Monday, August 31, 2009


That ---> is a 2-year look at AMZN vs. the S&P 500. Winner.

The fact that Amazon's Kindle reader has been getting new competition is no secret and I've written about it before.
Merrill Lynch is making a midday call that Walmart Marketplace, their entry into the 3rd party online retail market, will likely have a negative impact on Amazon.

I think this one is going lower.

Gamestop Might Be Cheap

The stock of video game retailer might be cheap. The stock is at $24 and next year's consensus earnings estimate is over $3.00

Goldman just upgraded it to conviction buy (I have not read the note or heard the rationale).

I doubt it (the part about it being cheap). I still think the shrink wrapped video game market is totally busted.

Anyone Listening?

Many of the Fed's actions in bailing out the financial system and the players involved have proven to be good investments, according to data released today.

Nobody viewed this as an investment at the time so that is a silly way to look at it. Some of the recipients have not yet repaid so the math is incomplete. AIG, despite recent claims that it will be able to repay all the money, is still in up to its neck.

My point is that the results have not only been not bad so far, they have been good. The banking system was saved and taxpayers have seen a return on their money.

Here's an ironic twist on the subject from Tim Collins at

"What I find ironic here is that the strongest banks/holdings are being allowed to buy back the holdings from the U.S. taxpayers. In essense, the U.S. taxpayer is being forced to sell its winners and hold it losers, which at least from my experience, is not a long term winning strategy."


Last day of August. This year is flying by.

Sunday, August 30, 2009

Solar Really?

Is this real?

Wow if so.

Twitter Twitter Twitter

"Anyway, this all leads me to understand that Twitter is way underhyped and is worth more in the marketplace than anyone has estimated yet. Now I totally understand why Ev Williams didn't take the Facebook deal of about a half billion dollars."

Robert Scoble on why Twitter isn't getting enough love and is worth $5 - 10 billion.

I'm still not close to seeing it. For consumer apps, I'm still thinking Facebook is better. For business apps, I can't think of a business I care enough about to want their Tweets.

Saturday, August 29, 2009


These guys. The owners I'm sure.


Friday, August 28, 2009


I woke up late and it's raining. This was supposed to be a great day.

My wife, kids and all the inlaws that were here left for the Outer Banks yesterday. When I got home from the office last evening my intention was to kick off a few blissful days of quiet quiet quiet nothing.

Then I locked myself out of the house.

I didn't exactly do anything to lock myself out. The door from my kitchen to my deck has a lock in the doorknob and a dead bolt. We always lock the deadbolt, never lock the knob lock. Never.

My mother in law had locked it. I went outside to move some stuff since rain was coming and re-entering the house entailed (a) me trying to crawl through a basement window that was way too small, (b) going to a neighbor's house to call a locksmith, (c) waiting like a loser for an hour for him to arrive, (c) paying him $160.12 for the 8 seconds it took him to pick the lock.

Not my finest hour.


Between the time Dell was tripped up in the 90s speculating on currency and the period a few years ago when PCs became a trueish commodity, Dell was revered as a great execution machine and Michael Dell was the man.

Along those lines, Dell's aggressive guidance post earnings last night is being treated as gospel by tech investors, at least in the pre market.

Oh, and Intel just took up 3Q numbers.


AIG is up another 10% pre market. Man oh man I would love to short this stock.

Thursday, August 27, 2009

Under the Radar

Drive maker Seagate (STX) is up 8%+ as it was reported that CEO Steve Luczo bought 100k shares on Tuesday. If my memory serves correct, Steve used to be an investment banker, so...


ML is insisting today (good call for a quiet day) that PALM can earn $1.00/share next year. CY 2010 consensus is around breakeven as far as I can tell. The stock at $13 is telling you that real consensus is higher than that.

Dog Days

Global Positioning System (GPS) makers Tom Tom and Garmin are talking about how 2010 might be a growth year for GPS systems.

It's amazing how quickly that biz went from the hottest category around to something not that exciting that you can do on your phone if you need to.


Stocks are up so many want to find something to be positive about. The idea of a PC upgrade cycle beginning in 2h 09 is gaining steam.

Gizmodo adds fuel to the fire by getting excited about Intel's new laptop product cycle, which happens to be coordinated with Microsoft's Windows 7 release. It will be interesting to see whether there is a chance with really new product to halt the slide in average selling prices.


Microsoft is cutting price on the Xbox 360. I'm not buying it and I think a lot of other people won't as well. The console market is broken.


