Continue reading Bernanke says he'll keep an eye on the falling dollar

Bernanke says he'll keep an eye on the falling dollar originally appeared on BloggingStocks on Mon, 16 Nov 2009 16:40:00 EST. Please see our terms for use of feeds.

Don't count me among Henry Blodget's admirers, but he makes an interesting argument in a recent video posted on BusinessInsider.com (see below). Blodget argues that Federal Reserve Chairman Ben Bernanke has a "secret plan" to keep interest rates too low for too long on purpose. Why? To encourage inflation. According to Blodget, Bernanke has two good reasons for doing this:

• Faster economic growth, which leads to more jobs, fewer angry constituents, and a Congress that's happier with Ben Bernanke.
• Faster erosion of the real value of our debts. Consumers and the government are drowning under a massive debt load. One way to make paying off this debt easier is to make the dollars it is denominated in worth less. Bernanke will try to hasten this process as much as possible, taking it right to the point where our creditor China is mad as hell -- but not quite to the point where China actually stops lending to us.

Continue reading Blodget says Ben Bernanke has a 'secret plan'

Blodget says Ben Bernanke has a 'secret plan' originally appeared on BloggingStocks on Mon, 09 Nov 2009 13:20:00 EST. Please see our terms for use of feeds.

Tim Geithner hasn't been Treasury Secretary for much more than a month, and already Henry Blodget is calling for his head.

Blodget writes that Geithner's ideas and personality have failed to inspire and, most importantly, he has "Refused to revisit or defend his almost certainly inaccurate view that this crisis is merely a temporary price decline caused by a lack of liquidity, rather than a collapse of a debt-driven economy. You can't cure the patient if you're treating the wrong problem."

Continue reading Blodget calls for Geithner's head

Blodget calls for Geithner's head originally appeared on BloggingStocks on Sun, 08 Mar 2009 11:10:00 EST. Please see our terms for use of feeds.

Eliot Spitzer, meet Henry Blodget! originally appeared on BloggingStocks on Fri, 05 Dec 2008 15:55:00 EST. Please see our terms for use of feeds.

DealBook reports that Frank Quattrone, the former First Boston high tech banker who spent four years fighting charges of obstruction of justice, is trying to change the role of analysts on Wall Street to make them glorified sales people for small, high-tech company IPOs.

That's what they were for Quattrone and they helped make him wealthy. But thanks to people like former Merrill Lynch & Co., Inc. (NYSE: MER) analyst and current Silicon Alley Insider blogger Henry Blodget, who famously trashed companies in e-mails to colleagues while boosting them in his reports, the role of Wall Street analysts has been permanently transformed. They can no longer get paid out of investment banking revenues. Instead, their compensation comes from trading revenues. And analysts are not supposed to talk to bankers unless a lawyer is present.

Quattrone makes two good points though. First, there is no career upside for analysts to cover small companies. That's because only the big companies can generate the trading or banking revenues needed to pay the analysts. Second, the most talented analysts went to work for hedge funds and private equity firms. The result is that individual investors can't get analysis for free. Quattrone fails to point out that the quality of that analysis is worth what individuals pay for it -- nothing directly and a modest sum indirectly (through trading commissions).

Continue reading Make investors pay for analysts

Make investors pay for analysts originally appeared on BloggingStocks on Tue, 12 Aug 2008 14:00:00 EST. Please see our terms for use of feeds.

The Wall Street Journal (subscription required) has obtained a draft version of the SEC's report on bond-rating firms and their role in the credit bubble, and some of the stuff is pretty scary.

In one e-mail, a staffer at Standard & Poor's, which is own by McGraw-Hill (NYSE: MHP) told another that "we rate every deal," and that "it could be structured by cows and we would rate it."

