Tycoon Research Weekly Market Advisory - Vol 1, Iss 7
Tycoon Research Weekly Advisory
December 17, 2004: Volume I, Issue VII
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
IN THIS WEEK'S ISSUE:
1. WATCHIN THE WHEELS GO ROUND AND ROUND: In the face of rising
interest rates already inflated American home prices are likely
to fall.
How it may be possible to hedge your home's paper profit without
ever renting a moving van.
--By www.Tycoonresearch.com
2. ANOTHER BRICK IN THE WALL: As part of it's stategic overhaul,
Blockbuster Video (SYM: BBI) has finally decided to eliminate the
late fees it's been charging it's customers.
Should Investors Make it a Blockbuster Night?
-- By www.tycoonresearch.com
**STOCKS MENTIONED THIS WEEK: Blockbuster (SYM: BBI), Netflix
(NFLX), Comcast (SYM: CMCSK), Viacom (SYM: VIA), Amazon (SYM: AMZN)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
1. WATCHIN THE WHEELS GO ROUND AND ROUND: In the face of rising
interest rates, already inflated American home prices are likely
to fall.
How you can possibly protect your home's paper profit without
ever renting a movine van.
--By www.tycoonresearch.com
YOU AND I HAPPEN TO SHARE A MUTUAL FRIEND.
No it's not Bob Jones.
Nor is it Karen Smith.
It's that person we both know who bought that second home ten years
ago for $250,000.
You know the one.
That self-proclaimed real-estate "mogul" who turned his
$250,000 into $1.1 million in a quick ten years.
The same one who now offers real estate advice at dinner parties to
other friends or ours who never ask for it.
Yea, that guy.
Well, for those among us tinted green with 2nd home real-estate
envy (I comfort myself with his stock-market envy), I have a
secret to share with you:
I might know a way for us simple folk to lock in the profit in
our primary home without even selling them.
That's right!
No listings, no moving vans, no real estate agent's.
Want to hear more?
Ok, Let me explain:
The people at the Chigaco Mercentile Exchange have reached an
agreement with Yale economist Robert J. Schiller's firm Macro
Securities to list Housing Options.
Yes, the same Robert J. Schiller who wrote a book boldly predicted
the demise of the stock market in APRIL 2001, EXACTLY ONE MONTH
BEFORE IT STARTED.
The same Robert J. Schiller whose been quietly mentioned as a
possible FED governer.
Yes, Mr. Schiller is back.
But this time it's not stock prices he's thinks are overvalued,
it's home prices.
And this time he doesn't want the publishing, he wants the trading.
You see, Robert J. Schiller has created a derivative instrument,
similar to an option index fund, that will track home prices
in "certain" (read: overvalued) markets (New York, Chicago, L.A.
etc).
So, if you live in New York and you think home prices
are going to drop, you could buy an option akin to a stock "put"
option and make money when they indeed go down.
Or, if you happen to be like my real-estate mogul friend (whom we
affectionately call "The Ronald") you could buy a derivative akin
to a stock "call" option and profit if home prices rise.
Margin trader meet Mortgage trader.
Peaceful homeowner meet Constant Anxiety.
Suprised that nobody thought of this before?
I was too, until I found out that HedgeStreet.com has a similar
product available now, although I hear that it isn't sensitive
enough to track price movements "properly."
Nope, for the real action we need to wait for Robert J. Schiller's
stuff to hit the streets which is expected in 2005.
But how do you know if either product is right for you?
Well, that is a bit more difficult to figure out, but I'll try to
give you your two cents worth.
Here's a short-hand method I use:
Home prices in many major metropolitan areas have risen an average
of 10.8 percent annually for the past 50 years.
That's right - your parents who paid $30,000 for that house in 1960
weren't just savvy real estate investors.
Nope, they had the patience to wait 34 years for that 10.8 percent
per year to compund before they pulled out their cool million.
Now for those of us who paid $300,000 ten years ago for a home:
At 10.8 percent per year your home should be worth appx. $835,000.
But home prices have risen a stunning 15.9 percent per year in some
areas, making many of our homes worth closer to $1.3 million.
So, with a little simple math, we see that many of us are sitting
on homes that are selling for $465,000 more than their historic
worth.