NJ stuff. Looks like Jon Corzine's Repulican opponent for the Governor's race in November, Chris Christie, shot himself in the foot. NJ101.5 broke the story over here yesterday.

Looks like Corzine will now be the favorite and not the underdog, which is a bummer. now has it as pretty even money.

This is a drag since as I've written before, I find Corzine's performance in his 1st term to have been very disappointing.


I watched the Allen Stanford (Antigua ponzi schemer) special on CNBC last night. I can't imagine a more boring villain.


“There is a theory which states that if ever anyone discovers exactly what the universe is for and why it is here, it will instantly disappear and be replaced by something even more bizarre and inexplicable. There is another that states that this has already happened.”
Douglas Adams

Wednesday, August 26, 2009

French Nonconnection

RIP Ted Kennedy.


If all goes according to plan, the French could help resolve the current impasse in the US regarding Wall Street compensation.

French President Sarkozy is about to take his Wall Street compensation message to the good folks at the G20 meeting next month in Pittsburgh.

Sarkozy, is his native fiefdom, is willing to among other things deny government underwriting business to firms who do not follow his guidelines, which include 3 year deferrals on 2/3 of bonus payments, limits on total bonus payments per firm and limits on individual bonuses.

Sarkozy wants to set an example and standard for the rest of the world. I hope the American public is paying attention because following French example is not something that Americans have been doing a lot of.

According to Bloomberg, France has done one debt offering this year and Barclays and HSBC were lead underwriters, not Paribas and SocGen. I wish we could fast forward the debate because I can't imagine a large US Government deal not having a US bank on the cover.
If a US institution owes US taxpayers money, the government should have some say on compensation. For all other players - bankers, athletes, musicians, artists, entrepreneurs - let the market decide.

Let the French bring the outrage. We're not going there.


Futures and oil are down a little. Not a ton going on.

Tuesday, August 25, 2009


That's the USPS cycling team, former cohort of overachieving Lance Armstrong from 1998 to 2004. Whether an [independent?] government agency should be sponsoring a cycling team is not the point I'm trying to make.

The following story hit the wires today:

"U.S. Postal Offering to Pay Workers to Leave, Retire

Aug. 25 (Bloomberg) -- The U.S. Postal Service said it reached agreement with two unions to offer as many as 30,000 employees incentives to resign or retire by the end of next month in a plan that may save $500 million...

[USPS] said in July it may lose at least $7 billion in the fiscal year ending Sept. 30."

In 2004, their last respectable year by decent profitability standards, USPS made $3.1 billion net profit on revenues of $69 billion - and that's not exactly killing it. Their fiscal year ends September 30. In 2007, the numbers had tumbled to a $5.1 billion dollar loss on revenues of $78 billion. 2009 is looking like a greater than $7 billion loss on revenues of $76 billion.

I'm not exactly criticizing USPS, although if you can lose billions three years in a row without having to come to market to issue equity or bonds, explain yourself and have a much better story to tell, you have a better sponsor than I do, but we knew that already.

The Bloomberg story above reminded me of a very strange research meeting I was in at an asset management firm I worked at in San Francisco in 1997 or 1998. Our Director of Research (DOR) told us that USPS was coming in the following week to do a fake road show for a tentative IPO. That wasn't what USPS was saying, that was our DOR's interpretation.

It turns out that the monster UPS IPO was on the way and USPS folks (the US Govvies) were wondering if they should be capitalizing on the same mojo. The process didn't quite get there but as late as January 2000 I found the following article referencing the speculation:

"Article: The Postal Service: One Hot Property

I have a proposal that would allow both the government and the people to benefit greatly from the stock market's growth. United Parcel Service's record-breaking IPO demonstrated that the company's market value was more than $80 billion. The U.S. Postal Service should be sold as well."

We all know what happened. The internet. Just as online shopping and biz-to-biz easier-than-ever eCommerce was giving a turbo boost to shippers UPS and FedEx, it was doing the following to USPS:

  • Killing traditional mail. Email and electronic payments have had a predictable effect on mail volumes, not to mention the fact that USPS' core mail customer are now more than likely to have grey hair.
  • Putting serious pressure on USPS management. A government agency that had a recent whiff of the public market limelight was subsequently faced with declining volumes and the imperative to cut costs in a high fixed cost organization that was not traditionally technology friendly.

In the words of Jessica Rabbit, not bad, just drawn that way.

The irony is that had the USPS IPO gone through as contemplated, the US would probably be without a postal service as you read this, or shortly thereafter.

