"There are two sorts of wealth-getting, as I have said; one is a part of household management, the other is retail trade: the former necessary and honorable, while that which consists in exchange is justly censured; for it is unnatural, and a mode by which men gain from one another. The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural object of it. For money was intended to be used in exchange, but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of modes of getting wealth this is the most unnatural."
- Politics, Aristotle, 350 B.C.
"The Jew alone regards his race as superior to humanity, and looks forward not to its ultimate union with other races, but to its triumph over them all and to its final ascendancy under the leadership of a tribal Messiah."
- Goldwin Smith, The Jewish Question, October 1881
“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”
- President Woodrow Wilson 1916
“We are grateful to the Washington Post, The New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is now more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.”
- David Rockefeller, Baden-Baden, Germany 1991
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
- Henry Ford
“The real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson.”
- Franklin D. Roosevelt, letter to Col. House, November 21, l933
“One of the least understood strategies of the world revolution now moving rapidly toward its goal is the use of mind control as a major means of obtaining the consent of the people who will be subjects of the New World Order.”
- The National Educator, K.M. Heaton
"We Jews, we, the destroyers, will remain the destroyers for ever. Nothing that you will do will meet our needs and demands. We will for ever destroy because we need a world of our own, a God-world, which it is not in your nature to build."
- Maurice Samuels, You Gentiles, 1924
“We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the New World Order.”
- David Rockefeller
“Today, America would be outraged if U.N. troops entered Los Angeles to restore order. Tomorrow they will be grateful! This is especially true if they were told that there were an outside threat from beyond, whether real or promulgated, that threatened our very existence. It is then that all peoples of the world will plead to deliver them from this evil. The one thing every man fears is the unknown. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well-being granted to them by the World Government.”
- Dr. Henry Kissinger, Bilderberger Conference, Evians, France, 1991
"Never argue with stupid people. They will drag you down to their level and then beat you with experience." –Mark Twain
If you want to begin to understand and appreciate the work of Mike Stathis, from his market forecasts and securities analysis to his political and economic analysis, you will first need to learn how to think clearly. For many, this will be a cleansing process that could take quite a long time to complete depending on each individual.
The best way to begin to clear your mind is to first move forward with this series of steps:
1. GET RID OF YOUR TV SET (at least cancel your cable)
2. REFUSE TO USE YOUR PHONE TO TEXT
3. DO NOT USE A "SMART PHONE" (or at least do not use your phone to access the internet)
4. STAY AWAY FROM SOCIAL MEDIA
The cleansing process will take time but you can hasten the process by being proactive in exercising your mind.
You should also be aware of a very common behavior exhibited by humans who have been exposed to the various aspects of modern society. This behavior occurs when an individual overestimates his abilities and knowledge, while underestimating his weaknesses and lack of understanding. This behavior has been coined the "Dunning-Kruger Effect" after to sociologists who described it in a research publication. See here.
Many people today think they are virtual experts on every topic they regard with relevance. The reason for this illusory behavior is because these individuals typically allow themselves to become brainwashed by various media outlets. The more information these individuals obtain on these topics from the media, the more qualified they feel they are in these subjects, without realizing that the media is not a valid source with which to use for understanding something. The media always has bias and can never be relied on to represent the full truth.
A perfect example of the Dunning-Kruger Effect can be seen with many individuals who listen to talk radio shows. These shows are politically biased and consist of individuals who resemble used car salesmen more than intellectuals. These talking heads brainwash their audience with cherry-picked facts, misstatements and lies regarding relevant issues such as healthcare, immigration, Social Security, Medicaid, economics, science, and so forth. They also select guests for interview based on the agendas they wish to fulfill with their advertisers.
Once their audience has been indoctrinated by these propagandists, they feel qualified to discuss these topics on the same level as a real authority, without realizing that they obtained their understanding from individuals who are employed as professional liars and manipulators by the media. Another good example of the Dunning-Kruger Effect can be seen upon examination of political pundits, stock market and economic analysts on TV. They talk a good game because they are professional speakers. But once you examine their track record, it is clear that these individuals are largely wrong, but they have developed an inflated sense of expertise and knowledge on topics for which they continuously demonstrate their incompetence.
