From the Absurdity of Governance File: Yesterday, during a Senate budget committee meeting, Treasury Secretary Paul O'Neill and West Virginia Senator Robert Byrd fought over who grew up poorer. A Washington Post story has the details, but the low point came in this exchange:
O'Neill: "I started my life in a house without water or electricity so I don't cede the high moral ground to you of knowing what life was like in a ditch."
Byrd: "I started out in life without any rungs in the bottom of the ladder... I've had that experience and I can stand toe-to-toe with you."
Byrd, the longest-serving member of Congress, then finished off by saying, "I knew Alexander Hamilton, I worked with Alexander Hamilton, and you're no Alexander Hamilton!" (Okay, we fudged that one a little, but in all seriousness, that's pretty close to what he said, referring to the first secretary of the U.S. Treasury.)
Yo, Senator Byrd and Secretary O'Neill, if you want to boast about growing up poor and how you're really just an Everyman despite whatever your economic status is now, do it on our Living Below Your Means discussion board. Mix with some real people. Get a dose of reality. Maybe even deposit some of your nickels and dimes via our short-term savings center. But most importantly, try to be competent stewards of our tax money!
The FOOL 50 knew Alexander Hamilton, too. The index rode some positive sentiment into the weekend, gaining about 1% today. For the week it was down 2%.
In today's Motley Fool Take:
Revenge of the Short Sellers
Short sellers are making a comeback. Much maligned by "long" investors during the bull run of the '90s, short sellers, who bet on stocks to fall, are now being heralded as the guys we should have paid more attention to before the bubble burst.
One of them, Wall Street veteran Jim Chanos, was recently profiled both in Barron's and Newsweek as "The Guy Who Called Enron." A year ago at a kind of short-seller retreat in Miami, Chanos pitched Enron as a murky company with deteriorating business fundamentals. He hit the nail on the head, and at the moment he's a Wall Street hero.
Short sellers often thrive in turbulent markets like the one we're in now. Chanos' hedge fund earned 47% in 2000. But shorting is a risky strategy, not suited for most investors. Unlike most of us, who hope to profit as stocks rise, short sellers borrow shares from their broker, sell them, and hope to repay the brokerage with shares bought later at a lower price.
Anyone can sell short. In fact, our Rule Breaker Portfolio usually has a short in its basket (the current one is Sirius Satellite Radio (Nasdaq: SIRI)). But remember, when you buy a stock long, the worst that can happen is you lose all the money you invested. But if you short a stock, conceivably your losses could be infinite if the stock rockets into orbit. Imagine what would have happened if you were short America Online back in 1993 and kept waiting for it to fall through the floor?
One short seller told Newsweek, "We're like detectives, the good guys who ferret out the bad stuff." It'd be fun to think of these guys as gumshoes, hanging in a dingy basement working for the betterment of mankind, but more likely, they're wearing Armani in the penthouse, doing it for big profit.
Still even if you never short a stock -- most of us don't -- paying attention to what short sellers are saying can help foster your own healthy skepticism, and it may prevent you from making bad investments in the future.
You can learn all about shorting stocks right here on Fool.com.
Misery loves company, scandal a televised sit-down with Connie Chung. Fraud pines for a frenzied bidding war on eBay (Nasdaq: EBAY).
Since every exec called to Capitol Hill is pleading the Fifth about the Enron meltdown, we thought we'd see what The People had to say. We hear them loud and clear on eBay, and they say: "More Lucite recognition plaques!"
The Enron debacle has sparked a veritable bazaar of Enron paraphernalia on the popular auction site -- 1,387 entries as of press time, to be precise. The highest-ticket items are domain names containing the word "Enron." For instance, EnronSecrets.com can be yours for 20 grand. EnronTrials.com is going for fifteen thou. EnronChat.com for ten grand (and one cent). And -- what a steal! -- EnronConspiracy.info and .net has an opening bid asking price of a mere $999.
More tangible Enronphernalia being hawked include an Enron Koozie lunch sack ("Brand New!"), silver Tiffany keyrings, Enron mugs, golf tees, three blue Enron Stress Balls and a double-breasted suit custom made for Ken Lay (42 Short). One Beaverton, Oregon-based seller (screen name: x enron) offers a roll of Enron toilet paper for those who "feel like flushin' your shares down the toilet." (Side note: A keyword search for "Jeff Skilling's soul" came back with the message: "item cannot be found.")
Though we've always cautioned against treating collectibles as investments, in this case we may be wrong. Sadly, some Enron employees could probably top the totals in their 401(k) accounts by auctioning off their dusty Enron tchotchkes.