Another wrote that "rating agencies continue to create" an "even bigger monster -- the CDO market. Let's hope we are all wealthy and retired by the time this house of cards falters. ;O)"

Yes -- complete with the smiley face. If this seems reminiscent of disgraced analyst Henry Blodget's e-mails bashing stocks he was publicly pumping during the dot-com bubble, that's because it's exactly the same. The lesson here, once again, is this: e-mails ever really get deleted permanently and, if you're being shady or doing something unethical, make a phone call, talk with the person in a dark alley, or send them a letter that they can promptly discard. Don't send an e-mail!

Of course, S&P's investment-grade ratings on CDOs stuffed with dodgy loans turned out to be wildly optimistic, and the house of cards has done more than falter -- it's brought down Bear Stearns and wreaked havoc on the economy.

S&P rated deal 'structured by cows' according to SEC report originally appeared on BloggingStocks on Sat, 02 Aug 2008 14:40:00 EST. Please see our terms for use of feeds.

Continue reading Ebay Q1: Strong quarter, so-so outlook. Earnings call highlights.

Ebay Q1: Strong quarter, so-so outlook. Earnings call highlights. originally appeared on BloggingStocks on Wed, 16 Apr 2008 20:59:00 EST. Please see our terms for use of feeds.

Continue reading Henry Blodget, not redeemed at all

Henry Blodget, not redeemed at all originally appeared on BloggingStocks on Fri, 28 Mar 2008 17:15:00 EST. Please see our terms for use of feeds.

Yahoo! (NASDAQ: YHOO) will begin an online technology TV show early next year.

The New York Times writes, "to be called TechTicker, the Web program will report exclusively on technology stocks, offering daily streaming-video segments and blog posts, as well as some live coverage of breaking news, said Brian Nelson, a spokesman for Yahoo." Hosts will include Henry Blodget of Silicon Alley Insider and blogger Paul Kedrosky.

The idea just may work, and it could offer some competition for the likes of CNBC and Fox Business Network. Internet consumers have become used to watching video online, particularly because of the success of YouTube. And, Yahoo! Finance and the portal's technology news section can certainly promote the new video news service by sending it a great deal of traffic.

The plan may also be a financial success. Video ads placed in online content tend to get much higher CPMs than display ads do. If some of the visitors to Yahoo! are willing to watch business and tech news presented in video instead of print, the online giant may be able to improve its ad yield.

Douglas A. McIntyre is an editor at 247wallst.com.

Yahoo! to start online tech TV program originally appeared on BloggingStocks on Mon, 10 Dec 2007 10:29:00 EST. Please see our terms for use of feeds.

How a combined Microsoft-Yahoo! would work originally appeared on BloggingStocks on Thu, 29 Nov 2007 16:25:00 EST. Please see our terms for use of feeds.

Question for Henry Blodget's many detractors: Are you mad that Michael Milken has become respectable?

Blodget and Milken symbolized the excesses of their internet bubble and 1980s respectively. Both were punished for their misdeeds. Milken, who went to prison, now devotes his time to his philanthropic work and an economic think tank. Blodget received a lifetime ban from the securities industry, a punishment he deserved.

Now pundits including MarketWatch's David Weidner and my colleague Zac Bissonnette say they are outraged that Blodget's writing is published in leading news outlets including the New York Times. What about Milken? Bloomberg News just interviewed him about the housing crisis. Should my former employer have killed the story given Milken's notorious past? Of course not.

Milken did his time and paid his fines. He's a brilliant man who still has plenty of interesting things to say. Same goes for Blodget. To be clear, investors shouldn't forgive or forget them for what they did. As far as I know Blodget has stayed out of legal trouble since he was banned from the securities industry. In 1998, Milken agreed to pay a $47 million fine to settle an SEC complaint that he violated his lifetime ban.

Continue reading Media World: If Michael Milken can be redeemed, so can Henry Blodget

Media World: If Michael Milken can be redeemed, so can Henry Blodget originally appeared on BloggingStocks on Sat, 06 Oct 2007 13:40:00 EST. Please see our terms for use of feeds.

