How is that for self promotion and being a shill ?

Selling is part of the job. Any job. If you want to get good results, you better believe in your product. I certainly believe in Steven Soderbergh. I believe in joanna and jason at HDNetFilims.

I believe in the management of Landmark Theaters. I believe in my partners at 2929, HDNet, Magnolia. the Mavs, I could go on and on.

When any of them is criticized, I am quick to try to learn from the critique, but also quick to defend. This blog has a long history of standing up for many of the above companies.

The point in all this is to emphasize my shock in reading EVERY SINGLE COMMENT about the day and date release strategy of Bubble and the many films we will release this way behind it.

Go through every article. Hollywood Producers, Directors, Theater owners from big chains and honchos from theater trade organizations.

NOT A SINGLE PERSON. NOT ONE stood up and said, “screw him, our product is great. We dont care what he does”. Not a single person said “It could hurt our business, but we will just have to work harder to bring people in to our theaters”. Not a single person said, “It will make us have to work harder and create a better value and experience for our customer”

THe overriding majority said the theater business needed protection. They needed windows.

No one even remotely associated with the industry even attempted to spin the situation. No one attempted to leverage the publicity (except for us of course) to their advantage. No one used it as a platform to say a single solitary positive word about theaters and the theater going experience.

They stood up and indirectly said….OUR PRODUCT SUCKS WE CANT SURVIVE WITHOUT HELP.

My goodness. Never in my 20 plus years of investing in and running businesses have i seen this happen. There always was someone who wouldtry to turnthe situation into positive press.

Not this time. I really believe this is a business first. The first time and industry basically admitted that a single step by content producers would, not could, would put them out of business.

Thats pretty damn stupid if you ask me. Every major movie studio head should be thinking to themselves….”Self, if i compress windows to nothing, they are going to give up. I can then walk in and buy those screens for pennies on the dollar. Its happened to them before, it will happen again. Then i can promote my own films in a way that maximizes our distribution and return. Heck, if i sell enough DVDs in the theaters, i can give away the popcorn !. Good thinking self”

Will the theater biz just give up ? Who knows.

Personally, as I wrote, we know that the theater going experience has to improve. Thats a problem for them. Tous at Landmark, thats an opportunity.

As in most industries, change is difficult to accept. So while some theaters wont be able to respond and will die, hopefully Landmark will continue to grow and take up the slack for them.

Landmark isnt perfect, but theater by theater, we are working to make it better. Its a challenge we are excited by. Slowly but surely you will see us add innovations that will improve the experience and value.

We have offered free soundtrack downloads to a movie. We are working on offering Ipod/speaker connectivity from each seat. There are more things behind that. Theaters can increase the value we offer customers considerably through digital offerings. We can make movie going a great experience, that is fun and fulfilling to movie fans. But we have to be innovative to do it. We have to know what business we are in.

If you are a film fan, hopefully you will go to a theater showing Bubble starting on friday (even if its a non landmark theater. And thank the manager of the theater for having the balls to go against the rest of the industry.) Its a film for people who love independent film.

The reviews have been all over the place, but Rotten Tomatoes has it 63pct fresh. Epert and Ropert called it a Masterpiece. A.O Scott and others wrote positively about it.

See it for yourself. Whereever you will have the most fun watching . Of course, i think its most fun at a theater, after a good dinner, with friends. However you see it, let me know what you think

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With the release of Bubble on January 27th in theaters, on

DVD and for 2 showings on HDNet Movies, there has been a ton of press and
discussion about the
future of the movie industry.

THe most extreme has come fromJohn Fithian, who wins the award for the best ever imitation of Jack Valenti’s
famous comparison of the VCR to the Boston Strangler when he was quotedin
FastCompany assaying

John Fithian, the head of the National Association of Theatre Owners, a trade group based in Washington, DC,
called Iger’s suggestion this summer a “death threat” against his members. Fithian says that “if [release] windows
were eliminated, what you would have would be fewer movies, fewer total dollars for the industry, and less choice for
the consumer.” He thinks movies would become little more than commodities and that hundreds or thousands of theaters
would close.

But he wasnt done there, he said the same thing to
USA Today

It’s the biggest threat to the viability of the cinema industry today,” John Fithian, president of the National
Association of Theater Owners, said of the so-called “day and date” release strategy.

How sad is it when the President of the National Assoc of Theater Owners doesnt think his members can create a
better movie going experience than what we can see in our houses and apartments ?

Guess what John, I can whip up a mean steak, but I still like to go to restaurants. Because I enjoy it. I enjoy
getting out of the house with family, friends, who ever.

Every single Mavs game is on TV. It wasnt that long ago that some people in the sports business thought that
having games on TV would reduce attendance. After all, why go to the game when you can watch it for free on TV ? Then
someone decided to do some research and as it turns out, the more games you broadcast on TV, the more people who go
to your games. At the NBA, when we do our analysis to determine the revenue opportunity in any given market,
the number of games broadcast is one of the criteria analyzed.

Hey John, you can get just about anything you want online….. but people still go shopping.

Going to a restaurant. Going to a sporting event. Going shopping. Cabin Fever is alive and well. Wanting to get
away from your parents, your kids, your job, your apartment, your house, your problems will never, ever go out of
style. For the next thousand years the question will be asked…

What do you want to do tonight ? For the next thousand years, people will want to get the heck out of the
house. The question is where to and why.

