3 stocks

[Non_Comformist]

Does anyone hold or have any opinions on the following. I'm looking long term (Im 28, would have no need to sale unless it was appropiate)

TIVO
HDTV spatialight inc
NFLX net flix

[Ray Zee]

in the long term those companies wont be around. they will have been taken over or gone broke. those technologies will have changed. not to say they will be bad investments.
for long term investments buy bigger companies that you know something about and expect to grow with the way the world is going in your mind.

[ericd]

Regardless of the goodness of those 3 companies you must first determine

1. What is long term to you ( 1 year, 5 years, 25 years...)
2. How much risk you can handle (ie none or lose it all)

That being said, then you need to do your own research. One way that is often overlooked is to check out which mutual funds (if any) have positions (buying or selling) in those companies. Much can be learned if a well respected fund is loading up or dumping it.

In any event, use this place as a starting off point and do your own homework.

Good luck,

Eric

[BadBoyBenny]

Non Confromist,

I don't know anything about spatiallight so I won't address that..

You must understand that these all carry very high valuations (last time I checked a few months ago). That means they have to grow at a fast rate, and then sustain the high profits in a mature phase to generate enough cash to justify what you would pay today. Maybe its possible, neither has really saturated their potential markets.

There are serious technological and business issues to both TIVO and Netflix though. If netflix keeps blowing rental companies away, Blockbuster and other large chains may move to a subscription model similar to theirs, but with drop off and pick up by the customer. This would give the customers the newest releases a couple days quicker and let them browse shelves and see the boxes for the movies they were intereseted in. The only part of the business that Netflix has patented is its online queuing model. Not really much of a moat to stop similar companies from springing up or larger companies from getting in and undercutting them at a loss to gain market share. Also on demand videos through cable are growing, I can rent all the new releases from my TV when I want to watch them and pause, rewind, etc. I get them for 24 hours. I don't watch more than 5 to 7 movies a month, so I get a more convenient option at the same price, with one less bill. Netflix's CEO says they can be successful without dependence on mail as their delivery medium but what cable company is going to let them in??? Internet bandwidths are not high enough to make downloading movies reasonable for the average consumer and they won't be for a long time.

As far as TIVO, I know my friend has satellite TV and gets a similar product from the company. It can store 100 hours of programming, he doesn't pay for hardware just an extra 5 or 10 bucks a month on his subscription, and once again its on one bill. That's worth a couple bucks a month to lazy people like him (I have no idea what Tivo charges..)

I think these companies don't have enough of a competitive advantage to sustain growth and dominate their niches once the big players in cable, satellite, rentals, and retail make a serious push in to compete. They better have damn good management if they plan on being around in 10 years.

Anyway, I think there are better long term options for your money, and if you do buy anything as richly valued and speculative I would limit it to a small portion of a well diversified portfolio.

[Nemesis]

Long term i think drug stocks are happy ways to go, I'm not a stock market guru, but i'm in pharmacy schoool and drugs are only getting more expensive and more people are using them =)

[BadBoyBenny]

A good tendency to point out, but if the Democrats ever get universal healthcare or something similar passed, and the govt uses its bargaining power to lower prices, their margins would severely suffer. Maybe they won't though, American beauracrats (mispelled, I know but I'm drunk right now) never seem to pay a reasonable price for anything. Also developing countries with less strict patent laws might not be as good of a market for brand drug manufacturers.

That said I definitely think they are a good addition to a portfolio as they tend to be resilient in big market downswings, reducing your portfolio's variance while adding a decent expected return.

Also, I work for a large company that has a major slice (25% or so) of its business in Pharmacueticals. I put about 3% of each paycheck into comapny stock at a 15% discount to market.

[Non_Comformist]

Thanks for your analysis I had not considered that. I was looking at all three companies because I use and believe in the products and companies but your point of sustainable competitive advantage and low barriers to entry was an extremely good one. Thanks