« January 2005 | Main | March 2005 »

WANTED: August 13, 1979 Business Week

Monday, February 28, 2005 | 07:50 AM

I am looking for a good (relatively clean) copy of the August 13, 1979 Business Week magazine. If anyone has located one of these, please contact me with sales information.

Bear_marketHere's why: Hanging on my office walls are several infamous magazine covers from days gone by. On the flip side, I tape a chart of the Dow over the three years following publication date. The exercise is rather instructive.   

I've discussed this many times over the years: Most comprehensively, in the Contrary Indicators of 2000-03 Bear Market, more specifically in the The Magazine Cover indicator, and with actual examples in the Februrary 2004 Uh oh: Forbes Cover Screams "Tech is Back!" and   Uh-Oh: Apple on the Cover of Fortune, as well as a rather frivolous but prescient political example Howard Dean and the magazine cover indicator

Life_inflationWhat I am missing from my collection of magazines and/or covers is the August 13th, 1979 and Business Week Magazine's cover story featured "The Death of Equities". The cover is a photo of a downed paper airplane fashioned from a stock certificate. The sub-caption decries "How inflation is destroying the stock market." 

The downed paper (stock certificate) airplane in the picture was actually surrounded by the crumpled remains of other "crashed" paper airplanes. An excerpt of the article reads:

Wall Street looks beyond stocks; Moving into options, futures, buying into insurance

The masses long ago switched from stocks to investments having higher yields and more protection from inflation.  Now the pension funds--the market's last hope--have won permission to quit stocks and bonds for real estate, futures, gold, and even diamonds.  The death of equities looks like an almost permanent condition--reversable someday, but not soon.

Beyond_bearPlease put "WANTED: August 13, 1979 Business Week" in the subject line . . .


UPDATE:  FEBRUARY 28, 2005 5:29  PM
Most of the full text of the article can be seen here:

Business Week's "The Death of Equities" Revisited

Monday, February 28, 2005 | 07:50 AM | Permalink | Comments (8) | TrackBack (1)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Back from California

Sunday, February 27, 2005 | 10:04 AM

Back from a week in La Jolla! How on Earth do you people out in California ever get any work done?

I read one of the best Market related books I have ever come across, and will post a review later this week. Oh, and it was originally published in 1924. 

I'll also post some photos at essays & effluvia later, and have some fresh content shortly . . .

Sunday, February 27, 2005 | 10:04 AM | Permalink | Comments (4) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Want to Be a Trader?

Saturday, February 26, 2005 | 09:55 AM

Another good RM column from Swing Trader author Alan Farley; Here's an excerpt:

"Ready to take the plunge and try your hand at the trading game? If so, you have a lot of work to do. This is an obsessive discipline that rewards its enthusiasts in many ways beyond cold, hard cash. But you'll also discover it's the toughest thing you've ever done. What's the best path to success for new traders, and how can they shorten the learning curve? I've put together this checklist to address many of the tasks required to get set up and ready to go."

Commit capital. Figure out how much cash you need to put into your trading account. This should be discretionary capital you can lose without a major disruption to your lifestyle. Trading is harder than it looks, and the odds you'll succeed are a lot lower than you think.

Pick a trading strategy. Then learn it inside and out. I like swing trading because it holds positions longer than daytrading, without the slow crawl of investing. But the markets will accommodate a wide variety of tactics, so find the method that matches your personality and lifestyle.

Choose a trading style. Decide whether to pursue a discretionary or systems trading style. Discretionary traders watch the markets and pick their entries through real-time analysis. Systems traders build automatic rules and backtest them to see how they perform in different conditions.

Experiment with different ideas.
You won't be locked into your initial trading strategy for life, so experiment with a broad variety of ideas as your knowledge and experience grow. Sooner or later, the market will tell you what works best, given your unique circumstances.

Find a good broker. A good broker means the difference between lost opportunities and substantial profits. Most new traders need to choose between a classic discount broker and a direct-access broker that offers execution through electronic communication networks (ECNs).

