Chungst

The Short Case on INVESTools

I also welcome intelligent debates but let's be honest, my criticism of your piece was no different than your criticism of Investools -- let's not have double standards shall we?? I asserted your piece was sloppy because it failed to discern cause and effect. I also asserted that your piece came across as hastily assembled. Neither of those constructive criticisms hardly qualifies as a personal attack -- to be clear, I was attacking your piece (which I consider fair game) and not you as an individual since I have no idea who you are.

I am stating that you never showed the readers what the instrinsic value of the firm, and thus at what price Investools should be shorted, much less the margin of safety. Additionally, you never showed the readers the value creation chain at Investools and how parts of this chain is suspect. In contrast to your approach, I focused on facts as well as my actual experience at Investools.

You stated: "my main concern is the product itself" and it very clear from the reader's perspective that the problem is you don't understand Investool's market demographics. If you had understool what customers Investools is targeting then you would never have made your assumption of: "...would assume (me) as an institutional investor." Investools is geared toward individuals (i.e. retail accounts), not institutional clients. Yes, I (like over 100,000 subcribers) pay a monthly fee out of my own pocket for Investool's data feed -- that information is broken out in the press releases and Investool's SEC filings.

Before you response to this post, I strongly recommend you research Investool's latest presentation (can be found on their website) dated 8/29/07 and focus on page 10 where you see how thinkorswim compares with its peers. Then kindly turn your focus on page 18 for the pro forma revenues at thinkorswim and you will notice the rapid year-over-year gains for Q1:07 and Q2:07, respectively. Lastly, if you just read the latest press release, thinkorswim disclosed it had $2.47 billion of client assets and 51,775 funded accounts as of 10/31/07, respectively. Based on those statistics, you would get a number of about $47,700 per account that trades an average of 153 trades (predominately in options) per annum, respectively. I know why this is the case since I interact with numerous Investools students on their community boards/forums; for example, you have no idea what is the most popular option strategy via Investools' education courses and there is a direct linkage, i.e. cause and effect at thinkorswim's commissions via option trades.

In summary, you need to discern what is a personal attack because I did no such thing; in contrast, I provided detailed arguments as to why I believed your piece was sloppy and hastily assembled. It's clear you need to do a better job of due diligence because based on your initial piece and subsequent response, you still have not demonstrated to the reader you understand how Investools as a franchise makes its money, i.e via a value chain analysis or some objective fundamental analysis.

Thank you.