Tuesday, January 4, 2011

Being Right or Making Money

Like an old dog with no new tricks, European wireless carriers are resurrecting a failed wireline move and trying to extract more money from the likes of Google, Apple and other web and mobile companies providing content over their wireless pipes. According to a report in Bloomberg, European carriers such as France Telecom SA, Telecom Italia SA and Vodafone Group Plc are pushing for new deals to get content providers to pay for their usage. The operators say the costs of building out their networks to handle growth in data traffic is outpacing data revenues, compromising their business models.


This is really about operators being upset over the Googles and Apples of the world profiting off the pipes the operators have built. Instead of realizing they are about providing access or building awesome content of their own, they sit at the table begging for a chunk of profits from companies which have built something on top of the operator’s networks. When begging doesn’t work, they threaten to stifle access and innovation. The carriers are like old dogs that can’t learn a new trick. Unfortunately, right now, the only trick they have is peeing on your rug.


Ed Whitacre, AT&T’s former CEO, tried to play this card a number of years ago on the wireline side, pushing for content providers to pay a quality of service tariff. The plan didn’t go through, but it showed some of the vacuous thinking of operators. That wireless carriers in Europe are looking at flogging the same idea shows they’re either dumb or really bold. Either way, it smacks of desperation.


What the carriers don’t understand is that they provide access. Yes, mobile data usage is soaring but that’s the business the carriers are in. They rely on Google and others to get people to buy their data plans and their phones. Without great services, why would people want to pony up for a smartphone or a data plan? It was great just a couple of years ago when data revenue helped offset declining margins on voice. But now that data is exploding, it’s put the carriers in a tough position.


However, trying to get money from content providers is not the way to go. The carriers are already charging users for data, and are in the midst of changing their pricing plans to reflect the very real flood of traffic caused by user demand. Right now, their wireless businesses are still very profitable; for example, Verizon reported operating income on its wireless business of 29.9 percent. It’s preferable that the operators look at tweaking that model to manage traffic and revenue. We’ve advocated innovative pricing for data plans and dynamic pricing, which makes more sense in a world with limited bandwidth and spectrum. They shouldn’t try to build a double-sided market by dipping into the revenue of companies, who have legitimately created valuable services on top of their networks. A flour mill owner can’t approach the baker for a cut of his bread revenue. This would stifle innovation and potentially undermine the dynamism in the mobile world. Will popular app makers have to worry about paying as well if their apps are consuming bandwidth?


If the wireless operators are peeved at Google and others making money off their pipes — and they are no doubt mad — they should build their own services that appeal to users. Otherwise, the carriers shouldn’t argue that they’re more than dumb pipes. The carriers may think they’re getting out early on charging content providers and may have more leverage than their wired counterparts. But pushing an unpopular model again doesn’t reflect bold thinking; it really shows that the idea cupboard is bare. Let’s hope their American wireless counterparts don’t try the same trick here.


Related content from GigaOM Pro (sub req’d):



  • 4G State of the Union

  • Metered Mobile Data Is Coming and Here’s How

  • Mobile Broadband: pricing for profits


Post and thumbnail photos courtesy of Flickr user abbynormy


Everyone likes to be right and the easiest way to be right is to surround oneself with people and opinions that are predisposed to be similar to ours. When investing, it pays to be contrary. That sets you up to be wrong some of the time. The thing is, if you are right 60% of the time, and manage risk properly, there is a good chance you’ll make money. The most basic principle of investing is buy low and sell high. When doing this you’ll seldom hit the actual bottoms or tops; you are buying when the market is going down and selling when it is going up. That in itself is contrary to most retail investors’ practice of buying high and selling low.


Mutual Fund Flows and Sentiment as Contrarian Indicators

The majority of retail (casual) investors use mutual funds and ETFs (Exchange Traded Funds) to invest in the markets. Fund flows (deposits vs. withdrawals) are generally regarded as contrary indicators. This is a component of a broader series of indicators classified as investor sentiment that provide some insight into future directions of the market. The basic principle is: when many investors are bullish the market is more likely to go down and conversely a higher level of bearishness or negative sentiment indicates the market is likely to make a move higher. TrimTabs Investment Research reports on these fund flows and in a recent report stated:


We observed that equity prices tend to fall after equity exchange-traded funds (ETFs) rake in large sums of money. Conversely, the market tends to rise after equity ETFs post heavy outflows.


