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    • Fri Nov 30th 15:02 PM | Rating: 0 0
      Commented on:
      Naked Short Selling: The Scales Are Rigged
      Correction -- naked short selling requires capital (which is the theme my reply) and I was using naked put selling as a analogy. Thank you.
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    • Fri Nov 30th 14:58 PM | Rating: 0 0
      Commented on:
      Naked Short Selling: The Scales Are Rigged
      Michael Shaffer's article is flawed on a number of levels. The most obvious flaw is to sell naked options, be it ATM or OTM or ITM, requires capital. The last time I checked "capital" didn't grow on trees.

      It would help if the author, at a minimum, understood how the options market works. The industry standard analogy of selling naked puts is akin to selling insurance and not selling "virtual shares."
      View article »
    • Wed Nov 28th 15:51 PM | Rating: 0 0
      Commented on:
      Countrywide's FHLB Bailout
      Ernie Montague said: "Yet another Fed funded bailout, and a legal way for CFC to

      gamble with Fed money."

      I started my career in banking and saw the creation of RTC, so it's easy to spot

      misunderstood views of banking. Ernie makes a number of incorrect assumptions:
      #1 As for FDIC, it charges insurance premiums based on the bank's risk profile.

      That is to say Countrywide Bank pays the FDIC a risk-adjusted premium for all

      those new deposits (please see:

      www.fdic.gov/deposit/i...]
      #2 The FDIC is not part of the "Fed." Here's what the FDIC says about itself:

      "The FDIC receives no Congressional appropriations – it is funded by premiums that

      banks and thrift institutions pay for deposit insurance coverage and from earnings

      on investments in U.S. Treasury securities. With an insurance fund totaling more

      than $49 billion, the FDIC insures more than $3 trillion of deposits in U.S. banks

      and thrifts – deposits in virtually every bank and thrift in the country."

      [source: www.fdic.gov/about/lea...]

      Ernie needs to recheck his facts.
      View article »
    • Mon Nov 19th 12:52 PM | Rating: 0 0
      Commented on:
      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.
      View article »
    • Sat Nov 17th 11:48 AM | Rating: 0 0
      Commented on:
      The Short Case on INVESTools
      I just check the recent news release (dated 11/9). Investools had 100,700 active subscribers to its Investools Online, Investools FX and Prophet.net websites.

      I must have confused the over 250,000 who took the course with active subscribers -- I knew the subscriber appeared too high. Again, to be clear, I pay $50 a month for Investools on line and I am not sure what the recurring fee is for Investools FX or Prophet.net.
      View article »
    • Sat Nov 17th 07:32 AM | Rating: 0 0
      Commented on:
      The Short Case on INVESTools
      I just want to make it clear that $50 a month for the service is $600 a year. Given Investools has about 250,000 subcribers, that gives Investools a stable revenue run rate of about $150,000,000 per year. Since Investools has already built up its network, the marginal customer to the network is very profitable after the one-time new customer acquisition expense.

      View article »
    • Sat Nov 17th 07:19 AM | Rating: 0 0
      Commented on:
      The Short Case on INVESTools
      Paul Simenauer's article is incredibly sloppy, due to lack of cause and effect, and his analysis comes across as something conceived and written in thirty minutes.

      First, there are a number of people (like as myself) who subscribe to Investools as a data service provider -- the monthly fee is $50, after a one-time payment to learn the stock investing course ($1,000 in my case). I've used Bloomberg's services on a professional basis for over 10 years so I understand the need for timely financial information. For people like me, $50 a month is a small price to pay for an insurance policy for key financial information when investing in stocks.

      Second, Investools recommends its students to open an account with Think or Swim. In this sense, Investools is building a franchise around Think or Swim with the educational seminars as a way to attract and build its overall franchise.

      Third, Investools acquired Prophet Software to further increase its franchise. While I am a fundamental analyst by training, I nonetheless see Prophet as value for technical analysis-oriented people. In this sense, Prophet is the "glue" that creates stickness for Investools customers.

      To summarize the aforementioned key facts, Investools charges $50 a month (this is recurring revenues) from its users for the service. The Company also generates revenues from its education course and these are generally one-time in nature. Investools gets new accounts for Think or Swim from its new students (and this in ongoing due to ongoing seminars). Investools' methodolgy helps its users generate stock and option trading ideas and some of those trades is picked up via Think or Swim (thus increasing Think or Swim's commissions). Clearly, the people at Investools understand their franchise and how to create money from this franchise.

      As a side note, Investools offers additional education beyond the stock course (again for me the stock course was a one-time sunk cost to get access to the data feed) and those courses deal with options and technical analysis. Some of these courses cost as little as $6,676 ($4,999 special price if you signed up during the stock seminar) for basic options to $35,362 ($23,999) for their PHD level course. Since I earned my MBA from a top 5 finance program and was award my CFA(r) Charter in 2001, there is no way I will pay those prices -- in my opinion, these courses are highway robbery. However, I did witness a number of people sign up for the PHD program at $23,999 and I was simple stunned by this fact. I couldn't get an accurate count of those enrolled in the PHD program because the program was for two people. I will also say that there is a lot of pressure (i.e. hard sell) from the instructor to get its students to sign up for the advance classes.

      Lastly, and most importantly, the author fails to explain what the intrinsic or fair value for Investools as a stock. Warren Buffet has stated it is important for stock investors to ascertain the true value of the stock. Therefore, if Paul Simenauer never provided an objective analysis of the fair value for Investool's stock, then on what basis can the author claim Investool is over-valued and thus a short candidate?

      Thank you -- by the way, I don't own any Investool stock.
      View article »
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