Financial Sarcasm Roundup for 06/22/15

The markets are on edge about Greece's fate, and my sarcasm is far edgier.  Investors can pull all the money they like from bond funds, because my sarcasm will always be there to fill the hole.

Greece throws some new proposals at Europe.  Only the dumbest journalists and analysts believe anything Athens says these days.  The Greek leadership goes through the motions and Europe's leaders act like they've earned another few billion euros.  Neither party believes in the process but they're both too terrified of what may happen in the markets if they don't keep up pretenses.  Anything Greece does to fulfill its austerity commitment will force a snap election that brings real radicals into power, and then the world watches an instant default.

Caterpillar plans another round of layoffs.  I'm glad I don't own that stock.  Bad times in the mining sector will hurt more than heavy equipment.  A whole bunch of truck stops and flophouses in Idaho, Montana, and Nevada will go under at some point.  Guess how much more the heavy equipment sector will hurt once the next housing market downturn comes along.

Amazon has incentives for vanity press authors.  Wow, now there's a reason to accelerate my pipe dream of self-publishing my financial tomes through Amazon's Kindle.  Content marketers are increasingly measuring user engagement in smaller increments.  Every instance counts.  It pays to change the metric from broad downloads to something like a la carte pricing.

I have to blast out a sarcastic missive at one loser who claims to operate in the tech sector.  I won't embarrass him by name.  This dude wouldn't listen to me a few years ago when I told him what he needed to do to make a minimum viable product (MVP).  He also demanded that I pretty much write his business plan for him and do a whole bunch of things he was too lazy to do himself.  I recently noticed that this guy is back in startup mode, running through the same accelerator program he's done before.  He has never succeeded in commercializing any of his claimed inventions.  Dude, sometimes you just need to know when to quit, so quit already.  I'm so glad he's not cramping my style anymore.

Writing For Dollars And Credibility

I heard a talk from a "writing coach" today about how business owners can raise their profile by publishing a book.  I got the distinct impression that the profitability of the book itself is less valuable  for that coach than the free media and lead generation from a book tour.  That approach may have been fine in days gone by when getting a book published was more difficult than today.  Writing for money is easier than ever in a digital world, but everyone is doing it now that entry barriers are so low.

Amazon has driven down the prices of both paper books and ebooks with its anti-competitive tactics.  Defining a simple distribution channel for ebooks though its Kindle platform was even smarter.  The industry recognizes the counterintuitive discovery of ebook profitability.  Hugh Howey's article "Two Important Publishing Facts Everyone Gets Wrong" covers ebooks' financial appeal quite well.  The Association of American Publishers' resources page now reports on the solid success of ebooks.

A cottage industry of enablers stands by to separate aspiring writers from their money.  Transcribing services will convert a writer's audio interviews into a printed record.  The San Francisco Bay Area in particular seems to be spilling over with freelance editors and proofreaders who will do for pay what more competent writers should do for themselves.  Business professionals looking to crank out a vanity book just to launch a speaking tour have money to burn.  They may be competent in their verticals, but stepping outside makes them suckers and invites the publishing world's parasites to view them as prey.  I'm pretty sure the automation trend that's about to sweep through financial services could just as easily set its sights on publishing.  All those cottage industry liberal arts grads can be digitized away once AI editors are launched.

Publishers Weekly tracks its own "Publishers Weekly Stock Index" in regular monthly articles.  PW also publishes a "Facts and Figures" section covering book sales and a "Financial Reporting" regular feature tracking recent sales figures at selected publishers.  I am disappointed that PW publishes those articles in long-form narrative with no downloadable CSV data sets.  They think like writers over there, not analysts.  The serious analyst could construct a "PWSI" portfolio for that stock index in lieu of publishing their own book.  That actually gives me an idea for a future blog article.

If there's a book in me somewhere, it won't be some crude promotional tool.  My permanent products on the Alfidi Capital main site are pretty serious even if they do look humorous.  If I ever change my policy about having nothing for sale, the first thing I would ever consider selling would be my own book.

The Haiku of Finance for 03/14/15

Reuters and Bloomberg
Known for tracking the markets
Headline arbitrage

Recap of Anthony Alfidi on Benzinga PreMarket Prep in June 2014

The general public had the opportunity to hear me live on Benzinga's #PreMarket Prep webcast for June 16, 2014.  Anyone who missed it can catch the recorded version on Benzinga's YouTube channel.  The audio quality wasn't the best so some of my comments may not be crystal clear.  Let me briefly recap a few points you may have missed.  

