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Latest Comments11 Comments
The Secret Villain Behind Our Economic Collapse
In this case, the experiment was that low income and middle class income people who ordinarily would not have the opportunity to own a home perhaps through risk management (CDS's, etc.) can have that opportunity. For a time it worked because most of the folks who were subprimers paid their mortgage. Then the defaults started growing which were mainly the people who abused the system with multiple homes they couldn't afford and couldn't flip fast enough and the rent would not pay the mortgage.
The experiment was a good one and hopefully we don't throw out the baby with the bathwater. The problem was that greed got the better of the loan originators and the flippers and everyone up the chain to the loan bundlers who pedaled these exotic mortgage instruments on wall st.
The problem now is trying to see how to fix the system. My sense is that although these exotic packages became toxic, it was the fact that there was no institutionalized market for determining the value as distressed as it may be that was the culprit in caiuse log-jams that froze up liquidity. So IMHO, the cure is to create a CDS or similar type Derivative Instrument Exchange specializing in trading these exotic products so the means of valuing them is institututionized and there is always a market regardless if the instruments are in or out of favor.
As a starter, although it's being called a government bailout, in essence what the government is doing in buying up these troubled assets to unclog the system is setting up an exchange mechanism which it is funding as the first buyer. If seen in this light, others perhaps will see that buying these distressed assets at ridiculously cheap prices will be a good investment and a few years down the road can return 100% or more.
Towerstream: Cost Structure Is Too High
If the author wanted to do the analysis right, he should be taking a close look at the business model and the dynamics and risks of the business as well as the proverbial moat.
Microvision's No Show Hands the Pico Projector Market to TI
In this case the consumer will eventually decide the best product in terms of availability, quality and price. If TI's pico is first to market and is eventually eclipsed by MVIS' product, in terms of projection quality and focus wheel issues, the consumer will recognize that too. My sense is that picture quality is an acceptabe trade-off for mobility, compactness and cost.
What's not an acceptable trade-off is a cumbersome focus wheel. If we've learned anything from Apple, its that if a mobile device is going to be cool, it must be easy to operate. The focus wheel will be tolerable until MVIS' cooler pico is brought to market, then it crashes.
So thanks Liam for the good research and hopefully it'll bring the price of MVIS down so we can accululate more at a better price.
Mid-Year Picks and Pans From Barron's Roundtable Part III
give it up...in 1982, oil was overpriced and the DJIA underpriced. Anyone who shorted oil and went long stocks in 1982 is a billionaire today. In 2008, the same is true, oil is overpriced and stocks are underpriced; short oil and go long stocks and in 25 years you'll be a billionaire
Retail, Consumer Electronics Spending: No Signs Yet of a Bottom
In another bit of news which is verifiable, sales of computer game hardware and software continues to soar. Go figure.
Beware of the 2008 Sucker Rally
There's nothing better than drama that has a kernel of truth to it and that is what this story has going for it. The housing sector represents some 12% of the economy and its not going to come to a complete standstill. There's going to be significant reduction in GDP due to this cumulative mess, maybe a reduction of 25% of its sector so we're talking about an impact of 3%. In other words, its going to take down the US growth rate from 4-5% to 1-2%. But fear rules the day and that's when fortunes are made.
Friday's Outlook: Stick a Fork in Mr. Market
Slow-Playing LoopNet For Now
The fact of the matter is that commercial real estate is different than residential RE in that the comm'l RE buyers and sellers are mostly professional who have a high level knowledge of what they're looking for and negotiating transactions, and the brokers are far less important in the process. An internet marketplace for comm'l RE is as natural a niche as Amazon in the book business. The above posters are probably luddites pooh poohing technology that they perceive to be threatening their job.
LOOP is stepping up and competing with CoStar, and if you compare their business models its like GOOG vs. AOL ten years ago.
Chris raises very good points and some will prove to be true like you can't maintain a ridiculous growth rate. But others are misleading like higher churn rate. When you raise prices, you're definitely going to lose more customers but if total revenues increase significantly and the churn rate increases marginally that's a trade-off any businessman will accept. The bottom line is hard numbers; much of the above data is out of context without bottom line hard numbers which we'll soon see. In the meantime, the stock at current levels is a good but risky buy mainly due to whether the economy goes into recession and not the residential fallout. Right now the odds are plus or minus 50% depending on the crystal ball reader.
Stay tuned and don't panic. Remember the greatest fortunes are won during times of crisis when people do irrational things enmasse.
Bill Gross: U.S. Already in Recession
Bill Gross: Expect Fed Funds To Hit 3.5%
The Fed may set target rates for various funds but its the global capital markets that set the real rates. In this scenario, the Fed's role really reverts to its classic role, the lender of last resort rather than setting proactive economic policy. In this capacity, it performed ideally in the recent credit crunch.
Now the credit markets are de-leveraging and unwinding in orderly fashion. Its sort of like when a football has been fumbled and the players on the field lose their poise and go crazy trying to recover the ball; and the end result is always the same: grown men throwing themselves on, over or under a pile of bodies hoping to save the day. Eventually, the referees after repeated attempts by blowing whistles, throwing flags and shoving these huge guys to one side or another finally gets everyone to stay put and slowly one by one bodies come away from the pile. Eventually the ref finds out who has the ball and signals who has possesion and the game gets back on track and everyone regains their poise. This is what's happening now with behemoths like Merrill and Citi emerging from the pile (they fumbled the ball and are coming up empty) indicating huge losses and of course heads rolling. There'll be a few more while the indicators (GDP growth, employment, inflation, etc.) will signal that the overall expansion is still on. Everyone will regain their poise, the doom and gloomers will go back in the closet and the capital markets will rise again and second leg of this expansion will drive the indices into new territory.
As the old Neill Young song goes "don't let the sound of the wheels drive you crazy".
Trident Plunges On Competition From Low End TV Makers
It challenges the imagination to contemplate a sequential 20% overall drop in revenue due to low-end product competition in the midst of favorable seasonal trade winds.