You would probably do well investing this way. I think you can do better.
There is such a thing as over-diversification. You do not need to own everything under the sun to get the best results.
A few examples:
Why on Earth would you want to invest in gold or other precious metals? Graph out a performance of gold over the past two years and it has been a nice steady decline (not even taking into effect inflation, which would kill it).
Why would you want to own utitilities (mainly speaking of the power companie), the industry is so over-regulated (even including recent rulings) that real growth (including inflation)is next to nil. While their dividends may be nice and high, they can barely afford to pay them... check net profit vs. payout. Interest rates also have the ability to fuck over the utilities (because they are so highly leveraged).
I like to stay away from luxury items and other cyclicle industries. The other day I was at the Apple Bagel, I ordered a bagel and coffee, got my bill and it was $7!!!! What the hell, when we go through a little tougher times, how many people are going to pay that much for a bagel and coffee!?
I also trully believe that long term bonds, notes and CDs have no place in a retirement portfolio. It is a fact, that over the long term, and we are talking 10 plus years, bonds are more risky than stocks (as measured by the S&P 500). And the reason is inflation. If you get locked into a 30 year bond at around 6.6% (todays rate), and we go through another decade like the 80's, where inflation reached as high as 20%... you are royally screwed.
With quality, individual stocks, you do not have that problem. They are able to set their prices to keep up with inflation.... so they are AT LEAST going to do as well as the standard rate of living, even with absolutely no growth.
Coca Cola did not raise their price from 25 cents to 75 cents over the past decade to increase their profits... they were merely keeping up with inflation.
I personally choose not to invest in foreign equities, and instead focus on US companies with a foreign presence. Rules and of accounting and disclosure are so much more strict in the United than any other place in the world, meaning I can trust the numbers better. The world market is a guessing game... which eceonmy will be number one next year? Well, the US is consistently in the top 10, and I believe serves as a model for other economies to follow. It has less severe down turns and recovers much faster.
Nobel Prize winners do not apply to the real world, and never will. I would listen to Warren Buffet (who has never once owned any of the "flavor of the month" companies), Fayez Sarofim, Jeremy Siegel and Peter Lynch before I would take the advice of a Nobel Prize winner.
NOT diversifying across the board and using sound fundamentals is how you flourish... through good times and bad.
Ahhh... but you only go on to further prove my point with the nifty fifty. Yes, non-tech companies such as Philip Morris, Coca Cola, Pepesico, Pfizer and General Electric were all in that group, BUT they (being non-tech companies) were the ones that fared best over the next decade.
The ones that fared worst were the tech (and they were high-tech for the 70's too) companies, such as Burrough Comp., Polaroid, Digital Equipment, Eastman Kodak and Xerox.... these were the companies that were selling at the highest valuations (their futures were though to be the grandest). They got creamed the worst.
As for a portfolio of all the computer stocks listed above? I have figured it out. Sure Compaq and Apple did extraordinary. But the combined average annual return for that entire portfolio comes to a fraction over 2% per year. Hmmm... that is not so impressive.
The point is that you stay out of such a speculative market.
Amazon is still grossly overpriced however. Even if what you say is right, and the first company to assert its brandname will succeed; Amazon needs to completely run Borders and Barnes & Nobles out of business to realize the price of its "future growth". If you buy Amazon right now... that is what you are betting on. Good luck.
Lets not forget a cheaper price is only a "click away".
Amazon did not invent these valuations, and neither did Microsoft or Yahoo. This same exact speculative bubble has risen around every new medium invented. You name it... from spices to the ol' tulip bulb mania to railroads to cars to telephone to catalougues to radio to TV to one of the most recent: computers.
How many people remember how many computer makers there were in the early 80's?
I remember a few... how about Apple, Atari, Burroughs, Coleco, Columbia Data Systems, Corona Computers, Delta Data Systems, Digital Equipment, Eagle, Franklin, GRiD Systems, Hewlett Packard, Hyperion, IBM, ITT, Kaypro, Mohawk, Data Sciences, NCR, NEC, Olivetti, Osborne, Sanyo, Seequa, Sunrise Systems, Tandy, Televideo Systems, Texas Instruments, Victor Technologies, Xerox and Zenith.
