Posts filed under “Technology”
Fair enough accusation. Let’s put this into some perspective as to the prior market calls and our positioning that whole year.
We flipped Bearish in January 2004 (Market Flashes Yellow Caution Light) saying, "For those of you who are short: let ‘em ride." That was a major market call — and a good one (no false modesty here).
There were several well timed trading calls after that — buy the March lows,
April sells, May buys, June sells. The next major buy was in July — what I consider my worst call of the year. It was wrong. A solid 2 weeks
too soon, we came within a hair of being stopped out. But the market rallied and saved what would have otherwise been a big whack. Lucky is better than smart.
From that nerve-racking Bullish position, we rode through the election — but overall, the timing in 2004
was darned good.
The major Buy Tech call after the January Sell ‘em was memorialized in the WSJ early August (see a pdf here Placing a Wager On the Chip Sector Strategist Sees Tax-Incentives Sunset Picking Up Semiconductors). From August to December, the Semis (SMH) gained a little over 10%.
As late as early December, I was still writing bullish columns. It wasn’t until mid-December that FASB rules, which many believed wouldn’t pass — got my attention.
On 12/16/04, I posted this:
"Stock options are no longer off balance sheet — they are an expense
that must be fully and transparently accounted for . . . and that may
leave a mark on quite a few balance sheets.
If you have been looking for an excuse to dump your Nasdaq issues, the new FASB rules on Stock options is it.
Regardless of your views on this rule, it now makes a slew of
equities much much more pricey. All of your favorite former high flyers
from the 1990s — it turns out that they were never really all that
profitible — assuming they have to expense stock options like they are
supposed to . . ." -FASB: Stock Options Must be Deducted
I even updated that post in March 2005, asking:
UPDATE: March 17,
20042005 9:41 AM
Is it just me, or has no one really grokked the significance of this to tech firms?
That puts the December "Look Out Below" into some perspective — it was coming from a bullish tech posture in August, 8 months after a major avoid.
These calls were far from perfect. But they were not the typical groupthink, and I’d like to think they were better than most.
Note: All the calls are on the blog, for those of you with the
patience to sift through everything. I added alot of the the tags as
time went on, so the trading or markets category may not go back far enough.
You can go to any month on the blog with this link:
And substitute for any date the 4 digit year and 2 digit month where the letters YEAR & MO are.
December 2004 is: http://bigpicture.typepad.com/comments/2004/12/index.html
How cool is this?
Websites as graphs displays your website as a graph of colored, connected dots representing the various HTML entities.
Below is a graph of the Big Picture:
After the jump, I grabbed a bunch of other sites for comparison purposes:
I frequently discuss Microsoft, and for many many reasons: They are a tech bellwether, a huge part of the S&P and Nasdaq 100 (and a smaller part of the Dow). They have also been a thorn in the side of new technology development and innovation, but now that so much of it has moved to the web, its gotten away from them.
This is a good thing.
One of the commenters said some time ago that I was "irrational in my hatred for Microsoft." That’s hardly the case; Microsoft has put a lot of cash in my pocket, so at worst, I should be grateful to them for the windfall.
However, I am still an objective observer, and I believe that Mister Softee is not what most investors think it is: They are hardly innovators; rather, they copy other people’s work relentlessly, until by default they own the standard. Their products are kludgy, bloated and anti-instinctive; They are hardly the elegant, easy to use software first dreampt up by science fiction writers decades ago.
From an investing standpoint, their fastest growth days are behind
them, yet they are hardly a value stock — yet. (Cody and I have disagreed about this for some time). The leaders of the last bull Market are rarely the leaders of the next. Despite this, Wall Street still loves
them, with 28 of
are widely owned by active mutual fund managers and closet Indexers.
Many people think of them as this well run money machine; In reality, they are very poorly managed by a group of techno-nerds with very little in the way of management skills. Even their vaunted money making abilities are profoundly misunderstood: Its primarily their monopolies in Operating Systems (Windows) and Productivity Software (Office) that generates the vast majority of their revenue and profits. Their Server software and SQL Database make money, but hardly the big bucks of Windows or Office. MSN is a loser, MSNBC is a dud, their Windows CE is hardly a barn burner — even X-Box has cost them billions more than it is likely to generate in profits over the next 5 years.
Lest you think its just me who thinks this way, consider no less an authority than Robert X. Cringely. He is the author of the best-selling book Accidental Empires (How the Boys of Silicon Valley Make Their Millions, Battle Foreign Competition, and Still Can’t Get a Date). He has starred in several PBS specials, including Triumph of the Nerds: A history of the PC industry.
After Gates resignation, Cringely wrote this:
"Microsoft is in crisis, and crises sometimes demand bold action. The company is demoralized, and most assuredly HAS seen its best days in terms of market
dominance. In short, being Microsoft isn’t fun anymore, which probably means that being Bill Gates isn’t fun anymore, either. But that, alone, is not reason enough for Gates to leave. Whether he instigated the change or someone else did, Gates had no choice but to take this action to support the value of his own Microsoft shares.
Let me explain through an illustration. Here’s how Jeff Angus described Microsoft in an earlier age in his brilliant business book, Managing by Baseball:
"When I worked for a few years at Microsoft Corporation in the early ’80s, the company had no decision-making rules whatsoever. Almost none of its managers had management training, and few had even a shred of management aptitude. When it came to what looked like less important decisions, most just guessed. When it came to the more important ones, they typically tried to model their choices on powerful people above them in the hierarchy. Almost nothing operational was written down…The tragedy wasn’t that so many poor decisions got made — as a functional monopoly, Microsoft had the cash flow to insulate itself from the most severe consequences — but that no one cared to track and codify past failures as a way to help managers create guidelines of paths to follow and avoid."
Fine, you say, but that was Microsoft more than 20 years ago. How about today?
Nothing has changed except that the company is 10 times bigger, which means it is 10 times more screwed-up.