One of the most insightful analogies created to explain how things are often not what you see was Plato's Allegory of the Cave, from Book 7 of the Republic.
We highly recommend that you study this masterpiece in great detail so that you are better able to use logic and reason.Although we recommend you read and study The Allegory of the Cave, you can get a flavor for its meaning by watching the following video.
If you can learn how to think like a philosopher, specifically one of the great ancient Greek philosophers, it is highly unlikely that you will ever be fooled by con artists like those who make ridiculous and unfounded claims in order to pump gold and silver, the typical get-rich-quick or multi-level marketing (MLM) crowd.
“Beware of false prophets, which come to you in sheep's clothing, but inwardly they are ravening wolves.”
King James Bible - Matthew 7:15
"It's easier to fool people than to convince them that they have been fooled." –Mark Twain
All Viewpoints Are Not Created Equal Just because something is published in print, online or aired in the broadcast media does not make it accurate. In fact, more often than not the larger the audience, the more likely the content is either inaccurate or slanted. The next time you read something about economics or investments, you should ask two main questions in order to assess the credibility of the source. Is the source biased in any way? That is, do they have any agendas which would provide any type of benefit accounting for their views? Most individuals either sell ads on their site or are dealers of precious metals or securities. That means their views are biased and cannot be relied upon.
Is your source is credible?
Most people associate credibility with name-recognition. But more often than not, name-recognition serves as a predictor of bias if not lack of credibility because the more a name is recognized, the more the individual has been plastered in the media. And every intelligent person knows that individuals who have been provided with media exposure because they are either naive or clueless. The media positions these types of individuals as “credible experts” in order to please its financial sponsors; Wall Street.
Instead of name-recognition or media celebrity status, you must determine whether your source has relevant experience on Wall Street as opposed to being self-taught. But this is just a basic hurdle that in itself by no means ensures the source is competent or credible. More important, always examine the track record of your source in depth, looking for accuracy and specific forecasts rather than open-ended statements. You must also look for timing since a broken clock is always right once a day. Finally, make sure they do not cherry-pick their best calls. Always examine their entire track record.
“Beware of false prophets, which come to you in sheep's clothing, but inwardly they are ravening wolves.”
King James Bible - Matthew 7:15
The above questions require only slight modification for use in determining the credibility of sources that discuss other topics, such as politics, healthcare, etc.We have compiled the most extensive publication exposing hundreds of con men pertaining to the financial publishing and securities industry, although we also cover numerous con men in the media and other front groups since they are all associated in some way with each other.
There is perhaps no one else in the world capable of shedding the full light on these con men other than Mike Stathis. Mike has been studying the indistry for well over a decade. Alhough he has published numerous articles and videos addressing this dark side of the industry, the entire collection can be found in our ENCYCLOPEDIA of Bozos, Hacks, Snake Oil Salesmen and Faux Heroes.
At AVA Investment Analytics, we don't try to pump gold, silver or equities like many others you see because we are not promoters or marketers. And we do not receive any compensation whatsoever (including from ads) from our content. We provide individual investors, financial advisers, analysts and fund managers with world-class research, education and unique insight.
If you listen to the media, most likely it is costing you hundreds of thousands of dollars in lost money at minimum over the course of your lifetime. The deceit, lies and useless guidance from the financial media certainly is a large contributor of these losses to the sheep you pay attention.
But a good deal of lost wealth comes in the form of excessive consumerism which the media seeks to impose on its audience. You aren’t going to know that you’re being brainwashed or that you have lost $1 million or $2 million over your life time due to the media, but I can guarantee you that with rare exception this is the reality for those who are naïve enough to waste time on the media.
It gets worse. By listening to the media, you are likely to also suffer ill health effects through the lack of timely coverage of toxic prescription drugs or through the ridiculous medical shows, all of which are supportive of the medical-industrial complex.
