Thom Calandra: Predictions, forecasts and Melt-UPs
Guru comes clean on quants, angels and the loonie
By Thom Calandra
Copyright © 2007, Thom Calandra
ALL RIGHTS RESERVED BY AUTHOR
TIBURON, Calif. -- Good morning again, Voldy Morts.
Do you really believe that it has been almost ten years now since I
co-founded Marketwatch.Com. And that it was several years since we coined
the term "Melt-UP" during those heady times? There we all were happily
scoping out gold and copper and genomic tools, and several other hotties way
before they became hot, and incredibly there were had millions of people
around the world hanging on my every word. Then, I got my deserved
half-million dollar comeuppance from government agents who are paid to
protect investors.
But I can say now that in the four years I have gone missing (writing my
novel Pablo By Numbers and developing Thom.Calandra.com ), not one former
subscriber of mine, not one audience member, and there were supposedly
millions of them for The Calandra Report, Thom Calandra's StockWatch and the
TV and radio reports I did for CBS and the Financial Times, NOT ONE has ever
complained they lost money following my advice. Hundreds of folks have
contacted me via phone, fax and email to say they made money. Do you believe that?
I donšt. If you are out there, I'd like to know, please.
-- Enough nostalgia. Thom, what have you done for me today, right? So,
today the topic is what are some of the compelling things for investors to
watch in the markets, and what does any of that have to do with what I
learned as Icarus flying too close to the sun?
-- Most of us still have no idea when a stock is too expensive and when it
is too cheap. We also seem to avoid forward thinking. For example, Avian flu
will become a pandemic at some point in the next 18 months. I'm sorry about
that, but there it is. In some parts of the world, bird flu will become
easily communicable among humans. In strictly investment terms, Avian flu
developers and pandemic-related life science companies are dirt cheap right
now. Perhaps you should be looking to find the avian flu developer whose
backers include some of the smartest private equity and venture capital
folks in this country. And yes I own it, and paid more for it than it is selling for now!
-- Very little has changed since the peak of the Melt UP. In fact, we are
still melting UP in some areas, most notably petroleum prices, lumber,
metals and MY landscaping fees.
-- There is no such thing as smart money. There is only long-term money and
short-term money. Find the folks who are willing to back an investment for
five years, or more, and you'll find the closest thing to smart money. There is also
funny money, and for more on that you'll have to read the novel Pablo By Numbers,
which will be complete by early 2008.
-- Penny stocks -- as in developing companies that trade for $50 million of
market capitalization and less -- are the most likely way to earn enough to
pay state and federal taxes, book a return worthy of a venture capitalist,
fund your next generation's inheritance and retire to Tahiti. Just do your
homework, which is something very few American investors, like their
children in school I guess, want to do each evening.
-- Angel investing will create and destroy trillions of dollars of wealth
in the next several years, rewarding those who do their homework and
punishing those that do not. For example, Web 2.0 is a scam. There is no Web
2.0 or 3.0. It is all seat of the pants. The lap toppers creating successful
next-generation technology and media companies are the same people who
spawned Internet companies in the mid-1990s. They are flying by the seat of
their pants, mashing up ideas that traditionally did not and might still not
go together. Maybe one in four of the new breed will make money, and perhaps
one in 10 will dominate their market segment.
-- Right now, I own three 'angel' investments, me and my family that is. We
own tiny stakes in music and video mash-up FlipTrack.com, in angel
networking channel Vator.TV and in Robert Friedland's nickel, platinum and
gold mining interests in Africa. They are privately held. Was I insane when
I signed the checks? None of them are liquid! (Eyeore to Pooh Bear: 'I said
ouch.') Is one of these a one-in-four, or a one-in-10? There is no way of
telling just yet. Which is why I said ouch.
-- Falling interest rates very well could spark another real estate boom in
cities around the world, but not until the commercial real estate market
gets whacked. Way too many inflated office and warehouse properties are
still out there, financed by 'iffy' boutique lenders.