It didnt take me long to realize that the business of the Mavericks was not selling basketball, it was selling a
fun night out and creating a favorable brand identification with our team and our players, with the hope that people
would be excited to buy merchandise , products and services from us.

It didnt take me long to realize that the business of
Landmark Theaters was very similar.
AtLandmark, our business is not showing thebiggest movies from the biggest studios.

At Landmark Theaters we know who our demographic is. Its not kids 18-24 who are deciding whether to hang out
at the mall or go to the movies. Its not people who are concerned with seeing the latest blockbuster. The 12mm
and growing number of people who attend movies at a Landmark Theater are typically 25 plus years old, who love
independent films from independent minds.

We try to be the Voice of Independent Film for the people who make movies, and the people who love to see those
movies. That is our mindset. That is what our demographic wants.

Our job at Landmark is to go out and find those movies and to make the experience of watching those movies as
unique and enjoyable as possible.It can bethe decor of the theater. It might be offeringadult
beverages before, during and after the film. It may be offering the a DVD selection of the movies director so
you dont have toscour the aislesof a huge retailer looking fora title theymay not have. It
may be offering the soundtrack of the movie, or the book the movie wasbased on. And starting withBubble,
it will includeselling the DVD of the movie you just saw.Also starting withBubble will bethe
rollout of Digital Cinema. Every single play of Bubble in our theaters will be digitally
projected.Weare using a mix ofSony 4k and TI based 2k projectors. We want our customers to
have the best possible viewing experience with every single showing of this and future movies. No scratches, no pops,
no fades, no problems with thepresentation whether you see it the first day of release or the last showing 6
months later.

Wehave to create an environmentthat makes going to a movie at a Landmark Theater- fun,
entertaining, relaxing, a good value andfor a film fan, the best answer to the question, what do you want to do
tonight.

We alsohave to create an environment where people trust our judgement in the movies we offer to
our customers. There are going to be times when someone wants to see something different, and may not know a lot
about a movie playing on one of our screens. We want them to trust our judgement that this movie is worth seeing. And
when we find a movie we really like, we try to put it on in as many cities as we possibly can. So as many of our
customers as possible can see it.

Thats the relationship we have with our customers. We arent perfect, but we work hard to make it as strong as
possible. We also want to retain the relationship we have with our customers when they cant make it to one of our
theaters to see a movie they want to see. We realize that there are times when you cant get out of the house for
whatever reason. You want to see the movie. You are dying to see it, but you cant make it to the theater during its
run. Or maybe you live in a city where the movie is not showing

We dont feel we should penalize our customers for either scenario. We want you to be able to see the movie you
want to see, where and when you want to see it. If you decide that you would like to own a copy of the moviethe
week it opens in theaters, feel free to buy it at your local Walmart, Best Buy, Movie Gallery, online,
wherever. Thats great.

If you have a great High Def home theater setup and you want to subscribe to HDNet Movies to watch one of the two
showings available only on opening night. Thats great. Go for it.

As with the Mavs, the more committed you are to independent film, the more likely you are going to come back to a
Landmark Theater, again and again.We know that the preference of any film fan is to see independent film
in a Landmark Theater And we will always work our asses offto make sure it stays that way. So unlike Mr
Fithian, we think the day and date release will expand the audience for the movies our audience wants to see.

As forMr Fithian’s Valentiesque fears … I can and will offer my observations of the problemsfirst run
multiplexes have.

First of all, I dont think they know what business they are in any longer. It appears they believe they are in the
business of showing the movies Hollywood gives them and praying that Hollywood makes good movies and spends enough
money to drive people through the doors so they make some money on the boxoffice andconcessions. They
arent.

But thats not the biggest of their problems. Their biggest problemis that they dont care who their
customer is, as long as a lot of people come. Which in turn makes it almost impossible to determine what
business they are in.

I will explain.

The experience that a 16 year old expects is going to be completely different than what a 35 or 55 year old
expects.

When a 16 year old goes to a movie, there is absolutely nothing at all wrong with answering your cellphone,
talking back to the screen and texting your heart away during a movie. The movie is just there because its better
than doing the same thing sitting or walking at the mall, or hanging in your buddys smelly bedroom again, listening
to his mom yell at him.

All of the above drives anyone not in that demographic crazy. So when a couple of 35 year olds go to see
King Kong, not only can you pretty much bet that they arent going to have a great experience during the showing of
the movie, but they probably didnt have a great experience before they even got their seats.

They are probably already pissed because the stereos were blasting in the parking lot, the lines to the concession
stands were filled with kids chit chattering and taking their good old time, while you wanted to get into the movie
so you could talk to your wife or date. The whole reason you left the house to see a movie in the first place was to
get away from kids.

People of different demographics have different expectations of the movie going experience. Trying to mix them
only ends up making both mad.

It probably wouldnt be a bad idea for the multiplexs to tailor the experience to the appropriate audience.

Its also probably a good time to take steps to be paid for the role you play in promoting the sale of DVDs and TV.
You already know that you platform movies and create demand for future sales. Your problem is that you dont get paid
for it. DVD sales now exceed box office sales and you dont get a nickel of those DVD sales. Its time for that to
change.