The report then issues this conclusion:


We have two explanations for the strongly negative correlation between equity ETF flows and future market returns. First, ETFs are traded mostly by retail investors and day traders.  These are the least informed and most emotional market participants—the ones most likely to lose money over time.  Second, we suspect hedge funds use ETFs when liquidity dries up.  Hedge funds were forced to close individual stock positions during the credit crisis, so they bought equity ETFs instead. Equity ETFs posted large outflows in 2009, when liquidity improved.


These concepts are not really as complicated as they seem to be. It’s Economics 101. When demand outstrips supply, prices go up and when supply is larger than demand, prices go down. When funds are flowing into stocks, markets rise but at some point most people are invested and there isn’t enough uninvested capital left to drive prices higher.


Whatever the internal dynamics, the retail investors are generally the last to join in a rally and their main vehicle of investment are mutual funds and ETFs so large inflows into those instruments suggests that  the market is near the top. That’s why many retail investors get the timing wrong and end up losing money. Nobody likes being wrong or losing money, it makes us feel pretty lousy about ourselves! This is borne out in the current rally where the retail investor is reticent to return to the markets after being burned so badly in the housing/banking crisis of 2008 – maybe one time too many in the last decade. As Adam Shell recently wrote in USA Today:


Yet, increasingly, investors on Main Street are not playing the stock market game with confidence like they used to, mainly because the game of making money has gotten tougher and more volatile since the financial crisis. Retail investors are buying fewer stocks. They are paring back on stocks and stock funds they already own. Instead, they’re moving into safer investments, like cash and bonds. “Investors are on strike,” says Axel Merk, president and chief investment officer at Merk Mutual Funds.


Fox News Doesn’t Make You Dumb. It Just Keeps You that Way

I don’t think the decision by retail investors to stay away from the markets is a good one. Markets have historically been a better investment than many other asset classes with the S&P 500 returning roughly a 7% annual rate of return.  Stocks should, at the very least, be a strong component of a diversified portfolio. Instead of shying away from being wrong, investors – people in general – should expose themselves to a broader group of opinions, to alter unsuccessful behavior and improve decision making.


The findings of a new study, Misinformation and the 2010 Election, from the University of Maryland’s World Public Opinion show that 9 in 10 voters in the 2010 election believe they encountered information that was misleading or false, with 56% saying this occurred frequently. The study also concludes that those who watched Fox News almost daily were significantly more likely than those who never watched it to believe misinformation.


The bad news for FOX News viewers is that merely watching the channel appears to be toxic. Most voters believed a few whoppers during the 2010 election cycle. But daily watchers of FOX News believed more misinformation than everyone else.

The underlying problem uncovered by this study is that today’s news organization are not unbiased deliverers of the day’s events, these outlets are partisan interpreters of the day’s events packaged to appeal to their viewership or constituency.  I don’t claim one network or source is a more egregious offender than another.  Everyone is entitled to their opinions, but each carries a bias that should be understood before assuming what we are digesting is “news” and not opinion.


This Article is Biased

This article exposes some of my own biases. We all have them and those views can be positive as they give us the strength to make decision with confidence. Most of the stocks I own are lesser-known, yet-to-be-recognized small technology stocks. I short stocks that people recommend as buys, such as Coinstar (CSTR), and I shy away from momentum stocks with historically unjustifiable valuations. I believe you should never buy a stock for which you can’t make a historically significant case of undervaluation. In our markets his is contrary behavior, but it works, and it helps me sleep at night.


If we are making bad decisions, like buying market tops and selling bottoms like the recent bottom in 2008, it is positive to examine our biases and correct them where possible. The best way to correct faulty assumptions is to take in a variety of disparate view points and make informed decisions. We can’t do this confining our media consumption to sources that only reinforce our previously held views. Religion and patriotism should allow for independent thought and interpretation. We should all try to broaden our information sources in 2011 and perhaps we can overcome the ‘misinformation’ gap and make some more profitable investment decisions.