I do not ever use technical analysis to make investment decisions.  It has no statistical validity in predicting stock market outcomes.  Academic research regards it as little more than cargo cult thinking.  I tried to understand it years ago but I eventually saw no value in using such random noise.  Warren Buffett's public comments on technical analysis are clear; he couldn't make sense of it as a teenager after turning the charts upside down and finding no different answers.  

I have not used accounting ratios like the quick ratio since the years immediately after graduate school.  They play an important role in corporate finance as KPIs.  Credit analysts for banks will find them handy.  They can't make much difference for me while central bank stimulus makes easy credit available to every business borrower, masking the problems that unhealthy businesses would otherwise reveal in accounting ratios.  I shall return to using these ratios when central banks cease their stimulus experiments.  

I bemoaned the state of the American consumer.  Our indebted middle class continues to blow hundreds of dollars on the newest models of smartphones that add only incremental capabilities.  Cheaper smartphones are just about to break the $100 price point with most of the functionality of today's elite Android models.  That's all most people need.  

I continue to seek hard asset hedges in my own portfolio.  I mentioned one possibility but I am still not willing to buy it while its price remains elevated.  I still like the shipping sector as a long-term investment but I'm not buying into that either.  Everything is just too expensive thanks to central bank intervention.  

I did not make any securities recommendations or give any personal financial advice for investors on the Benzinga webcast.  That's not my job and my readers know it.  

Benzinga's hosts were great.  They must be super-sharp to recognize my incredible genius.  I will enjoy expanding my reach through future webcasts with any broadcaster who wants me as a guest.  

The Haiku of Finance for 06/08/14

Broadband audience
Social and mobile channels
Ad metrics adapt

BroadbandTVcon 2014 Fits Right Into Silicon Valley

I opened up a brand new chapter in Alfidi Capital history by checking out BroadbandTVcon this month.  I only had time to attend the first day but there was enough content to spark my interest in the sector.  I took my traditional corporate badge photo prior to the first keynote, but it came out less than perfect.  Tough luck.  I was still there.

The morning keynoter from HuffPost Live could easily have a second career as a comedian or motivational speaker, although maybe there isn't much difference.  Media executives are all about panache.  HuffPost's discovery that most web article commenters engage each other instead of the article content makes sense anecdotally.  Low-information people log on to media sites to become stars themselves rather become more well-informed.  That's why HuffPost's elevation of their engagement screen to "above-the-fold" positioning in the UI drove their traffic up.  They have discovered some interest in deep dive formats beyond short-form broadcasts, but I am not surprised that such "analysis" comes from amateurs who offer only emotional hooks for the audience.  It is obvious that mobile adoption is driving content towards short-form and low-information content.  I have seen the future of webcast media, and it is downscale.  I like HuffPost's revelation that humans don't share what they search, but rather they share their "aspirational selves."  They search naughty images but share cute cats.  Our superegos are such hypocrites; advertisers meet our id-level desires as well.  I would do video broadcasting myself, but I need strong metrics.  I need monetization metrics that track subject matter (by keyword), length, page views, social media shares, page placement, live vs. recorded contrasts, and video / text mix per article.

Panels are always fun and I assembled a whole bunch of lessons from the random executives on hand.  Cable TV's value proposition is declining and rising percentages of subscribers show interest in cord-cutting.  People won't pay premiums for reduced value forever.  I have long believed that a la carte subscription channels solve an untapped pain point for dissatisfied cable customers.  I now believe that social / mobile broadcasters must deliver news and first-run shows to tap even more pain points in"time-shifted" broadcasts.  Netflix's success with "House of Cards" shows us the way.  The ad people here at BroadbandTVcon thought that ads in video-on-demand (VOD) offer huge upsides in monetization and targeting.  I cannot believe how dumb cable broadcasters are for thinking that bundled channel packages enable content discovery among customers.  Those idiots have never used web searches, or social media, or maybe even email.  I'm certain that the next decade will bring the destruction of the cable TV business model that has existed since the late 1960s.  Say goodbye to the multichannel video programming distributor (MVPD).  Cable TV will end up like VCR, a quaint tech that had a window of opportunity in the pre-digital age.

Get ready for Alfidi Capital's ultimate curveball prediction on broadband monetization.  The basic monetization metric in broadband will mirror mobile e-commerce:   LTV of a viewer compared to their acquisition cost.  Measuring both will make some traditional audience scoring methods useless.  Broadcasters will  have to migrate to the RTB ad networks on the Web for tracking data.   You heard it here first.