$465,000 in additional profit - nothing to sneeze at.
So I have a suggestion for the more enterprising homeowners among us:
If you won't leave your primary residence and believe it's overvalued,
buy one of Mr. Schillers "put"-type options (assuming it comes
out soon and meets our smell test).
This way you'll be betting that if/when home prices in your
neighborhood drop you'll make a $465,000 profit without ever having
to sell your house or move out!
But now you have a bigger problem....what to do with the money?
If you happen to think like my real-estate mogul friend, you may
ignore rising interest rates, the declining dollar and weak
housing starts to let it roll with real estate.
Of course history isn't on your side but what the heck?
Let's say that your money continues to compund at 15.9 percent
per year during the next 3 years.
That would turn your $465,000 into a cool $723,000.
Not bad for 3 years worth of work.
But alas, there is another option.
Let's say you happen to be like this humble author and believe
the following:
1) That Real-Estate is historically overvalued and with interest
rates rising is very likely headed a nasty fall.
AND
2) Stocks WERE overvaled and already had their nasty fall a couple
years ago.
If you believe that (and history suggests you should) than you
could take your $465,000 and invest it into stocks.
Now, if you happen to achieve OUR average rate of 38.7 percent
per year during the past 3 years (as opposed to the 15.9 percent
in real estate) than:
Instead of having $723,000 you'd have almost $1.3 million.
NOT BAD FOR 3 YEARS WORTH OF WORK, EH?
But the best part of all is that it doesn't cost you anything to
find out what stocks we like right now.
As a matter of fact, in addition to finding the right stocks,
you could read our new December issue to find out what stocks
you should avoid going into 2005.
And all you have to do is try the Tycoon Report free for 30 days.
Go ahead, make your parents in Florida proud.
Remember, you have nothing to lose.
Visit here now to learn more:
http://clicks.aweber.com/z/ct/?.VmegOoijHl5q3oJGo8w2w
--By www.tycoonresearch.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
2. ANOTHER BRICK IN THE WALL: As part of it's stategic overhaul,
Blockbuster Video (SYM: BBI) has finally decided to eliminate the
late fees it's been charging it's customers.
Is it time yet for investors to make it a Blockbuster night?
-- By www.tycoonresearch.com
YOU'VE RENTED THAT MOVIE BEFORE.
The one where that possee of Zombies lumber across the football
field, slowly swaying from left to right.
Gargling, "Brains...brains...brains...", the zombies first suprise
the innocent couple making out under the bleachers.
Than they make their way to the shopping mall, where they're
confronted by an astute security guard who manages to get most
of the screaming customers into the mall before slamming the
glass doors shut.
As the attractive blond woman tends to that weird "bite mark"
on the security guards neck, the customers watch horifically
as the zombies repeatedly and methodically ram their heads
into the glass, trying to break it.
It must be hard to be among the Walking Dead - not quite dead,
not quite alive...mumbling thorugh life trying to satisfy some
undying thirst (No hidden meanings here you Freudians)
But investors don't need to watch a movie to be scared away by
the Walking Dead.
One must look no further than Blockbuster (NYSE: BBI) to find
Wall Street's version of the same.
Instead of "brains" though, Blockbuster wants "money" - your money.
As a consumer you may or may not have a problem giving it to them.
I know I won't.
I could care less that they announced that they were dropping
late fees this week.
Way too little, way too late.
They lost me permanently two years ago after killing
me on late fees for years that I know I didn't owe them.
You know how their drop box "system" works.
You drop a movie into the box Monday morning before you
rush to work - well before the 12 o'clock deadline.
Although the movie is in their system on-time, the pimply-faced
manager doesn't scan it into the system until 2 p.m.
(technically the "next-day").
Your loved one returns that Friday to rent another movie and is
hit with late fees because it wasn't in the box in-time.
She pays it withought thinking and just assumes
I'm losing my marbles.
(Believe me folks they've done research on this dynamic.
At one point I got so paranoid that every time I dropped
a movie into the box I could have sworn that I saw Sumner
Redstones hand pushing it back).
But that's a story for later.
Anyway, I moved to smaller and better things, such as
Netflix (NNM: NFLX).
20,000 movies. No late fees. As easy to use as Amazon (SYM:AMZN).