The Monsters Under Pixar's Bed
Monsters can be scary, but they can also be box office gold if mined just right. Pixar (Nasdaq: PIXR) trounced fourth-quarter estimates on the heels of the runaway success of its fourth full-length feature film, Monsters, Inc. While the quarterly take of $26.1 million in revenue and $0.25 a share in earnings might not seem like much, that was 40% ahead of consensus projections. The tantalizing aspect of the report is that even greater riches are there for the taking once the movie hits the home video market later this year.
The meatier storyline here is the public negotiations between Disney (NYSE: DIS) and Pixar, who have three films left in their 50/50 production and distribution deal. With Disney's in-house animated films tanking at the box office while Pixar is four for four, they are each painting a different picture as to the health of the relationship. Will Disney sweeten the pot now before Pixar bolts come 2005?
The battle is being waged in the conference calls. Last week, Disney noted that Disney and Pixar are doing just fine and that the company is looking forward to three more movies as well as a couple of sequels. The next day Pixar shot back with the equivalent of "Sequels? We don't need no stinkin' sequels?"
Surely enough, Pixar has the right-of-first-refusal to produce follow-ups but is under no obligation to do so. The three contracted films are already in production, with Finding Nemo already slated for its theatrical release next summer. But is Pixar headstrong enough to the point of letting someone else take over what would amount to easy money?
Right now, life is imitating computer-rendered art. Pixar is being run like Monsters Inc., attempting to harness the screams of Disney's shareholders in order to power its own metropolis. Meanwhile, Disney is playing it like the elderly chess addict in Pixar's award-winning animated short, Geri's Game, playing against itself and playing dead to score the ultimate checkmate.
The bottom line is that Disney needs Pixar far more than Pixar needs Disney right now. Last night, Pixar announced that it would green light the production of its first "post-Disney" flick this summer. There's your ransom note Disney.
Is this the end of Woody and Buzz as best buddies? How did Disney yield the crown of animation to the upstarts? Can Pixar evolve into a complete entertainment company? All this and more -- in the Pixar Discussion Board. Only on Fool.com.
Shameless Plug Dept: Package Deal
Everybody likes packages. Big packages, little packages, surprise packages. As long as it's not your still-unopened package from Aunt Matilda with the cheese log she sent last Christmas.
Well, we've got a package deal that we promise will reek of nothing foul. Right now you can get TMF Money Advisor, membership in the Fool Community, and the 2002 Motley Fool Tax Guide all for one low price. It's one package that will never go rotten.
Corning (NYSE: GLW) says its bottom is showing. The world's top fiber-optic cable maker believes this current quarter should mark the bottom for its business, as first quarter revenues are expected to be about the same as the fourth quarter. Management also expects to hit the free cash flow positive mark later in the year.
Goodyear Tire & Rubber (NYSE: GT) reported a net fourth-quarter loss of $1.07 per share this morning, and a $1.27 per share full-year loss. Despite the accounting loss, the company generated $289 million in free cash flow during 2001. Despite that, however, Goodyear will be eliminating 3,500 more jobs worldwide, resulting in about $100 million a year in savings.
The company with the comical cognomen, Crown Cork & Seal (NYSE: CCK), is streamlining its operations. The packaging products supplier will sell off some of its interests in Africa and close seven plants in the U.S. and Europe. The streamlining will leave the company about 700 employees lighter. Shares of Crown Cork popped over 10% on the news.
Global Crossing, which filed for Chapter 11 bankruptcy last month, now finds itself under SEC investigation. At issue is a letter from a former employee alleging accounting practices that artificially inflated revenues.
As Enron Turns: It seems our daily serial will soon be turned into a made-for-TV movie. Cable network FX will be teaming up with Artisan Television to produce a two- or four-hour movie about the Enron scandal. We suggest "Pull My Finger, America: The Enron Energy Story" as the title, and Alan Hale, Jr. to play the role of Ken Lay, Bob Denver as Jeffrey Skilling, and Tammy Faye Baker as Ken Lay's wife.
In testimony yesterday, former CEO Skilling (even more former than Lay) told a House subcommittee that when he resigned from Enron last August, the "company was in strong financial position." During Skilling's grilling, many lawmakers cast strong doubt on his claim that he had no knowledge of wrongdoing. Said one Representative, making us rethink our Bob Denver suggestion above: "You are employing the Sergeant Schultz defense of 'I see nothing, I hear nothing.'" Jawohl, Herr Kommandant!
And Finally...
Today on Fool.com: Polling All Fools: Should Enron employees be compensated for their losses?... In "Cisco in a Time of Paranoia," Bill Mann looks at the company's latest quarterly report.... Figure out how to avoid paying estimated taxes, and learn about bonds.
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