And if you seek out the so-called "alternative media" you might make the mistake of relying on con men like Kevin Trudeau or Alex Jones. This could be a deadly decision. As bad as traditional media is, the so-called "alternative media" is even worse.
Why Does the Media Air Liars and Con Men?
The goal of the media is NOT to serve its audience because the audience does NOT pay the bills.
The goal of the media is to please its sponsors, or the companies that spend huge dollars buying ads, and in order for companies to justify these expenses, they need the media to represent their cause. The media does this by airing idiots and con men who mislead and confuse their audience.
By engaging in "journalistic fraud," the media steers its audience into the arms of its advertisers because the audience is now misled and confused, so in the case of the financial media, it seeks the assistance of Wall Street brokerage firms, mutual funds, insurance companies, precious metals dealers. This is why advertisers pay big money to be promoted in the financial media.
We see the same thing on a more obvious note in the so-called "alternative media," which is really a remanufactured version of the so-called "mainstream media." Do not be fooled. There is no such thing as the "alternative media."
In order to be considered "media" you must have content that has widespread channels of distribution. Thus, all "media" is widely distributed and the same powers that control the distribution of the so-called "mainstream media" also control the distribution of the so-called "alternative media."
The claim that there is an "alternative media" is merely a sales pitch designed to capture the audience that has since given up on the "mainstream media." The tactic is a very common one used by con men.
The same tactic is used by Washington to convince naive voters that there are meaningful differences between the nation's two political parties. In reality, both parties are essentially the same when it comes to issues that matter most (trade policy, healthcare and war). Anyone who tells you anything different simply isn't thinking straight.
On this site, we expose the lies and the liars in the media. We discuss and reveal the motives and track record of the media’s hand-selected charlatans with a focus on the financial media.
No one has generated a more accurate track record in the investment markets over the past several years than Mike Stathis. Yet, the financial media wants nothing to do with Stathis.
You aren't even going to hear him on the radio being interviewed.
You aren't going to see him mentioned on any websites either.
You won't read or hear of his remarkable track record unless you read about it on this website or read his books.
You should be wondering why this might be. Some of you already know the answer.
The media has banned Mike Stathis because the trick is to air clowns so that the audience will be steered into the hands of the media's financial sponsors - Wall Street and gold dealers.
And as for the radio shows and websites that either don't know about Stathis or don't care to hear what he has to say, the fact is that they are so stupid that they assume those who are plastered in the media are credible. And since they haven't seen or heard Stathis in the media, even if they come across him, they automatically assume he's a nobody in the investment world simply because he has no media exposure.
Well, if media exposure was a testament to knowledge, credibility and excellent track records, Peter Schiff's clients would be a lot happier when they looked at their account balance.
Others only care about pitching what’s deemed as the “hot” topic because this sells ads in terms of more site visits or reads. This is why you come across so many websites based on doom and conspiratorial horse shit run by con artists looking to cash in on ads.
We have donated countless hours and huge sums of money towards the pursuit of exposing the con men, lies and fraud. We continue this mission but we cannot continue it forever without your assistance.
We have been banned by virtually every media platform in the U.S and every website (mainly because we expose the truth about gold and silver).
We have been banned from use of email marketing providers.
The fact is that the Jewish Mafia has declared war on us because we have exposed the realities of the U.S. government, Wall Street and corporate America.
Note that we only began discussing the role of Jews in criminality by 2009, three years AFTER we had been black-listed by the media, so no one can say that our criticism of the Jewish Mafia has led to being black-listed, not that it would even be acceptable.
You can talk about the Italian Mafia, and Jewish Hollywood can make 100s of movies about it...
BUT YOU CANNOT TALK ABOUT THE JEWISH MAFIA.
We rely on you to help spread the word about us. Just remember this. We don’t have to do what we are doing.
We could do as everyone else and focus on making money. We are doing sacrificing everything because in this day and age, unfortunately, the truth is revolutionary. It is also critical in order to prevent the complete enslavement of world citizenry.