Peter Cohan, my colleague here at BloggingStocks, recently wrote about Henry Blodget's latest prediction: Google (NASDAQ: GOOG) is going to $2,000! Cohan summed up my reaction nicely: "Is this achievable? Who knows. But one thing's for sure, I am one sucker who took the bait to write about Blodget's call. So while the SEC has banned Blodget from providing investment advice, he remains as media savvy as ever."

After he agreed to a lifetime ban from the securities industry for his role in promoting internet companies (while trashing them in private emails), Blodget has managed to stay in the spotlight. He wrote a terrible book called The Wall Street Self-Defense Manual, which leads me to the thing I dislike most about Blodget. I would love for Mr. Blodget to be a great redemption story but the sad fact is, this man doesn't really seem to take responsibility for what he did. Consider this snippet from his book:

If missing the top had been my only mistake, I would have survived . . . I also made a more serious mistake, however, which was to write a lot of emotional unprofessional e-mails, especially during the heat of the crash. Later, amid the wreckage, when the press, public, and regulators began calling for blood, my emails did me in . . . I was accused by New York State Attorney General Elliot Spitzer of having made remarks in e-mails that were "inconsistent" with my research (popular translation: "privately trashing stocks he was public recommending"). Along with others, I agreed to pay a humongous fine and be barred from the industry. (Bold added by me)

Continue reading Why Henry Blodget should go away

Why Henry Blodget should go away originally appeared on BloggingStocks on Thu, 04 Oct 2007 01:45:00 EST. Please see our terms for use of feeds.

Henry Blodget, who was banned from the securities industry due to his dishonest analyst work, predicts in AlleyInsider that Google Inc. (NASDAQ: GOOG) will hit $2,000 -- his biggest ever boost boast.

Blodget's fame soared in December 1998 when he predicted that Amazon.com (NASDAQ: AMZN) would hit $400 when it traded at $243 -- a 65% boost. After his call, which proved accurate, Amazon soared to peak at $630 in April 1999. It now trades at $552 on a comparable basis (six times the currently quoted price since Amazon split 3:1 in January 1999 and 2:1 in August 1999). Blodget was later hired by Merrill Lynch (NYSE: MER) where e-mails which trashed the companies he was publicly boosting landed him a life ban from the securities industry.

What is Blodget's logic for Google's $750 billion market cap (at $2,000 a share, which is 242% above its current $585)? "Assuming a 25x free cash flow multiple (generous), it would take free cash flow of $30 billion. That is one heck of a lot of free cash flow, especially considering that Google's free cash flow next year will be about $4 billion."

Is this achievable? Who knows. But one thing's for sure, I am one sucker who took the bait to write about Blodget's call. So while the SEC has banned Blodget from providing investment advice, he remains as media savvy as ever.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Blodget misses limelight, calls for Google (GOOG) $2,000 originally appeared on BloggingStocks on Wed, 03 Oct 2007 12:11:00 EST. Please see our terms for use of feeds.

On Friday my colleague Jonathan Berr posted Henry Blodget blasts Mary Meeker's Google (GOOG) math. In this story he outlined a slight difference of opinion. Actually a 1000%, regarding the potential revenue and earnings of YouTube. Since my own attempts at guessing what Google Inc. (NASDAQ: GOOG) is worth (Serious Money: What IS Google worth? One year later...) proved more accurate than either of them, and since total stock value is of more importance, I had to comment.

Here are some real important numbers: If Google earns $18 per share over the next twelve months, its forward P/E is around 28. If they continue to make any progress with YouTube revenue at somewhere in between our battling pundits and hold market share, Google might be worth $600 in 12 months. Not the stuff investors are dreaming of but pretty darn good.

If Google gains market share, adds any new revenue streams or improves its margins, it could reach 5% to10% above these figures. I do not believe this will happen because Google will not be able to achieve a return on investment for new business equal to that of its original idea. In addition, any new acquisitions, and there will be some, will not improve margins either.

