CrossProfit_

Distinction Between Hard and Soft Assets

Marol,

Suggestion noted, thank you.
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Georealsit,

1) The increase from 80K to 270k or from 130/170k to 300/400k for rig/platforms would be meaningful for platforms producing 25,000 bpd or less. For platforms producing 40,000 bpd or more the increase from $55 per barrel to $110 per barrel more than covers the difference.

As stated accurately above "Oil and natural gas, in most cases, would be considered hard assets as well"; emphasis on 'most cases'. The majority of (actually all) platforms in the $400k range produce 40,000 bpd or more.

2) What newsletter are you referring to? The CrossProfit site is free without advertisements as well.
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InvestorsLive.com,

Nice site. BTU is a long term long in our opinion.
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kotika,

From our understanding of your comment, you seem to miss the point of the article. Perhaps you would like to expound a bit.

CrossProfit

Roger Nusbaum: Why I Blog

Roger,

Thank you for your detailed response. Now let’s delve into the crux of the issue. CrossProfit is faced with the same dilemma as was put forth to you. CrossProfit analysts all work for established firms. Your firm (YSF) doesn’t seem to mind that you openly teach the general public how to build and manage their own portfolio. This is not the case elsewhere.

In order to avoid further confusion/misunderstan... as was evident from the numerous comments posted; a little background is required.
1) You do not owe anyone anything, which is why we used the word ‘appreciate’!
2) CrossProfit, as you know, is a regular contributor to Seeking Alpha and we do not understand why you were “put off”.
3) The entire comment was meant to deal with how you can dance at two weddings at the same time – NOT why you blog (as was perceived by the Seeking Alpha editors) and NOT whether you should continue and NOT whether or not you are providing an altruistic service.
4) The first ‘wedding’ is YSF as an investment adviser. The second ‘wedding’ (second most favorite phrase; “do-it-yourselfer”) is the private invester w/online broker account.
5) The comment was posted on an article whereby you gave incredibly GOOD straight forward honest advice to the average Joe. (We like that.) Apparently we should have spelled out the connection.

The Quandary (Tom of Indy, thanks for the word)

Before delving into the issue on hand, let’s take another example, blogosphere verses mainstream media. For months now it is apparent that blogosphere is here to stay. Mainstream media has unsuccessfully attempted to ignore at first, then went on to belittle and now attempts to discredit the phenomenon. The bottom line is that conventional media feels threatened and justly so.

We now go back to the investment community issue. Schwab was probably one of the first to take a step in this direction. Along came the online brokers, ETF’s and blogosphere. Putting the three together spells trouble for the traditional investment adviser and managed account community down the road. Your firm may or may not benefit from your blogging. This is not the issue. The issue is about the bigger picture. With over 3 million active accounts with online brokers, traditional brokerages are feeling the heat. Ask BSC how many accounts they have lost in the past 12 months alone. (They probably won’t disclose numbers but if you review the quarterly revenue figures the trend is noticeable.) More and more people are managing their own money. Some are splitting their investment portfolio between managed accounts and self managed.

Before you correctly state that 90% of all equities/trading/inves... are still in the hands of conventional firms and mutual funds, let us remind you that nothing changes overnight. Conventional establishments have correctly assessed the potential of this (self managed investment) trend. The latest proof that the day of reckoning is sooner rather than later is the free trading offer from Bank of America.

A good analogy can be taken from the optical industry. In the 70’s when B&L first came out with the soft contact lens, all of the hard lens manufacturers – without exception – ignored this new product. By the early 80’s the industry was touting figures showing how 75% is still ‘hard’ and ‘soft’ had ONLY 25% of the market. In the early 90’s the professionals in the industry were pointing out all the negatives of the ‘soft’ lens (infections, GPC etc.). By the late 90’s, Europe (excluding the Netherlands) was 85% soft and the U.S. closing in fast at 80% soft. In the past 6 years hard (RGP) contact lenses, which is still considered to be a professional’s first choice lens type, is less than 5% of the market. (If this theme sounds familiar it is because history is constantly repeating itself as in the better known industrial revolution – cottage industry era).

Convenience, product improvement and customer satisfaction won the day. If you think about this analogy this is exactly what is happening in the investment arena. We are not prophesizing that the outcome will be 95% private and 5% institutional as there are pension funds etc. Even if it were 95% (not very realistic, but one never knows!) some of that would remain with managed investment firms. An ever increasing number of people self manage their 401k and are gradually shifting away from mutual funds in favor of ETF’s and stock portfolios. Is there a need for a bond ETF? Sure, why not. Don’t forget that at CrossProfit we do not promote ETF’s in general. It doesn’t mean that because it does not match our investment philosophy for the average Joe that there is no need or demand for this type of instrument. On the contrary, we see a tremendous growing potential for ETF’s. We envision ETF’s cannibalizing the mutual fund industry more so than direct stock investments.

Roger, this is just the first half. Before we continue to post the second half on your site, based on your previous response, you either misunderstood the ‘exercise’ or have a genuine reason that you do not wish to discuss this issue.

Just two further clarifications are needed. First, the CrossProfit website is still under construction and after registering no one has ever been charged a subscription fee. As you can probably surmise from this post, we are in the process of formulating a business model to incorporate the new investment trend. Upon conclusion the site will be rebuilt and then perhaps you can justly ‘accuse’ us of promoting a commercial site or spam as one commentator put it. We tend to post articles on Seeking Alpha about stocks that are not covered on the site, so that too is not for promotional reasons. The only self promotion achieved is that people get to know the various opinions within the CrossProfit family and perhaps notice that we reach a consensus every now and then. We can honestly say to Uncle George that everything we have done until now is academic / altruistic in nature.

Second, as one commentator noted, we are not bloggers per se. The site that we accidentally linked to in one of our comments belongs to Faisal Laljee. We have been invited to post articles on his site as guest authors on numerous occasions. If you think his site is ‘pathetic’, so be it. We think that ALL opinions are valid learning material whether we agree with the author or not.

BTW, we previously disclosed in other articles and comments elsewhere that the CrossProfit advisor on ETF’s is Mr. D. Kimche, former Chairman of the Board at UMB.

CrossProfit

Disclosure: This comment was submitted by CrossProfit and does not state an investment opinion and is for educational/conversati... purposes only.
www.crossprofit.com