Not the end of the world, but a strange dozen years none the less.

The LA Times is Part of the Problem

The LA Times has a story today about the death of buy and hold investing. The premise is a layup to resonate with many since the S&P 500 is down 23% over the last 10 years. That is a long time.

The problem I have with the article is encapsulated in the following example that they use in the story:

"Susan York was fed up with the dismal performance of her 401(k) retirement account. Then her husband saw a Sunday morning infomercial in January touting the benefits of trading options, which give an investor the right to buy or sell stocks and other securities at pre-determined prices.

The 50-year-old from Naples, Fla., had limited investment knowledge but attended several seminars before starting to trade in May. So far, York said, she's up an average of 40% a month and is trading full time.

"It's the best job I've ever had, not just for the enjoyment but from the compensation standpoint," said York, who previously sold telecom equipment. "I've replaced a significant six-figure income.""

Let's say she started with $100k, which is low if her actual intention was to replace a six figure income. Compounding at 40% per month over one year would result in a gain of over $5.4 million in the first year. Let it ride and her new bank roll will be over $310 million after year two.

Is that going to happen? Of course not. Might some readers try it for themselves? Of course.

I am not defending the professional investment industry here. Lots of pros got it wrong and the market has been dismal. I'm just pointing out that putting a 4 month fairy tale example into a financial article with a serious premise is irresponsible.

Richard Russell

That young fellow is Richard Russell and he has been writing the highly respected newsletter Dow Theory Letters since 1958. I am not a subscriber currently but someone emailed me Russell's note from today, which raises the question of whether this is a bear market rally or a new bull market. While that question is much more interesting than whether Bernanke was going to get another term, the conclusion that Russell is leaning toward gives me pause.

"Here's my problem -- I believe all great bear markets end with stocks selling at great values and with investors "fearful and hating the market." I have yet to see either of those phenomena, which makes me think that the final bottom for the bear market that started in October 2008 lies somewhere ahead. It's a fascinating puzzle, and the very viability of the US may depend on its outcome."

I have written about this before but I do believe that just because something happened before does not mean that it will happen again. Particularly, just because past bear markets ended with stocks trading at trough multiples on trough earnings, doesn't mean it will happen this time or ever again. The market may be smarter. Furthermore, making major investment decisions based solely on historical patterns is unlikely to ever create a variant view that leads to outsized gains.

Yet another argument that won't be settled until well after it is proven by time and history.

I am reminded of the following quote:

“Consistency requires you to be as ignorant today as you were a year ago.”
Bernard Berenson

August can be Depressing

If you're not on vacation. It feels as though most people are on vacation - investors and company executives and newsmakers. Only the media outlets have the same level of coverage as they do during earnings season.

Hence the mania at CNBC and others this morning to make big news about Obama's confirmation that he intends to offer Bernanke another term as Fed Chairman.

This was bound to happen and Ben B. still has five months left on his current term.


What kind of bottom/recovery are we going to get? V, W, U, Verizon V, square root sign, L? Applause to those who say they don't know. I wonder when individual stocks are going to come back into fashion.

Financial services firms, particularly those who are market-related, are big advertisers for financial media. Some or lots of the potential consumers of these services - individual investors - have sworn off the market. It would be a boon to all involved if these folk were to get re-involved in investing. It's hard to get Joe Investor excited about the next big tech stock when all the chatter is about macro projections and Washington DC machinations.


According to this Bloomberg article, Apple has the hottest store on NY's 5th Avenue. Not Soho. Not Silicon Valley. 5th Avenue.

Monday, August 24, 2009

Wikipedia Bends, Kind of Breaks

The New York Ties is reporting that Wikipedia has succumbed to the fact that it is far too important to be left to the unchecked devices of random internet surfers.

"Officials at the Wikimedia Foundation, the nonprofit in San Francisco that governs Wikipedia, say that within weeks, the English-language Wikipedia will begin imposing a layer of editorial review on articles about living people."

That step probably doesn't go far enough but who am I to say. I am surprised that there haven't been more large, embarrassing incidents given to fact that anyone could until now edit away regardless of veracity, at least until someone caught the error or ruse.

It was kind of like much of the rest of the web, where instant gratification is more important than fact checking, spelling and grammar. That being said, I use Wiki all the time - but not for researching anything serious.

The Witch Hunt Continues

The WSJ has a sort of vague story this morning discussing how Goldman Sachs (evil) makes trading calls to its biggest clients (evil) which may be slightly at odds with the long term recommendations in its published research and therefore disadvantaging smaller clients (angels) who don't have the same depth of access to Goldman analysts and traders.