On Exposure: No one who has significant exposure can be trusted because those who are responsible for permitting such exposure have allowed it for a very good reason, and that reason does not serve your best interests.
On Spotting Frauds: Whenever you wish to know whether someone can be trusted, always remember this golden rule..."a man is judged by the company he keeps."
This is a very important rule to remember because con men almost always belong to the same network.
You will see the same con artists referencing each other, on blog rolls and so forth.
Recently, I reminded readers of a very lucrative (and what I felt was a very obvious) long-short equity strategy I discussed that would have yielded huge returns to those who opted to take on this risky maneuver.
I normally don’t recommend that everyday investors take short positions because it’s extremely risk for many reasons. Most non-professional investors fail to recognize the risks involved with shorting securities because taking a short position is just a mouse click away if you have an online brokerage account. That in itself is an entirely different issue that needs to be addressed by the SEC.
Unless you have a good deal of relevant investment experience, you’re not likely to full appreciate the risks involved with shorting. Some unwary investors have learned the hard way after taking a short position, only to watch helplessly as the stock is halted during the trading session prior to the release of a major announcement. While such events can swing either way, more often than not, such an announcement is likely to go against you if you’re short.
There are times when I feel very confident about a company’s bleak future. In the past, I have made the bold move to publish a short recommendation in a book. As discussed recently, I made this call when presenting my analysis of Blockbuster in the Wall Street investment Bible. I added that a nice example of an effective long-short strategy would be to take a long position in Netflix and a short position in Blockbuster.
As many of you recall, I also made this call for Fannie, Freddie, the banks and homebuilders in Cashing in on the Real Estate Bubble, released in early 2007.
In this book my main strategy for making money from the real estate bubble was to short real estate-related securities. I made specific mention of those securities I felt most likely to collapse and provided guidance as to the timing. I even included a brief tutorial for those who were not experienced shorting stocks.
First on this list were Fannie, Freddie, Accredited Lender, Novastar, and Fremont General. Next were the banks and homebuilders. I also discussed that General Electric and General Motors were likely to get hit really bad.
The downside associated with putting these calls into a book is that I had no way to change my mind if I turned out to be wrong. So if things didn’t turn out as I anticipated, I might have looked silly. But that wouldn’t have been the first time a person made a poor investment call in a book. In fact, I challenge you to see if you can find a book that has ever specifically instructed readers to short a stock. You are unlikely to find a single case because shorting is a short-term strategy that often reverses.
The point I want to make is that all investment strategies must always be managed. Even if someone has overwhelming evidence to indicate a company is destined for demise, the fact is that no one has a crystal ball. Things can and often do change over time. Thus, if you ever plan to take a short position you must hedge your position. And you must manage the position throughout its duration.
One way to hedge a short position is to purchase call contracts. But you cannot expect to receive a full hedge against the position unless you select in-the-money calls (whereby the strike price is below the price of the underlying stock at the time you short it) to account for slippage, frictional costs, exit premiums and other less obvious costs. Many investors don’t like to pay the added costs involved with hedging, but I can assure you it is well worth the price.
Here I want to show you another example of a more recent long-short position. Note that I am not recommending investors take this long-short at this point. There are man better opportunities out there. I merely wanted to point it out to show the irony.
As many are aware, a few days ago AOL announced its purchase of Huffington Post for around $315 million. Immediately after the announcement the Internet was buzzing with the news. First , let’s take a brief look at Huffington Post.
Huffington Post. Trash or Treasure?
I won’t get into the details of my analysis, but many of you probably already know what I think of the Huffington Post. In short, I feel it is complete trash that disguises itself as an ally and advocate for Main Street when the fact is that it’s really no different than other media publications that only serve the interests of their corporate sponsors. Similar to many other publications, HP has successfully fooled millions who go to the site thinking they are receiving unbiased, accurate insight and valuable opinion.
In reality, HP is no different than the rest of the media except it contains even more trash. The only real news the site gets comes from other sources. In fact, HP is really a social blogging site whose bloggers have been selected based on their adherence to Arianna’s own views.