If you want to know who's really watching what on which devices, don't ask the traditional broadcasters just yet.  They have not used programmatic marketing equations until now.  Their interest in RTB data will metastasize when some broadcaster acquires an RTB network to do more than just master their algorithm.  They want to know the CPMs showing where dynamic ad insertion into VOD pays off the most.  Nielsen does track online campaign ratings (OCRs) but I'm not going to assume broadcasters know how to price their offerings until they plug RTB data into programmatic solutions.  The lack of NTSC-type standards for dynamic ad insertion into mobile devices means any broadcaster generating the most attractive traffic from RTBs will absolutely own standards definition.

The disguised sales pitches from various sponsors required me to read between the lines for more universal lessons.  Monetization strategies for VOD come in different flavors:  subscription (SVOD), transaction (TVOD), and advertising (AVOD).  That breakdown reminds me of the mobile game sector's discovery that interstitial ads work better than banner ads.  I suspect the most successful mobile broadcasters will use RTB data predictions of optimal CPM to manage their content streams.  Over-the-top (OTT) content is more than just the junk mail offers from broadband providers that I immediately recycle.  It's the business model that will program all those VOD ad types.

Smartphone users must be frustrated when they discover that their smartphone will only work as a universal remote for TV if they have a household subscription for all services - phone, Internet, TV - from the same broadband provider.  Even with universal standards, service providers erect walled gardens to prevent consumers from bundling competitors' services.  The downsides aren't just for consumers.  Broadband companies can't run predictive analytics if they can't see what customers are watching or surfing on competitors' networks.  These companies will have difficulty predicting the ad inventory they'll be able to deliver in their fourth quarter, which drives about half their annual ad revenue.  The upside for entrepreneurs is that walled gardens to defeat transcoding (video file conversion from produced formats to playback formats) generate pain points that entrepreneurs can solve.

I asked one speaker whether the big social media companies are serious about defeating fraudulent accounts and paid "liking" that rips off advertisers.  The answer I got is that they will have to adapt prevailing broadcast standards identifying non-human traffic that advertisers don't want to reach.  ComScore's tech is one representation of those broadcast standards.  I still think Facebook and Yelp will be slow to fully implement comScore and Nielsen audits as long as they are under pressure to generate earnings that justify their inflated P/Es.  Zuck and others want the gravy train to run as long as possible.  Social media companies do use auditing data to estimate the target rating points (TRPs) they can generate from gross rating points (GRPs).  Both social media companies and broadband providers know that Big Data offers a big analytical leap over the previous use of small samples and panel data to measure audience size.  The Coalition for Innovative Media Measurement (CIMM) is driving the train on Big Data metric adoption in mobile / social / broadband integration.  Multiplatform users are the drivers of most of the digital audience's consumption, in true Pareto 80 / 20 fashion.  This means omnichannel ad buys (radio / TV / Internet) require metrics for reach, frequency, impression, GRP, and TRP.  This stuff matters to advertisers.  It is transparent to broadband subscribers.

Television isn't like the cable-vs-satellite choices for the lower-class families on my block when I was growing up in the 1980s.  Broadcasting has become atomized to match the delivery channels of multiple mobile platforms.  Audiences for both long-form and short-form TV have fragmented down to the individual viewer.  You make your own network now.  The BroadbandTVcon customization of television fits the spirit of Silicon Valley.  

The Haiku of Finance for 09/20/13

Drink with media
Find hot female reporter
Key to good PR

Learning PR at the Impact Hub San Francisco

I got to attend a free public relations workshop last week at the Impact Hub San Francisco.  The space is unique among incubators because it supports non-profit startups and B-corporations.  It's the latest manifestation of the social capital phenomenon.  I'm all about free info and free support so I had to check this out.  I must have looked out of place as the only dude there in a suit and tie but I had just come from a more formal engagement, so that's my story.

The speakers were all PR practitioners and journalists.  The single most important thing I learned in the PR workshop was the importance of building relationships with journalists.  They repeated that lesson over and over again; repetition drives a point home like nothing else.  The social media space is pretty small but it can launch stories into the mainstream media.  They key is to cultivate a targeted list of journalists covering your sector who can give a social media story traction if they trust you as a source.  The story, of course, is your press release that touts something your business is doing.

