Tag Archives: unemployment

Peter Schiff’s Interview From The Panic of 2008 Film

19 Jun

Peter Schiff’s economic analogies

21 May

A collection of potent metaphors reflecting the current state of the US economy. Reminders are always beneficial for those who are aware. While I do not subscribe to all of Schiff’s views he’s core direction in terms of promoting gold, silver, oil and foreign currencies against the US dollar is something which most apt investors are attuned to.

Some of the quotes: 

“They might as well nominate my six year to be treasury secretary. At least he would play with his toys instead of screwing up the economy.”

“We’ve just been going on a consumption binge, where we borrow money like drunken sailors from the rest of the world, and blow it!”

“The American did nothing all day but sun himself on the beach, he had a service economy!”

“The boom is the problem, the bust is the solution.”

“The government is like a kid experimenting with a chemistry set, and eventually they are going to blow us all up.”

Best quote:

“If a kid tells his teacher he has a straight A policy, but he skips class and he doesn’t study, he’s not going to get A’s just by saying he has a policy. The treasury can say they’ve got a strong dollar policy all they want but if we’ve got Ben Bernanke debasing the money it is going to go down.”

Established a small short position in Monster Worldwide (MWW)

17 Apr

Established a small short position in Monster Worldwide at 16.7 px at $2.2 bn market cap. The total float is already 13% short so this is no contrarian position. MWW is already down approx 30% YTD 2011 so further upside/downside volatility is to be expected. The current job market in most major economies is anemic. Companies and public sector organisations are still shedding jobs and at a higher pace and are saving costs through natural wastage and re-deploying their existing workforce within their organisations to avoid costly redundancies.  Budgets for HR and recruitment are being cut because the transmission mechanism into earnings performance by non-core functions like HR are weak in a lot of organisations especially public sector. Unemployment in the US is currently 8.8% although most apt investors are well aware that U2 which is a better gauge of unemployment is considerably higher.

It is also not possible to consider unemployment metrics in a homogeneous manner globally. In the US fiscal monetary expansion is occurring with significant momentum; across most of Europe the seeds of fiscal tightening are beginning to sprout. Monster Worldwide’s management are also weak; the purchase of HotJobs from Yahoo for $225 million in cash was poor and a reflection of the Board’s fundamental non-understanding of the core and systematic issues their company now faces. Competition within the sector has also intensified with the rise of Indeed and Simply Hired, who have pioneered the meta-search functionality, which basically amalgamates job postings across hundreds of websites harmonising search across one platform. Indeed is the #1 job site worldwide, with over 40 million unique visitors and 1 billion job searches per month. It has the lead in page views in the US and UK.

The concern on the Street is mainly focused around LinkedIn and the fact that almost half of its revenue originates from job postings and related company advertising. Clearly LinkedIn is positioned around professional networking but the real economic benefits are being leveraged around its job portal functionality and that is the catalyst going forwards. Either way both functions are worrisome for Monster Worldwide. The resignation of their CFO, historic problems with option settlements and financial restatements reminds us that there are still legacy issues with MWW. Ongoing earnings guidance are also sketchy and have been poorly received by the Street. Furthermore, major companies are re-directing larger proportions of their recruitment and advertising expenditures towards the social networking sphere including Facebook, Twitter and LinkedIn.

There is chatter around mergers and acquisitions circling Monster and from a stock performance/valuation perspective now may be an apt time if there is such interest. However, I cannot see the logic or wisdom in such a purchase; the ongoing fundamentals of the company are horrible, they have a poor control over costs and management are not sophisticated enough to direct the company successfully through the numerous headwinds that are likely to impact its performance going forwards. Monster has been obsessed with discounting and short-term promotions to retain and win new business further eroding margins. While I believe longer-term social networking trends are likely to be making major inroads into Monster’s core business the threat from meta-search job websites is the major immediate threat. Recruiters websites are crawled and job posts are aggregated. Recruiters can also feed their job postings directly into Indeed’s index at no cost with a high number of eyeballs. Monster is clearly behind the curve.

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