Maximus

Who Would Buy a Newspaper? Anybody?

I don't think it is a half bad idea for someone that has an inkling of a decent plan.

You could buy the strategic brands like the NY Times, the Tribune/LA Times, Wash Post. bundle them up as one company and charge for access to a good deal of their web content since these companies provide a great deal of information that the web relies on.

Reverse syndicate content and push APIs to websites outside the umbrella and make money on advertising that doesn't come from your own site.

I have to say I see the end of the "free" internet culture lurking around the corner.

In the context of a protracted economic crisis many private equity firms and owners of digital assets are going to pull the plug on some of these unproductive noncash generating companies.

Goodbye Twitter...

And I also agree with Graham and Dodd. When and if the last newspaper dies, the next day someone will have the great idea of of launching a general, quasi unbiased news and reporting service since nothing like it would exist at that point.

Why This Rally Is Unsustainable

Your comment about XL Capital is correct. But your overall your comment begs the question posed by the author that the market is rigged, and that it is up on low volume. If your long, have tight stops losses in place. Based on the comment stream, TBT seems like the place to be.

I also find it out of place to insult a very intelligent author by calling him a "basket case" simply because his point of view diverges from your own.

Did you even know what the stock market was when you were 19?
On May 02 02:32 AM InvestBaboo wrote:

> This author is a real basketcase.
>
> XL capital staged a rally to $9.84 from the low digits. To this basketcase
> author this is a 400% unjustfied rally. He would argue "What has
> changed in the fundamentals since March of this year to justify a
> 400% rally?" To those investors who remember seeing XL at 40 dollar
> plus last year it has barely begun to make up for the decline. These
> investors were probably shocked and aghast that a 40 dollar stock
> so quickly ran down to the single low digits in such a short timeframe.
> The same is true with all other equities the author talks about.
> The author forgets that these were behemoths once that were brutally
> punished by the market and have not recovered even to half their
> original value.
>
> "THE MARKET OVER CORRECTED MANY EQUITIES TO THE DOWNSIDE AND NOW
> IS BARELY BEGUN MAKING UP FOR THE OVER CORRECTION." There have been
> significant improvements in the fundamentals that are helping the
> markets now put proper value on these devastated equities. While
> the market will not reward them with their 2008 highs (yet!) the
> market will certainly take them a lot higher than where they are
> today.
>
> It is exactly this "Cup half empty" syndrome that creates suckers
> out of people. People like this author always think they are smarter
> than the market and always try to double guess and/or outsmart the
> market. There is a whole bunch of these sucker authors on Seeking
> Alpha who have caused their readers great disservice by influencing
> them to stay out of this rally. If this author and others like him
> had simply followed charts and then came up with a rationale to justify
> why the markets were rewarding the equities perhaps they would not
> only be wiser but also richer.
>
> As for the author finding faults with the technical parameters of
> this rally there are thousand other analysts who will look at the
> same data and argue otherwise. At the end of the day the markets
> rule and investors are wise to follow the trend till the bend at
> the end.

A Third Way in the Current Inflation / Deflation Debate (But It's Even Scarier)

Great article Cam. You are far and away one of the best, most-insightful writers on SA. Thanks for your contribution.

Goldman Sachs Top Ticks the Market

At least his comments are interesting...


On Apr 14 08:26 PM Jorb wrote:

> Spammer. He cut and pasts the same garbage line for line from a template
>
>
> www.google.com/search?...;hl=en&filter=0
>

The 15 Most Cash Rich Companies

Great article and great comments.

I agree about the technology companies and the downside in a shrinking economy. I looove Apple but just can't buy it. Google is the only safe bet of the bunch due to its near-monopoly status in a growing market.

Given the inflationary course clearly being pursued by the Fed, I think it is time or the time is soon to come when cash is no longer king and we need to get everything out of greenbacks and into investments that will maintain their value in an inflationary context.

My main concern right now is finding companies -- in addition to natural resource ETFs and stocks -- whose market value will rise along with inflation and a declining dollar.

These companies should possess wide-moats (near monopolies or with strong competitive positions), easy-to-understand business models, high ROEs, low business risk and low debt (all Buffet/Morningstar critieria).