As you might imagine, HP has also banned me. In fact, the kids at HP who monitor emails have never even responded to my inquiries to submit articles on healthcare and the economy, despite the fact that HP publishes opinion pieces from more than 15,000 blogs. Similar to all other corporate media firms, HP does not want the truth to be exposed about these critical topics because they represent corporate and political agendas.
In addition to its own publications largely from very inexperienced and clueless reporters, Huffington Post features opinion pieces and interviews from the same names with the same lines you see on TV and other print media. You’ll see the same bozos and marketers who have been positioned as experts by the media.
I recently provided clear evidence of the incompetent nature of Huffington Post’s business reporter.
“By now it should be clear to even the most naïve individuals that the banking cartel caused this global collapse. Meanwhile, its partner in crime, the corporate media kept consumers in the dark, while covering up the criminal activities of Wall Street. Yet some journalists still remain clueless. For instance, in a recent conversation I had with Shahien Nasiripour, the business reporter for the Huffington Post, he stated that he was not aware that Wall Street banks committed securities fraud. This was a few weeks after I sent him chapter 10 of America’s Financial Apocalypse and chapter 12 of Cashing in on the Real Estate Bubble. Brief excerpts from these chapters can be found here.
Even Greenspan recently admitted the financial collapse was due to Wall Street fraud. If Greenspan is willing to admit fraud caused the collapse, it implies that virtually everyone with a pulse is aware of it. If only he could take responsibility for his own actions which facilitated the fraud.
Meanwhile, like all other media, Huffington Post continues to feature articles and blogs from Washington and Wall Street hacks, as well as extremists who claim to be chief economists, but are merely marketers. For the record, the Huffington Post has also banned me, as they are just as useless as all other forms of media in the U.S., so don’t be fooled by their ‘We’re on your side.’
Regardless who you turn to in the Huffington Post, New York Times, or any of the other members of America’s propaganda machine, you will find one of two things. Their so-called “experts” either have no idea what they are talking about, or they are lying in order to line their own pockets. Have you ever wondered why you see the same bozos throughout the media? It’s called the flooding approach. People will believe anything if it is repeated over and over.”
But remember, the media’s mission is NOT to deliver unbiased insights from real experts with solid track records. The real mission is to brainwash its audience to accept the positions most beneficial to corporate America because they are the ones buying the ads. You get the same censored, biased, agenda-filled content, plastered with ads from corporate America.
In the end, rather than something different, HP provides the same trash. In fact, HP is more like the TMZ of news, economics, healthcare and other topics that most Americans fail to truly understand because they look to the corporate media monopoly as their primary source of information.
Furthermore, HP has been accused of stealing content from other sites, as well as other questionable behaviors. It should be clear to any intelligent individual who has spent time on HP that this media site contains very little if any original valuable content. It appears that most of the efforts at HP are spent on SEO (search engine optimization) activities rather than on delivering quality content.
As the head of a corporate media firm, you can imagine the low opinion I have of Arianna Huffington. She’s obviously a complete whore for corporate America. Despite her surname (which she chose to keep after her divorce from former Congressman Michael Huffington) Arianna is Greek. As a Greek-American myself, I’m disgusted by her lack of character, integrity and sneaky behavior.
Perhaps it’s of no coincidence that Michael Huffington admitted he was bisexual shortly after divorcing Arianna. If I was stuck with her, I might seek other options for my sex life as well.
Arianna has a long history of cozy relationships with the right group of people that one would need to form a “successful” media company. The same can be said about Wall Street, Washington, academia and virtually everything else. I have documented this on numerous occasions. Perhaps Arianna has become a victim of the company she keeps.
Arianna offers no expertise other than spin facts, censoring, and brown-nosing. Yet she is invited to speak at events offering her opinion on critical issues such as healthcare, the economy, trade and politics much in the same way as Sarah Palin has. This is disconcerting.
Under her direction, HP staff carries out the fine art of selective censorship mastered by America’s media monopoly by publishing content and permitting only those who share in her deluded views, all without offering balance. This is problematic.