Some folks resent Goldman's success and want them to go down no matter what. Some want maximum protection for the smallest investors, even if that makes no sense from a business standpoint. Do you know any business owner who does not treat her biggest customer better than her smallest one? Let's say I'm an analyst at GS. If I have a Neutral rating on XYZ because I think it will perform in line with the market over the next 24 months, but think the stock may pop next week if people get excited about a new product cycle (a product cycle I am not a fan of), is it wrong for me to have that conversation with a client? No.

We have a very quiet two weeks ahead so maybe this one will stay under the radar.


A friend of mine at Citi just upgraded distant #2 processor maker AMD. Most stocks are up a lot and AMD is as well, but you could argue that it is still cheap if business overall gets better and they manage to execute. That is the kind of call you get at this point in the cycle. It's probably a good one, though.

Sunday, August 23, 2009

Apple TV?

"An Apple television set [will be introduced] within the next two years that could wirelessly sync with iPods, iPhones and Macs. “Such a device would command a premium among a competitive field of budget TVs; we believe Apple could differentiate itself with software that makes home entertainment simple and solves a pain point for consumers (complicated TV and component systems).”"

That is analyst Gene Munster at Piper Jaffray speculating that Apple's next foray in the battle for the living room media market will include an actual TV.

This is going to be a big deal for cable companies, Microsoft, TV makers, Netflix, satellite companies and a host of others as it plays out. TV replacement cycles are much longer than those of other consumer electronics so this battle will be a long one.

Friday, August 21, 2009


--> S&P 500 year to date.

It can't go straight up from here but that continues to look like the direction.

Enjoy the weekend. I'm in Woodstock NY if anybody is looking for me.


Usain Bolt is rewriting the books, and not just the record books.

It's a quiet Friday in August and the futures are leaning to the upside. The existing home sales number coming out at 10 could be interesting.


Morgan Stanley is making positive comments about Apple and RIMM this morning based on market share gains in smart phones. The rich are getting richer.


Reddit users are going after Sears. I wish there was a way to measure whether this internet activism has any effect.

Thursday, August 20, 2009

AIG Said What?

"Aug. 20 (Bloomberg) -- U.S. stocks rose for a third day as American International Group Inc. led a rally in financial shares after saying it will pay back the government, overshadowing an unexpected increase in jobless claims."

I, for one, was not expecting that.


After the bell throwback momo name knocks it out of the park again.

Short Attention Span

I don't see how this is going to work. From the WSJ:

"Google Inc., which has struggled for nearly three years to turn YouTube into an advertising platform, is aggressively pushing new ad formats and ramping up deals with media companies for the online video site.

YouTube said Wednesday it will distribute a range of short clips from Time Warner Inc. properties such as CNN and the Cartoon Network. The agreement follows similar deals struck with Walt Disney Co.'s ABC and ESPN and a number of Hollywood studios earlier this year."

The last thing I want to do when I click on an online video is to sit through an ad in order to get to it. Since I'm a fan of Google I'd like to see them figure this out but I don't see it.


The price of oil, largely influenced by traders and not consumers, is very troubling. Mark Cuban has some interesting thoughts over here.

Wednesday, August 19, 2009


This arrived in my inbox today and it is a good deal. iPod touch pricing starts at $229. I'm going to go out on a limb and say that this doesn't mean that they're having a soft quarter - too early for that. I still like Apple here.


Back from Canada. 10 days and I drove about 2,000 miles, played some golf, visited family and friends, bought expensive gas, crossed the border very slowly twice and redeveloped a hint of my old Canadian accent.

I was travelling with my brother for most of the week. He lives in California and we both have Verizon cell phone service. Once we got 250 miles outside of Toronto, my phone stopped working but his service was fine. It was like going back to 1998.

This market feels shaky despite yesterday's bounce. Consensus seems to be looking for a 5 - 10% correction in the short term, so most of the time I'd be prepared for something different but who knows.

The average Canadian is quite amused at this health care debate that we are having. The bottom line is that said average Canadian believes that a single payer system in which everyone is covered is an inalienable right. It's never that simple.

Monday, August 10, 2009

Guelph Ontario

Is where I am today. Heading north tonight.

Early market action is very uneventful today.

(PCLN) reported this morning and the stock is going bananas, up 12% today. Looks like the bears lost that battle.

