Administrator's Note: Starting March 14th, each Wednesday at 12:00PM EST chat directly with Cody on the Echo system. Talk stocks, rock, politics, or TV -- no subject is out of bounds. Click here to sign up today on BoomRev.com and we’ll see you there.
“Everything you want on the Internet,” this network of user-programmed
and user-organized video content is hoping to improve and streamline
web activity for its users. Members of the network can upload their
favorite content from YouTube or other videosharing sites simply by
pasting in a link. Best yet is that users get a free hosted webpage
with complete access to the coding or for those who aren’t html-savvy,
there are a number of free templates available to customize individual
homepages. And for those frustrated by inability to IM at work, or who
just fear having an offhand comment come back to bite them, their
browser-based instant messenger system Echo is reputed to work behind
any firewall and does not record conversations.
I get emails like this all the time from readers, so I thought I'd share one example here:
I imagine you get many emails like this daily, but I hope you might have the time to answer mine.
I am 24 years old, an avid reader of RealMoney, and have been an individual investor for several years, for myself and my family. I graduated from college in 2005 and have worked in journalism since high school.
Anyway, I love investing and trading and have pondered this career move. But I'm not sure where to start. I would like to find a job where I can continue to write, on top of trading.
Would you recommend going to business school? Is it really necessary? Should I look for entry jobs at a hedge fund? What did you do when you graduated from school? What advice or suggestions might you have?
Thank you for your time and help."
First, this is a classic example of a question for which there's no "right" answer.
I remember when I first moved to New York City. I was so excited to hit the interviews for those "account executive" positions that schlock brokerage houses advertise in The New York Times and Wall Street Journal. That excitement turned to dismay when I showed up at the first few interviews and sat down with 20-something kids who oozed more sleaze than Jabba the Hutt in Return of the Jedi. My first job in this city was at a Starbucks on 86th and Broadway, where I served Nathan Lane coffee on Sunday mornings.
I ended up getting my first job in this business by doing exactly what the reader above is doing now: I wrote people whose quotes I had read in the papers, whose faces I'd seen on TV or whose books I'd read. After months of persistence and with hands that became numb to scalding coffee, I eventually got a job at Oppenheimer answering phones and filing papers. Eleven years of 80-hour work weeks later, I don't make photocopies for others anymore.
At that Oppenheimer job, I made $24,000 a year, which I'd negotiated up from the $22,000 first offer. I remember how jealous I was of the kids I met who were my age or even younger and getting cushy analyst jobs as they groomed themselves for MBAs and the standard paths to decent money on Wall Street. Some of those kids now run hundreds of millions of dollars and are wildly successful beyond their dreams. The vast majority aren't.
The point here is that anyone can indeed come to Wall Street and cut his or her own path. The only requirements are brains, guts and commitment. And more commitment. If you have some brains, a good bit of guts and are willing to commit, Wall Street is a great place to call home. Mi casa es su casa. Come on over!
It took more than a decade before any major label agreed to let unprotected MP3s to be distributed on the Internet. But a few weeks ago, the indie-label consortium, which accounts for about a third of all record sales, agreed to let MySpace.com sell MP3s.
Meanwhile, Steve Jobs is finally saying that Apple wants to sell unprotected MP3s on iTunes. I guess he got tired of the fact that 97% of music that is loaded onto iPods is estimated to be not from iTunes.
The minute iTunes goes MP3, its sales will explode higher. Consumers aren't stupid; they know that what they supposedly "buy" on iTunes isn't really theirs, as Apple and the labels put so much restriction on the usage of iTunes content. Ownership rights matter -- not just for the label, but also for the end users, after all. The total disregard of end users by labels and their distribution networks has hampered sales badly. Because the iPod has become the de facto standard of music players anyway, Apple is ready and excited to move away from its closed network.
