Friday, April 6, 2012

What Ever Happened to Motley Fool? (Teasers)

Motley Fool is taking on the air of a carnival barker.   Or were they always this way?

One of the annoying things of the internet is the "made you look!" peek-a-boo techniques that advertisers use - and even news organizations - to get you to click on a  link.   "You are paying too much for car insurance!" one ad says, "if you don't know this simple trick!  Click here to find out!"

Like those newscast teasers that say, "Snow in the forecast?  Stay tuned for news at 11!" the idea is to get you to watch.   After all, they could have just told you already whether there was snow forecast or not, in the time it took to "tease" you - which is why they are called "teasers".

And no one likes being teased, do they?   Remember, as a kid, being teased by a sibling or friends?  You just wanted to shoot them, it was so painful!  Today, thanks to the NRA, kids do!

So in the time it takes to tease you about the "one trick of the tiny belly" (eat only hand-sized portions) they could have just told you.  Or with the "one trick to cheaper car insurance" (dump junk coverage) they could have just told you - in the time it took to distract you with some weird homeless guy staring at you while you try to read your horoscopes online.

People who tease you are not nice, period.  It is like the fellow who tickles you and says, "Oh, I was just joking, can't you take a joke?"  And again, thanks to the NRA, you no longer have to.  The "tickle monster" can be dispatched like a zombie from the Night of the Living Dead.   Just a warning to you tickle freaks out there.

So, teasing is bad.   It is mean-spirited, and really is a form of a lie.  Yes a small lie, but one nevertheless.   Any business relationship that you enter into, predicated on a lie, no matter how small, is going to go downhill from there.  I keep repeating this mantra, because it is so true - and small lies are the police tape that rope off bad deals and alert you to flim-flam artists, scumbags, and rip-offs.

And guess who has started a full-blown teasing campaign?  Yea, the folks at Motley Fool.

This e-mail was in my SPAM box the other day:

Jay Leno's Trillion Dollar Investing Tip

Wall Street know-it-alls laughed when we said the host of The Tonight Show was onto something. But it's no joke -- his favorite new gadget is launching a 21st-century industrial revolution that will end the "Made in China" era -- and generate serious wealth for well-positioned American investors.

Dear Fellow Investor,

The Air Force already bought one. So did Rolls Royce, Black & Decker, and Chipotle. Jay Leno has one in his garage (but it's not a car). And now that the sticker price has plummeted from $100,000 to $1,299, it won't be long before everyone buys one.

Business Insider says it's "the next trillion dollar industry." The Economist has gone even further, comparing its potential impact to the steam engine and the printing press.

Too good to be true? Wall Street thinks so. Meanwhile, the guys who brought you the iPod and Amazon.com are true believers -- and they're getting ready for their next big score. You still have time to join them, if you act fast...

The opportunity to profit from a transformative technology like this comes along once in a lifetime. Technology experts say it could be "bigger than the internet."

That's why The Motley Fool has JUST RELEASED this stunning new video -- to help individual investors like you jump on the 3 stocks that get you the biggest piece of the action. Because when the skeptics wise up, the big money will already be off the table.

Click here to see the impossible (but real) technology that could make you impossibly rich.

By the way, don't bother clicking on the link, it just plays an audio (with text, so I guess that qualifies as a "stunning new video") that blathers on for 5 minutes without telling you what it is.  Finally, at the end, they tell you that the magic invention that will "change everything" is 3-D printing.

Really?  Not really.   You see, as a Patent Attorney, I've seen this technology for more than a decade.  Early 3-D printers were very expensive machines that used liquid urethane.   Ultrasonic transducers creating standing waves on the surface of the tank could harden the urethane, layer at a time, to make a 3-D object based on CAD drawings.   It was one of those "Gee-whiz, that's cool!" kind of things.

Problem was, and is, it only makes things out of urethane.  And while there are a lot of applications for urethane (gaskets, soft parts, trim pieces, etc.) the cost per piece with those early machines was, well, high.  So while it was an interesting toy for making prototypes, it never took off as a production machine.

Today, newer machines use powders and can make objects that are more solid and structural.  In one famous video, a man makes an adjustable wrench - that works - from powder, and tightens a nut with it.  But a funny thing, they are still making adjustable wrenches out of metal - it is far cheaper.

3-D printing is an interesting technology, but hardly a major game-changer of the world.  And the hype that Motley Fool is using reminds me of the hype surrounding the Segway (remember that?  We were all supposed to have one by now - didn't happen).  That was another "game changer" that was supposed to change how cities were designed (how do you change how a city is designed, once it is built?  No one thought to ask that.)

The funniest part of the "video" link was this tag line:
"Here at the Motley Fool, we don't chase after hype..."
Really?  Because you are hyping the snot out of 3-D printing with a teaser e-mail and a five minute audio that doesn't mention the product until the end, and then only in passing.  That's hype my friend, and when you told me you don't chase after hype, that is not quite correct.  Well, I guess it might be technically true if you are just generating the hype you are not chasing it.  Touché.

But the over-arching problem with this pitch is that it caters to the casino mentality of the stock market.  That the way to make money and get ahead is to pick technology "winners" in the marketplace and that by stock-picking "the next big thing" you can become fabulously wealthy.

Is is possible to do this?  Yes and no.  The folks who pick the winners often end up doing so by accident, not by design.  In retrospect, they tell us what geniuses they were to invest in Microsoft early on, as they "knew that Bill Gates fellow was going places!"