Perform a reality check. Ask yourself if you have the ability or desire to watch the real-time markets during the trading day. Those who want to follow every tick do better with direct-access brokers, while end-of-day traders with responsibilities outside the markets will find that a discount broker meets their needs.

Get an education. Now you're all set up and ready to go. This is where the trouble starts, because it's easy to enter positions without a trading plan that works. So take a giant step back and get an education in technical analysis before you make your first trade.

Read some books. Three classic trading books to start with are Trading for a Living by Dr. Alexander Elder; Technical Analysis of Stock Trends by Edwards and Magee; and Technical Analysis of the Financial Markets by John Murphy.

Buy some software. You don't have to spend a fortune to watch the markets. There are free alternatives provided by your broker, as well as inexpensive charting programs that won't empty your wallet. Two solid choices for budget-minded traders are StockCharts.com and Medved QuoteTracker.

Learn to lose gracefully. Trading isn't the same discipline as technical analysis, and it will take longer to master than all of those charts and patterns. It also requires real-life experiences with cold, hard cash. And many of these will be painful and costly.

Avoid paper trading. There's no substitute for placing your own capital at risk. Many educators tell students they should paper-trade before taking real market positions. I don't agree with this at all. Simulated trading doesn't show how the markets really operate, and it also builds false confidence.

Trade small.
The trick is to keep position size very low for a long time while you learn how the markets operate. In fact, it's best to take positions of 100 shares or less for at least the first year. This way you'll experience many profits and losses, but control the emotional swings that can undermine your growth.

Use only limit orders. You choose your entry price in advance with this strategy, but you risk getting shut out of the trade. It's a far better approach for newbies than a market order that carries you into a position at the best price available at the time.

Do your homework. Think about why you want to own a stock, or sell it short at a particular price level. This is the first step to mastering the market. New traders get filled at the worst possible prices when they use market orders. This happens because they're chasing stocks around mindlessly, buying many highs and selling many lows.

Forget making money. Learn how to trade well, and don't worry about making money. This is tough, because greed is an overriding influence in the decision to trade. But the markets aren't printing money despite what you may believe. And they won't reward your efforts until you learn how to manage positions effectively.

Respect your opponent. Newbies get so blinded by the potential rewards that they forget the substantial risks. The market is a giant chessboard in which your opponent shows no mercy, so you have to be up to your game at all times. It's all about discipline, and the only way to get into the groove is by forgetting about the goal entirely.

Lower the noise level. Trading isn't a group sport. Avoid the chat rooms and stock boards at all costs, because it's your money at risk, not theirs. Successful traders develop their own market approach, then apply it religiously each day. This takes a lot of time, because the market is a complicated animal indeed.

Yet another example of uncommonly good common sense advice . .  .


So You Think You Want to Be a Trader?
Alan Farley
RealMoney.com, 2/10/2005 11:00 AM EST

Saturday, February 26, 2005 | 09:55 AM | Permalink | Comments (0) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Political Futures, Revisited

Friday, February 25, 2005 | 09:29 AM

There's an interesting collection of links and data points over at Chris. F. Masse's blog, looking at the most memorable moments in the field of prediction markets in '04.

Readers of this blog know that I find most of these exchanges to be of little predictive value; There are simply too many examples where they are wrong, and by quite large margins, to place much faith in their prescience.

I come in for some razzing for my own views of inefficient markets.

As the 2004 Presidential election futures contracts revealed, traders of political futures followed the polls rather than led them. Indeed, on Election day, futures traders incorrectly surmised a Bush defeat due to early exit polling data. Bush contracts dove to 27 cents, while Kerry's skyrocketed.

I'm not familiar with Masse's politics, but he seems to have given a surprsing amount of weight to  the Don Luskin theory that George Soros was manipulating political futures contracts. How is it that some purchases are purchases, while others are manipulations never gets satisfactorily addressed, but that is irrelevant, as I am unaware of any conclusive evidence that Soros ever made any future trades.

While we're on the subject of paranoid flavored ravings, I note that several other commentators also feared that Soros was going to 1) crash the dollar; 2) crash the stock market; or 3) spike oil prices -- or other nefarious acts pre-election.