The major record labels, including Edgar Bronfman and his Warner Music Group, continue to flail about and fight the empowerment of their fans. What really blows the mind is that music sales are showing accelerating double-digit declines right this very minute, yet the labels keep pursuing the same policies as they have for the past decade, which obviously has completely failed already. Look, they really can't stop the revolution! And as I told Aaron Task last week, there's 100% chance that we'll all be buying unprotected MP3s from iTunes, Wal-Mart.com, Microsoft's Zune and so on by the end of 2008.
Now let's apply some of this logic to video. Viacom and other studios/networks are playing hardball with the big guns at Google. The studios say they're upset because YouTube isn't trying hard enough to keep their content off its site, even as YouTube says it easily can and will start policing its content much better if the studios would only sign on the dotted line to legalize it.
That's all just posturing. The studios recognize the tremendous value in the ability to distribute their content on demand to anyone with a browser rather than having to go through cable and satellite broadcast networks, movie theatres and DVD retail outlets. The fact that users can easily now upload and organize that video content for other users is an absolute dream situation for these studios. After all, do you really think that the tens of thousands of people who currently control how that professional content gets programmed, broadcasted and otherwise distributed can compete with the 1.5 billion people who now can do that for themselves and other fans on ever new platforms?
No, they can't stop that revolution, either. But unlike the idiot record labels that never even seriously tried to create a legal, monetized P2P distribution outlet for their content, the studios are indeed in discussions about figuring out how to build a user-organized and fan-monitored YouTube-like site.
The key here is that when the studios do that, they'll have to allow other sites like YouTube to do so also. Indeed, we designed BoomRevolution.com to become the de facto standard for that user-organized and fan-monitored professional content movement from the start. I've learned a lot from dealing with the studios and their reps, and they are really aggressive about figuring this new movement out.
There will be many other distribution outlets that empower fans in ever more ways that will crop up as the studios finish embracing the revolution. And that's the upshot: more content, more control, more distribution outlets to more people, all of which can and will be monitored and policed by fans and end users. That's why I say that the entropy of these Revolutionomics is so virtuous. And more to the point, it's why I continue to call content king, and this year I've started scaling into some of the best content owners like Disney.
At the time of publication, the firm in which Willard is a partner was net long Apple, Microsoft, Google and Disney, although positions can change at any time and without notice.
The inventory glut in the semiconductor space not only is evident in the inventory numbers and related commentary, as it was for the last three quarters of 2006, but also is now hurting earnings and sales. I've heard almost no discussion about how it's working itself out.
Several quarters ago, I noted how commentary on the semi calls to which I listen had started to change in regard to the sector's inventory situation. At the time, I repeatedly wrote:
Anybody else notice that 'We're comfortable and even happy with our increased inventories' replaced 'We continue to scramble to meet demand' as the most-oft-heard commentary on the semiconductor company earnings calls?
That means in the past five quarters, we've gone from "We can't keep up with demand" to "We're comfortable with the inventory situation" to "The inventory situation could get worse before it gets better" to now "This inventory situation is really bad, and we don't know what will fix it." Meanwhile, Semiconductor HOLDRs have fallen to the mid-$30s from about $40.
I'd like to start buying some semi names in anticipation of these inventory problems working themselves out, but two things are keeping me from rushing into that move.
The first is that the SMH has already rallied from below $30 to the mid-$30s since last summer. That has me worried that the Street is still not discounting the extent to which this ongoing inventory glut is hurting the fundamentals.
The second is that similar but smaller inventory gluts worked themselves out just fine for the last handful of years. As I pointed out to Aaron Task in a video interview last week, I don't think that making such a bet this far into a booming cycle is as good a bet as it has been as the cycle was just developing.
I do expect to get into the semi names more aggressively as the year wears on. But I am definitely not in a rush, nor am I interested in trying to nail the bottom. Patience is key when it comes to trading the semis.
At the time of publication, the firm in which Willard is a partner had no positions in any of the stocks mentioned, although positions can change at any time and without notice.
After all that back-and-forth, the bulls are the ones who ultimately cried "uncle" this week and gave in to the selling. The day had an ugly close, making it an ugly close for the week. So maybe that does make this the most important day of the trading week after all, in contrast to my opening comments. Flipping it into the weekend then, here's what I'm thinking about.
