Investment Idea For Believers of the Downward Wage Pressures on the Middle Class Theory

Many people, such as Sen. John Edwards, use statistics and anecdotal evidence to the argue for the gradual and persisent decline in the income of working Americans (for me the bottom two-thirds of the population), due to outsourcing, automation, etc.

If you believe this to be the case, you should consider a position long EZPW and short SHLD.

EZPW operates pawnshops and offers payday loans. Theoretically, two industries that will grow should a real-estate-bubble-that-popped-recession occur.

Conversely, SHLD straddles the no man's land between low-price WMT and chic TGT. Eddie Lambert has done a wonderful job and pulled the trade of the century, but SHLD is not best of breed when compared to the other companies in the RTH.

If there is indeed a recession/slow-down in 2006, it is unlikely that SHLD would outperform the retailers.

The End of Monopoly Rents? A brief missive re. a pairs trade for the rest of the decade.

Like many others, I love firefox! The primary reason that firefox is superior to internet explorer: people work hard in a decentralized manner to improve firefox and then give away their work for FREE! In the process, the open source crowd makes the Redmond-campus look like goose-stepping fascists or mindless, drone Borgs.

Just as there is a secular outsourcing of labor from high wage countries to low wage countries, there finally may be a secular movement away from the serfdom of monopoly rents, towards the open source movement. The plentiful access of broadband connections and computing power allowa anyone with skill to have a good product distributed around the world. Traditionally, economists raise the classic "free-rider" problem, ie good, free things are underproduced while negative externalities are overproduced. However, the tech bubble has made the marginal cost of producing certain knowledge-based equal zero (like software), while the fixed costs of production (a developer's time, grief, etc.) gets spread over millions of users.

Mozilla developers, Google plugin writers and the like don't get paid in the traditional sense, ie cash. However, I presume that widespread recognition as the author of very useful software to mozilla brings forth a high level of praise from the software cognescenti (which is then transformed/monetized into better job prospects, salary, etc). Thankfully, due to their hard work I can browse more efficiently with mozilla without google text ads, flash ads and check out cool sites like this.

So the question becomes.....will Microsoft be the RCA of the 21st century? Will Google embrace the open source movement? Should the trade of the decade be long RHAT and short MSFT?

History Repeating? Finding the next 10 bagger.

I've been following Jon Markman's working since 1999 and he's published some pretty good ideas (for those of you who remember think XLA). Recently, Jon highlighted the best performing stocks of the decade.

• Hansen Natural (HANS, news, msgs), which is up 3,739% since Jan. 1, 2000.
• KCS Energy (KCS, news, msgs), +3,251%;
• IRIS International (IRIS, news, msgs), +3,248%;
• Amedisys (AMED, news, msgs), +3,181%;
• Quicksilver Resources (KWK, news, msgs), +2,929%.

Interestingly enough, Jon solicited ideas from his readers (c. Nasdaq 5000) for the 10 baggers of the 21st century. How did the Markman and his readers do?

	Purchase Price	12/9/05
Plug Power Inc. (PLUG)	25.75	~5.73
Kopin Corporation (KOPN)	30.00	~6.64
Superconductor Technologies Inc. (SCON)	13.13	~0.47
Xcelera.com (XLA)	18.27	~0.28
Maxygen, Inc. (MAXY)	143.27	~7.48

Naturally, it's unfair to fault these choices, unless you rode them down 50%. Moral of the story: 1) Know when to fold them; 2) the next 10 bagger isn't necessarily among the names in vogue at the moment.
An analysis of HANS, KCS, IRIS, AMED and KWK will be forthcoming....

Go SOX Go!?!?!

Does this chart show the renaissance of the $SOX?

Is the $SOX finally bottoming out with respect to $OSX?

$SPX:$GOLD....this is either very good or very bad....

The ratio of $SPX to $GOLD broke down from its two year range.....so it seems that a major top has been made in either the $SPX or gold. The loser from this pairs trade should be evident by January 31.