I have just begun this exercise using Morningstar data by screening Morningstar's wide moat, low business risk, five-star stocks (stocks with a large margin of safety) but have not yet examined cash, debt, debt-to-equity ratios, ROE, etc.

One extremely interesting company is Landstar System (LSTR).

Here is the list of other wide moat companies that I will examine for ROE, cash and debt levels (note there is some overlap):

Procter & Gamble Company PG
3M MMM
Abbott Laboratories ABT
Alcon, Inc. ACL
Boardwalk Pipeline Partners LP BWP
Buckeye Partners, L.P. BPL
Campbell Soup Company CPB
Coca-Cola Company KO
Colgate-Palmolive Company CL
ExxonMobil Corporation XOM
Fastenal Company FAST
International Business Machine IBM
John Wiley & Sons, Inc. JW.A
Johnson & Johnson JNJ
Kinder Morgan Energy Partners, L.P. KMP
Magellan Midstream Partners, L.P. MMP
Medtronic, Inc. MDT
Microsoft Corporation MSFT
McDonald's Corporation MCD
Novartis AG NVS
PepsiCo, Inc. PEP

Comments about these companies very welcome...

On Mar 15 12:33 PM MDLGTO wrote:

> Good starting point. I agree with other posts that cash flow per
> share would be a helpful measure AND that Net Cash/Debt is more important.
>
>
> With regard to specific stocks:
> AAPL garners a majority of revenue from Laptops and Ipods (macworld
> pie chart www.macworld.com/artic...)
> -IMHO these sales will evaporate along with other consumer disc.
> purchases. I think will crash hard. AND without Jobs, even more so.
>
>
> MSFT, as noted, cash rich for a long time--have really not gotten
> any traction with new products svcs-dependent on win/office. Some
> possible good news is that I THINK that companies will prefer to
> bleed a little w/ new licenses rather than take a large capital investment
> on low cost solutions (linux/google apps)--cap ex is in training/IT
> that can handle these jobs
>
> GOOG is VERY interesting 0 debt. Still a bit overpriced, But will
> continue to innovate (lots of blah blah about innovation in crisis
> type articles are around), advertising continue to shift to web (more
> cost effective and goog owns this arena). GOOG is the microsoft of
> tomorrow.
>
> I think PHARM is much maligned. Think about it people. For all the
> flak that Obama gets (I'm a liberal), He won't be able to change
> the system--look what happened under Clinton--A lot of talk, no change.
> AND Boomers are just now striding into their peak Medication years!!!
>
>
> BRK is, I think, a Buffet/munger vehicle-old guys whose active investing
> longevity won't outrun this downcycle.
>
> XOM etc. Great company, probably overvalued. I'd look at historical
> Oil prices--Even $30/bbl is avg/high in inflation adjusted terms.
>
>
> INTC-Not sure how their other lines stack up, but i'd guess worldwide
> chip demand is going to be neg/flat for a while.
>
> CSCO-Not great equipment, but Corps will need to maintain network
> status quo.
>
> HQP odd chimera of IT. Consumer sales will be neg/flat. I'd think
> their best days are over
>
> IBM as a friend wrote to me "we're outsourcing everything that's
> not bolted down" IBM should be able to capitalize on that
>
> TOM-Think consumer capital expenditures will not be great for some
> time.
>
> So, This is my 2 min Cramer exercise--look at IBM, GOOG, and pharm.
> I'd also be interested in Consumer Staples that have strong balance
> sheets/ low debt/equity ratios--Help me people!! Most consumeer staples
> seem to be too highly leveraged.

Will the Euro Survive?

Agreed.

Of course no weak country (read: PIGS+Ireland, Austria, etc.) wants to leave the euro, but that is beside the point.

The point is that economic reality might force them to leave.

Argentina did not want to breaks it currency board that ensured a 1:1 backing of every peso in circulation with dollars since it overcame its historic inflation problem.

The rigid exchange rate regime though stifled domestic manufacturing as local manufacturing became too expensive. Public sector borrowing crowded out the private sector and interest rates soared as investors demanded higher and higher rates on the country's sovereign debt.