To verify my track record, including bad calls, read Chasing Value and Serious Money.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

Sunday Funnies: Google (GOOG) now undervalued? originally appeared on BloggingStocks on Sun, 26 Aug 2007 19:40:00 EST. Please see our terms for use of feeds.

When Morgan Stanley's (NYSE: MS) veteran Internet analyst Mary Meeker estimated that overlay ads on YouTube could immediately add $4.8 billion in gross revenue and $720 million in net revenue to Google's Inc. (NASDAQ: GOOG), her one-time competitor Henry Blodget was puzzled.

Her figures were dramatically bigger than his estimate of $12 million to $360 million of gross revenue. As Blodget discusses in his Silcon Alley Insider blog, Meeker made a huge mathematical blunder. She didn't calculate her estimates using cost per thousands (CPM), the common measurement used in selling advertising. She just forgot to divide by a thousand. So instead of $4.8 billion, Meeker really meant to say $4.8 million and $720 million becomes $720,000.

These ads are insignificant to Google's bottom line.

Blodget, who is turning out to be more honest as a blogger than he was as an analyst, clearly is delighting in jabbing the Internet Queen Meeker. It's odd that no one on her team caught this mistake before it was published.

Investors need to remember that analysts often are wrong. When they guess too low, as Wall Street often has with Google, it's called an "upside surprise" and when they guess too high it's called a "disappointment." This is a game that Blodget knows very well.

Henry Blodget blasts Mary Meeker's Google (GOOG) math originally appeared on BloggingStocks on Fri, 24 Aug 2007 09:25:00 EST. Please see our terms for use of feeds.

I'm going to be really disappointed if there isn't a massive amount of outrage in response to this. According to a piece in Thursday's New York Times, students calling the financial aid office at some colleges may, unbeknownst to them, actually end up speaking with a representative from a student lending corporation. Their calls are automatically routed and answered as though they had reached the college's office. But they haven't. This is how a representative from Texas Tech, which engages in this practice, responded to questions:

Becky Wilson, director of financial aid at Texas Tech, defended the practice of routing student financial aid questions to Nelnet and said that the university was "trying to make the aid process as seamless as possible for students" so they do not have to deal with multiple people. She said that if call center workers identified themselves as Nelnet employees it would cause confusion ...

Great. And I suppose that disgraced Merrill Lynch analyst Henry Blodget's practice of giving stock recommendations based on the encouragement (read: bonuses) provided by the company's investment banking arm made the process "seamless."

But New York Attorney General Andrew Cuomo sees through this. He said the call centers pose "an inherent conflict of interest" because "a self-interested lender is providing what is purported to be unbiased advice."

That's exactly the point. I'm certainly not saying that there is anything bad going on. I would never accuse banks or other companies in the financial services industry of not acting in their customers' best interests (although James Scurlock certainly would, and does, in his amazing book Maxed Out). But just as the not-necessarily corrupt relationship between investment banks and research analysts provides ample opportunity for unscrupulous conduct, it seems likely that this system of colleges forwarding calls to loan providers does as well.

Lenders field financial aid queries at colleges -- where's the outrage? originally appeared on BloggingStocks on Sun, 01 Apr 2007 12:40:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• The Wall Street Journal's "Heard on the Street" column focused on Starbucks Corporation (NASDAQ: SBUX), writing that some analysts see the stock rebounding since being beaten down after hitting a 52-week high in November.
• Also in the Wall Street Journal, "The Mossberg Solution" reviewed the Apple TV product from Apple Inc (NASDAQ: AAPL), concluding that it is "a very well-designed product that easily brings the computer and the TV together."
• The Financial Times reported that Mike Mayo, one of Wall Street's best known financial services analysts, is heading to Deutsche Bank AG (NYSE: DB) after leaving Prudential (NYSE: PRU).

