TDI Episode 45: Robbin’ The Hood

February 25, 2008

WARNING AND IMPORTANT ADVICE on how to protect your portfolio and your cash. Andrew brings back essential knowledge from the Reuters Summit on Housing. In this episode we hear what is on the minds of advisors and other noted speakers of significantiTunes Subscribe influence who all had their opportunity to discuss how they believe we arrived in this dreadful position while at the same time looked for solutions. Thanks to Microsoft for inviting Andrew and providing the opportunity to attend as a guest of the MSN Money team.

Stocks mentioned: (TOL) (PPD) (BAC) (C) (MBIA) (MSFT)

** NOTE: Andrew is teaching: PORTFOLIO MASTERY on February 28 (free) Register Now. Also calls are being accepted for the upcoming advice-only episode. Leave your information and question by calling 877-623-8473. In this episode, listen for details on how to get a free audiobook. **

Audio clips are sprinkled throughout this episode from the panelists included Short Seller and Seabreeze Partners head Doug Kass, home-builder and CEO of Toll Brothers Bob Toll, Neighborhood Assistance Corp. of America CEO Bruce Marks and MSN columnist Jim Jubak.

The basic discussion surrounded the basic questions:

– Should the government bail-out home lenders and owners?
– How much further can prices fall?
– Will the consumer continue to hold up or will this trigger a recession?
– Who should take the blame?

If it was a movie, The American Dream has been renamed to: A Nightmare on Elm Street. Unfortunately, the focus of who will really to suffer has not been addressed as this quickly evolving housing situation has focused on the financial industry, lenders and Wall Street.

Andrew explores:

– Trouble for investors with certain Money Markets and other traditionally safe short term debt securities
– Credit seizure in all areas could prevent local economies/governments from running
– Pension Plan losses due to inability to price auction and asset backed investments
– State Pools (an other emergency funds) freeze if they have funds in sub-prime, junk bonds, auction-backed and asset-backed
– Student Loan market crisis looming
– Muni bonds will cost significantly more to issue as credit agencies are untrusted, driving rates down and interest payments up
– Opportunity in Rental Real Estate for investors
– Fallout for Retail and Travel/Tourism industries
– Run-on-the-bank scenario starting to build
– South Florida banks that should be on watch list
– FDIC – concern over if they handle another S&L type emergency
– South Florida auto industry implosion ( pricing, limited credit, excess inventory, poor floor-planning, tighter credit requirements)
– Mutual Fund distribution freeze for illiquid fixed income investments
– Section 8 housing flood on market as next investment opportunity as it is a possible beneficiary under one bailout idea.
– Sovereign debt drying up as a foreign countries are not only feeling their own problems, unwilling to risk in potentially illiquid positions
– Lawyers will benefit from Foreclosures, bankruptcy and liability lawsuits – Investment IDEA!

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TDI Episode 43: Inside MSN Money and The Facebook Factor

February 3, 2008

Special Guest: Chris Jolley, MSN Money Senior Manager. $180 prize giveaway. MSN Money and discussion of where they are going. Andrew begins with a discussion of the Microsoft and YAHOO! deal and the real reasons for the move. Then we go in depth into the MSN Money site and what it has to offer.

Chris Jolley is a 12 year – veteran of Microsoft Corporation, having served in a number of business and marketing capacities. Currently, as the business leader for Microsoft’s Financial Products Group, Chris Jolley is responsible for defining and executing the marketing strategy for Microsoft’s consumer finance products, including MSN Money and Microsoft Money software. In this role, Jolley oversees the distribution, sales, public relations, and advertising of the products, as well as industry partnership efforts.MS Money Logo

Chris JolleyDuring Jolley’s tenure with the Financial Products Group, the MSN Money site has grown from 2 million visitors a month to over 13 million and the Microsoft Money software has evolved to include unprecedented Web integration, marking a new era in automation for online financial activities.

He has been a speaker and moderator at numerous financial conferences, including American Banker’s EBPP andZune Subscribe Account Aggregation conferences, Spring Internet World and NetFinance, and has become a recognized industry expert discussing trends and issues in the online finance space.