I surmise it was political insurance in case their man lost.

The great irony of this discussion is that part of the reason I have such low expectations for political futures is due to Soros' theory of Reflexivity -- that markets themselves can affect the fundamentals of the economy:

"The generally accepted theory is that financial markets tend towards equilibrium, and on the whole, discount the future correctly. I operate using a different theory, according to which financial markets cannot possibly discount the future correctly because they do not merely discount the future; they help to shape it. In certain circumstances, financial markets can affect the so-called fundamentals which they are supposed to reflect. When that happens, markets enter into a state of dynamic disequilibrium and behave quite differently from what would be considered normal by the theory of efficient markets. Such boom/bust sequences do not arise very often, but when they do, they can be very disruptive, exactly because they affect the fundamentals of the economy.”

I find Soros' thesis quite compelling; Its consistent with my own critiques of the efficient market hypothesis, as well as the political futures exchanges. (Remember Dean in Iowa).

As to the hubris-filled chest-pounding over at Chris. F. Masse's blog, consider the following:  I expect to wrong in every single prediction, trade and investment I ever make. No, its not a function of poor esteem or lack of confidence; rather, its a way to ensure that stop loses are strictly adhered to. The less ego a trader wraps up into any one position, the easier it is to follow the discipline and get out of Dodge when required.  Expecting to be wrong at the onset removes the emotion from the sell. Its part of a bigger plan. Mr. Market demands humility from his participants -- get some, or be humbled the hard way.

I see none of that lack of arrogance amongst the prediction markets crowd. Such is life in academia, where you can backtest to you heart's delight, rather than step onto the field of battle.

Theorize this! One of these days, I may have to issue a challenge to these weenies -- real money, real trading, real gains and losses. I'd be curious if they would be willing to step it up . . . 

Friday, February 25, 2005 | 09:29 AM | Permalink | Comments (10) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

How to Use Earnings as a Buy Signal

Thursday, February 24, 2005 | 02:30 PM

I've been having an interesting discussion with my friend Tony Dwyer of FT Finacial over the impact of year-over-year changes in S&P500 earnings on subsequent market performance. TD is a savvy market technician whose charting work is both straightforward  and yet different enough from the mainstream as to be value added and worthwhile.


click for larger graph

Nyt_06strachart"Since 1927, according to data from Ned Davis Research of Atlanta, the market has performed best during quarters when earnings are as much as 25 percent below year-earlier levels. When earnings are growing strongly, as many expect them to do this year, the market has tended to have below-average performance."

A recent study confirms this: "Stock Returns, Aggregate Earnings Surprises, and Behavioral Finance," by S. P. Kothari, an accounting professor at the Massachusetts Institute of Technology; Jonathan W. Lewellen, an M.I.T. finance professor; and Jerold B. Warner, a finance professor at the University of Rochester, has been circulating as an academic paper since last year.

I actually disagree (in part) with the explanation why the overall market "fails to react more favorably to rapidly rising earnings." The profs argue that earnings growth itself is not bearish, but rather the problem, is that "growth usually leads to higher interest rates. When rates rise, the net present value of future earnings, cash flow and dividends automatically falls, and this generally causes the market to decline."

I see a behavioral explanation rather than an interest rate when - but they are two sides of the same coin. To me, when earnings are plummetting, its because the economy is in or about to enter a recession. Stocks have likely already had a big run up in the pre-recession period. So stocks get dumped in this period. Think 1991 or 2002. 

The Profs focused on the powerful role of interest rates, as it relates to stock market's valuation. They wrote that Market tends to perform best when aggregate corporate earnings are falling -- which  typically occurs when rates drop like stones. Again, consider what the sentiment is like during these periods.

Ned Davis Research determined that "since 1927, the Standard & Poor's 500-stock index has risen at a 28 percent annualized rate - nearly triple its historical average - during quarters in which earnings were 10 to 25 percent lower than where they were in the periods a year earlier."