• According to the Economic Times, International Business Machines Corporation (NYSE: IBM) is close to signing a 10-year $700M outsourcing contract with Idea Cellular in India.
• The U.K. Times reported that prospective merger partners Barclays plc ADS (NYSE: BCS) and ABN Amro Holdings (NYSE: ABN) are considering using the proceeds from a possible sale of ABN Amro's LaSalle retail bank to generate a merger dividend for shareholders on both sides of the possible merger.

• Henry Blodget's Internet Outsider blog wrote that Google Inc (NASDAQ: GOOG) should buy Spot Runner, which reduces the cost and time necessary to plan and buy a TV advertising campaign.

Newspaper wrap-up 3-21-07: Walt Mossberg reviews Apple TV originally appeared on BloggingStocks on Wed, 21 Mar 2007 09:45:00 EST. Please see our terms for use of feeds.

If Henry Blodget was trying redeem himself with his new book, he failed miserably. In fact, the book reinforces the idea that he is a slime-ball. But recently Herb Greenberg sat down with two ex-cons who have gone a long way toward redeeming themselves: former Zzzz Best Carpet conman Barry Minkow and former Crazy Eddie CFO Sam E. Antar. I have also spoken with these men and, in speaking with them, one thing becomes clear: These two are living proof that people really can change. When you look at the work they've done since they set off on the road to redemption, I would argue they have more than made up for the damage they've done.

They also offer valuable advice for investors. From Greenberg's piece, Mr. Antar says: "Watch how management handles bad quarters, earnings disappointments, criticism, skepticism and cynicism. Do they start by saying, 'We take full responsibility and make no excuses' -- only to follow by carefully worded innuendos, excuses and deflection? Do they question the integrity of those who ask questions?"

To learn more about these two amazing people, visit Barry Minkow's website and Sam E. Antar's site, a must for understanding white-collar crime.

Former fraudsters fightin' fraud originally appeared on BloggingStocks on Thu, 08 Mar 2007 13:45:00 EST. Please see our terms for use of feeds.

I enjoy reading investment books, and I especially enjoy when they're written by people with interesting backgrounds. The disgraced former Merrill Lynch Internet analyst Henry Blodget certainly seems to fit the bill. So in spite of the New York Times review trashing the book, I couldn't help ordering a copy of his The Wall Street Self-Defense Manual. Lesson Number One: If the New York Times says it's bad it probably is. In the case of this book, it's actually worse than the review said. To begin with, this book offers nothing new. It contains solid advice, but it's advice that has been fairly trite since A Random Walk Down Wall Street first came out. That was in 1973.

Let me save you 10 bucks and a lot of time by providing you a brief overview of everything you will learn in Blodget's book: Predicting the market is difficult at best, impossible at worst. By buying low cost index mutual funds, you can beat most funds. You don't need to hire a financial adviser because adding costs will hurt your returns. Just keep it simple. It's sage advice, but it's been written about in tons of other books. To learn more about passive investing strategies, pick up The Bogleheads' Guide to Investing and/or The Only Investment Guide You'll Ever Need. These books are better-written, more interesting, and provide better plans.

Now onto the part Blodget's book that really angers me. The one thing that Blodget could provide that would be interesting would be a down and dirty expose of Wall Street corruption, and a tell-all, soul-cleansing account of all the horrible stuff that he did (i.e., pumping stocks in reports while trashing them privately in emails). But Blodget is strangely silent on this, and the only real mention to his past that he makes comes early in the book where he makes the most pathetic apology non-apology that I've seen in awhile. Referring to the decline of Internet stocks, he writes: If missing the top had been my only mistake, I would have survived . . . I also made a more serious mistake, however, which was to write a lot of emotional unprofessional e-mails, especially during the heat of the crash. Later, amid the wreckage, when the press, public, and regulators began calling for blood, my emails did me in . . . I was accused by New York State Attorney General Elliot Spitzer of having made remarks in e-mails that were "inconsistent" with my research (popular translation: "privately trashing stocks he was public recommending"). Along with others, I agreed to pay a humongous fine and be barred from the industry.