There will be non Landmark Theaters that show Bubble, just as there were that showed

Enron – The Smartest Guys in the Room. The DVD for Enron just came out this week, and every single theater that
played the movie will get a percentage of the DVD sales.

Its time your industry stood up for itself and rather than fighting day and date or collapsed windows, realizing
that it will increase the total sales for a movie and get paid for the fact that you help increase those
total sales.

Just think, all thosemillions of people that were outside the reach of even King Kongfirst run
theaters could run to the store and buy the movie they have beenhearing so much about. While its still exciting
and fresh to them. Think maybe they could sell more DVDs that way ?You could even getpaid for it. A
pct of DVDsales in towns where the movie isnt even playing..Youearned it. Or are you going to make
this a religous war and adamantly oppose any day and date release of movies ?

And lets take a look at kids movies. If you have DVDs sitting behind the counter, staring at the little kids
, all with big smiles as they come out of the theater after just having seen Ice Age Benji,Shrek, or any number
of kids movies. How many kids are going to let their parents walk out of the theater without pitching a fit if
they dont have the DVD of the movie they just saw to watch at home ? And to be nice, you can give them a 5 dollar
discount from retail for having seen the movie. Lets see, you made 5 bucks on the popcorn and soda, but you stand to
make 15 on the DVD.. Isnt that more than your gross margins on the concessions and box office combined ?

But alas no, Mr Fithian. Rather than recognizing this and using the business opportunity that the studios want to
present you as a way to make the pie much bigger, and do a deal to get a piece of that pie that you ahve never gotten
in the past, and also use the change as a catalyst to correct some of the movie going experience issues your members
face and maybe even extract some guarantees in the process (after all , you are eliminating the DVD spend. They might
share that with you up front)…. you would rather join Jack Valenti in the “oops, did I say that ” Hall of
Fame and try to block it all

Thats your call. But the decline in the number of theaters wont come from the collapsing windows, it will come
from not recognizing what is happening in the business and missing an opportunity to get paid for the value you
create

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it always amazes me when people talk about content delivery on the internet. They discuss it as if there is unlimited bandwidth available. Well guess what. There is not.

Sure, new bandwidth is being added onnetworks every day. But guess what, our ability to consume bandwidth is growing far, far faster than the speed at which it is being added. Call it digital gravity. The bigger and more powerful our PCs become, the more specialized processors that are enabled with internet connectivity, the more bandwidth we all consume.

There are some basic facts about the internet that remind me of driving on the 405 in Los Angeles. Traffic jams happen. There is no end in sight for those traffic jams. The traffic jams are worse at certain times of the day. Whether its the 405 or the internet.

Uless of course we add multiple tiers of service so that users, companies and applications that want to, or need to avoid those traffic jams have alternatives. We need HOV lanes and toll roads on the net as badly as we needthe HOV lanes on the 405.

Take this to the bank. The more we upload and download and share:

standard definition video, high definition video,home movies in DV and eventually HDV,multiple megabit photos the more bandwidth weconsume.The more PCs and servers we backup online, themoreWeb2.0 applications we use, the more new database applications come online, the more bandwidth we consume. The more bandwidth we consume, the more internet traffic jams we have. The more internet traffic jams we have, the worse our internet applications perform.

If the holy grail to some is any video content in high definition, anytime anywhere from the internet , well guess what, your 15mbs download speed is going to crawl like a 14k hayes modemduring peak use times. You think its bad now, having to wait overnight for that video to download. It can get a lot worse.

We can try all the tricks we want. Edge servers, peer to peer, it wont matter. Just like a 20 lane highway is still going to have gridlock if enough cars use it, so will the net.

But wait, theres more. That doesnt even account for the problems and hassles of network providers exchanging traffic.

Which leads to the foolishness of the information wants to be free movement. Video on the net is a nice to have application. Self publishing is a nice to have application, whether video or any other format. For our entertainment driven society, it seems to be the low hanging fruit that realizes the value of the net. Wrong.

The internet is a great enabler and equalizer not because if can do the easy stuff. Not because it can replace photocopied newsletter of the 70s, or provide an alternative to VHS cassettes, or provide an alternative to satellite or terrestial radio or tv, but because it can help people in ways that can change and savetheir lives.

Medical and home diagnostic applications require bandwidth. They also require a quality of service that cant be interrupted because little Johnny down the road is trying to download the entire NBC schedule for his freshman highschool class. To enable mission critical applications, you have to have mission critical reliability. And that mission critical reliability has to be able to reach any home that a broadband connection can reach. To do that you need multiple tiers of service.

I would rather have little Johnnys grandma getting priority for her video checkup with the doctor at the hospital over little Johnnygetting his bandwidth to upload the video of the prank he pulled onhis buddy.. I would rather make sure that information from life support or other important monitoring equipment, medical or otherwise is finding its way without interruption, and without the end user having to pay for an off the net solution. These are the applications that make the net great. These are the applicatins that offer equal opportunity to those who are disadvantaged.

I want the telcos and the cable companies and the wireless companies to work out a way to exchange traffic at multiple quality of service levels.

