Microsoft shares, which I expect would easily  double were this combo to work out so well. Further, we’re not dependent  upon this Nokia/Microsoft combo in our Softee long, whereas we are  totally dependent upon the combo’s potential success or lack thereof  with the Nokia play. Either the Windows bet works out for Nokia or it  goes to zero. Microsoft’s got Windows for PC, it’s got XBox, it’s got  Kinect, it’s got Office and it Microsoft’s business model has changed in  recent years so they’ve got tens of billions of dollars in future  revenues guaranteed by their giant enterprise software subscription  business.

As you know, I have recently been adding to my own personal Microsoft position, using  both common and very-long-dated slightly-in-the-money call options. The  stock has maybe two or three dollars potential downside even if the  company can’t figure out how to compete in the handset software  business…and potentially $20 or $30 upside over the next couple years  if any good news works out. The stock has started acting much better of  late and has put in a nice bottoming action around the $24 level.

So we’re selling our Nokia at a loss and will be looking to continue to add to my  weightings to increase our Microsoft  exposure in coming days and weeks, as I’ll of course detail in real-time for you guys as I do it.

Thanks for subscribing and I’ll see you next week!