I hope technology positively affects your life in 2011 and all your stock investments are winners.


Steven Bulwa is an investment analyst with a focus on new developments in technology and the companies poised to benefit. He has contributed to TheStreet.com, Realmoney.com, Business Insider, Huffington Post and SeekingAlpha.com, among others. Visit www.bulwatechreport.com, or follow @BulwaTech, to learn about technology companies with true growth prospects for 2011 and beyond.

Follow us on Twitter.


Sign up for Mediaite’s daily newsletter.



robert shumake

Small Business <b>News</b>: Starting Your New Business In A New Year

Whether your starting a new business or rethinking an existing one, 2011 offers fresh possibilities and a new start. If you're launching a new business, there.

Now Tucker Carlson Says Michael Vick Should Not Be Executed - AOL <b>News</b>

Fox News Host Tucker Carlson says that he. ... NEWS PHOTO GALLERIES. From The Wires � Top News Photos � Celestial Delights � Solar Eclipses � The Bright Side � Good News Now � Extreme Elements � Weather Photos � Their Intelligence ...

John Roberts Leaves CNN for Fox <b>News</b> - NYTimes.com

Executives at CNN confirmed Monday that John Roberts, who served as the morning anchor for the network since April 2007, would be joining Fox News as a national correspondent.


robert shumake detroit

Small Business <b>News</b>: Starting Your New Business In A New Year

Whether your starting a new business or rethinking an existing one, 2011 offers fresh possibilities and a new start. If you're launching a new business, there.

Now Tucker Carlson Says Michael Vick Should Not Be Executed - AOL <b>News</b>

Fox News Host Tucker Carlson says that he. ... NEWS PHOTO GALLERIES. From The Wires � Top News Photos � Celestial Delights � Solar Eclipses � The Bright Side � Good News Now � Extreme Elements � Weather Photos � Their Intelligence ...

John Roberts Leaves CNN for Fox <b>News</b> - NYTimes.com

Executives at CNN confirmed Monday that John Roberts, who served as the morning anchor for the network since April 2007, would be joining Fox News as a national correspondent.


robert shumake detroit

Like an old dog with no new tricks, European wireless carriers are resurrecting a failed wireline move and trying to extract more money from the likes of Google, Apple and other web and mobile companies providing content over their wireless pipes. According to a report in Bloomberg, European carriers such as France Telecom SA, Telecom Italia SA and Vodafone Group Plc are pushing for new deals to get content providers to pay for their usage. The operators say the costs of building out their networks to handle growth in data traffic is outpacing data revenues, compromising their business models.


This is really about operators being upset over the Googles and Apples of the world profiting off the pipes the operators have built. Instead of realizing they are about providing access or building awesome content of their own, they sit at the table begging for a chunk of profits from companies which have built something on top of the operator’s networks. When begging doesn’t work, they threaten to stifle access and innovation. The carriers are like old dogs that can’t learn a new trick. Unfortunately, right now, the only trick they have is peeing on your rug.


Ed Whitacre, AT&T’s former CEO, tried to play this card a number of years ago on the wireline side, pushing for content providers to pay a quality of service tariff. The plan didn’t go through, but it showed some of the vacuous thinking of operators. That wireless carriers in Europe are looking at flogging the same idea shows they’re either dumb or really bold. Either way, it smacks of desperation.


What the carriers don’t understand is that they provide access. Yes, mobile data usage is soaring but that’s the business the carriers are in. They rely on Google and others to get people to buy their data plans and their phones. Without great services, why would people want to pony up for a smartphone or a data plan? It was great just a couple of years ago when data revenue helped offset declining margins on voice. But now that data is exploding, it’s put the carriers in a tough position.