Arianna has also used HP as a platform to feed her ego by posting her “All Things Arianna” section on the site. It’s unfortunate that Steve Case no longer heads AOL, because Arianna’s ego would have provided a nice fit.
I think it is important to ask the following question. Other than her physical appearance, is Arianna really much different than Sarah Palin?
A Case Study in Failure
Some of you might also know what I think of AOL. The AOL-Time Warner merger embodied everything that went wrong with the dotcom era, marking the end of a longer era of irrational exuberance that led to the great bull market. Ridiculous valuations and delusions of greatness preached by incompetent CEOs with large egos characterized this period. Towards the end of the dotcom bubble, AOL had emerged to a prominent position. In its final act prior to its demise, AOL led the worst merger in U.S. history; the merger between AOL and Time Warner.
For those who don’t remember, or for others who were too young to care, in 2000 under the “leadership” of Steve Case AOL purchased Time Warner for $165 billion making it one of the largest mergers ever. The business strategy was simple. Combine the world’s largest Internet access firm with the world’s largest media firm.
The problems with this merger were several-fold. First, AOL was severely overvalued due to the dotcom bubble. But it was also severely overvalued due to accounting fraud that had not yet surfaced. Even worse, AOL had no real broadband strategy to speak of. Thus, going forward the company stood to lose significant market share. The stress would mount as the dotcom bubble corrected and accounting fraud was revealed.
Yet, all of the “geniuses” praised the merger. If the deal was truly as great as Ted Turner claimed (“better than sex”) I certainly don’t envy his sex life. I never bought AOL either before or after the merger because I didn’t fall for the hype.
When a company spends hundreds of millions of dollars sending out trial CDs month after month, that should tell you that its services really aren’t that good. This marketing strategy allowed AOL to seize a first-mover advantage. But it also pissed a lot of people off because they became tired of receiving CDs from AOL every month.
"If there's one thing more certain in life than a Man United fan living in Portsmouth, it's that every person in the UK will, at some point, receive an AOL sign-up CD.”
Anyone who knows the first thing about business will tell you that a first-mover strategy is not considered a competitive advantage. It merely offers a temporary advantage. And if this early lead is not used to establish a competitive advantage, all bets are off. This was specifically why Case wanted Time Warner. It had exactly what AOL needed; a huge and diverse collection of valuable (from a monetary sense) content. The only problem is that Case completely blew the distribution side of the equation.
Analysts assumed Case would make up lost ground by rolling out a reliable broadband strategy, but this never happened. By the time AOL realized that broadband would represent the new market for Internet access it was too late. Millions of AOL customers had already departed to cable and telecom providers offering faster Internet connections.
This failure by Case soon took its toll on the newly merged entity. By 2002 AOL Time Warner recorded the largest loss ever (at the time) at nearly $100 billion. As a result, the company wrote off most of the value of the merger. This amounted to an immediate vaporization of $100 billion of shareholder equity.
The merger of AOL and Time Warner serves a perfect example of the need to scrutinize the goodwill entry on the balance sheet. Goodwill is something I discuss in the Wall Street Investment Bible. Although it is often considered to represent the value of intangible assets, what it really amounts to is a black box because the value of these assets is very difficult to determine.
After many years of pain and suffering, Time Warner finally ditched the virtually useless AOL in 2009. It’s been a long and rough struggle for Time Warner ever since destroying billions of dollars of shareholder value.
Although management has done a somewhat admirable job since this disaster, after more than a decade the market cap of Time Warner stands at just $40 billion. With a market cap as high as $230 billion at the peak of the dotcom bubble, it is unlikely that shareholders who bought shares of Time Warner anytime during 1998-2000 will live to see the day when they break even on their investment.
Some Things Never Change
Despite all of the accounting fraud committed by AOL, in addition to execution of the most irresponsible and disastrous merger in U.S. history, no heads rolled from either AOL or Time Warner. This outcome is much like the case seen today after Wall Street reaped huge payouts while committing securities fraud. Some things never change.
