Could Hostess Twinkies Be Gone Forever?

Although Hostess Twinkies may possibly be the most unhealthy snack a person could ever eat, they are our unhealthy snack. The news out today is that the company has decided to liquidate after failing to get a wage and benefit agreement with their striking workers. Not good news for Twinkie lovers like me.

And I must not be the only one who likes these golden cream filled cakes since they sell about 36 Million packages a year.

Twinkie Wedding Cake -Yum!

One time someone even made me a birthday cake assembled out of Twinkies. There were thirty of the luscious little cakes arranged three rows high covered with frosting. Yum!

Twinkies have been around since 1930 when they were invented by James Alexander Dewar in Schiller Park, Illinois. At first Twinkies were filled with banana cream but a World War II related banana rationing forced Mr. Dear to use vanilla cream in his snack cakes and he never switched back except for a promotional run of banana cream filled Twinkies related to the 2005 release of the movie King Kong.

So why did the Twinkie maker need to liquidate the company?

The company has been in and out of Chapter 11 bankruptcy for the last few years and was financially strapped because of inflexible unions who would not let the company moderate their contacts.

Well… The Unions won and would not let the company make changes to their contacts so as of this morning 18,500 workers will lose their jobs. And it's not a great time to be out of work.

You can't blame this one on Chinese imports or unfair competition. I have seen the enemy and the enemy is us.

What might the company do next?

This isn't just the end for Twinkies. All the Hostess brands including Wonder Bread, Ding Dongs, Sno Balls, Fruit Pies and those wonderful chocolate cupcakes will be affected.

But… What could really happen?

I think these brands are so strong that some other baking company like Sara Lee will probably buy the brands and the secret formulas. They will probably get a fire sale price for the assets.

So…

Don't expect Twinkies to be off store shelves for too long. But you might want to take them off your Christmas gift list. But I'm sure they will be a hot item on eBay.

 

Could this be the end for Apple (AAPL) stock?

Today the grand poobah of Apple announced that the company would start to pay a dividend. The company has so much money stock piled in its basement that it is running out of room and has decided to give some of the cash back to its investors.

A noble thing to do.

The dividend could amount to about 2% a year. Not bad in times when you have a hard time finding a bank CD that pays anything even close to 1% a year. This dividend could be a nice thing. People will get paid while they wait for the stock to go up even further.

One big problem…

The stock is going crash and crash hard. Go back down to $1 a share is a real possibility.

How do I know this?

Well… For the first time ever I actually bought a few shares of Apple (AAPL) stock today. Right now I want to apologize to all the current Apple shareholders. But every time I buy a stock it crashes out.

Remember WorldCom and Enron?

Moments after my Apple stock purchase a story comes out that the New iPad has been overheating.

Why wasn’t I surprised?

Is this stock market scary or what?

The news today that the Nasdaq closed above 3,000 has me a little spooked. They are saying that this index of tech and other growth stocks has closed at the highest level since December 11, 2000.  That was just before the tech bubble burst.

Now no one is saying that another tech bubble has formed but it has taken us almost twelve years to get back to even.

Smart People On Wall Street

What could be driving stocks that high?

One culprit could be the excessively low returns being offered for money market accounts and Certificate of Deposits. With these cash storage devices paying 1% or less interest while the real inflation rate (what you actually pay for food, clothing, fuel, and housing) is probably something closer to 6% you lose 5% a year by just parking your cash.

Regular Investor

So… Every day many people are dipping their toes into the stock market using mutual funds with names like “The Super Safe Growth Generator” and “Can’t Lose Undervalued Stock”.  When they do this smart people on Wall Street just plow their cash into the same stocks we have seen going up for the last few months.

Like any bubble this party may be over soon. Just like last time.

Stocks can only;y go up for so long. Remember: You heard it here first.  

 

Could I be wrong on DirecTV (NASDAQ: DTV)? Or is Warren Buffet wrong?

A few days ago I shared my thoughts on DirecTV customer service. I was not happy and thought the company was probably headed down the toilet.

Well… Since then Warren Buffet, the legendary investor, has announced that he is increasing his stake in DirecTV by five times to $1 Billion. And… The company has released some incredible earnings results.

The company posted a 16% jump in fourth quarter profits and is adding to its number of subscribers while cable operators are losing subscribers.

Sure… The company can offer some great deals to lure people away from their current cable company but can they hold onto the customers once those great rates expire and people realize how much the service really costs. And that doesn’t count the extras they might tack onto your bill and how channels you thought you were paying for disappear overnight.

I stand by my opinion about DirecTV.

Between their questionable business practices and pressure from other entertainment choices this company will probably start to feel some pain in a few years if not sooner.

So why did Warren Buffet increase his holding in DirecTV?

Even the best baseball player has a bad day.  As hundreds of thousands of DirecTV subscribers realize what they are really paying they will call their cable company and hop back over there.

 

Is there really a stock market January Effect?

Articles have been flying around about the stock market’s January Effect.January Effect. People have attached this “January Effect” term to the idea that if the first few days, weeks and month of the year are good for the market then the rest of the year will be be good.

Well… I have been watching this January Effect from the shadows for a while and I have a few ideas on what it really is about… Actually what happens is the Stock Market’s volume drops in the last two weeks of December and right around that time the investors who are in the market seem to be doing tax loss selling.

And… Come January more money starts to flow into the market from year-end bonuses and new retirement fund deposits.

So what does this all mean?

If you didn’t make your moves to buy up some solid stocks in December it might have been too late. The only thing for sure in the stock market is that you can just end up with a lot of cold water even if you are careful.