However, trying to get money from content providers is not the way to go. The carriers are already charging users for data, and are in the midst of changing their pricing plans to reflect the very real flood of traffic caused by user demand. Right now, their wireless businesses are still very profitable; for example, Verizon reported operating income on its wireless business of 29.9 percent. It’s preferable that the operators look at tweaking that model to manage traffic and revenue. We’ve advocated innovative pricing for data plans and dynamic pricing, which makes more sense in a world with limited bandwidth and spectrum. They shouldn’t try to build a double-sided market by dipping into the revenue of companies, who have legitimately created valuable services on top of their networks. A flour mill owner can’t approach the baker for a cut of his bread revenue. This would stifle innovation and potentially undermine the dynamism in the mobile world. Will popular app makers have to worry about paying as well if their apps are consuming bandwidth?


If the wireless operators are peeved at Google and others making money off their pipes — and they are no doubt mad — they should build their own services that appeal to users. Otherwise, the carriers shouldn’t argue that they’re more than dumb pipes. The carriers may think they’re getting out early on charging content providers and may have more leverage than their wired counterparts. But pushing an unpopular model again doesn’t reflect bold thinking; it really shows that the idea cupboard is bare. Let’s hope their American wireless counterparts don’t try the same trick here.


Related content from GigaOM Pro (sub req’d):



  • 4G State of the Union

  • Metered Mobile Data Is Coming and Here’s How

  • Mobile Broadband: pricing for profits


Post and thumbnail photos courtesy of Flickr user abbynormy


Everyone likes to be right and the easiest way to be right is to surround oneself with people and opinions that are predisposed to be similar to ours. When investing, it pays to be contrary. That sets you up to be wrong some of the time. The thing is, if you are right 60% of the time, and manage risk properly, there is a good chance you’ll make money. The most basic principle of investing is buy low and sell high. When doing this you’ll seldom hit the actual bottoms or tops; you are buying when the market is going down and selling when it is going up. That in itself is contrary to most retail investors’ practice of buying high and selling low.


Mutual Fund Flows and Sentiment as Contrarian Indicators

The majority of retail (casual) investors use mutual funds and ETFs (Exchange Traded Funds) to invest in the markets. Fund flows (deposits vs. withdrawals) are generally regarded as contrary indicators. This is a component of a broader series of indicators classified as investor sentiment that provide some insight into future directions of the market. The basic principle is: when many investors are bullish the market is more likely to go down and conversely a higher level of bearishness or negative sentiment indicates the market is likely to make a move higher. TrimTabs Investment Research reports on these fund flows and in a recent report stated:


We observed that equity prices tend to fall after equity exchange-traded funds (ETFs) rake in large sums of money. Conversely, the market tends to rise after equity ETFs post heavy outflows.


The report then issues this conclusion:


We have two explanations for the strongly negative correlation between equity ETF flows and future market returns. First, ETFs are traded mostly by retail investors and day traders.  These are the least informed and most emotional market participants—the ones most likely to lose money over time.  Second, we suspect hedge funds use ETFs when liquidity dries up.  Hedge funds were forced to close individual stock positions during the credit crisis, so they bought equity ETFs instead. Equity ETFs posted large outflows in 2009, when liquidity improved.


These concepts are not really as complicated as they seem to be. It’s Economics 101. When demand outstrips supply, prices go up and when supply is larger than demand, prices go down. When funds are flowing into stocks, markets rise but at some point most people are invested and there isn’t enough uninvested capital left to drive prices higher.


Whatever the internal dynamics, the retail investors are generally the last to join in a rally and their main vehicle of investment are mutual funds and ETFs so large inflows into those instruments suggests that  the market is near the top. That’s why many retail investors get the timing wrong and end up losing money. Nobody likes being wrong or losing money, it makes us feel pretty lousy about ourselves! This is borne out in the current rally where the retail investor is reticent to return to the markets after being burned so badly in the housing/banking crisis of 2008 – maybe one time too many in the last decade. As Adam Shell recently wrote in USA Today:


Yet, increasingly, investors on Main Street are not playing the stock market game with confidence like they used to, mainly because the game of making money has gotten tougher and more volatile since the financial crisis. Retail investors are buying fewer stocks. They are paring back on stocks and stock funds they already own. Instead, they’re moving into safer investments, like cash and bonds. “Investors are on strike,” says Axel Merk, president and chief investment officer at Merk Mutual Funds.