At that point, the internet becomes a viable means for important applications it cant support today. We will see a number of new applications developed, whether medical or otherwise, that cant be put in place today, simply because there are definable levels of service.

This doesnt mean that we all cant do all the fun things wecurrently use the net for. It just means that we will watch applications zip by us in the internet HOV lane. Yes, some of those applications will be commercial and geared towards non mission critical apps. If the networks are smart, they will account for this and prioritize applications within the “HOV” lane. Yes, it will mean some content will cost more if we want it faster, but that will be our choice. Just as

If information wants to be free. So be it. It will just take a little longer to get it.

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Ref stats update

It’s time for my ref stat updates. As usual no names, no claims, just the facts and nothing more or less!

This week holds lots of fun facts that you can inspire your friends with.

Total fouls called are down vs last year, with an average of 46.47 in total fouls being called per game (compared to 48.17 this time last year).

The average number of calls by the 3 veteran officials who call the most total fouls is about 51, with the high being his crews calling 52.07 fouls per game. On the low side, the average of veteran officials who call the least fouls is about 42.5 for their crews. Suggesting a variance in foul calls between certain veteran officials can run approximately18 pct from game to game.

The average number of travels called this year is 2.49. (Thank you NBA for eliminating the “why don’t you call traveling, it’s a bad example” emails!) This compares to 2.1 at the end of last year. The variance between high and low, is 4.17 for one veteran officials crews and 1.44 for another veteran officials crew. Meaning that the highest officials’ crews will call travelling almost 3x as often as the official whose crews call it the least.

Defensive 3 seconds is called on average .89 times per game this year, vs .59 times per game this time last year. The average number ofcalls by the 3 veteran officials who call def 3 the most is 1.7x per game. The least, 0.55x per game, or a factor of about 3.

Offensive fouls are called on average 4.6 times per game, compared to 5.16 times per game last year. The average number of calls by the 3 vet officials crews who call it the most is about 6 per game. The average for the 3 officials’ crews that call it the least is 3.3.

Last year for offensive fouls, theaverage number of calls by the 3 veteran officials who call offensive fouls the most is 7 per game. The least, 3.6 per game.

There are .609 techs called per game this year compared to .724 per game last year. The top and bottom averages are about 1.1 per game vs .25 per game.

Last by not least, is offensive 3 seconds. There are .70 called per game , vs .794 called per game last year and.552 the year before. This year the top and bottom averages are about 1.25 per game vs 0.25 game, or about a 500pct variance.

So now you know everything you always wanted to know about officiating statistics but were afraid to ask.As you can see, different officials use their professional judgement differently, which is exactly what you would expect .

By reading this license agreement you agree to give me 25 pct of any bar bets won with this information.

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For the many that have asked, Enron – The Smartest Guys in the Room, the first movie from HDNEt Films will be available on DVD on January 17th. You can pre order it now from online stores like Amazon, Best Buy, Walmart and others.

This is a GREAT movie. Its made quite a few Top 10 Movies of 2005 lists. It has been
named the top documentary of 2005 by several reviewers and associations.
.

And if one movie isnt enough for you, dont forget to check out the DVD release for the War Within. It ships January 31st.

The War Within was easily one of the most controversial movies of 2005. Critics either loved it or hated, Fortunately , more loved it. There were untold crazies out there calling me names just because we made this movie. I loved it. Hopefully many of you will check it out for yourself and let me know what you think.

And for those of you, who like myself do not support the Hollywood approach to copy protection and fair use, ifyou buy a copy of either movie, check out the copy protection environment that we use.

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Portable media devices, whether Ipods, portable gaming devices, phones with all their features, or whatever have solved what has been a generations old nuisance for all of us, boredom.

We have our little devices and now we are never bored. We dont find ourselves staring off into space unoccupied, wondering what to do. We dont find ourselves muttering about how bored we are sitting on the train, or on a plane, trying to do anything to make the time go by more quickly.

Our little mobile devices are so popular because they are the ultimate, continuous distraction. They are the easiest cure for boredom.

Check your email. Call your friend. Play a game on your phone or PSP. Watch a movie on your Ipod. It doesnt matter where you are anymore. You always have at least one.

When we leave the house now, its keys, wallet, phone/pda/IPod, lock the door. The minute we have nothing better to do, or our mind starts to wander, regardless of where we are, meetings, events, elevator, exercise bike, walking down the street, out it comes.

When we have to do something that we want to go by quickly, like those 45 mins on the bike. Out it comes. You dont care how big the screen is, you just want to be distracted…and maybe catch up on your favorite show or watch the video of the kids soccer match

We are going to become increasingly dependent on these devices not because we think they are amazing or wonderful, but because they are there. They do their job. They distract us.

Portable video will be successful not because it will siphon off viewing from traditional tv. Portable video sells and will sell in increasing numbers because its a better cure for boredom, and a better distraction than just music, or just a phone, or just games.

Daydreaming and zoning out arent dead and gone, but they now have a soundtrack anda video

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Someone rightfully pointed out in the comments that I had been sounding a little sour in my last couple posts regarding investments. Very true.