Lastly, NDR noted that the bullish effect vanishes, when earnings are falling too much. That's typically because the economy is in the earlier stages  of a longer contraction. During those quarters when earnings were more than 25 percent below their year-earlier levels, the S.& P. 500 declined at a rate of 28 percent, annualized (since 1927).

The academics explained it thusly: "The positive effects of lower interest rates, though strong enough to overcome the negative consequences of more modest declines," he said, "are unable to overcome them when earnings are falling by a huge amount."

Kinda like 2000?

The key to this lies with psychology: Perception versus reality. When year-over-year earnings improve from awful to merely bad, the headlines are still extremely negative. But this is the earliest partof the recovery, and no one -- at least, almost no one -- has recognized the changing character of the economic cycle. Hence, event though the mood is palpably morose, that's when you gotta buy 'em: Not only when everyone hates 'em, but when we see quantititative proof of the cycle turning.

Admittedly, this is easier said than done.

If Profits Grow, How Can the Market Sink?
Mark Hulbert
NYT, February 6, 2005

Thursday, February 24, 2005 | 02:30 PM | Permalink | Comments (2) | TrackBack (1)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Red Flags

Wednesday, February 23, 2005 | 11:57 AM

Hewitt Heiserman, author of "It's Earnings That Count," (mentioned previously), weighs in on the exit strategy discussion from earlier. While I have a few rather different strategies use in temrs of price action, I particularly appreciate Hewitt's Fundie metthods of getting out of dodge:

Stock price Sell 50% if stock drops 15% below purchase   price; sell other 50% if drop 25%             
  Write down in notes sell points                 
Income statement Earnings announcement falls short of consensus                
  (studies indicate the effects for as long as a year   after the announcement)             
  Last two quarterly earnings growth slow                
  Other revenue rises without explanation (especially   if company uses distributors for international sales)          
  Same store sales down 3% in last quarter                
  New store results are disappointing                 
  Earnings miss unless a one-off, temporary problem   (the first disappointment usually followed by another miss)         
  Company announces worse-than-expected earnings               
  Options, additional share offerings, conversion of   convertible bonds result in massive dilution for existing stockholders         
Strategic Big price cuts on flagship products which does not   result in market share increases            
  Company embarks on acquisition spree                
  Company buys another company in an industry they   know nothing about             
  Company using acquisitions to bolster revenue growth               
  Change in business model; e.g., switch from   all-company-owned store structure to franchise           
  Market is closing; e.g., Dayrunner organizers when   PDA's became popular             
Valuation P/E ratio of 30, when most optimistic projections   of earnings growth are 15-20% for next few years           
  Company sells at higher P/E than its growth rate?                
  No room for minimum 5% annual returns next 3-5 years               
  Is P/E ratio greater than 1.5x the market's   multiple?               
Technical Relative price strength trending down                 
  Company in a lagging industry as measured by   industry relative strength (source: IBD)            
  No support at 50-, 200-day moving average                
  Is company breaking down badly and not rallying   well vis-à-vis the S&P 500, Dow and Nasdaq?           
  (William O'Neil 4/04 issue of AAII Journal found   when market leader finally tops, it will decline avg. 75%.)          
  Money flow or accumulation/distribution index   deteriorate               
  Compare a stock's money flow on a relative basis   and compare its current level to historical norms (Bloomberg, BigCharts)        
  Industry market leaders are topping out                 
  After months of significant price advance, a stock   runs up faster than normal in just one or two weeks           
  Stock shows downside gaps, usually indicating many   institutional sellers present.             
  Stock exhibits deteriorating relative strength,   suggesting the stock is beginning to lag the overall market.          
  Earnings fall short of expectations or fundamental   strength deteriorates.             
Stock Splits for the second time in less than 12 months                
  Secondary offering priced at discount to current   stock price and carries warrants that can dilute EPS even more         
  (Sharp underperformance of companies following   secondary issue)              
  Private offering in convertible notes because it   dilutes earnings per share             
  Company with large cash flow keeps buying its stock   back at rich multiples as growth in organic revenue slows         
Management Best story is stock performance rather than   business.               
  Top executives and some key employees go to rival   firm               
  New management team that hasn't proved its bona   fides               
  Business conditions described as   "challenging"                 
  Investment banker hired (are they trying to protect   their cushy jobs?)              
  Company files extensions for reporting earnings                
Other New competitors entering the market?                 
  Customers changing spending habits?                 
  Price war erupted in industry?                 
  How are other companies in same industry doing?               
  (Red flag when one company in industry doing much   better than its peers)             
  Cut losses short, as they can be overcome. Big   losses do severe financial/psychological damage that are harder to recover   from.        
Stores Decline average weekly stores sales                 
Other: Management significantly reduces sales, earnings   forecasts              
  Competitor says business is tough                 
  Negative same-store sales growth                 