Fox News Doesn’t Make You Dumb. It Just Keeps You that Way

I don’t think the decision by retail investors to stay away from the markets is a good one. Markets have historically been a better investment than many other asset classes with the S&P 500 returning roughly a 7% annual rate of return.  Stocks should, at the very least, be a strong component of a diversified portfolio. Instead of shying away from being wrong, investors – people in general – should expose themselves to a broader group of opinions, to alter unsuccessful behavior and improve decision making.


The findings of a new study, Misinformation and the 2010 Election, from the University of Maryland’s World Public Opinion show that 9 in 10 voters in the 2010 election believe they encountered information that was misleading or false, with 56% saying this occurred frequently. The study also concludes that those who watched Fox News almost daily were significantly more likely than those who never watched it to believe misinformation.


The bad news for FOX News viewers is that merely watching the channel appears to be toxic. Most voters believed a few whoppers during the 2010 election cycle. But daily watchers of FOX News believed more misinformation than everyone else.

The underlying problem uncovered by this study is that today’s news organization are not unbiased deliverers of the day’s events, these outlets are partisan interpreters of the day’s events packaged to appeal to their viewership or constituency.  I don’t claim one network or source is a more egregious offender than another.  Everyone is entitled to their opinions, but each carries a bias that should be understood before assuming what we are digesting is “news” and not opinion.


This Article is Biased

This article exposes some of my own biases. We all have them and those views can be positive as they give us the strength to make decision with confidence. Most of the stocks I own are lesser-known, yet-to-be-recognized small technology stocks. I short stocks that people recommend as buys, such as Coinstar (CSTR), and I shy away from momentum stocks with historically unjustifiable valuations. I believe you should never buy a stock for which you can’t make a historically significant case of undervaluation. In our markets his is contrary behavior, but it works, and it helps me sleep at night.


If we are making bad decisions, like buying market tops and selling bottoms like the recent bottom in 2008, it is positive to examine our biases and correct them where possible. The best way to correct faulty assumptions is to take in a variety of disparate view points and make informed decisions. We can’t do this confining our media consumption to sources that only reinforce our previously held views. Religion and patriotism should allow for independent thought and interpretation. We should all try to broaden our information sources in 2011 and perhaps we can overcome the ‘misinformation’ gap and make some more profitable investment decisions.


I hope technology positively affects your life in 2011 and all your stock investments are winners.


Steven Bulwa is an investment analyst with a focus on new developments in technology and the companies poised to benefit. He has contributed to TheStreet.com, Realmoney.com, Business Insider, Huffington Post and SeekingAlpha.com, among others. Visit www.bulwatechreport.com, or follow @BulwaTech, to learn about technology companies with true growth prospects for 2011 and beyond.

Follow us on Twitter.


Sign up for Mediaite’s daily newsletter.



robert shumake detroit

make money not art by BehindDarkEyes


robert shumake

Small Business <b>News</b>: Starting Your New Business In A New Year

Whether your starting a new business or rethinking an existing one, 2011 offers fresh possibilities and a new start. If you're launching a new business, there.

Now Tucker Carlson Says Michael Vick Should Not Be Executed - AOL <b>News</b>

Fox News Host Tucker Carlson says that he. ... NEWS PHOTO GALLERIES. From The Wires � Top News Photos � Celestial Delights � Solar Eclipses � The Bright Side � Good News Now � Extreme Elements � Weather Photos � Their Intelligence ...

John Roberts Leaves CNN for Fox <b>News</b> - NYTimes.com

Executives at CNN confirmed Monday that John Roberts, who served as the morning anchor for the network since April 2007, would be joining Fox News as a national correspondent.


robert shumake

Small Business <b>News</b>: Starting Your New Business In A New Year

Whether your starting a new business or rethinking an existing one, 2011 offers fresh possibilities and a new start. If you're launching a new business, there.

Now Tucker Carlson Says Michael Vick Should Not Be Executed - AOL <b>News</b>

Fox News Host Tucker Carlson says that he. ... NEWS PHOTO GALLERIES. From The Wires � Top News Photos � Celestial Delights � Solar Eclipses � The Bright Side � Good News Now � Extreme Elements � Weather Photos � Their Intelligence ...

