Mar 23 2012

Apple Flash Crash: Trades halted after odd trade causes 9 percent drop. For a second Apple lost $50 billion in market cap.

Apple stock took a very big drop today, actually dropping by 9 percent while circuit breakers were activated to halt trading.  The hit took place early in the morning.  It must have come as a shock to many traders especially given the near unstoppable rise in the value of Apple’s stock.  The sale and plunge is now being attributed to a “fat-finger” trade.  In other words someone accidentally put in a trade for a really low price.  I’m always surprised how fragile the financial system is when a company worth over half-a-trillion dollars can see nearly 10 percent of its market value disappear in the matter of a few seconds.  Apple quickly regained the lost market cap value once traders realized the error and ended the day at 595.05 a share.  Talk about a fat-finger because for a brief moment, some $50 billion was wiped out in Apple market share.

The plunge was brief and likely created short-term volatility while circuit breakers halted trading:

apple shares plunge

Not exactly a confidence event.

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Mar 23 2012

How much does it cost to run a losing NBA team?

Professional sports provide a fascinating business model.  Every year, in the most popular American sports of the NFL, NBA, and MLB one winner will emerge out of a multitude of teams.  In sports, winning is everything and organizations pay big bucks to bring a championship to their town.  What this also means is that many teams fail to achieve the stated goal of ultimate winner but still need to pay to play.  Of course the revenue model of say an NBA team will come from ticket sales, marketing, and other ancillary products.  Teams that are competitive will usually do well but how about teams that are having a very difficult season?  I wanted to take a look at the salary for players from the struggling Charlotte Bobcats that currently have the league leading worst record of 7 wins and 37 losses.

Pulling up the data on this team we realize that money is not necessarily everything especially when it comes to sports.

Charlotte Bobcats roster:

nba charlotte bobcats salary roster

Source:  ESPN

The roster of players comes out to roughly $49 million.  This does not include the coach and supporting staff.  Professional sports operate under very unique business models but where else will it cost you roughly $50 million a year simply to have a very subpar record?

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Mar 21 2012

The empty apartments of China – 64 million homes plaster the landscape of China. What does this tell us about China’s GDP?

China is one of the fastest growing countries in the world.  In 2000 China’s GDP stood at $1.1 trillion and today it is approaching $6 trillion quickly putting it in the number two spot of biggest global economies.  China has been growing so quickly that even cities are being built in anticipation of future occupants.  When countries begin to boom, a large portion of their early development is in the form of real estate growth.  China is no exception to this general trend.  Part of this has to do with the way the Chinese economy is setup.  State owned and operated enterprises take on a favorable role in the growth but not always allocate funds to the most needed areas.  Needed is such a hard concept to define because some will believe that housing should take precedent over say research and development and many would argue the opposite.  Some will argue that both can be done at once but usually in growth, one item comes before another.  The ghost cities and empty buildings do show an excess building on the real estate side for China however.

china empty apartments

Source:  Daily Mail

“As sprawling housing developments and skyscrapers in one of the world’s most populous countries, these tower blocks and recently-built neighbourhoods should be busy and swarming with people.

But on closer inspection these stunning pictures show elaborate public buildings and open spaces which are left completely empty.

The most recent pictures of unused housing emerged as China announced plans to build 20 cities a year for the next 20 years.”

An estimate 64 million empty apartments pepper the land.  And keep in mind this is a big boom for GDP but is it really quality growth?  So when we see charts like this:

china gdp

How much of this growth is going to be sustainable?  No doubt the country is growing at a strong pace but too much growth can also be a bad thing.  This probably sounds odd coming from our economy that is desperately trying to get out of the worst recession since the Great Depression.

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