Most of these companies are not in the computer business anymore, and many of them are not in *ANY* business at all. Yet, they were all trading at hundreds of times earnings (if they were earning anything at all) at one time.... Because computers were going to change the world. Sound familiar to anything we are seeing today?
Also keep in mind that some of the most succesful computer makers today had not even come into existance during this hotbed of speculation... Dell and Gateway for instance. First is not always happily ever after.
The internet will change the world. But make no mistake, it is a speculative bubble right now. It will burst. Some will make it, but the vast majority will fail and be replaced by ones yet to come. At some point, stock price *will* equal the actual performance of the company... it always has, it always will. Because after all, you are actually owning a portion of that company with your shares.
Ever read about the 20's? Ever read about the late 60's and early 70's when the so called "Nifty 50" (the majority of them, technology stocks) lead the market to all time highs and were thought unstoppable? Well, in 1972 they were stopped... and they were stopped for the next 10 to 20 years (some have still not recovered).
I choose to invest in companies that have proven they can perform and thrive in tough markets and have great oportunity for growth well into the future. The internet is a fool's market right now, and the majority of the fools will get burned. Just pray that someone is dumber than you when you sell your shares.
I just had a friend write to me and ask about a company called Seligman Communications & Information. The reason he asked was because he thought this company owned Transmeta??????
Well that is not a company, it is a mutual fund. How on Earth did he hear this, especially considering he works for IBM?
I was not aware Geekdom only applied to techies and programmers.
Thanks for clarifying that.
Also, please try and make you flames more creative in the future... in other words, much more entertaining. Instead of "You suck on all levels. Please die. (Uh-Oh, I misquoted you, are you going to run screaming and crying?) Try something akin to: I hope you choke to death on your momma's pubic hair. Going on in detail is great.... but always remember to insult their mother.
If the flames do not get more creative here, I am going to be forced to finally set my threshold to a 0 or 1. That goes to all you first posters also.
And it's Michael KEATON, not Cain. Keaton and Washington were both awesome.
Ha!
I thought his name was Keaton, but then I thought, "wait isn't that the character played by Michael J. Fox in Family Ties", who was actually Alex P. Keaton now that I think about it. Michael Cain is the old marina guy from cocktail...
OK, never mind.
I am not a big fan of Shakespeare movies, the plays just are more fun. I recently saw an absolutely wonderful rendition of The Comedy of Errors. Damn funny.
I completely agree with you. I think in a few years (maybe not even that long), the media portions of Time Warner will be spun off into a new company.
I really do not think AOL was ever interested in CNN, Time, Warner Bros, or Sports Ill.... despite what they say.
AOL did this for the access to the cable lines and broad band connection. This was what they felt was their best option (AT&T was certainly not playing their game).
The "New Media" screaming going on is just a smoke-screen... AOL does not give a rat's ass about content.
This is the perfect opportunity for Ted Turner to retire.
This is funny: Ted Turner has compared his reaction to this deal to the joy he experienced when he lost his virginity:)
I think I would like this deal better... AOL has decided that Time Warner was worth about 70% more than what the public (the stock market) had deemed fair.
While it has stabilized today, AOL's stock needs to be high for this deal to go through. AOL was down 15% since the announcement was made. With the 11% loss of Time Warner in the past two days, the value of the deal has dropped an incredible $23 billion. If this continues, this could spell a lot of trouble.
If AOL backs away (because of dwindling market valuation), they would be forced to pay a $5.37 billion breakup fee (the largest ever), with Time Warner's at $3.9 bilion. The walk away date is May 31, 2001.
Re:A Correction: Not the Largest!
on
AOL Nation
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· Score: 1
Which of these companies have the small margins imposed by maintaining and producing equipment? Of these, only Micro~6 and AOL/T-W sell predominantly Intellectual Property!
But also, which of these companies have the lowest barriers to entry in heir sectors, and which of these companies can be replaced the easiest?
The same ones.
Re:Just say no to anti-trust
on
AOL Nation
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· Score: 2
In the case you're talking about above, Time-Warner most certainly has a monopoly on providing cable services to homes in a large number of areas in the country. The concern is, particularly with this deal with AOL, that they will erect barriers preventing others from providing Internet access over those cable lines.