A similar situation is brewing in Spain, whose unemployment rate is skyrocketing and economy has skidded to a halt. Euro membership has made labor quite expensive and Spanish exports are uncompetitive. The country is running an appallingly high trade deficit and the government will have to spend well beyond the 3% budget deficit limit for euro membership. Inflation has been higher than in other European countries and the last decade's low interest rate environment (the result of euro membership) funneled money away from more productive investments and into a housing boom. Spain's complicated macroeconomic picture has caused spreads on Spanish sovereign debt rise with respect to German bonds.

I can conceive a day after years of deflation and no growth when a country like Spain might suspend its membership in the euro when it can no longer tolerate the high price it must pay.

The only way unproductive countries can compete is through currency devaluations.

On Mar 03 01:09 AM tmorris007 wrote:

> No homework required, this is an open book test and the text has
> nothing to do with quantitative analysis and everything to do with
> political and national, self interest. Stop looking for facts and
> figures to explain it's fate. It will be determined by the realities
> of each sovereign's assessment of what is in the best interests
> of their individual economies. A union this divided will ultimately
> unravel..
>
> Mar 02 09:52 AM American in Paris wrote:

How Long Before the Dollar Fails?

If you believe Bernanke, then you know he will drop money from a helicopter in order to combat deflation.

The Fed will monetize the debtin an attempt to keep interest rates low because an even more protracted deflationary spiral will be unacceptable to him and to the Obama admin.


On Mar 07 02:21 PM driftwood2 wrote:

> If Washington can't keep borrowing at it's recent rate, that would
> be deflationary. People seem to forget that the Great Depression
> was a deflationary crisis. If the US can't borrow as much money
> as we did then, that would make the current crisis more deflationary.

Silver Backwardation: Prices About to Soar

I couldn't agree more. Get the heck out of Bolivia for the reasons cited.

I would also stay away from SLW. If I am not mistaken a good percentage of their business depends on silver mined in Latin America.

If one believes that the global economy has entered a severe recession/depression then investments in Latin America could be very risky if there is social unrest, a backlash against "capitalism" and foreign direct investment, and a wave of nationalizations as result. All very real possibilities if things get worse from here.

I think the safest investments for survivalists would be (1) physical possession of bullion or (2) Canadian mining companies.

Given the relatively poor economic fundamentals of the US vis-a-vis Canada, in the context of a run on the dollar, I wouldn't rule out overt government intervention/nationali... in the mining sector/gold market.


On Mar 06 07:19 PM nmelendez wrote:

> Get outta CDE, Bolivia is in league with Hugo Chavez. Brazil has
> a big ongoing conflict with Bolivia due to govt confiscation of Brazilian
> company assets in Bolivia. Beware Bolivia and Venezuela. All other
> plays in SA OK. Personally prefer Brazil in all aspects, second
> Argentina/Peru and then Central American countries.

2009 Depression Will Be Nothing Like 1929

Agreed. The internet phenomenon/Google/Crai... are gutting advertising prices and radically altering the media landscape/business models.

It seems that the internet as a technology is a highly deflationary one.

It will take some time following this period of creative destruction before jobless ad/newspaper/tv, etc. professionals find jobs in other productive endeavors.



On Mar 06 09:54 AM Harry Tuttle wrote:

> 1) The economy was more globalized in 1929 than you think. Indeed,
> the Depression may have started by the England's pursuit of getting
> the Pound back to its pre-war value in Gold.
>
> 2) Instant pricing technology may actually make things worse as it
> destroy pricing power and profits from intermediation.
>
> 3) I see no evidence that "the economic system is better". Many
> assumptions are being challenged right now and I expect that many
> more will be challenged in the future.
>
> 4) The Depression was finally ended by WWII. With current technology,
> that outcome is no longer plausible (not that War is ever a desirable
> solution).

Everything Is Backwards, But We Can Endure

Rolex, go somewhere else.

A Sad Day for Newspapers

Excellent list... and one that I concur with. It shows that media outlets producing quality and relevant journalism will survive in different formats.

Seeking Alpha is a great new format that I have been impressed with. The comments section calls out the truly bad analysis and has also helped me discover great investment and trading ideas.

As far as other formats, the only reason I don't read the WSJ newspaper regularly is that I live in Europe and it is too expensive on a daily basis.

I love the Economist, Wired, Monocle and Foreign Affairs.