What do the paranoid rantings of an ex-Blockbuster junkie have to
do with whether or not you should buy Blockbuster stock?
Plenty.
After getting tossed to the curb by Viacom (SYM: VIA) earlier
this year, Blockbuster began major strategic overhaul.
While I wrote about this at length in our October issue of the
Tycoon Report as a case study, here's a summation:
1. Instead of just renting videos theyir going to convert their
stores into "stores-within-stores for video gamers and
DVD buyers, traders and resellers."
2. Expand by making a major purchase, such as the proposed
(and likely) acquisition of Hollywood Video
3.And, as I mentioned before, they announced this week that
they were cutting back their late fees (which accounted for
$300 million of their $350 million in operating income
this year - do you need more proof of a conspiracy?)
All of these clever moves, while admirable, hide one simple fact.
That Blockbuster, no matter how hard it tries, still sells "Buggy
Whips" (video rentals).
And company's like Comcast (NNM: CMCSK), which was featured
in the September issue of the Tycoon Report, sell
"automobiles" (digital cable).
And when the automobile was introduced Buggy Whip companies didn't
last too long.
Sure, many of them tried to compete. Some began to sell bicycles,
others tried their hand at motorcycles.
In that context, it appears to me that what Blockbuster is trying
to do strategically, is akin to a Buggy Whip company trying to
create bicycles after Ford began selling cars.
Sure, it might work for a little while.
Heck, the stock may even "run" from single digits to low double
digits occasionally.
But, if you are like me, and you get the occasional call from that
hard working stockbroker who wants to take Blockbuster for
a spin with your money do what I do:
First - find an astute security guard and a gorgeous blond.
Second - begin to run as far and as fast as you can until
you get to the next shopping mall.
Third - lock the doors, buy some popcorn from Blockbuster,
and watch the Zombies pound their heads against the glass.
Remember, open minds mean larger wallets.
-- www.tycoonresearch.com
Want to Know Whether We Think Comcast (NNM: CMCSK) is sill
a good buy?
Visit us here and get access to the Tycoon Report free:
http://clicks.aweber.com/z/ct/?.VmegOoijHl5q3oJGo8w2w
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
December 17, 2004: Volume I, Issue VII
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
IN THIS WEEK'S ISSUE:
1. WATCHIN THE WHEELS GO ROUND AND ROUND: In the face of rising
interest rates already inflated American home prices are likely
to fall.
How it may be possible to hedge your home's paper profit without
ever renting a moving van.
--By www.Tycoonresearch.com
2. ANOTHER BRICK IN THE WALL: As part of it's stategic overhaul,
Blockbuster Video (SYM: BBI) has finally decided to eliminate the
late fees it's been charging it's customers.
Should Investors Make it a Blockbuster Night?
-- By www.tycoonresearch.com
**STOCKS MENTIONED THIS WEEK: Blockbuster (SYM: BBI), Netflix
(NFLX), Comcast (SYM: CMCSK), Viacom (SYM: VIA), Amazon (SYM: AMZN)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
1. WATCHIN THE WHEELS GO ROUND AND ROUND: In the face of rising
interest rates, already inflated American home prices are likely
to fall.
How you can possibly protect your home's paper profit without
ever renting a movine van.
--By www.tycoonresearch.com
YOU AND I HAPPEN TO SHARE A MUTUAL FRIEND.
No it's not Bob Jones.
Nor is it Karen Smith.
It's that person we both know who bought that second home ten years
ago for $250,000.
You know the one.
That self-proclaimed real-estate "mogul" who turned his
$250,000 into $1.1 million in a quick ten years.
The same one who now offers real estate advice at dinner parties to
other friends or ours who never ask for it.
Yea, that guy.
Well, for those among us tinted green with 2nd home real-estate
envy (I comfort myself with his stock-market envy), I have a
secret to share with you:
I might know a way for us simple folk to lock in the profit in
our primary home without even selling them.
That's right!
No listings, no moving vans, no real estate agent's.
Want to hear more?
Ok, Let me explain:
The people at the Chigaco Mercentile Exchange have reached an
agreement with Yale economist Robert J. Schiller's firm Macro
Securities to list Housing Options.