RIMM's stock has been acting bad the last week and is again today. Feels like there's something shaky going on.

Sunday, August 9, 2009

More Road

I am in London, Ontario today. Sweet little 512 mile drive yesterday with the usual congestion at the border crossing.

Lots of construction along the way but no tickets and no road rage so all is good.

Picking up my brother at the Toronto airport tomorrow night then heading north.

No rain, no rain.

Friday, August 7, 2009


Last Friday I wrote that Citi should give the Phibro trader with the big compensation package more equity in lieu of bonus. The NY Times writes today that it looks like it is happening.


$2 billion more gets approved for clunker subsidies. The hangover from this, in terms of the next auto sales air pocket that we are going to have to work though, could be a doozy.


Interesting. Apple and not Microsoft as the King of anti trust, or at least anti competitive tactics?


Big jobs number this morning

Thursday, August 6, 2009

On The Road

I have a color version of that ^ on the wall of my office at home. It is a scene from the main street in the small Canadian town in Northern Ontario that I grew up in. In Canada we spell it colour.

I'm hitting the road Saturday for my annual midsummer visit. I'm stopping in Southern Ontario for a couple of days this weekend, picking up my brother who is also an expat at the Toronto airport Monday night and I'll be arriving up north Tuesday morning.

My family is not going up with me this year due to scheduling conflicts but my golf clubs are and I am seriously having the worst summer of golf that I can remember - probably since the summer I spent in Japan since I never touched a club that year. The reason that I'm writing all of this is that there is a two-man tournament August 15th and 16th which drives the timing of this trip annually, but also and perhaps more importantly a potentially epic pre-tourney match a week from today between myself and my partner and a couple of local semi-legends named Chammy and Frenchy. We lost a little moolah to them last year but it was a side bet, not a heads up match.

It's a little ironic that Chammy is French - French Canadian - and Frenchy may not be but there's no need to get into that. The plan is that we will play a better ball match for an amount of money that makes them just a little uncomfortable, then sit around and talk about the good old days. I have no intention of being uncomfortable.

Chammy is a better short stop than he is a golfer and Frenchy is into politics so probably doesn't want to piss us off. Combine those tidbits with that the fact that I'm due to put a few good rounds together and I think I know how I'm going to pay for the trip.

See you next week boys.


It feels to me as though Cisco earnings are almost never a non-event, but they were today.

Wednesday, August 5, 2009

Cisco Earnings

Not good enough relative to high expectations.

Did I say that this morning? Think so.

This tape is stretched and tired. Just my opinion.

That pic --> has zero to do with this post.
Edit - Cisco might be good enough. I'm going fishing.

Not Much Going On

Very quiet today as it should be in August.

Cisco reports tonight and should be the catalyst for a correction should it be not good enough, since tech has been leading. The ADP jobs number and ISM non-manufacturing data were both soft so today is not looking great in any case.

Who thought Billy Clinton would be the key that unlocked the journalists in North Korea?

I'm traveling a lot through Labor Day and won't be writing as much or as frequently, so feel free to not read this space as infrequently as you currently don't.


Tuesday, August 4, 2009

1999 Redux

Part of me wants to see this work.

I saw in an email from BofA Merrill Lynch last night that they are the lead underwriter for an IPO of web site It really felt like the good old days when everyone was rushing to get anything .com into the IPO pipeline.

I'm sure it's a subscription + advertising business model and equally sure that it has no shot at being a large, profitable company. I could be wrong of course. If the deal gets done, and done well, it will speak volumes for the risk appetite of this market having returned big time.


The market acted great yesterday, moving through some important psychological levels and not rolling over. Today is looking down.

Monday, August 3, 2009

Don't look now but

The S&P 500 hit 1000 today.

The late summer correction that I predicted is not materializing.

Enjoy the ride.

Citigroup and Some Other Stuff

I wrote earlier about Citi/Phibro and their vastly unpopular $100 million man. Why not just turn his compensation into equity in that subsidiary, and book his comp as a capital gain and not bonus?

Citi owes taxpayers a lot of money. This guy is a money making machine. Easy game.


Lots of optimists got up earlier than I today. Futures are quite perky.


I still don't like oil being above $70/bbl.


I was at my mother in law's place this weekend and was trying to figure out why her computer was running so slowly. Viruses, despite the fact that I had installed McAfee antivirus software last year. I downloaded a couple of free scan programs, all of which found dozens of viruses that McAfee wasn't finding. Junk. The stock is up nicely this year which makes it today's easy money anecdotal short.