Well, you point here is no good... at least if AOL is true to their word. They have already said they will be opening their cable lines up to other ISP's.
A Correction: Not the Largest!
on
AOL Nation
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· Score: 4
Katz says:
AOL/Time-Warner plans to be the world's largest corporation
They have quite a ways to go in order to be the World's largest corporation (though this is definitely the largest merger ever).
Microsoft $576.6 billion General Electric 496.5 Cisco Systems 362.2 Wal-Mart 305.1 Exxon-Mobil 293.3 NTT 287.3 Intel 274.0 AOL-Time Warner 261.0 Vodafone-Mannesmann 261.0 MCI Worldcomm-Sprint 223.7 Royal Dutch-Shell 218.7 Pfizer-Warner Lambert 207.8
AOL's community is going to be almost completely self-sufficient. Why would you need to leave the vaulted doors of AOL in the future... you have almost everything you (the consumer) need, or want. Every aspect of your leisure life is just about covered. Like sports, hello Sports Illustrated. Need something for the kids to do... well, Warner Brothers has plenty of that. Need your news, well Time and CNN are right there for you.
Soon, there will be AOL, and the rest of the internet.
Slashdot Mirror
You would probably do well investing this way. I think you can do better.
There is such a thing as over-diversification. You do not need to own everything under the sun to get the best results.
A few examples:
Why on Earth would you want to invest in gold or other precious metals? Graph out a performance of gold over the past two years and it has been a nice steady decline (not even taking into effect inflation, which would kill it).
Why would you want to own utitilities (mainly speaking of the power companie), the industry is so over-regulated (even including recent rulings) that real growth (including inflation)is next to nil. While their dividends may be nice and high, they can barely afford to pay them... check net profit vs. payout. Interest rates also have the ability to fuck over the utilities (because they are so highly leveraged).
I like to stay away from luxury items and other cyclicle industries. The other day I was at the
Apple Bagel, I ordered a bagel and coffee, got my bill and it was $7!!!! What the hell, when we go through a little tougher times, how many people are going to pay that much for a bagel and coffee!?
I also trully believe that long term bonds, notes and CDs have no place in a retirement portfolio. It is a fact, that over the long term, and we are talking 10 plus years, bonds are more risky than stocks (as measured by the S&P 500). And the reason is inflation. If you get locked into a 30 year bond at around 6.6% (todays rate), and we go through another decade like the 80's, where inflation reached as high as 20%... you are royally screwed.
With quality, individual stocks, you do not have that problem. They are able to set their prices to keep up with inflation.... so they are AT LEAST going to do as well as the standard rate of living, even with absolutely no growth.
Coca Cola did not raise their price from 25 cents to 75 cents over the past decade to increase their profits... they were merely keeping up with inflation.
I personally choose not to invest in foreign equities, and instead focus on US companies with a foreign presence. Rules and of accounting and disclosure are so much more strict in the United than any other place in the world, meaning I can trust the numbers better. The world market is a guessing game... which eceonmy will be number one next year? Well, the US is consistently in the top 10, and I believe serves as a model for other economies to follow. It has less severe down turns and recovers much faster.
Nobel Prize winners do not apply to the real world, and never will. I would listen to Warren Buffet (who has never once owned any of the "flavor of the month" companies), Fayez Sarofim, Jeremy Siegel and Peter Lynch before I would take the advice of a Nobel Prize winner.
NOT diversifying across the board and using sound fundamentals is how you flourish... through good times and bad.
If they can lose money at books and CD's, they can probably do a great job at losing money in other areas.
... so I'm getting status report email from dozens of new Slashlings as they pop up
Sounds like a problem for your dermatologist.
Ahhh... but you only go on to further prove my point with the nifty fifty. Yes, non-tech companies such as Philip Morris, Coca Cola, Pepesico, Pfizer and General Electric were all in that group, BUT they (being non-tech companies) were the ones that fared best over the next decade.