John Roberts Leaves CNN for Fox <b>News</b> - NYTimes.com

Executives at CNN confirmed Monday that John Roberts, who served as the morning anchor for the network since April 2007, would be joining Fox News as a national correspondent.


robert shumake detroit

Keywords and search engine rankings are the two most important aspects parts regarding to optimizing your articles for search engines (SEO). Search engines check your articles starting with checking your keywords first so you have to place them to the right position where they will be easily detected and recognized as a keyword, therefore the search engines will list your page when others search for that particular keyword.

Why are keywords so important?

A keyword is a term or word that you must place in your particular article more than a couple times, not only once in order to get it recognized being a keyword. When a search engine finds that you have a a word appearing multiple times in your article, it will make a decision that your page might be useful to users who are searching for that particular keyword.

Over using keywords

You have to know that there is a risk of over optimizing your pages for some keywords, this is called "keyword stuffing". This means if you stuff keywords in an article body randomly a search engine is going to detect that you try to trick them in order to get them place your page a high position in the search engines for that particular search term, and will instead of bringing up your content it will penalize your content giving you as low ranking as possible. Remember:, this can have an adverse effect on your other web sites too, not to mention that you can get your site easily banned from a particular search engine if you are caught on you do this too often. (Sometimes even a few times is enough).

What is Keyword Density?

Keyword density in content shows how many times you used the keyword in your page. . Take a 500 words article as an example:: to achieve to a a keyword density of 5%, then you you have to place the keyword in your content 25 times. You can find many products, e-books and articles making recommendations with regards to one keyword density over another but bear in mind you want to avoid keyword stuffing. Some article sites (I mean the big ones) usually limit this at 5% and will not let you submit an article with a higher keyword density. A good example is: Ezinearticles, which has the most powerful tool that detects everything you might use as a trick, from duplicate content to high keyword density. In the end of the day you will have to determine which density is more suitable for your niche keywords and target audience. Every article marketer has their own proven density that works for them and is proven to bring in profit. You have to find the balance between over optimizing the article and still ranking high in search engines at the same time. You are trying to achieve profit here, and profitability and whether or not you will profit of your content does depend on your ranking.

What is the ideal keyword density?

Whichever density you will decide to use , it is a good pattern to follow to place your keywords the way that there are more at the beginning of the article or in the intro text and also the end which will show a hour glass pattern. Getting your keyword density right is the key to start making money from your content, so it is imperative that you will keep a close eye on it. In the end of the day you are looking for profit from your pages, so the key to success is testing, testing, more testing and tweaking. One thing you must do is to keep an eye on your search engine rankings regularly and tracking the click thrus is what you have to do daily.


robert shumake detroit

Small Business <b>News</b>: Starting Your New Business In A New Year

Whether your starting a new business or rethinking an existing one, 2011 offers fresh possibilities and a new start. If you're launching a new business, there.

Now Tucker Carlson Says Michael Vick Should Not Be Executed - AOL <b>News</b>

Fox News Host Tucker Carlson says that he. ... NEWS PHOTO GALLERIES. From The Wires � Top News Photos � Celestial Delights � Solar Eclipses � The Bright Side � Good News Now � Extreme Elements � Weather Photos � Their Intelligence ...

John Roberts Leaves CNN for Fox <b>News</b> - NYTimes.com

Executives at CNN confirmed Monday that John Roberts, who served as the morning anchor for the network since April 2007, would be joining Fox News as a national correspondent.


robert shumake detroit

make money not art by BehindDarkEyes


robert shumake detroit

Like an old dog with no new tricks, European wireless carriers are resurrecting a failed wireline move and trying to extract more money from the likes of Google, Apple and other web and mobile companies providing content over their wireless pipes. According to a report in Bloomberg, European carriers such as France Telecom SA, Telecom Italia SA and Vodafone Group Plc are pushing for new deals to get content providers to pay for their usage. The operators say the costs of building out their networks to handle growth in data traffic is outpacing data revenues, compromising their business models.