I've been saying that I want to start buying the semiconductors when the glut really starts to be recognized by most of the Street and therefore likely discounted. With Micron's acknowledgment of glut issues in most sectors but the PC world hurting business this quarter, is anybody unaware of the glut now? There's chip blood on the streets. I'll be looking to start buying Micron as it settles in from today's new lows.
Both the believers and the skeptics of the Microsoft Vista cycle have been talking a lot about how the early data are showing they're right. In my mind, though, it's not just about this quarter and whether consumers are lining up around the block to buy it. It's more about the video-centric killer apps that will be developed as hundreds of millions of us get access to simple video technologies on our broadband networks. As for the data, I wish I could fast-forward three months and see what Softee says, because the proof will be in the pudding (read: earnings), not in stats and guesses from surveys.
I can't imagine that the recent spike in oil, gold and other commodities has anything to do with the Fed perhaps pumping more liquidity into our economy as it freaks out over this week's subprime blowups. I can't deny those blowups sure grew the knot in my gut.
If the Fed is juicing things in the money supply and understating inflation (as we all pretty much agree that it does, at least to some extent) and so is just about every central bank on the planet, then we won't be able to gauge which fiat currency is in bad shape first, because they're all juicing and inflating. When it comes to forex, it's all relative.
If you didn't see it yet, check out the video from Aaron Task and me, made earlier today. We talk the market (boy, do I feel red-faced about calling for a breakout as the market was tanking today, but I gotta call it as I see it), Cisco and Broadcom (I still think they're tells, but as they both faded hard today, I'm wondering what exactly they're trying to tell me), DRM (I anticipate total capitulation from the studios and other copyright holders for sites like MySpace.com and BoomRevolution.com) and Apple's options backdating issues.
I've been saying all week that traders' emotions are being ratcheted higher. I know I'm feeling tense and anxious, and that makes me wonder if it's more me than the market in regard to the building tensions.
If you didn't see it yet, check out the videos from Aaron Task and me, made earlier today. Here's one, and the other.
And on that note, I will wrap it up for the week. Thanks for reading, and I'll see you Monday.
At the time of publication, the firm in which Willard is a partner was net long Microsoft, Cisco and Apple, although positions can change at any time and without notice.
Last night, I spent a couple of hours with a few Web 2.0-type folks. Sales managers, business development managers and I talked about strategies in P2P networking, social networking, Internet video revolution stuff and so on.
Over fried pig's ear, I told them I was worried that we might already be in a new dot-com bubble. You can imagine how poorly that statement went over among this crowd. But popular opinion or not, it's something to think about. Here's how the discussion went, at least as I remember it this morning after four hours of sleep.
They didn't couch their rebuttal. "That's crazy talk, Cody. Don't you see how high CPMs on the Net have gone? We're profitable here. It's not like we're being valued on eyeballs like Pets.com was back in 2000. We're being valued on the cash and sales we generate, and those are healthy."
But I countered, "The problem is that bubbles don't just happen when investors make up new metrics like captured eyeballs to value a company. Think about the fiber-optics industry back in 1999 and 2000, for example. Those fiber-optic suppliers like JDSU were growing sales and earnings through the roof. It's not as if the fundamentals in fiber optics weren't strong. Indeed, real cash was being generated by the many fiber-optic suppliers who were benefiting from the strong demand for their wares."
And I continued, "Back in the late 1990s, the customers, such as Nortel, of those fiber-optic suppliers had booming fundamentals, too. See, the customers of Nortel were flush in capital from Wall Street as hundreds of billions of dollars flowed into the coffers of any telco, from old-world AT&T to start-ups like 360 Networks and Level 3. And AT&T was seeing its own fundamentals boom as those hundreds of billions of dollars were passed back and forth, as the telcos sold services to each other and ordered ever more equipment in anticipation of ever more booming fundamentals. When the money stopped flowing into the sector from the Street, the whole bubble collapsed on itself."