The ones that fared worst were the tech (and they were high-tech for the 70's too) companies, such as Burrough Comp., Polaroid, Digital Equipment, Eastman Kodak and Xerox.... these were the companies that were selling at the highest valuations (their futures were though to be the grandest). They got creamed the worst.
As for a portfolio of all the computer stocks listed above? I have figured it out. Sure Compaq and Apple did extraordinary. But the combined average annual return for that entire portfolio comes to a fraction over 2% per year. Hmmm... that is not so impressive.
The point is that you stay out of such a speculative market.
Amazon is still grossly overpriced however. Even if what you say is right, and the first company to assert its brandname will succeed; Amazon needs to completely run Borders and Barnes & Nobles out of business to realize the price of its "future growth". If you buy Amazon right now... that is what you are betting on. Good luck.
Lets not forget a cheaper price is only a "click away".
I agree and disagree:
Amazon did not invent these valuations, and neither did Microsoft or Yahoo. This same exact speculative bubble has risen around every new medium invented. You name it... from spices to the ol' tulip bulb mania to railroads to cars to telephone to catalougues to radio to TV to one of the most recent: computers.
How many people remember how many computer makers there were in the early 80's?
I remember a few... how about Apple, Atari, Burroughs, Coleco, Columbia Data Systems, Corona Computers, Delta Data Systems, Digital Equipment, Eagle, Franklin, GRiD Systems, Hewlett Packard, Hyperion, IBM, ITT, Kaypro, Mohawk, Data Sciences, NCR, NEC, Olivetti, Osborne, Sanyo, Seequa, Sunrise Systems, Tandy, Televideo Systems, Texas Instruments, Victor Technologies, Xerox and Zenith.
Most of these companies are not in the computer business anymore, and many of them are not in *ANY* business at all. Yet, they were all trading at hundreds of times earnings (if they were earning anything at all) at one time.... Because computers were going to change the world. Sound familiar to anything we are seeing today?
Also keep in mind that some of the most succesful computer makers today had not even come into existance during this hotbed of speculation... Dell and Gateway for instance. First is not always happily ever after.
The internet will change the world. But make no mistake, it is a speculative bubble right now. It will burst. Some will make it, but the vast majority will fail and be replaced by ones yet to come. At some point, stock price *will* equal the actual performance of the company... it always has, it always will. Because after all, you are actually owning a portion of that company with your shares.
Ever read about the 20's? Ever read about the late 60's and early 70's when the so called "Nifty 50" (the majority of them, technology stocks) lead the market to all time highs and were thought unstoppable? Well, in 1972 they were stopped... and they were stopped for the next 10 to 20 years (some have still not recovered).
I choose to invest in companies that have proven they can perform and thrive in tough markets and have great oportunity for growth well into the future. The internet is a fool's market right now, and the majority of the fools will get burned. Just pray that someone is dumber than you when you sell your shares.
I just had a friend write to me and ask about a company called Seligman Communications & Information. The reason he asked was because he thought this company owned Transmeta??????
Well that is not a company, it is a mutual fund. How on Earth did he hear this, especially considering he works for IBM?
huh?
I really do not think Katz is guilty of making an unfair generalization by stating the majority of (computer) geeks are white and male.
How much is this going to help AOL?
I know they have been trying to increase their Asian representation, but what are the other ISP's being used?
I was not aware Geekdom only applied to techies and programmers.
Thanks for clarifying that.
Also, please try and make you flames more creative in the future... in other words, much more entertaining. Instead of "You suck on all levels. Please die. (Uh-Oh, I misquoted you, are you going to run screaming and crying?) Try something akin to: I hope you choke to death on your momma's pubic hair. Going on in detail is great.... but always remember to insult their mother.
If the flames do not get more creative here, I am going to be forced to finally set my threshold to a 0 or 1. That goes to all you first posters also.
And it's Michael KEATON, not Cain. Keaton and Washington were both awesome.
Ha!
I thought his name was Keaton, but then I thought, "wait isn't that the character played by Michael J. Fox in Family Ties", who was actually Alex P. Keaton now that I think about it. Michael Cain is the old marina guy from cocktail...
OK, never mind.