In fact, Case and several former AOL employees remain very wealthy today. At one point, Case had 10 personal assistants. Having spoken to several of these individuals by phone while I was on Wall Street, it was clear to me that they were not particularly well educated or intelligent. They were essentially gophers or glorified secretaries. Yet, each of them became very wealthy from stock options and the accounting fraud that boosted their value.
Other AOL employees (many in their mid- to late-20s) were being paid $200,000 and more back then for basically entry-level IT jobs. It’s no wonder why so many have flocked to ITT, Devry and other less-credible colleges for 2-year degrees in IT.
This ridiculous compensation continued even after the merger. I know this because I did a lot of research and spoke to numerous individuals back then. These ridiculously high salaries represent an irresponsible use of shareholder equity and therefore could be argued to constitute shareholder fraud.
Furthermore, the employee stock options system that is widespread throughout corporate America constitutes insider trading (especially for executives). But it is permitted by the SEC. I discussed this 5 years ago in America’s Financial Apocalypse.
Case got away with massive accounting fraud much in the same manner that he and Time Warner executives got away with destroying shareholder value, so of course these other issues would never be addressed by the SEC.
Ultimately, shareholders are responsible for these acts of fraud and irresponsibility because they continue to sit back and let it happen over and over again. Thus, I really don’t have any sympathy remaining for those who lost it all. Keep sitting back, doing nothing and the same results will repeat indefinitely.
The Future of AOL and Time Warner
As far as content is concerned, Huffington Post compliments the cheese and trash content offered to AOL’s dial-up users. However, AOL would need a revolutionary strategy in order to have long-term success. The main engine of AOL’s business model continues to come from its dial-up Internet service which comes at a price tag of up to $25.90 per month. However, the majority of its revenues come from advertisements.
I can’t imagine how anyone these days is able to surf the web too well with such slow access, especially when new web-based programming continues to require more bandwidth. Remember, we are now living in a period whereby wireless smart phones have 4G Internet access.
While AOL doesn’t stand much of a chance of long-term survival, the company is by no means distressed. While it has a nice cash position even after overpaying for Huffington Post, in the worst case scenario it will still be around for a few more years. However, AOL remains stuck in a vortex of shrinking growth due to strategic confusion.
AOL has established a consistent pattern possible only under the leadership of incompetent management. AOL’s overpaid and clueless management team continues to search blindly for a way out of the corner, after losing a huge amount of money on Bebo and several other assets, many having been sold at a loss with others on the way.
Without a significant restructuring of its business model and strategy, AOL’s purchase of Huffington Post will most likely represent one more page in the story of a once large company that has faded into the dusk due to a chronic period of poor execution, terrible strategy and incompetence, all while very few take notice.
I do believe I understand what AOL needs to do to mount a permanent turn around. But I’m not about to share this for free for the benefit of AOL’s management. Most likely, management wouldn’t listen to me even if I sent in a written analysis and strategic blueprint, similar to the one I sent Blockbuster management some 6 years ago.
Unlike the situation seen in Japan, Canada and most other advanced nations, in the U.S., executive management of publicly traded corporations are not held accountable for their actions. They pull in huge salaries and bonuses regardless how low the stock price sinks. This is specifically management does things their own way, which often positions their own incentives above those of shareholders. They don’t listen to those who might be better able to build shareholder value because they don’t have to. In fact, Washington operates in the same manner.
While I certainly wouldn’t be a buyer of Time Warner much in the same as I wouldn’t short AOL at this point, I think it’s ironic to note the long-short strategy that would have performed nicely over the past few months. The following chart is likely to represent the long-term fate of each company.
Down the road the best investment in AOL just might end turn out to be collecting old trial CDs. Maybe not, but it appears that some have already started.
Remember, if you plan to short AOL or any other security, you had better hedge your position.
I invite you to join other subscribers who wish to become great investors, as they learn how to navigate the financial landmines that promise to be commonplace for years to come. The best way to achieve this difficult task is to subscribe to one of our investment newsletters.
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