Wednesday, February 23, 2005 | 11:57 AM | Permalink | Comments (2) | TrackBack (1)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Exit Strategies

Wednesday, February 23, 2005 | 08:59 AM

I wanted to take a moment to talk about exit strategies. There's alot more to this than a brief blog post has room for, so I plan on addressing this in a subsequent column.

Lets look at Apple, circa 1999 and 2005. It demonstrates two common mistakes investors make -- they don't hold on long enough, or they hold onto a stock too long.

If you bought Apple when co-Founder Steve Jobs returned in the late 90s, the stock rode the newly introduced iMac from $13 all the way to $150 (split adj). If the phone call questions I got on AAPL were representative of many 90's buyers, than too many investors rode it right back down to the teens.

Fast forward a few years: In 2003, Apple is trading in the mid-teens -- a coupla bucks over cash on hand. I spoke about the stock to many investors (insitutional and otherwise). Again and again, I saw people who owned this in the teens sell it in the $20s or at $30.

Why?  "Cause its a winner in a tough market, and we need to lock down some profits" was the answer, again and again.

That's essentially 2 mistakes in one: 1st, on a relative strength basis, you should hold onto strong stocks in a week market. 2nd, selling something merely because it went up is no strategy -- its a guess. I certainly understand when a fund manager has a position which balloons to too big a percentage of their holdings, so they must do a little trimming; But merely saying "I'm selling this cause its gone up" is no strategy at all. Even worse is "I'm shorting this because its been so strong" ala the home builders. Ouch . . .

I'd be curious what rules other fundies/technicians use for sells. I'll start with two basic ones:

Rule 1) if a stock breaks its uptrend, I'll sell.

Rule 2) on a runner like Apple, if it gives back 20-25% of its profits, it is a sell. If you own AAPL at $15, and now its $85, you have 70 points in gains. A sell off of 15 points, and I'm likely gone.

Any other exit strategies out there?

Wednesday, February 23, 2005 | 08:59 AM | Permalink | Comments (3) | TrackBack (1)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Number of Legal Downloaders Doubled in 2004

Tuesday, February 22, 2005 | 01:46 PM

The Online Reporter is a terrific Tech/Media/Entertainment journal that does a grat job covering the intersection of these areas. If you are int he business of following these firms, do yourself a favor and subscribe tot hem (that's an unsolicited endorsement).

Here's their latest take on legal digital downloading:

Ipsos-Insight has released the findings from its most recent TEMPO quarterly study of digital music behaviors - and the results should please the record industry. The study found that as of December, some 47% of US music downloaders age 12 and older - 24 million people - had paid to download music files off the Internet. That's more than double the 22% who had done so a year earlier and five times the number who had paid to download music in December 2002.

According to the TEMPO research, folks in the 25-54 age range are the most likely to have paid to download digital music, with 50% of 25-to-34-year-olds and 53% of 35-to-54-year-olds having done so. Additionally, the younger crowd, those aged 12 to 17, are starting to pay for the tunes they download as well. Some 50% of that group says they've paid for digital music, which Ipsos-Insight says suggests that recent efforts to promote pre-payment methods to teens are proving successful.