This is really about operators being upset over the Googles and Apples of the world profiting off the pipes the operators have built. Instead of realizing they are about providing access or building awesome content of their own, they sit at the table begging for a chunk of profits from companies which have built something on top of the operator’s networks. When begging doesn’t work, they threaten to stifle access and innovation. The carriers are like old dogs that can’t learn a new trick. Unfortunately, right now, the only trick they have is peeing on your rug.


Ed Whitacre, AT&T’s former CEO, tried to play this card a number of years ago on the wireline side, pushing for content providers to pay a quality of service tariff. The plan didn’t go through, but it showed some of the vacuous thinking of operators. That wireless carriers in Europe are looking at flogging the same idea shows they’re either dumb or really bold. Either way, it smacks of desperation.


What the carriers don’t understand is that they provide access. Yes, mobile data usage is soaring but that’s the business the carriers are in. They rely on Google and others to get people to buy their data plans and their phones. Without great services, why would people want to pony up for a smartphone or a data plan? It was great just a couple of years ago when data revenue helped offset declining margins on voice. But now that data is exploding, it’s put the carriers in a tough position.


However, trying to get money from content providers is not the way to go. The carriers are already charging users for data, and are in the midst of changing their pricing plans to reflect the very real flood of traffic caused by user demand. Right now, their wireless businesses are still very profitable; for example, Verizon reported operating income on its wireless business of 29.9 percent. It’s preferable that the operators look at tweaking that model to manage traffic and revenue. We’ve advocated innovative pricing for data plans and dynamic pricing, which makes more sense in a world with limited bandwidth and spectrum. They shouldn’t try to build a double-sided market by dipping into the revenue of companies, who have legitimately created valuable services on top of their networks. A flour mill owner can’t approach the baker for a cut of his bread revenue. This would stifle innovation and potentially undermine the dynamism in the mobile world. Will popular app makers have to worry about paying as well if their apps are consuming bandwidth?


If the wireless operators are peeved at Google and others making money off their pipes — and they are no doubt mad — they should build their own services that appeal to users. Otherwise, the carriers shouldn’t argue that they’re more than dumb pipes. The carriers may think they’re getting out early on charging content providers and may have more leverage than their wired counterparts. But pushing an unpopular model again doesn’t reflect bold thinking; it really shows that the idea cupboard is bare. Let’s hope their American wireless counterparts don’t try the same trick here.


Related content from GigaOM Pro (sub req’d):



  • 4G State of the Union

  • Metered Mobile Data Is Coming and Here’s How

  • Mobile Broadband: pricing for profits


Post and thumbnail photos courtesy of Flickr user abbynormy


Everyone likes to be right and the easiest way to be right is to surround oneself with people and opinions that are predisposed to be similar to ours. When investing, it pays to be contrary. That sets you up to be wrong some of the time. The thing is, if you are right 60% of the time, and manage risk properly, there is a good chance you’ll make money. The most basic principle of investing is buy low and sell high. When doing this you’ll seldom hit the actual bottoms or tops; you are buying when the market is going down and selling when it is going up. That in itself is contrary to most retail investors’ practice of buying high and selling low.


Mutual Fund Flows and Sentiment as Contrarian Indicators

The majority of retail (casual) investors use mutual funds and ETFs (Exchange Traded Funds) to invest in the markets. Fund flows (deposits vs. withdrawals) are generally regarded as contrary indicators. This is a component of a broader series of indicators classified as investor sentiment that provide some insight into future directions of the market. The basic principle is: when many investors are bullish the market is more likely to go down and conversely a higher level of bearishness or negative sentiment indicates the market is likely to make a move higher. TrimTabs Investment Research reports on these fund flows and in a recent report stated:


We observed that equity prices tend to fall after equity exchange-traded funds (ETFs) rake in large sums of money. Conversely, the market tends to rise after equity ETFs post heavy outflows.


The report then issues this conclusion:


We have two explanations for the strongly negative correlation between equity ETF flows and future market returns. First, ETFs are traded mostly by retail investors and day traders.  These are the least informed and most emotional market participants—the ones most likely to lose money over time.  Second, we suspect hedge funds use ETFs when liquidity dries up.  Hedge funds were forced to close individual stock positions during the credit crisis, so they bought equity ETFs instead. Equity ETFs posted large outflows in 2009, when liquidity improved.