The ever-awesome Hermione Way was the final speaker.  She is even hotter in person than she looks in photos.  Her "inside baseball" tips on media relationships were invaluable and I'll repeat a few right here.  Never assume anything is off the record.  Don't launch your PR at bad times (like when a big competitor has a major launch) or misunderstand a reporter's lead time for publishing.  Retweeting journalists' articles gets their attention and sometimes high-powered people tweet back.  One TV appearance is worth millions in ad spend.  Drink booze with the press, because that's how journalists relieve stress.  Got it, Hermione (BTW, it's pronounced "her-MY-nee").  Thanks for the tips and for being so incredibly hot.  Now I just need to figure out where the financial press in the San Francisco area goes for drinks after hours so I can ply them with my awesomeness.  I look forward to drinking with hot female media personalities like Hermione Way so they can marvel at my extreme genius while they push out my business PR.

Here come the hot media sites the experts mentioned.  Help A Reporter Out (HARO) enables anyone with authority on some subject to get the attention of reporters.  Muckrack aggregates the daily tweets of topics journalists discuss.  TechCrunch likes entertaining stories.

Hey folks, I don't publish this stuff just for my health.  I'm always looking for the hot angles that will give my business the edge.  You betcha I'm using these strategies myself.  Sharing a few tips with my audience makes me the go-to guy for business insights.  Don't believe me?  Just ask me.  

The Arrival Of Geojournalism

Tonight the Commonwealth Club asked "Does The Environment Matter?"  I was there.  It really should have asked whether journalism matters.  Traditional news media have been in decline for years.  Newspapers can't compete with the advertising reach of online media.  I think too many journalists are still enthralled with old-fashioned media doing old-fashioned beat reporting.  The new beats are all online covered by bloggers like Yours Truly.  The number of full-time journalists has declined but the amount of informed commentary available online has exploded.  Journalism is morphing into a concept that fuses data analysis, geospatial mapping, and time-series reporting.  This is the realm of the "geojournalist."

The geojournalist uses GIS tools to embed text and data within photos and maps.  This requires skills in data mining and content curation that aren't taught in journalism schools.  I think an open-source knowledge management practitioner (ahem, Yours Truly once again) qualifies as a geojournalist.  It also calls for some mobile media savvy.  I noticed one hot journalist babe at this CW Club talk tonight use her smartphone to record one of the panelist's answers.  Old-fashioned note-taking will soon give way to digital tablet notations for geojournalists who embed their stories into maps on the spot.

Some environmental media sites are doing geojournalism well.  InfoAmazonia tracks reports by map location within the amazon rain forest.  ClimateCommons adjusts US temperature data for anomalies like industrial emissions.  Internews teaches social media techniques to aspiring geojournalists in developing nations.  Interdisciplinary academic initiatives like the Yale Project on Climate Change Communication need to adapt geojournalist techniques if they want to be heard.

Other digital media can adapt to the new realities of crowdsourcing and crowdfunding.  Journalists are IMHO too dependent on foundation grants and PBS money.  I've seen some filmmakers pitching ideas for short films on crowdfunding sites.  This could work for investigative journalists making documentary films that can embed into GIS maps if geojournalists think like entrepreneurs.  They need an elevator pitch to get donors' attention and market data on the size of an audience for their project.  Market data for short films is easy to find with view counts for similar content on YouTube.  I say the Society for Environmental Journalists should teach startup thinking to geojournalists.  Just ask me how to do it and I'll show you if the price is right.

I Don't Understand iMing (IMNG)

I got a tease mailer today from Legendary Stocks touting iMing (IMNG on OTC).  It's some maker of HD set top boxes out of Hong Kong.  There are plenty of things about this company I just don't understand.

I don't see how they can claim to compete against Apple TV in the set top box market.  I don't see any management team listed on their website, and only one person on Yahoo Finance's profile page who apparently does everything at the head office except actually make the product.  So who makes the product?  Is it even ready to be sold, shipped, and installed?  Beats me.

They have a publicly traded ticker symbol but I can't find any financial reports on them in EDGAR.  If they have not filed any reports, I cannot understand how Yahoo Finance can report their financial results.  Looking at their historical prices reveals adjusted closing prices as high as $70,000/share back in 2009, but the stock currently trades under a buck.  That implies a whole lot of reverse splits since then just to keep this ticker from falling off the exchange.  I can't be sure of any splits since there are no SEC filings to review.