"Over the past year, the online music market has proved that it is growing into a formidable music distribution channel marked by rapid growth and increasingly dynamic usage levels," said Ipsos-Insight VP and TEMPO author Matt Kleinschmit. "While fiercely competitive online music services and download stores undertake high-profile efforts to attract consumers to their respective sites and business models, it is clear from these data that consumers are increasingly experimenting with legitimate online methods of music acquisition."

The battle of the sexes is pretty much a draw these days, with 49% of male downloaders and 45% of female downloaders paying to acquire digital music. This is quite a different scene than a year ago, when only 16% of female downloaders and 24% of male downloaders were paying to do so.

For the first time, the study found equal shares of the US population downloading from fee-based and P2P download sites - 11%. This, according to the research, was driven both by the increase in fee-based downloading and by gradual declines in file sharing among the US population over the past two years, down from 13% in December 2003 and 19% in December 2002.

"This marks a potential turning point in the evolution of digital music, as the proportion of Americans using file-sharing services and fee-based services has intersected for the first time," said Kleinschmit. "This is significant both functionally and symbolically, as operators of fee-based digital music Web sites are finally seeing American downloaders embrace their services, and the broader industry can now see empirical evidence that fee-based online content can survive and even flourish while non-licensed content remains available. This was thought to be impossible only a few years ago - before convenient, flexible and content-laden consumer-focused online music services, a growing population of portable device owners, and continuing enforcement efforts nurtured this nascent marketplace.

Of course, downloading doubling  reflects little more than the success of Apple's design and marketing strategy, and has precious little to do with the music industry. But hell, they'll take it.


February 19-25, 2005 - Issue 432
Published weekly by Rider Research

Tuesday, February 22, 2005 | 01:46 PM | Permalink | Comments (0) | TrackBack (2)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

The Ugly Divorce of FM Radio and the Music Industry

Tuesday, February 22, 2005 | 08:46 AM

Excellent discussion over at A/V revolution by Jerry Del Colliano on the The Ugly Divorce of FM Radio and the Music Industry.

My favorite quote perfectly sums up what's been long with the recording industry forever:

"The record industry hasn’t had it as good as radio in recent years. While radio was booming in the late ‘90s, the music business was dealing with new technology the only way it has historically known how to do – by fighting anything new."

The rest of the piece is filled with arguments that readers of this blog will surely be familiar with. Its well worth the read.

Here's an excerpt:

"The value proposition of selling an album with one or two hit songs on a $16.95 disc is no longer competitive with the music consumers, especially the all-important Gen Y audience. DVD-Video movies cost a little more than $20 and offer an entire feature film containing an audio and video experience that lasts over two hours. Instead of embracing music in surround sound and higher resolutions at lower prices, the music business is now trying to reinvent itself by selling songs one at a time on legal download sites. Some progress is being made on that front, but it will always be competing with free downloads – a tough battle. Until the music business addresses increasing the quality and the value of their discs, they will be losing market share year after year as they cling on to the antiquated compact disc and continue to believe in the questionable download model.

Hollywood movie studios, in contrast, are getting ready to sell all of their catalog movies all over again on either Blu-Ray, HD-DVD and.or Windows Media 10. High-definition video is a good enough reason for mainstream consumers to buy their movie collections all over again. Little mention of how to sell music on Blu-Ray or HD-DVD has been made public, despite the format’s likely launch later in 2005."

Good stuff. Glad to see that many of the non-mainstream positions we have been staking out are penetrating  into the rank and file. Is it only a matter of time before someone in the industry figures out whats wrong and how to deal with technology -- or am I too optimistic?

What's a solution to the industry's woes? How about the recording and broadcast industry stop working against their own interest:

"The record business is unquestionably its own worst enemy, but it needs to look to their former best friend, FM radio, as a way out of their troubles. They need to find a way to sell music on discs that are an excellent value and can compete favorably with HDTV-oriented discs that are only months away from hitting store shelves with two-hour-long movies configured for consumers’ enjoyment. Radio offers free advertising - worth hundreds of millions of dollars per year - to the music business, which is essential in breaking and developing new artists, even with new broadcast technologies like Internet and satellite radio. If major labels focused more on creating and nurturing talent, as they did when they were most successful, and less on fighting over signing high-priced established bands and has-been solo artists, they would be able to offer radio the better content they crave. More records are guaranteed to be sold. More people would tune in for morning and afternoon drive radio. Radio and the music business would both win, no matter what the new technology challengers do."