If the list is a predictor of what publications will survive, then say goodbye to generalist newspapers.

Sell what's left of the New York Times.

Sadly, coming from someone who thus far has made a living as a newspaper designer.



On Feb 27 07:25 PM bcncv wrote:

> With all of the (deserved) negative comments on print media, I thought
> I would take a second to recognize the news/content sources that
> I find have quality, and are enjoyable to read- in no particular
> order:
>
> The Wall Street Journal
> Stratfor
> Wired!
> Foreign Affairs
> The Economist
> MIT Technology Review
> MSNBC online (least bad of major news IMO)
> SeekingAlpha (mostly good- some bizarre)
>
> Sure this list reflects my personal bias, but it is always worth
> a moment to recognize the companies that are doing things mostly
> right. Feel free to add more of your own.

Rick Santelli: The Best Five Minutes in CNBC History

Right on man.


On Feb 20 11:02 PM The Rebel wrote:

> CO2, just curious.....are you one of those global warming nutjobs?
> By the way, my late father came from a family of nine at a time when
> it wasn't common practice to denigrate having a large family. When
> did times change? Was there a specific year? Oh, I get it. You
> must also be one of those planned parenthood fanatics who has yet
> to see an abortion that you didn't like.
>
>
> On Feb 20 02:08 PM CO2 wrote:

Rick Santelli: The Best Five Minutes in CNBC History

Dude CO2 you are so out of line here.

It is none of your business and the number of children is irrelevant to this parent's argument.

I assume you are an intolerant, dogmatic and self righteous... liberal.

I thought tolerance was a virtue. People are free to have as many or as few children as they like. I thought liberals didn't judge others' lifestyles... whoops except when it is different from one's own. Hmmm.

Ironically, Responsible Parent's children will pay for your social security. If there is no social security in the future, then Responsible Parent will be provided for by his/her children and you by your own savings or lack thereof.

Please dispense with ad hominem attacks and learn some civic virtue.


On Feb 20 02:08 PM CO2 wrote:

> responsible parent, just curious- did you adopt some of your 9 children,
> or did you responsibly decide not to use any available birth control
> methods?
> maybe you can give the latest octuplet mom, Nadya Suleman some lessons
> in responsibility, too.

Inflation: Demand Destruction and Wealth Erosion Trump Money Growth

Alan,

I admire your willingness to continue to express this view in spite of the bashing you repeatedly receive from the gold bugs.

I tend to think the Obama administration and the Fed will do what it takes to win the battle against deflation. Bernake got his PhD in the subject and plans to drop money from a helicopter. It will be hard for them to overcome the deflationary forces you cite, but they will win.

I think what we are seeing now is simply gold as a leading indicator of our inflationary future.

Let's say you are right: inflation does not materialize and deflation persists for some time (say several years), then perhaps gold may decline.

The problem is that the run up is beginning to occur now. The danger of your position is that if you do not have some allocation to gold, you may get wiped out. The ride up may well occur now and you would be left out before the inflation actually kicks in.

You make some great points about the difficulty of overcoming deflation, and I agree wholeheartedly, but there is a greater risk of not getting on a train as it is leaving the station.

I would rather risk losing 30% if gold falls on deflationary concerns than 90% on my cash and T-bills in a hyperinflationary scenario.

Don't Kick Yourself Later for Not Buying Gold and Silver Now

CLH,

I empathize with you and definitely see your point. But I think the inflation issue is a medium-term one. If it doesn't show up in 1-2 years and deflation is pronounced then people might sell in a hurry.

Right now, people are buying gold out of fear (and greed) and this could continue for some time.

In the short run, I agree with the bugs although the one thing that could precipitate an immediate gold price decline is Central Bank selling in concert with other large banks shorting.

I'm an American that lives in Spain and people are getting really worried about the banking system and the euro. I plan on getting my savings out of euros and into bullion very soon.

I don't think Spain is solvent and I don't think the euro is sustainable. And I certainly don't want to hold pesetas.




On Feb 17 03:05 PM CLH wrote:

> CLH back. Sold gold in March of 2008 and rode it down with DZZ until
> Fall. As the double top forms I will ride it down again. Gold is
> now topping again. No inflation and dollar still strong so gold
> makes no sense.