Weekend Reading

Holy cow I can’t believe the crap they pass off as news! There are so many things wrong with this short article on media moving towards independent amateur producers I don’t even know where to begin: http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060908:MTFH11333_2006-09-08_17-06-48_L07256019&type=comktNews&rpc=44 If it wasn’t for my TIVO finding shows like Monk and The 4400 for me, I don’t think I’d ever remember to watch them. I don’t even know what’s on TV this year as there are now a dozen networks releasing new shows and the noise of the 99% that stink makes it very, very hard to find something worth watching. The premise of this “new” viewing paradigm is that you will devote hours of your time to watching the worst of all possible junk in order to find one show you like then you will create a “buzz” and tell your friends who will virally market the show until 20 Million people a week are downloading it. Go to www.youtube.com right now and find something you like so much you want to buzz all your friends. Hard isn’t it? If this kind of marketing worked Sienfeld would have told NBC to drop dead a long time ago. If anyone is going to take advantage of this thing it will be major networks, like TWX or VIA or, perhaps, the cable operators, who don’t shy away from investing money and could easily experiment with a few new channels of free content. I like LBTYA in the European market and CMCSA in the US as they have the double whammy of providing both digital cable and internet access. In the case of all these picks, I like them long but I would prefer a pullback before jumping in. ==================================== Great article in the WSJ on how the economic impact of 9/11, looking back 5 years, has been far less severe than expected. Nothing I haven’t said before but finally the Journal agrees with me that the “Fear Factor” is weighing more on the economy than actual economics. The economy is by any measure, 10-15% more efficient after absorbing that shock and corporate profits are up a cool $500Bn (70%) since 9/11, an amount equal 4 times Iran’s entire GNP or the entire GNP of India (with 1Bn people): http://online.wsj.com/article/SB115776485374658406.html?mod=home_whats_news_us And how is the S&P faring on the 5-year anniversary, after corporate earnings have grown a compounded 10% per year since? It’s up a whopping 17%. The Dow is up 16%, the Nasdaq is up 23%. Only the NYSE is in the ballpark (so far) positng a 38% gain over that time. http://finance.yahoo.com/q/bc?t=5y&s=%5ENYA&l=on&z=m&q=l&c=&c=%5EGSPC&c=%5EIXIC&c=%5EDJI Were it not for the 9/11 tragedy, what would the natural stance of the market really be? http://finance.yahoo.com/q/bc?s=%5ENYA&t=my&l=on&z=m&q=l&c=%5EGSPC,%5EIXIC,%5EDJI ==================================== I mentioned BRCM several times as having some trouble with options, most recently on Friday. It now turns out the number they “miscalculated” was more like “over $1.5Bn” rather than the $500M they estimated it at just a month ago. I love to say “I told you so” and I did, but now I’m going to confuse you by telling you that the sell-off may be overdone. They didn’t steal money, they stole shares of stock. In fact, the shareholders aren’t even any more dilluted than they would have been if the options had been priced higher. Yes they may get sued but there’s not much merit on the majority of shareholders forcing the company to pay them cash, which will devalue their shares. Ideally, existing officers and directors who benefited should be forced to give the shares back but it will be very surprising if a Bush balanced Court will force corporate criminals to give anything back to the victims. The IRS may take issue with what is looking like, on a wide scale, a $100Bn plus fraud that has been perpetrated on the US public as the companies manipulated books to create long-term capital gains but the benefit should have been realized at the time. Worry much more about that than class action suits! Still, once the dust settles you still have a company like Broadcom that is growing 15-20% a year with $3.6Bn in revenues and $700M in profits trading at around 18 times earnings. I am using http://online.wsj.com/page/perfectpayday.html to track these guys and will hopefully find a time to make a “best of list”. BRCM is a very extreme case (I hope) while many companies caught in the SEC’s net will be thrown back with little real damage. ===================================== On 8/24 I said: “HAL is selling off in anticipation of a Democratic House launching an investigation into war profiteering (anyone want to bet on HAL’s innocence?) but SLB looks ripe for a takedown as well…” Finally, 2 weeks later, someone is getting a jump on the action: http://www.nytimes.com/2006/09/09/world/middleeast/09contract.html?ex=1315454400&en=7aa9ef3d84bd95c5&ei=5088&partner=rssnyt&emc=rss&pagewanted=print ===================================== “OPEC officials and industry analysts say that the cartel has been producing below its ceiling of 28 million barrels a day for months because there simply hasn’t been demand for more.” http://online.wsj.com/article/SB115789599036758793.html?mod=home_whats_news_us ROFL!!! This would be much funnier if the oil scammers in this country weren’t ripping us off the whole summer! Here’s the “conundrum” for OPEC – if they cut output, they increase spare production capacity (above the shadow capacity that is already there under 28M), which will decrease the terror premium (which is, in part, based on there being no spare capacity) which is still 20% or more of the total cost of oil. Check out this master of the obvious: “The market had factored in a lot of negative possibilities such as hurricanes in the U.S. into the price of oil, but those events have not played out,” said Hisakazu Amano, who helps oversee $16 billion at T&D Asset Management Co. in Tokyo. “The drop in the crude price will be bad for oil-related companies’ earnings.” http://www.bloomberg.com/apps/news?pid=20601087&sid=aGHpbrBW2_jM&refer=home Come on, they give this guy $16Bn to play with??? Here’s another genius in hindsight: “The drop in oil, gold and other raw materials since May is signaling an end to the five-year bull market in commodities as global growth slows and demand falls”, according to Stephen Roach, the New York-based chief global economist at Morgan Stanley, the world’s biggest securities firm. Guy-who-comes-back-from-summer-vacation-on-the-wrong-side-of-trades says what? Oh and if you like thinking you can trust your broker – do not read this: http://www.bloomberg.com/apps/news?pid=20601087&sid=a4Iy3J2GROBk&refer=home ===================================== Lenovo was dropped from the Hang Seng today as they struggled to justify the massive purchase of IBMs already struggling PC division. They are going to start dropping prices and this could be the bad news we’ve been waiting for to push Dell down a little further so we can make a short term buy again. I’m in the Jan ’08 $27.50s at $1.60 and I’m going to sell the Oct $22.50s against it for .60 with a .90 stop. Were I not in it already I would just wait for a sell-off to buy some November calls – as it is, I’m just looking to make .20 or .30 on a dip. http://www.bloomberg.com/apps/news?pid=20601087&sid=aALkd6vb9uSg&refer=home