I am not a big fan of Shakespeare movies, the plays just are more fun. I recently saw an absolutely wonderful rendition of The Comedy of Errors. Damn funny.
What's even more funny is that he did do a Shakespeare movie. Kenneth Brannaugh's Much Ado About Nothing. He was the evil dude :)
Also starred, Denzel Washington and Michael Cain.
I think Reeves was even in another one... but I can't remember which one.
I completely agree with you. I think in a few years (maybe not even that long), the media portions of Time Warner will be spun off into a new company.
I really do not think AOL was ever interested in CNN, Time, Warner Bros, or Sports Ill.... despite what they say.
AOL did this for the access to the cable lines and broad band connection. This was what they felt was their best option (AT&T was certainly not playing their game).
The "New Media" screaming going on is just a smoke-screen... AOL does not give a rat's ass about content.
Could this be the Seven-Headed Dragon of the Apocolypse?
1) AOL
2) Time
3) Netscape
4) Warner Bros.
5) CNN
6) Road Runner
7) Sports Illustrated
And the whore riding on its back?
Steven Case.... Ted Turner?
:)
This is the perfect opportunity for Ted Turner to retire.
:)
:)
This is funny:
Ted Turner has compared his reaction to this deal to the joy he experienced when he lost his virginity
I think I would like this deal better... AOL has decided that Time Warner was worth about 70% more than what the public (the stock market) had deemed fair.
You bet he's selling
But how smart is AOL?
While it has stabilized today, AOL's stock needs to be high for this deal to go through. AOL was down 15% since the announcement was made. With the 11% loss of Time Warner in the past two days, the value of the deal has dropped an incredible $23 billion. If this continues, this could spell a lot of trouble.
If AOL backs away (because of dwindling market valuation), they would be forced to pay a $5.37 billion breakup fee (the largest ever), with Time Warner's at $3.9 bilion. The walk away date is May 31, 2001.
Which of these companies have the small margins imposed by maintaining and producing equipment? Of these, only Micro~6 and AOL/T-W sell predominantly Intellectual Property!
But also, which of these companies have the lowest barriers to entry in heir sectors, and which of these companies can be replaced the easiest?
The same ones.
In the case you're talking about above, Time-Warner most certainly has a monopoly on providing cable services to homes in a large number of areas in the country. The concern is, particularly with this deal with AOL, that they will erect barriers preventing others from providing Internet access over those cable lines.
Well, you point here is no good... at least if AOL is true to their word. They have already said they will be opening their cable lines up to other ISP's.
Katz says:
AOL/Time-Warner plans to be the world's largest corporation
They have quite a ways to go in order to be the World's largest corporation (though this is definitely the largest merger ever).
Microsoft $576.6 billion
General Electric 496.5
Cisco Systems 362.2
Wal-Mart 305.1
Exxon-Mobil 293.3
NTT 287.3
Intel 274.0
AOL-Time Warner 261.0
Vodafone-Mannesmann 261.0
MCI Worldcomm-Sprint 223.7
Royal Dutch-Shell 218.7
Pfizer-Warner Lambert 207.8
Their stock symbol alone is going to guarantee a succesful IPO!
But, expect these to sell off very quickly after the initial opening, when people start wondering what exactly they are holding.
Damn Scam-artists.
Why is it I get the feeling that The Rolling Stone is Katz's #1 news source?
;)
AOL is getting 55% of the new company.
:)
What you described above shows that you have a poor understanding of the situation.
Very rarely do merging companies have the same amount of outstanding shares. In this case, Time Warner has 1.2 billion, while AOL has 2.2 billion.
Some stock swapping has to take place in order for AOL shareholders to have 55%. You do the math.
Once again... I am right
In a sense, this is creating a new internet.
:)
AOL's community is going to be almost completely self-sufficient. Why would you need to leave the vaulted doors of AOL in the future... you have almost everything you (the consumer) need, or want. Every aspect of your leisure life is just about covered. Like sports, hello Sports Illustrated. Need something for the kids to do... well, Warner Brothers has plenty of that. Need your news, well Time and CNN are right there for you.
Soon, there will be AOL, and the rest of the internet.
Fine, let them have it
Maybe next, Amazon will buy Wall Mart :)