The stock market is one of those hot buttons for me. Fairly valued stocks ? Fairly valued by who ? PEs ? Why have they expanded ? Why was Intel a 10 PE cyclical stock in the early 1990s, pre digital technology boom, and now when it has to remake itself, its PE is 20x ? Can you say marketing ? Can you say cash has to go somewhere ? Take away the PE expansion and Intel is one of many, many companies that would be trading at the same levels they were more than 10years ago. And Im not picking on Intel. Its a great company.

The reality is that there is so much money chasing stocks today, fair value is only fair when you can find someone else who thinks its value should be a little bit fairer . Which is another way of saying that public companies are the meat of the bellcurve and private companies, particularly recent startups are the longtail and where the opportunity is.

Let me repeat myself one more time on another topic. The best investment you can always make is in yourself. If you want to secure your financial future, invest in your own knowledge. 29 dollars for a book is going to be a better investment than 29 dollars in commission to a brokerage 99 out of a 100 times. Being the best at something you love to do, is going to bring rewards, financial and otherwise that will far exceed what any stock or bond can offer you.

It took me 18 years of failure and success to go from being a little bit lucky (Someday I will write the blogpost about how people in the PC/Lan reseller industry used to give me a hard time about how I got lucky selling MicroSolutions at just the right time.:), to a little more lucky (trading technology stocksagainst the uninformed), to a lot lucky (the broadcast.com IPO , then sale), then even luckier still (collaring my stock), to even luckier still again (not trying any of the “tax savings options all the brokerage firms were trying to sell me, that would now be costing me hundreds of millions of dollars in penalties), to more lucky, starting HDNet at the right time and partnering with amazing people.

But I digress.I hope to get lucky again. I think we are in the middle, not the beginning, the middle, of a very unique time period. One unlike anything we have seen since the early 1980s.

Back in the early 1980s when I started MicroSolutions, the only computer literate people were those who worked on big computer platforms. IBM 36s, DEC, Data General, HP mainframe and minicomputers. There were few people who had much expertise in writing software for, orworking on personalcomputers. Fewer still that focused on connecting multiple PCs together into local and wide networks.

That was a unique time because the amount of money it took to get in the business was the cost of buying a personal computer and the time to learn what to do with it. For $5k, an IBM XT and copies of a basic interpreter, compiler and application software like DbaseII was yours to start your own company with. And for those of us who couldnt afford to buy them, we borrowed them

Back then, the meat of the business bellcurve was in proprietary applications. Every mini or mainframe had appsthat were exclusive to it. The long tail opportunity was inusing the new development tools to create custom, PC based apps that provided businesses with new productivity and profitability opportunitiesthat hadnt existed before.

Today, a comparable environment exists. Computers with power and storage unheard of just a few years ago, are available for under 1k dollars. Heck , under 500 dollars. Has anyone noticed that we have been stuck on 3.xghz speed equivalency from CPUs in PCs for going on 2 years now ? Prices come down, cpu speed has stabilized, storage and memory and specialized processors keep on expanding. Its amazing the things people can do with a PC/Mac these days and the price points they can do it at.

Which has created a boom of individuals developing web based interfaces and applications. Some like to call this Web 2.0. Others are calling it the AJAX boom. Buzzwords and new development frameworks are coming at us faster than we can think of them all. Ruby on Rails, Mashups, RSS, WML, Flash 8 and tons more. The great thing about all of these is that all it takes is one or two smart people on a computer to put them together. Have a great idea on a new user interface or application ? For under 500 bucks, and 10 bucks a month to a hosting service, you can be up and running and taking on Google.

Thats where my investing focus has been. The “long tail” of innovation. Thats how cool and up and coming companies like Goowy.com, icerocket.com, box.net, redswoosh.net, filesanywhere.com among others have caught my interest and potentially my investment dollars.

Check out their sites. These are people who invested in themselves, and have growing companies to show for it. The exciting part is that they are just a few of the thousands that are coming up with unique ideas. Somewhere out there are Google and MicroSoft competitors.

Im not suggesting that you run out and find friends starting companies and give them your money instead of putting it in the market. Or that you run out and start one yourself. What I am saying is that the biggest upside today is not in the stockmarket. Its not in seeing where PEs expand or contract to. Or watching to see how the market treats splitting up Viacom.The real money and upside is in the investment longtail and people investing in themselves.

All I am saying is that for me, someone who is fairly well versed in technology, this is an amazing time to invest. I may hate the market, but I love what is going on in the long tail of technology and innovation. The future is bright for some of these companies, and in reality, we may be finally seeing a return to the Peter Lynch mentality of investing in companies whose products you like and use. The difference is that it isnt coffee or something you see in the store. Its something you use yourself on your PC, PDA or Phone. The challenge, and what makes it fun, is that these are private companies.

Where there is change, there is opportunity.

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I wanted to respondto Tom Hawks comments. Someone i respect a lot, but who i disagree vehemently on this topic.

Tom I stand by what I said. You can have as long a term horizon as you want, but like most other long term plans we have, most peoples lives dont match up to their “horizons”. Its amazing how life intervenes. Kids, whatever. its a fortunate few that can just shell it away and never touch it. Your “horizon” hits a dead end when you have to put money into a checking account. I have never seen any investing research that deals with random withdrawls that represents real world. And boy oh boy, if life hits you hard when the market is down, you make a withdrawl and you wont ever catch up.

