You never know where you're going to find great investments -- sometimes they are cast aside like worn-out tires on the side of the road. That's Bill Mann's point today as he highlights one company featured in Stocks 2004, our Foolish investor's guide to the New Year. It's not too late to get your copy.
Speaking of great investments and great investors, our own David Gardner will be on Nightly Business Report tonight, discussing the year ahead with Paul Kangas. Be sure to check the air times in your area.
In today's Motley Fool Take:
- CNBC's Draconian Move
- Quote of Note
- E*Trade Scores a TD
- Discussion Board of the Day: Discount Brokers
- Fair Isaac Snags IBM
- Shameless Plug: Stocks 2004
- More Fool News
- And Finally...
CNBC's Draconian Move
By Bill Mann (TMF Otter)
This week, CNBC laid down new restrictions on its news staff and managers that will effectively bar them from owning individual stocks and bonds. Several pundits have expressed belief that the move at CNBC might trigger a sea of change among other media outlets to strengthen their security ownership guidelines.
CNBC employees have until Jan. 2005 to comply with the new restrictions. After that time, they will only be able to own index funds and other broad-based mutual funds, as well as stock in General Electric
CNBC claims that the new policy has been under planning for about a year. In a statement the network said it wanted CNBC to have "the highest possible standards." The network insists that this change has nothing to do with the firestorm that arose this past summer when anchor Maria Bartiromo prefaced an interview with Citigroup
I find the restrictions to be both overkill and incomplete. CNBC has exempted non-employees such as on-air personalities like Louis Rukeyser, Jim Cramer, and Lawrence Kudlow, since they are not full-time employees of CNBC. If the "highest possible standards" is the goal, clearly that's a loophole the network should close. But the network's existing standards strike me as being more than satisfactory, with minimum holding periods of four months for stocks or bonds, as well as other restrictions -- and newscasters or writers must mention any conflicts when discussing a company.
As for other media outlets following along, CNBC isn't actually the first to place outright bans on stock ownership. TheStreet.com's
Here's my beef with CNBC's decision. While it may reduce the possibility of manipulation of an individual security, these folks would have to be demented not to understand that their business lives are deeply tied to the performance of the stock market anyway. Think CNBC has much incentive to be overly negative about the market? No. In fact, a look at viewership trends in the late-90's versus, say, 2002, puts this in stark relief.
People watch when stuff goes up. It's human nature. So now CNBC employees' job performance and their retirement benefits are linked not to their own individual decisions, but to whether the market goes up or not. It's grasping to suggest that this will be a central motivation for the station or any one of its employees -- show only good news. But it demonstrates something simple -- CNBC's limitations on trading will not ultimately impact its effect on the overall market. It makes me think that the limitations they've placed are ultimately unnecessary.
Quote of Note
"Just because you like my stuff doesn't mean I owe you anything." -- Bob Dylan
E*Trade Scores a TD
The mating rituals of discount brokers aren't exactly rare sights. Taking the trade of trading to heart, they always seem to be out on shopping sprees. Ameritrade
And, yes, E*Trade is at it again. The online financial specialist has confirmed that it is in talks to merge with Toronto Dominion's
We'll expect a wedding invitation, of course. TD Waterhouse has been a member of our active Broker Center for years. However, as far as shareholders are concerned, consolidation can be a beautiful thing. It's not just the raw combination of accounts, or even the cost-saving efficiencies that arise through economies of scale and the reduction of overlapping redundancies, that is exciting about the nuptials -- not that there's anything wrong with those things.
In the highly competitive discount brokerage landscape, consolidation translates into one less competitor for E*Trade to worry about if it does in fact team up with TD Waterhouse later this year. That does not mean that fees will inch higher. However, with trading volume returning after last year's inviting stock gains, the discount brokers are well positioned to grow their financials anyway.
Shares of E*Trade have nearly quadrupled since last year's lows. While investors may have a tough time deciding between buying into the discount brokers or just opening up new accounts, deciding on the merits of the merger from an investing perspective is pretty clear. In every sense, it's a fair trade.
Discussion Board of the Day: Discount Brokers
Is finding a new broker part of your New Year's resolution? Have you checked out Broker Comparison Table lately? Who are the best discount brokers out there based on your particular needs as an investor? All this and more -- in the Discount Brokers discussion board. Only on Fool.com.
Fair Isaac Snags IBM
The total size of the deal -- by which IBM becomes a reseller of Fair Isaac's analytical software tools -- is not clear. What is clear is that shareholders liked it, bidding the stock $2.55 higher yesterday, to $53.96.
You probably know Fair Isaac from its famous (or perhaps, infamous) system of credit scoring known as FICO. But that's just one part of the business. The firm also develops modeling solutions that help enterprise customers grapple with decision strategies, as well as financial risk and data management.
And the deal with IBM is comprehensive, involving the full range of Fair Isaac products on a global basis for sale to financial services companies. There will also be joint development of future products, as well as integration with existing product lines.
All of this speaks well for Fair Isaac. IBM understands that partnerships are critical, and that means offering best-of-breed solutions. The company has moved into Linux, for instance, with deals with Novell
IBM likewise recognizes that its own clients need advanced analytics. Providing financial services in the digital world is increasingly complex and dangerous -- with increased regulation, globalization, and fraud. These very concerns, and high-profile deals like this, represent long-term opportunity for Fair Isaac.
Shameless Plug: Stocks 2004
You have to admit our Stocks 2003 picks did pretty darn well last year. They're up 39% vs. the S&P 500's 17% return. What do our analysts like this year? Find out in the just-released Stocks 2004. Get your electronic version in a snap!
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Bob Bobala, Robert Brokamp, Sam Edwards, Paul Elliott, Mathew Emmert, Jeff Hwang, LouAnn Lofton, Alyce Lomax, Bill Mann, Selena Maranjian, Dave Marino-Nachison, Rex Moore, Rick Munarriz, Reggie Santiago, Tom Taulli, Dayana Yochim