MONDAY MARCH 8, 2010

I want my OSCARS!

As investors, we are constantly on the prowl for the next Microsoft, Apple or Goggle.  The stock that exponentially gains value...the home run.  Unfortunately, these opportunities are difficult to spot and fairly rare.  I wish everyone luck on their "elephant hunts."  However, investors might want to take a more productive approach to managing their portfolios.  That is, identifying and selling companies where the long term competitive landscape is rapidly changing and the long-term viability of its business model is in jeopardy is usually more productive than elephant hunting.  Think about it, the horse and buggy was put out of business by the car.  Air travel directly put an end to long distance rail and indirectly helped establish destination sites such as Disney World at the expense of Old Forge and the Catskills.

Last night, many metro-New Yorkers did not get to see the beginning of the OSCARS due to a contract dispute between Disney, owner of the ABC network, and Cablevison, the primary cable TV provider in the NYC area.  This follows a similar fight over the Fox's distribution of the Super Bowl.  I am not taking sides in these battles.  However, these contract disputes are evidence of dramatic change occurring in the media distribution space.  Much change is going to happen, whether these companies want it or not.  As our ability to receive information multiples before our very eyes, for example, smart phones and the Internet, old business models are beginning to fail.  The newspaper industry is fighting for its life.  Are cable companies next?  Certainly, the ability of cable companies to bundle TV channels is dwindling.  Why if one hates to cook, should they have to pay for the Food Channel?  Likewise, Animal Planet, Nickelodeon or CNN?

It is not clear which companies will be the winners or losers in these battles.  But it is clear that there will be big winners and big losers.  The point is, as investors, we should be asking these questions about all of the stocks in our portfolios.

POSTED AT 1899-12-30 12:19:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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