I don't understand why anyone would invest $150,000 in iMing's first round.  I do not understand why this company used to be named China Career Builder Corp. and yet plans to enter the set top box market with so little capital.  I just don't get it.  I don't invest in things I find impossible to understand.

Full disclosure:  No position in IMNG ever, but you already knew that.

The Haiku of Finance for 10/30/12

Disney buys Lucas
More "Star Wars" films in the works
Use the Force to deal

The Haiku of Finance for 10/18/12

No more print Newsweek
Online media beat it
Digital future

The Haiku of Finance for 08/07/12

Disney profit up
Movies score with consumers
Fantasy come true

Empire Post Media (EMPM) Loses Money In 3D

The unwanted solicitations to invest in penny stocks don't just come via junk mailers.  They also arrive via junk email.  Today I got an email from Ultimate Penny Stocks, which is really owned by something called Promo Kombo Ltd in the British Virgin Islands.  Go figure.  The email touted Empire Post Media (EMPM), a penny stock that purportedly does post-production work for the movie and TV industry.

The reason for taking such a company public escapes me.  Post-production companies are typically small private companies that have little need for access to the capital markets.  There is no realistic expectation for such a company to expect to grow to a size that would justify making it a publicly-traded stock.

The company's 10-K from Mar. 14, 2012 tells us plenty.  The proceeds from the company's IPO all went to the founder and not to the company.  They netted a whopping $15,050 in capital just to get listed.  The founder later made a cash infusion for $14,192 back into the company.  Even he couldn't make any money off this one.  Like I said above, the business model for something like this doesn't justify capital market access.  Their burn rate and need for additional capital raise substantial doubt about their ability to continue as a going concern.  It is ridiculous for the company to have over 250M outstanding shares.

I have only seen penny stocks lose money with two-dimensional approaches but Empire Post Media manages to lose money in 3D.  You don't even need special glasses to watch the show.  If they want to keep developing reality-based entertainment, maybe they can start by documenting their own difficulties making money.

Full disclosure:  No position in EMPM, ever.

WPO Trying To Sell A Weakened Newsweek

I'm aware of the irony in linking to a New York Times story for this development.  The Washington Post Co. is putting Newsweek up for sale:

As the American conversation has become harder to sum up in a single cover, that era seems to be ending. The Washington Post Company announced Wednesday that it would sell Newsweek, raising questions about the future of the newsweekly, first published 77 years ago.

Wow, this comes barely a day after a reader prompted me to look into the drag on WPO's earnings from their declining print media holdings.  They may just be going through the motions in looking for a buyer, as a turnaround effort just isn't worth it.  I say just shut Newsweek down and write it off as a tax loss.  I used to read it as a teenager and remember being very disappointed at the lack of depth in their political and business reporting.  Thankfully, I eventually discovered The Economist. 

Maybe WPO should also throw in the towel on their namesake daily newspaper and just make it an online political portal.  That way they can go head-to-head with The Huffington Post.  The WPO ten years hence will look nothing like its historical incarnation.  BTW, Berkshire Hathaway was once a textile maker and now does something completely different; its new mission includes part ownership of WPO.  Times change.

Full disclosure:  No position in WPO at this time.

Follow-up on WPO (for Hondo!)

Here's a longer response to a comment from one of my readers in response to my post about WPO.

Thanks Hondo. I haven't read the Barron's article. My criticism was of print media in particular, not necessarily WPO as a whole. Media companies will have to continue to diversify their business models to stay viable.

Buffett himself acknowledges how weakness in print media can drag down the rest of the firm:

For the newspaper industry, however, setbacks are more troubling. "It blows your mind how fast" the newspaper industry is losing ground, Buffett explained, according to coverage by The Wall Street Journal's MarketBeat blog. However, as Barron's pointed out last month, Berkshire Holding Washington Post earns most of its revenue from its Kaplan private-education subsidiary, which could be worth more than the firm's current market cap alone.

Looking at WPO's 10-K from March 2, their Education division has shown steadily increasing revenues since 2007.  Meanwhile, the Washington Post's paid daily circulation declined to 615,628 in 2009 from 657,918 in 2007.  The MD&A's discussion reflects the firm's focus on shifting the firm more into the education services market, with mention of Kaplan's serial acquisitions and strong revenue growth.  It also mentions declines in print advertising revenue in 2009 (23% at the Post, 37% at Newsweek).

Indeed, WPO's management sees the handwriting on the wall.  Shareholders should welcome continued progress away from the print media business segment.  Weakness in print is clearly what's dragging down ROE at WPO!