Yes, the same Robert J. Schiller who wrote a book boldly predicted
the demise of the stock market in APRIL 2001, EXACTLY ONE MONTH
BEFORE IT STARTED.
The same Robert J. Schiller whose been quietly mentioned as a
possible FED governer.
Yes, Mr. Schiller is back.
But this time it's not stock prices he's thinks are overvalued,
it's home prices.
And this time he doesn't want the publishing, he wants the trading.
You see, Robert J. Schiller has created a derivative instrument,
similar to an option index fund, that will track home prices
in "certain" (read: overvalued) markets (New York, Chicago, L.A.
etc).
So, if you live in New York and you think home prices
are going to drop, you could buy an option akin to a stock "put"
option and make money when they indeed go down.
Or, if you happen to be like my real-estate mogul friend (whom we
affectionately call "The Ronald") you could buy a derivative akin
to a stock "call" option and profit if home prices rise.
Margin trader meet Mortgage trader.
Peaceful homeowner meet Constant Anxiety.
Suprised that nobody thought of this before?
I was too, until I found out that HedgeStreet.com has a similar
product available now, although I hear that it isn't sensitive
enough to track price movements "properly."
Nope, for the real action we need to wait for Robert J. Schiller's
stuff to hit the streets which is expected in 2005.
But how do you know if either product is right for you?
Well, that is a bit more difficult to figure out, but I'll try to
give you your two cents worth.
Here's a short-hand method I use:
Home prices in many major metropolitan areas have risen an average
of 10.8 percent annually for the past 50 years.
That's right - your parents who paid $30,000 for that house in 1960
weren't just savvy real estate investors.
Nope, they had the patience to wait 34 years for that 10.8 percent
per year to compund before they pulled out their cool million.
Now for those of us who paid $300,000 ten years ago for a home:
At 10.8 percent per year your home should be worth appx. $835,000.
But home prices have risen a stunning 15.9 percent per year in some
areas, making many of our homes worth closer to $1.3 million.
So, with a little simple math, we see that many of us are sitting
on homes that are selling for $465,000 more than their historic
worth.
$465,000 in additional profit - nothing to sneeze at.
So I have a suggestion for the more enterprising homeowners among us:
If you won't leave your primary residence and believe it's overvalued,
buy one of Mr. Schillers "put"-type options (assuming it comes
out soon and meets our smell test).
This way you'll be betting that if/when home prices in your
neighborhood drop you'll make a $465,000 profit without ever having
to sell your house or move out!
But now you have a bigger problem....what to do with the money?
If you happen to think like my real-estate mogul friend, you may
ignore rising interest rates, the declining dollar and weak
housing starts to let it roll with real estate.
Of course history isn't on your side but what the heck?
Let's say that your money continues to compund at 15.9 percent
per year during the next 3 years.
That would turn your $465,000 into a cool $723,000.
Not bad for 3 years worth of work.
But alas, there is another option.
Let's say you happen to be like this humble author and believe
the following:
1) That Real-Estate is historically overvalued and with interest
rates rising is very likely headed a nasty fall.
AND
2) Stocks WERE overvaled and already had their nasty fall a couple
years ago.
If you believe that (and history suggests you should) than you
could take your $465,000 and invest it into stocks.
Now, if you happen to achieve OUR average rate of 38.7 percent
per year during the past 3 years (as opposed to the 15.9 percent
in real estate) than:
Instead of having $723,000 you'd have almost $1.3 million.
NOT BAD FOR 3 YEARS WORTH OF WORK, EH?
But the best part of all is that it doesn't cost you anything to
find out what stocks we like right now.
As a matter of fact, in addition to finding the right stocks,
you could read our new December issue to find out what stocks
you should avoid going into 2005.
And all you have to do is try the Tycoon Report free for 30 days.
Go ahead, make your parents in Florida proud.
Remember, you have nothing to lose.
Visit here now to learn more:
http://clicks.aweber.com/z/ct/?.VmegOoijHl5q3oJGo8w2w
--By www.tycoonresearch.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
2. ANOTHER BRICK IN THE WALL: As part of it's stategic overhaul,
Blockbuster Video (SYM: BBI) has finally decided to eliminate the
late fees it's been charging it's customers.
Is it time yet for investors to make it a Blockbuster night?