But thats just the start of the problem. Lets say you buy into what the brokerages and funds are selling. Buy and hold, or whatever. How do you pick from the 17k funds ? By reading some websites ? By talking to some friends ? By watching the commercials ? By selecting among the optionsyour company gives you in their plan ? Which of course was the result of a salespitch that the fund company put together to the person offering the plan to your company. Everyone is getting paid on the gravy train, except for the guy putting in the money at the end.

Wall Street has done an AMAZING job of creating conventional wisdom . “Buy andHold “is the 2nd
most misleading marketing sloganever, after the brilliant “rinse and repeat” message on every
shampoo bottle. Weas a country have fallen for it. Every message from every marketer of stocks tell
us.Young or old, if you can hold for the long term, things will work out for you.

That is total bullshit. Its for suckers.

Ive traded stocks for almost twenty years now. IM good at it. When i work at it. And it takes a lot of work. Not just reading all the 10K/Qs and corporate websites and product managers, or talking to people at the outskirts of the company where management doesnt reach. It takes often knowing the market for a company’s product better than the company does. After all just because a company is public doesnt mean a thing other than someone has , and continues to make money buying and selling the stock as their own product.

If you are going to trade stocks, you just have to follow one rule and remember one thing. That rule is
always have a definite knowledge advantage about the company you are trading, and always remember that every stock transaction has a sucker, and you have to know whether its you or the person on the other side of the trade. No one buys a stock from your, or sells one to you knowing they are leaving money on the table.

The bottom line is that unless you plan on making it a full time job to do your research and put yourself in a position to have an advantage, you are going to get your ass kicked at some point by someone who does. You just have to hope that it doesnt put a big financial hurt on you when it happens
The same logic applies to funds. Funds are in the business of making money for themselves first. You 2nd.

First check what the heads of some public mutual funds are making. Someone help me out, I cant find the link right now .Was it Mario Gabelli who not only paid himself more than his fund earned for its shareholders in a year (forget the people with money in his funds), but he was paying himself from like 3 companies at the same time? Get me the links and I will update them here.

Then you should check the turnover of fund managers some day. You know where the good ones go ? To start or manage their own funds.

Then there is the portfolio turnover. How often they completely turn over the stocks in their fund. last
numbers I saw was that on average funds turnover their portfolios 85pct every year. Thats not investing. Its fund managers doing whatever they can to beat their peers, knowing that if they dont, they are out of a job. Their bosses know that if they dont beat their peers, the money flows out, and that is a HUGE problem for any fund. So many funds take chances they shouldnt, with your money. We never see any headlines for funds that close.

Why is that ? We never see any headlines for fund managers who get fired. Why ?

But even if performance sucks, rather than saying how bad it is, they pick the short stint when it wasnt so bad. orbes

did a nice job reviewing this little marketing habit of fundsand referencing some manager turnover issues at Fidelity.

As far as ETFs. Which one ? Remember, the Dow and S&P are marketing tools. They change the indexes. Look at the stocks in there today, vs what was in there in years past. You are not buying a passive investment that tracks nthe economy. You are buying the stock pickers at those respective indexes. Last time I looked, both Dow Jones and McGraw Hill are for profit companies. They want people tothink theirDJ 30 & S&P 500 indexes are
powerful indexes that can be reported daily as a reflection of market action. So they change the stocks when they think they need to. To help them with their product.

Ive said a lot of this before. The stock market
is by definition a ponzi scheme. As long as money keeps on
coming in, then there is someone to take the stocks from the sellers. If the amount of money coming in is reduced,
the stocks, indexes, et al go down. What if, for who knows whatever reason, the amount of money going into
stocks declined significantly ? Who would buy stock from the sellers. I mean goodness gracious, you could see
something disastrous happen. Like the Nasdaq dropping from 5000, to under 2000 in just a few years. Its happened
before, it can happen again.

Which is exactly why we get all these nonsensical commercials from brokerages. To keep the money coming in . I
wish someone would index the amount of money spent on marketing by mutual funds and brokerages to the Nasdaq and Dow
and see if it correlates.

Money inflows drives the business. We can get all the economic data we ever dreamed of getting, but if money
inflows declined significantly for an extended period of time, then every rule of thumb would go out the window until
money started flowing in. Yes it would flow in eventuallyas prices dropped. From big investors like me
who wouldnt have gotten hurt by a huge market decline and could come in and buy huge chunks, or companies
outright.

You ? You probably would be like Charles Ponzi’s customers. You wouldnt be able to get your money out of the fund
when it went down, and by the time you did, it would be too late. You would have been crushed.

Ive said it before,a stock that doesnt pay dividends is valued like a baseball card.
Just whatever you can sell it for. The concept that you own “your share” of the company is a joke. You are completely
at the whim of the CEO and board who will dilute you on a daily basis with stock options, then try to buy back stock
to cover it up and push up the price, rewarding the shareholders who get out, rather than those that continue to hold
the shares. Meaning you.

Have you ever seen Warren Buffet talk about buying 100 shares of anything k shares ? or does he take control of
, or purchase a material percentage of a company ?