At this point, I either had the table riveted or bored out of its mind, as nobody even attempted to stop me as I explained the potential parallels to today's Web 2.0 world. "So here we are in 2007, and everyone at this table is pretty much doing business with one another in some way. And the capital that's being passed around comes from the VCs, who like Wall Street's bond investors back in the late 1990s, are ridiculously flush with cash. They keep pushing more capital into the sector, and that capital is passed around as one Web 2.0 company pays another which pays another for some service, and so on. What if Web 2.0 is like one big Ponzi-scheme of VC dollars being mindlessly passed back and forth while the getting is good? That would make all your fundamentals, which you rightfully claim are booming right now, based on an unsustainable and unhealthy marketplace. And that would make this a Bubble 2.0 already."
To be sure, I believe that even if this is already a bubble, it's only going to get much bigger before it pops on this go-'round. And more to the point, bubble or no, as I've been saying since May, it's been a hell of a ride from the techonomic depression that ended in 2002, and it's important to have taken something off the table by now.
I don't hear the trumpets blaring around this Web 2.0 marketplace yet, but we certainly aren't anywhere near the bottom anymore.
Take something off the table in tech. Don't be too aggressive, and be very selective.
At the time of publication, the firm in which Willard is a partner had no positions in the stocks mentioned, although positions can change at any time and without notice.
The scary morning action reversed nicely into the afternoon, and the markets finished at their highest levels since the open, which in my book means the bulls get to take the crown home tonight. This pointless churning in the market is enough to drive a trader/investor crazy. Except for rare names like Sirf Technology, which really rallied strongly after its report and has continued to climb, there's little tradeable out there right now. I've been saying for a few days now that I expect to see a 5% move in the broader markets commence any day now. Any day now. Any day now. Sigh.
There's a long letter out from Steve Jobs about digital rights management and how Apple plans to deal with it going forward. I do believe he's firing the first shot across the bow in calling for a total elimination of DRM and proprietary standards for music on the Net. Steve's dead right in calling for this, and the main reason he's finally bringing this up after three years of unfairly locking in iTunes customers is because the independent label consortium finally capitulated to MySpace.com in January, and unprotected MP3s are now legally available for downloading. The dam's been broken, and there's no going back now. At least some of the labels are finally going to rightfully profit on those unprotected songs.
In fact, as I wrote in this weekend's FT:
Want to listen to music you purchased from Apple on another MP3 player? Sorry, Apple and the music labels think it is more important to empower themselves than the end user. And people wonder why music sales are down double digits over the past few years. Hey, labels, wake up and start monetising peer-to-peer and all other forms of open music distribution.
Sure enough -- though it took a full decade after MP3 file trading first became mainstream -- the music labels have begun to license the selling of open-standard MP3 songs on MySpace.com and elsewhere on the Internet.
Anybody want to bet that we see music sales climb in 2007? It turns out people will pay for a good product delivered to them simply and in a form they can use on any system.
Any company that succumbs to the pressures of anybody but the end user is going to fail. Think about it this way: How about all those hundreds of thousands of people who had uploaded content from Viacom to their accounts on YouTube? They've suddenly lost hours upon hours of their work. All because YouTube and Google think it's more important to protect the interests of their cronies rather than the interests of their end-users and fans.
That's not going to fly, and I invite any of those users to come upload that content onto BoomRevolution.com, where we will never give into the corporate attorneys' and cronies' demands for removing such content. The Internet Revolution belongs to the end user -- you! -- not anybody else, including those suits who are trying dictate their terms to us otherwise.
As I trademarked here on RealMoney.com several years ago -- "They can't stop the Revolution." And, indeed, they can't. Not even Steve Jobs.
Cisco's call is going very well after the strong numbers. See you tomorrow.
At the time of publication, the firm in which Willard is a partner was net long Sirf Technology, Apple, Google and Cisco although positions can change at any time and without notice.