-- By www.tycoonresearch.com
YOU'VE RENTED THAT MOVIE BEFORE.
The one where that possee of Zombies lumber across the football
field, slowly swaying from left to right.
Gargling, "Brains...brains...brains...", the zombies first suprise
the innocent couple making out under the bleachers.
Than they make their way to the shopping mall, where they're
confronted by an astute security guard who manages to get most
of the screaming customers into the mall before slamming the
glass doors shut.
As the attractive blond woman tends to that weird "bite mark"
on the security guards neck, the customers watch horifically
as the zombies repeatedly and methodically ram their heads
into the glass, trying to break it.
It must be hard to be among the Walking Dead - not quite dead,
not quite alive...mumbling thorugh life trying to satisfy some
undying thirst (No hidden meanings here you Freudians)
But investors don't need to watch a movie to be scared away by
the Walking Dead.
One must look no further than Blockbuster (NYSE: BBI) to find
Wall Street's version of the same.
Instead of "brains" though, Blockbuster wants "money" - your money.
As a consumer you may or may not have a problem giving it to them.
I know I won't.
I could care less that they announced that they were dropping
late fees this week.
Way too little, way too late.
They lost me permanently two years ago after killing
me on late fees for years that I know I didn't owe them.
You know how their drop box "system" works.
You drop a movie into the box Monday morning before you
rush to work - well before the 12 o'clock deadline.
Although the movie is in their system on-time, the pimply-faced
manager doesn't scan it into the system until 2 p.m.
(technically the "next-day").
Your loved one returns that Friday to rent another movie and is
hit with late fees because it wasn't in the box in-time.
She pays it withought thinking and just assumes
I'm losing my marbles.
(Believe me folks they've done research on this dynamic.
At one point I got so paranoid that every time I dropped
a movie into the box I could have sworn that I saw Sumner
Redstones hand pushing it back).
But that's a story for later.
Anyway, I moved to smaller and better things, such as
Netflix (NNM: NFLX).
20,000 movies. No late fees. As easy to use as Amazon (SYM:AMZN).
What do the paranoid rantings of an ex-Blockbuster junkie have to
do with whether or not you should buy Blockbuster stock?
Plenty.
After getting tossed to the curb by Viacom (SYM: VIA) earlier
this year, Blockbuster began major strategic overhaul.
While I wrote about this at length in our October issue of the
Tycoon Report as a case study, here's a summation:
1. Instead of just renting videos theyir going to convert their
stores into "stores-within-stores for video gamers and
DVD buyers, traders and resellers."
2. Expand by making a major purchase, such as the proposed
(and likely) acquisition of Hollywood Video
3.And, as I mentioned before, they announced this week that
they were cutting back their late fees (which accounted for
$300 million of their $350 million in operating income
this year - do you need more proof of a conspiracy?)
All of these clever moves, while admirable, hide one simple fact.
That Blockbuster, no matter how hard it tries, still sells "Buggy
Whips" (video rentals).
And company's like Comcast (NNM: CMCSK), which was featured
in the September issue of the Tycoon Report, sell
"automobiles" (digital cable).
And when the automobile was introduced Buggy Whip companies didn't
last too long.
Sure, many of them tried to compete. Some began to sell bicycles,
others tried their hand at motorcycles.
In that context, it appears to me that what Blockbuster is trying
to do strategically, is akin to a Buggy Whip company trying to
create bicycles after Ford began selling cars.
Sure, it might work for a little while.
Heck, the stock may even "run" from single digits to low double
digits occasionally.
But, if you are like me, and you get the occasional call from that
hard working stockbroker who wants to take Blockbuster for
a spin with your money do what I do:
First - find an astute security guard and a gorgeous blond.
Second - begin to run as far and as fast as you can until
you get to the next shopping mall.
Third - lock the doors, buy some popcorn from Blockbuster,
and watch the Zombies pound their heads against the glass.
Remember, open minds mean larger wallets.
-- www.tycoonresearch.com
Want to Know Whether We Think Comcast (NNM: CMCSK) is sill
a good buy?
Visit us here and get access to the Tycoon Report free:
http://clicks.aweber.com/z/ct/?.VmegOoijHl5q3oJGo8w2w
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
posted by tycoonresearch at 6:36 AM
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