If you have enough money to have influence , take control or buy it outright, then the stock market can
workfor you. Thats why I buystock in public companies that relate to myother business
entities. When i pick up the phone and call the CEO of a company i own shares in, they call me backvery
quickly. When I ask if there arebusiness opportunities that make sense for the company and another company of
mineto work together, I wont always get the business, but Iwill always get a meeting.If Im smart
about the investments I make, the more important returns come from the relationships with the companies than the
action of the stock.

If the best you can do is buy shares that are going to be continuously diluted, then you are merely a
sucker.There is a good chance that the shares you boughtcame fromsharesan insider who got
stock options. You just helped dilute yourself with your first share purchase.

The wealthy can make the stockmarket work for them. Individuals buying shares of stock in non dividend paying
stocks… they work for the stockmarket.

I know Ive painted a pretty bleak picture.

The stockmarket isnt going away. Would it shock me if the whole thing collapsed ? yes. it would. Its just too
engrained in our way of life in the USA. What would change my mind is if a better investment vehicle came
along.

The stockmarket used to be about investing capital in companies that came public or did secondary offerings. That
money was used to create amazing businesses and return dividends back to people who truly were investors. There
once was a day where most companies paid dividends higher than the interest rates on their bonds. Why ? Because
stocks are inherently more risky. If a company goes belly up, bondholders collect first, shareholders usually
last. People could buy and hold stocks, and get paid real cash money for being a shareholder in the company at
rates far higher than the divident yields we see today. If the company did well, the dividends went up. Investors who
held, actually got all their money back in dividends at some point and the rest was gravy. The good ole days.

But that changed when mutual funds came along and started marketing the concept of growth as a way to attract
investors.

Its not inconceivable that the old mindset could comeback. That a new market of stocks could be created where
companies didnt continuously dilute shareholders by issuing stock and options to themselves. Where earnings were
earned for the same reason they are in private companies, to not only fund growth, but also provide cash back to
investors. Now if that market existed today. Where I could buy 100 shares of stock, and even if it represented just
1/100000 of ownership in the company, I could have confidence that year after year, I would still own 1/100000th of
that company, and if that company generated earnings , I would have at least some of that money returned to me. Well
then, that wouldnt be a ponzi scheme. That would be a true market of stocks, and I would be happy to recommend to
anyone to be careful, but buying stocks in that market could be something worth considering if your appetite for risk
canhandle it.

Sorry for the long winded response Tom, but thanks for getting me going

If you put your money in safe bets like i mentioned in the last post, then you can spend that time you would
otherwise have to spend researching funds and or stocks, either with people you love, things you love to do, or in
yourself.Using those hours to be the best at whatever you love to do.Thats an investment you never
have to pay a commission on. You never get a margin call. And thereturns can be astronomical.

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Every year at this time, everyone and anyone who has a vested interest in selling stocks comes out and talks about how great a year its going to be in the stockmarket. Of course its all nonsense and bullshit. NO ONE knows what the market is going to do.

Not timers. Not technical charts. Not economists, Not brokerage Heads of Research, Not stock pickers. No one. If you watch CNBC, over the last few months they have taken to putting “experts” who disagree up against each other on stocks and topics. Instead of having carte blance to come across as an expert, they have to offer some support and take some criticism. Its a blast to watch because there rarely is a winner. Its so rare that they get questioned that they have lost the ability to support their own positions. So much for experts.

If its hard to find an expert who can support their investmen choices, what about mutual funds ?

According to an ad for one family of mutual funds, there are 17,000 mutual funds on the market for purchase. How amazing is that ? How in the world can there be 17,000 fund managers that are worth a damn ? There cant be. How many are good ? How many suck ? How many of the funds will close every year taking your money with them ? Are you completely confident in the fund that is taking money from your paycheck every 2 weeks ?

Then of course there are the brokerages. I swear that there are few things that turn my stomach on TV more than watching commercials for brokerages. The guy who gives the toast at the wedding, Paul McCartney, the guy from Law & Order, all trying to con people into thinking that any of their stockbrokers can take you to a financial promised land.

Well guess what, they cant. Yes there are good stockbrokers that are worth the commissions you pay them, but guess what ? Most of the good ones work with people who already have money, not ones with very little hoping to build a nest egg.

One fun little thing I like to do is to look at “The Favorites”. The list of the stocks held by he largest number of accounts at Merrill Lynch.These are the stocks that the largestbrokerage, with the largest number of consumer clients is being enticed , convinced or directed to invest in. These are the stocks that Merrill Lynch stockbrokers have had the most success selling. They are their favorite products.

Its interesting how well the names are performing, but also how the names have changed , or in some cases, not changed over the years. A look at the last list of 2005 doesnt inspire overwhelming confidence in the ability of Merrill to pick stocks. 7winners. 13 losers. Biggest winner was Exxon at 9.7pct. On the losing side, there were 7 stocks that lost 10 pct or more and 3 that lost 20pct or more. And these are the stocks that many wouldclassify as todays “widows and orphans” stocks.

Of coure they are completely different from the widows and orphans stocks of yesteryear. GM, Ford, Utilities….Just put them away and dont think about them. Now that was good advice wasnt it. And here is the list from Jan of 2002. You havent done so well if you took Merrills advice then, or now. To be fair , Merrill is not better or worse than any other full service brokerage. They just happen to publish their list of widely held stocks.