We've been discussing this for what seems like forever. Glad to see someone else picking up the baton . . .

The Ugly Divorce of FM Radio and the Music Industry
Jerry Del Colliano
The Audio Revolution, February 17, 2005

Tuesday, February 22, 2005 | 08:46 AM | Permalink | Comments (1) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Why I Don't Do Social Networking Sites

Monday, February 21, 2005 | 04:00 PM

Time for a bit of a rant:

"Its not you, it's me"


So said George Costanza, and I second the notion. Please do not be insulted when I turn down your request for one of the social networking sites. Really, "its not you, it's me." 

Actually, its neither of us, but that's hardly amusing. Several times a week, I get an invite to some social networking site: Plaxo, Friendster, MySpace, Orkut, 43Things, Spoke, Leverage Software, Zero Degrees, SelectMinds and LinkedIn.

Kevin Bacon may be six degrees away from everyone else, but I don't need to be. More importantly, I do not want to entrust my data (precious data) to a start up firm -- or Microsoft for that matter. (Google, maybe -- but thats where I draw the line).

Indeed, I refuse to participate in any and all of these sites, and with good reason.


I think its safe to say that the marketplace does not have space for 9 (nine!) of these companies. And I probably missed some. Eventually, there may be some consolidation -we see it starting already. That means two things:  One, I have no idea where my personal data and address book will ultimately end up, what company or person; and B) the liklihood is that at least 2 but more likely 3 and probably 4 and maybe even 5, and quite possibly 6 of these firms will go belly up, the long dirt nap, buy a farm.

And when that happens, the VC's investments will be worth zero, nada, zilch, and they will seek to recoup something, anything, even just pennies on the dollar (pretty please?). And then the vultures will come in: strip the offices down to the bare walls, sell everything thats not moving for pennies on the dollar. Aeron Chairs (ha!), PCs, desks, wall cabinets, EVERYTHING.

And when that happens, when the Bankruptcy Judge brings down the gavel, the most valuable asset these companies have -- all of my personal info, plus all of your contact info, plus every person you know's name/number/email address -- will be sold to the highest bidder. They may promise that they will protect your data, but I simply do not believe they can control anything post banckruptcy.  The contracts are ignored.

And I'll bet you dollars to donuts that the buyer will be a bigtime spammer. That's right: I bet that some of the data that you have so willingly forked over to these new social networking firms will be sold to a spammer. That's why I suggest you update your own damned address book.

No thanks . . .


UPDATE   March 27, 2005 5:24pm

This spam scam is circulating, preying on  (what do you know!) Social Networking sites:

Subject: Ringo

Finally got around to checking this, and it may be of interest to others.  It came from a friend a month or so ago, and I haven't had a chance to speak to him yet, but it's clearly something that should be avoided.

This falls in the same category as e-cards.  Seems like a nice easy and convenient service, but when you "send" the e-card, you're giving out somebody's email address to a big black hole.  Who knows how many places the address and other info are stored, or who has access to it..

This Ringo thing is a spammers mother lode -- an organized, up-to-date email database.  We have enough problems with private info being hacked into, without offering even more of it up for grabs.  It doesn't take much effort to keep an address book up to date, or to notify friends of address changes; and nobody else needs to get involved.

Just a FYI,


I'm updating my address book.  Please click on the link below and enter your contact info for me:


I'm using a new, free service where I put in my contact info for you, you put in your contact info for me, and everyone stays up to date automatically.  It's surprisingly easy and useful.

It was inevitable that the spammers and scammers would get around to spoofing/phishing via these networks.

Monday, February 21, 2005 | 04:00 PM | Permalink | Comments (13) | TrackBack (4)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      


Complete Archives List



Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:

Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo



Odds & Ends

Site by Moxie Design Studios™