These concepts are not really as complicated as they seem to be. It’s Economics 101. When demand outstrips supply, prices go up and when supply is larger than demand, prices go down. When funds are flowing into stocks, markets rise but at some point most people are invested and there isn’t enough uninvested capital left to drive prices higher.


Whatever the internal dynamics, the retail investors are generally the last to join in a rally and their main vehicle of investment are mutual funds and ETFs so large inflows into those instruments suggests that  the market is near the top. That’s why many retail investors get the timing wrong and end up losing money. Nobody likes being wrong or losing money, it makes us feel pretty lousy about ourselves! This is borne out in the current rally where the retail investor is reticent to return to the markets after being burned so badly in the housing/banking crisis of 2008 – maybe one time too many in the last decade. As Adam Shell recently wrote in USA Today:


Yet, increasingly, investors on Main Street are not playing the stock market game with confidence like they used to, mainly because the game of making money has gotten tougher and more volatile since the financial crisis. Retail investors are buying fewer stocks. They are paring back on stocks and stock funds they already own. Instead, they’re moving into safer investments, like cash and bonds. “Investors are on strike,” says Axel Merk, president and chief investment officer at Merk Mutual Funds.


Fox News Doesn’t Make You Dumb. It Just Keeps You that Way

I don’t think the decision by retail investors to stay away from the markets is a good one. Markets have historically been a better investment than many other asset classes with the S&P 500 returning roughly a 7% annual rate of return.  Stocks should, at the very least, be a strong component of a diversified portfolio. Instead of shying away from being wrong, investors – people in general – should expose themselves to a broader group of opinions, to alter unsuccessful behavior and improve decision making.


The findings of a new study, Misinformation and the 2010 Election, from the University of Maryland’s World Public Opinion show that 9 in 10 voters in the 2010 election believe they encountered information that was misleading or false, with 56% saying this occurred frequently. The study also concludes that those who watched Fox News almost daily were significantly more likely than those who never watched it to believe misinformation.


The bad news for FOX News viewers is that merely watching the channel appears to be toxic. Most voters believed a few whoppers during the 2010 election cycle. But daily watchers of FOX News believed more misinformation than everyone else.

The underlying problem uncovered by this study is that today’s news organization are not unbiased deliverers of the day’s events, these outlets are partisan interpreters of the day’s events packaged to appeal to their viewership or constituency.  I don’t claim one network or source is a more egregious offender than another.  Everyone is entitled to their opinions, but each carries a bias that should be understood before assuming what we are digesting is “news” and not opinion.


This Article is Biased

This article exposes some of my own biases. We all have them and those views can be positive as they give us the strength to make decision with confidence. Most of the stocks I own are lesser-known, yet-to-be-recognized small technology stocks. I short stocks that people recommend as buys, such as Coinstar (CSTR), and I shy away from momentum stocks with historically unjustifiable valuations. I believe you should never buy a stock for which you can’t make a historically significant case of undervaluation. In our markets his is contrary behavior, but it works, and it helps me sleep at night.


If we are making bad decisions, like buying market tops and selling bottoms like the recent bottom in 2008, it is positive to examine our biases and correct them where possible. The best way to correct faulty assumptions is to take in a variety of disparate view points and make informed decisions. We can’t do this confining our media consumption to sources that only reinforce our previously held views. Religion and patriotism should allow for independent thought and interpretation. We should all try to broaden our information sources in 2011 and perhaps we can overcome the ‘misinformation’ gap and make some more profitable investment decisions.


I hope technology positively affects your life in 2011 and all your stock investments are winners.


Steven Bulwa is an investment analyst with a focus on new developments in technology and the companies poised to benefit. He has contributed to TheStreet.com, Realmoney.com, Business Insider, Huffington Post and SeekingAlpha.com, among others. Visit www.bulwatechreport.com, or follow @BulwaTech, to learn about technology companies with true growth prospects for 2011 and beyond.

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