So what to do if you want to invest your money ? What to do if you want to end this year with more than you started with ?

Simple, avoid risk.

Risk is what Wall Street lies about every day. Risk is what they try to sweep under the covers knowing that we all are addicted to the dream of financial freedom. Risk is the poison that is masked by the commercials.

When you see a commercial for a brokerage, they are telling you in a very subtle way that they remove risk. Invest with them and the risks regarding investing that you have heard about will be reduced or eliminated because they are so smart. All of which they say beforethey rush through all the disclaimers that confirm that everything they just said is nonsense, that they cant really avoid risk.

You can however make the personal decision to avoid risk. Avoiding risk allows you to sleep at night. Avoiding risk allows you to have more at the end of the year than when you started.

Lots of people spent a lot of money on commissions this year. If you put your money in the bank, in a CD or in treasuries, you not only slept better than them, there is a very, very good chance you kicked their ass in total return. Your interest compounded, they probably paid interest on their investments.

I get emails every day asking me where people should invest. I tell them all the same thing, and I will say it here. Put your money ininterest earninginvestments.

For every stock you buy, there is someone selling you that stock. What is it that you know that they dont ? What is it that they know, that you dont ? Who has the edge ? If its not you. Chances are you are going to lose money on the deal.

If you want more info on how i feel about the stock market, here is another blog entry on the topic.

So here is my investment advice for anyone who doesn’t have enough saved to walk away from their job and retire…

1. If interest rates stay where they are or go higher, look at 5 year or shorter maturity vehicles. It doesnt matter if its a bank CD, a money market fund, a tax free fund, treasuries or combinations there of. Bottom line is this, 4plus percent taxed, or up to 6 plus percent tax free equivalent (depending on your tax bracket), is not a bad way to go. If rates go down, do the same thing, evenif you earn a lower rate. At the end of the year, you are guaranteed to have more than you started with.

2. Evaluate your lifestyle. People forget that sometimes the best investment they can make is in wisely buying things they know they will use. If you track what you use and consume, whether its gas vs bus fare, buying bulk quantities or other discretionary spending, you can save more and earn a far greater return than you could in the stock market. If you can save 10pct per month on a hundred dollar per month budget, thats 120 bucks you can put in the bank. Thats the equivalent of earning 12 pct on a 1k dollar investment. If you can cut 100 bucks per month off 1k dollar monthly budget, thats like earning 12 pct on 10k dollars. Thats pretty darn good. Spend smart, put your savings in risk averse, interest earning offerings.

3. Invest in yourself. Do the things that can get you closer to your goals and dreams. It wont come from a brokerage commercial. It will come from preparing yourself , working hard and standing apart from your competition. You Inc is the best stock you can ever buy…if you are willing to do the work.

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l

The price of paper is up, the stocks of newspaper holding companies are down.

The saying”All the News that is fit to Print” has become an anachronism. It reflects a time when newsprint was a marginal cost, not a debilitating one. It reflects a time when the newspaper was a unique source of news, not the last source after the internet, TV and radio.

IMHO, todays newspapers better give me information that is unique. Things that I havent read four stories about online, or figured out from the Sportscenter highlights or seen scroll 463 times an hour across the bottom of a cable news feed.

If a newspaper is going to covera story that has already been reported, then they should leverage their medium and give it some depth Its a whole lot easier to read an extended report or story in a newspaper, coffee or soda in hand, kicking back in a favorite chair, than it is on a PDA, laptop or PC. IF, you have given me a reason to read you and not what i find in my goowy.com RSS newsreader

What led me to this post was a small story in the NY Times. It wasnt more than 50 words.

Now I dont know how much 50 words costs in newsprint across a million papers that were distributed. Imguessing its more than a dollar.

Im also guessing that there were other stories in the paper that could have benefited from those 50 words. A reporter who could have added a 2nd point or opposing opinion to make an article fair. An editor who wouldnt have to tell a reporter that his story was getting cut because there wasnt enough room. Who knows, maybe those 50 words could have earned some lucky writer a Pulitzer.

What was the story ?

It was a story about Charles shackleford.

If you have to ask, you have made my point.

The NYTimes wasnt the only paper to carry this story. The stupidity crosses the industry. Why in the world would they cover anything that happens to this person as news ?

Newspapers have a product that has the ability to be differentiated.

Digital media is about realtime first: find it, report it. Digital media is looking to social networks to assist in publishing news and information. Digital media isnt conducive to long, extended articles. Where digital media is mobile, its small and hard to read. Where its easy to read on a big screen, its stationary in a home or office.

The newspaper offers mobility, ease of reading and the opportunity for depth of coverage. I dont have any research, but im willing to bet that more people will read a 3 page or longer story in a newspaper far moreoften than they willonline. When we encounter multi-page stories online, weprepare ourselves to avoid an onslaught of ads, popups and intrusions. When we encounter a multiplage story in the newspaper, we have been conditioned to getcomfortable, grab a cup of cofee or soda ,and focus ourattention.

If the newspaper industry doesnt recognize these differences, then they are going to find themselves falling further and further out of the continuous infostream that we all are becoming increasingly addicted to every day.

Charles Shackleford ? What a joke.

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