Quick overview
As I expected, the market did not take the housing slowdown well. I was surprised that it didn't go down very much despite the slower than expected sales. Nevertheless, negative creates buy opportunities. I expect tomorrow to add negativity and for the week to end down. We will buy either tomorrow or Friday.
Sometimes I want to invest in the extreme trends - the markets where outrageous growth is seen. High tech often has the opportunities. Certainly oil services and equipment does.
Sometimes I look for companies with the right product at the right time. I picked AKAM for this reason, same with GHL.
The major trends today are the housing bust, mobile entertainment, and economic downturn.
HOUSING - The crash is going to be very painful. Bay Area homes are 10X median income. They were only 5X at the height of the boom in 2000. Folks are extremely overextended - and that's bad when the economy is slowing.
An example - the friends I'v eoften discussed here are still unable to sell their home after 6 months on th emarket and a 10% drop in list price. Rather than drop the price again and settle for 'only' a 20% net profit, they have decided to rent it out for less than their costs. They hope the market will recover next year.
These are supposedly financially smart people, educated people, and they are willing to take a real cash loss in the hopes that the market strengthens. Meanwhile, they can barely afford the payments on their primary residence and were absolutely counting on the profit from selling the first home to offset their exposure on this new home. And they bought using an ARM.
If they are taking incredibly risky steps, and they are supposedly savvy, imagine what others less sophisticated are doing.
MOBILE ENTERTAINMENT
Digital entertainment is happening in 2 streams: mobile entertainment and IPTV. Mobile entertainment wsa jumpstarted by the iPod and is now migrating to the cell phone. I got out of AKAM too early and didn't get back in because I expected GOOG to offer strong competition. Instead, GOOG isn't really a player of significance. That's important because the world needs an infrastructure for enabling movie downloads to multiple devices (cell phones, TVs, laptops, iPods).
Infrastructure is the name of the game for the next wave. Regular phone companies (SBC/ATT) being able to compete with the cable companies at last via IPTV.
Also, devices like flat panel TVs are still hip. It's possible a hard drivebased video camera would work as a stepping stone to all Flash.
SLOWDOWN
Moves away from basic industry and energy (already in full swing in the market) and a defensive move to foods and medicines.
Sometimes I want to invest in the extreme trends - the markets where outrageous growth is seen. High tech often has the opportunities. Certainly oil services and equipment does.
Sometimes I look for companies with the right product at the right time. I picked AKAM for this reason, same with GHL.
The major trends today are the housing bust, mobile entertainment, and economic downturn.
HOUSING - The crash is going to be very painful. Bay Area homes are 10X median income. They were only 5X at the height of the boom in 2000. Folks are extremely overextended - and that's bad when the economy is slowing.
An example - the friends I'v eoften discussed here are still unable to sell their home after 6 months on th emarket and a 10% drop in list price. Rather than drop the price again and settle for 'only' a 20% net profit, they have decided to rent it out for less than their costs. They hope the market will recover next year.
These are supposedly financially smart people, educated people, and they are willing to take a real cash loss in the hopes that the market strengthens. Meanwhile, they can barely afford the payments on their primary residence and were absolutely counting on the profit from selling the first home to offset their exposure on this new home. And they bought using an ARM.
If they are taking incredibly risky steps, and they are supposedly savvy, imagine what others less sophisticated are doing.
MOBILE ENTERTAINMENT
Digital entertainment is happening in 2 streams: mobile entertainment and IPTV. Mobile entertainment wsa jumpstarted by the iPod and is now migrating to the cell phone. I got out of AKAM too early and didn't get back in because I expected GOOG to offer strong competition. Instead, GOOG isn't really a player of significance. That's important because the world needs an infrastructure for enabling movie downloads to multiple devices (cell phones, TVs, laptops, iPods).
Infrastructure is the name of the game for the next wave. Regular phone companies (SBC/ATT) being able to compete with the cable companies at last via IPTV.
Also, devices like flat panel TVs are still hip. It's possible a hard drivebased video camera would work as a stepping stone to all Flash.
SLOWDOWN
Moves away from basic industry and energy (already in full swing in the market) and a defensive move to foods and medicines.
posted by Andrew at
10:53 PM
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