Dear Henry: The problem wasn't that the e-mails were "unprofessional" or "emotional." The problem was that you were acting as a paid shill for the investment banking arm of your firm, and passing off your research as legitimate when it was anything but.

Henry Blodget's failure to take any real responsibility (instead blaming his downfall on "the press, public, and regulators calling for blood") can lead me to only one conclusion: this book is a cynical effort by a dishonest man to make money by slapping his name on a book of unoriginal investment advice. Stay away from this, like you should have stayed away from the stocks Henry was pumping.

Go away, Henry Blodget originally appeared on BloggingStocks on Mon, 05 Mar 2007 15:35:00 EST. Please see our terms for use of feeds.

I am legitimately embarrassed for being excited about this, but I can't help it. Henry Blodget, the disgraced former Merrill Lynch internet analyst has a new book out entitled The Wall Street Self-Defense Manual: A Consumer's Guide to Intelligent Investing. In spite of the scathing review in today's New York Times, I couldn't help rushing to Amazon.com to order it.

For those of you who don't remember Henry Blodget, he first gained notoriety in December of 1998 for his prediction that Amazon.com would go to 400 dollars, which it did, rising 128% in less than a month. In 2003, the SEC charged him with securities fraud, basically alleging that he acted as a shill for Merrill's investment banking arm. He sent emails to colleagues describing stocks he covered in vastly different terms than his glowing reports recommending them. On June 3, 2000, he wrote that ``ATHM (At Home Excite) is such a piece of crap!'' That same day, he issued a buy rating on the stock. On December 4th of the same year, he wrote about Lifeminders Inc. (LFMN): ``I can't believe what a POS thing is.'' Seventeen days later, Blodget reiterated his ``accumulate/buy'' rating on the stock. He settled the charges without admitting guilt, paid a hefty fine (though he still kept millions in what most consider to be ill-gotten gains), and was banned from the securities industry for life.

A few years ago, Blodget was interviewed for Maggie Mahar's amazing book Bull!: A History of the Boom and Bust 1982-2004. Referring to the internet stock bubble, he said that "Have you ever read John Kenneth Galbraith's book about the history of bubbles?...Well I just finished it. It's amazing how Galbraith spells it all out--what happens in every bubble every time. He's almost yawning as he lays it out: First a new thing comes along and captures the public's imagination. Then everyone starts making money. After that, some person of average intelligence is held up as a genius...Hi, the was me."

I found Blodget's self-effacing commentary and insightful realization of his role in the bubble interesting. However New York Times writer Harry Hurt III isn't impressed with his new book:

MAYBE I'm brain-damaged, but all that just rubs me the wrong way. I believe that everyone has a right to free speech regardless of past transgressions. By the same token, everyone has the right to evaluate speech and speakers, as well as the right to vote with their pocketbooks. The advice that Mr. Blodget now offers may be sound, but it's also rather mundane. Would a similar book written by Joe Blow attract similar attention?

Which brings us back to the larger question that began our inquiry: whether to invest or not to invest in financial misconduct. I don't buy That Henry's rehabilitation, and I don't recommend that you buy his book. In keeping with publishing-industry custom, I received a free review copy.

But I hereby state in public that I've already given my review copy the same kind of treatment that the author used to give certain Internet stocks in private - I've trashed it.

Still, I'm buying a copy, mainly because I love a redemption story, even if it's somewhat disingenuous, as Blodget's may appear to be. For a really good redemption story, check out ex-con Barry Minkow's book Cleaning Up: One Man's Redemptive Journey Through the Seductive World of Corporate Crime.

Henry Blodget's new "Self-Defense Manual" for investors originally appeared on BloggingStocks on Mon, 19 Feb 2007 10:50:00 EST. Please see our terms for use of feeds.