Jolley joined Microsoft in 1995. Prior to re-joining the financial products group, he focused on partnership marketing, distribution and fulfillment for the MSN Internet Access business, direct marketing for Microsoft’s consumer annuity programs and leading the merchandising teams for MSN Shopping and Windows Live.

Stocks Mentioned: (MSFT) (AAPL) (YHOO) (GOOG) | Get Andrew’s Book – The Disciplined Investor


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Microsoft and Yahoo! – Facebook is the Real Reason

February 1, 2008

Balmer is dancing, Yang is sobbing. If you listen closely, you can almost hear the distant sound of Taps playing as the vultures are circling what is left of a once gorgeous technology story. After a pathetic quarter and an even more disappointing year, Yahoo! is now bleeding a slow death. The takeover announcement has opened a hole in the fabric of the universe today. It may seem like an alternative reality that Microsoft (MSFT) and Yahoo! (YHOO) will merge, but that was precisely what was announced. For $44 billion (66% premium), Microsoft will step up their web presence and create the most significant competition to Google (GOOG) that we have seen since Google’s inception.iTunes Subscribe

Throughout the morning, this announcement was the focus of CNBC discussions and online message boards. Admittedly, it was a left-field surprise to guests and reporters as well as individuals and institutions. One oddball standout in the discussion was CNBC’s commentator Jim Goldman who talked the deal down and continued his Gah-Gah praise (love affair) with Goo-Goo. One has to wonder what is his angle is as he seemed to qualify the news as nothing more than a fly in the ointment for Google’s long-term strategy. Jim, wake up… this easily throws a 900-pound monkey wrench into Google’s quest for global dominance for all things online.

As Google has been executing with almost flawless precision, Yahoo! has been generally fathering. So what makes this so attractive to Microsoft? It is simple, synergistic and an accretive transaction. It has also been estimated that it could provide a terrific addition to the bottom line, adding approximately $.13 of positive earnings per share to Microsoft. That is a deal worth doing!

Beyond that, the reasons and rationale will be tossed around for the next few weeks. Many have also questioned whether or not Google would thrown in a bid for Yahoo!. Truth be told, it is not their style. It would surely meet with regulators disapproval as Google holds the majority of market share. Anti-trust is not Google’s game. Even so, while it appears that this could take some market share, the combination is still not strong enough to significantly hurt Google.

So, why is this merger/buyout in the works? Simple…it is all about the the Facebook Nation. This is apparently the main focus of the Microsoft plan as they have been slowly moving towards a greater relationship with Facebook for some time. Have you taken notice of the sea-change to the look and feel of Microsoft as a company as they have finally realized that “square-corners” is not selling. Microsoft wants desperately to be hip. They own the desktop, but they don’t own the action/nightlife.


Think of a teenager living in their parent’s home. They use it as a place to flop, eat and wash. They tolerate their parents yet keep them at a social distance. Once they have their wings, they are out of there. Apple (AAPL) has done a good job at capturing the early adoption of many of the Gen-Xers and now Gen-Y is up for grabs. This is the social generation with idealism. “They’re after a sense of purpose, work-life balance, fun, variety, respect, and the opportunity to do ‘real’ work that makes a difference. Arguably everyone wants these things from a job but the difference with Generation Y is they’ll talk with their feet when their needs are not fulfilled,” explains by author Peter Sheahan in his book Generation Y.

The communication vehicle of choice is text messaging and Facebook. This generation is always-on in a virtual-conversation. Privacy is not as much of a concern to them as is the thought of knowing that someone is listening.

Yahoo! Offers sex-appeal and millions of potential opportunities for eyeballs and access for Microsoft. It a way of stepping up the cool factor for Microsoft to ensure that they will be the choice for search, operating system and mobile products for generations to come. The timing couldn’t be better as the first chink in Google’s earnings growth was announced just hours prior. There is a plan and it looks like it may actually work. Microsoft should be able to break out above the recent resistance of $35 if this actually goes through.

Disclosure: Horowitz & Company clients are LONG MSFT