-- Investors still cannot reach their stock brokers on the phone. Most
Americans do not know how to buy a pure commodity. Or a bond. Most Europeans
and Asians do. Most Americans are still still paying too much in fees to
undeserving financial managers.
-- Consumers want the best products at the cheapest prices, and workers want
the best wages for the least work. Except if the worker lives in China or
someplace like China. That is why China is winning. Guatemala looks pretty
good from here.
-- The torpedoed U.S. dollar is a very good thing. It means the world's
fiscal systems are working as they were designed to. The dollar, by the way,
will keep falling as long as oil keeps rising. T. Boone, he was right.
-- Most Americans have no idea the Canadian dollar is worth more than the
U.S. dollar for the first time in half a century or so. Most Canadians do.
-- The media, not just the financial media but all media, are not doing
their primary job, the one we all learned in J-school: report news, as in
new stuff, new ideas, new events, new people. It's a crime really that most
of the media, even new media, report old news and views. The pack mirrors
what the human race is all about: very few of us are cool enough, smart
enough, brave enough, to be out in front, leading the parade.
-- Technically, Jeff Skilling and others do not deserve the sentences they
got for their white collar crime. The sentences are twice and three times as
harsh as any existing federal guideline for incarceration. Tell me the
country that locks up its smartest wealth producers for the rest of their
lives and I will show you either a dictatorship or a very stupid country.
-- Most CEOs are not crooks. But nearly all CEOs are the greediest human
beings at their company. CFOs, too. That's why they get all the stock
options, isn't it? In most cases, these executives deserve what they earn,
including the headaches and the hemorrhoids.
-- Nearly all professional investors talk their own book and are not the
best sources of information about a company. Ditto for CEOs, and CFOs. And
most but not all venture capitalists. One of the few honorable and reliable
barometers of value in the market today is the private equity profession.
They have to get it right. Another are hedge funds -- but only those that do
not talk about their investments and truly understand the leaders in their
specialty investment areas, understand them well enough to have home
telephone numbers and personal e-mail addresses. Everyone else, with the
possible exception of one or two very perceptive newsletter writers, is full
of beeswax.
-- I do not believe in quantitative tools or stock charts for measuring
potential stock market success either, regardless of what that talented
actor Mr. Josh Brolin says about market probability. Still, at the present
time, who knows, maybe I could use a quant revision? I/we own several stocks
that are quickly becoming vanishing acts and soon will marquee at the
circus, with the clowns, that's how invisible and laughable they are
looking. So what do I know?
-- News Corp. will squander its most valuable part of Dow Jones, its online
properties, in particular MarketWatch.com, unless it turns its financial
broadcast properties into one seamless, entirely interactive and online
media experience for investors, all of it for free and powered by advertising. Forget subscriptions.
-- The prices of gold, platinum and copper, among other commodities, will
double in the next year, and double again within three years.
-- Finally, there are more hidden gems in the stock market today than in
the fattest pipe of kimberlite a geologist can find in South America. There
are hundreds and hundreds of life science and technology companies, for
instance, that are selling for pennies that should be selling for quarters.
A handful of energy companies as well. Find out who the buyers are today,
and talk to them. I'm one of them, and so far I am dead-in-the-water WRONG.
I am a buyer of avian flu, of energy management companies and of cancer
diagnostic and stroke treatment developers. They are all dirt cheap. They
are all doing good deeds for their industries and their social circles, with
the exception of making money. I paid more for their shares than they are
selling for now. I do not mind a single bit. In fact, I welcome the
destruction of wealth in these "names." It means I can buy more at cheaper
prices.
So doc, this is supposed to make me feel better? Jimi said, Angel came down
from heaven yesterday/Stayed here just long enough to rescue me. Harpo said,
Honk honk.
And again, good morning Voldy Morts.
-- Thom Calandra in Tiburon
thom.calandra@gmail.com
Copyright © 2007, Thom Calandra
ALL RIGHTS RESERVED BY AUTHOR