But back in 1980, Microsoft was an unlikely bet.  And it was not their superior technology or great programming skills (the first version of DOS was farmed out to another programmer) but the fact they were in the right place at the right time when IBM dumped a lucrative contract and licensing deal in their lap.   Back then, everyone thought the money was in hardware, not software, and it turned out, if you had the exclusive license to sell 3rd party copies of the IBM-PC operating system, well, you would end up a Billionaire.

It could have panned out much differently, if Gary Kildall hadn't decided that flying his plane was more important than talking with IBM.  And things would have been far different if Gates had signed a deal with IBM that didn't give him the "back end" rights to sell copies of DOS to the clone market.   If either of these things hadn't happened, Gates would be an obscure retired IT guy somewhere in Seattle.

The point is, no one could have "predicted" this chain of events.  There was no "exiting new product" on the test stand, ready to take off, that only clever investors would have appreciated.  In other words, picking winners and losers in the technology world is difficult at best - and the track record reflects this.  More companies lose than win, and who ends up a winner can often be a dark horse.

You might as well gamble in Vegas.

But, and this is a big but, even assuming arguendo that you could "spot" the "next big thing" correctly (and that is one hell of an assumption) - what, pray tell, would you invest in?  The first company to market is often last in the marketplace - almost always.   If you invested in Gary Kildall's company, Digital Research, you might be thinking you made a smart bet, as their CP/M operating system had the dominate market share of the pre-PC marketplace.  First to market - last in the marketplace.

Or take "Social Networking" - which we are told is the "big thing" right now, even though not a lot of money is being made on it - if any (no really, check out the real numbers, not the hype).   Which one would you invest in?  A few years ago, MySpace would seem like the logical choice, and Facebook would seem like a long-shot proposition.   Why would anyone go on Facebook, when they already have a MySpace page?

Why, indeed.   Predicting winners and losers in the marketplace is a crap shoot  - with long odds not in your favor.

For the small investor, trying to pick technology winners is a sure way to go bankrupt.   And I say this having seen a lot of friends of mine do this, during the last technology stock craze, in 1995.   One friend borrowed on credit cards to margin trade, convinced that "everyone was making money in tech stocks!"  He bought IPO stocks after they doubled in value, and then rode them all the way down.  It nearly bankrupted him.

Or the fellow who licensed his Patents for a cool $2 Million and then "invested" it all in "dot com stocks" and lost it all.   ALL.  Not a freaking penny left!

As a small investor, trying to pick winners and losers is suicide.

The best investment advice is basically FREE.  You don't have to pay Motley Fool for their secret insider tips or any other such nonsense:

1.  Diversify your portfolio:  Don't try to invest in all one thing or one type of thing.  Invest in a panoply of things:  stocks, bonds, mutual funds, insurance, real estate, whatever.

2.  Invest for the long-term:  Companies that produce steady growth and pay dividends are a better bet for the long-term than startups that might skyrocket in price, and then tank, or just tank, period.

3.  Put more and more of your investments into safe harbors as you get older.   This is your retirement lifeline we are talking about - not Vegas money.   By the time you are 70, 70% of your money should be in boring government bonds or FDIC insured accounts - and you should be spending it.

Over time, even a modest rate of return of 7-10% will double your money in less than a decade.   This is a fantastic thing, even if it isn't like buying Microsoft early on.

The deal is, you have one shot at this - and one shot only.  There is no "do over" if you decide to gamble your retirement fund on some long-shot technology.

And you just have to ask yourself two pertinent questions:

1.  Even if you could pick the winners from the losers, do you want to trust a company that uses sleazy carnival-barker teasing techniques to get you to sign up?

2.  If this was such a hot investment, why, on God's Green Earth would anyone who is sensible, ever, ever, EVER tell ANYONE about it?  They would surely invest in it THEMSELVES and then SHUT UP about it!  Right?  No one sells the goose that lays golden eggs.

But funny thing, the investment gurus and stock pickers all have good advice on how YOU should invest YOUR money.   They make their money when you pay them for this advice.

6 comments:

  1. UPDATE: May 2013

    While 3-D printing is getting a lot of press these days, it remains to be seen if "every home will have one".

    Smithsonian Magazine hyped it, making little 3" "heads" of all the authors in that issue. As they were all white plastic, they had to paint the faces on them. They were ugly and weird.

    3-D printed guns are drawing a lot of press. But really, given how easy it is to just buy a gun at Wal-Mart, is this really anything to worry about?

    Yes, there will be some interesting applications for 3-D printing. And yes, some companies (which ones, it is hard to predict) will make some money on this technology.

    And yes, some early adapters will go out and buy these machines for home use, and after thrilling their friends and neighbors by "printing out" white plastic 3" garden gnomes, will realize they don't have any real useful application for the device, which will just languish on their desks.

    A useful invention? Yes. A game-changer that will put China out of business? No. No more than the Segway was going to force us to "redesign cities" around it.

    It is pure hype. Never invest in hype.

    ReplyDelete
  2. 3-D printing has died down somewhat, in the news media. Scanning-in miniature garden gnomes and then reproducing them in a brittle white plastic, seems to have lost its allure.

    One fellow on the Internet, claims to have developed a "dancing 3-D printed robot!" but if you look closely, the robot is just a commercial toy with a 3-D printed "head" glued to it.

    Much uproar is being made about 3-D printed guns. However, the House just renewed the ban on "undetectable" plastic guns (with the NRA's blessing) and thus a 3-D printed gun would still be illegal (and probably more likely to injure its user than anyone else - as the plastic blows up under pressure from the explosive gases produced by burning gun powder).

    In short, it was a lot of hype - just like the Segway. Will this technology continue to be revised and used, down the road?

    Sure. Of course it will. But you aren't going to use it in your home, anytime soon, unless you want to dump thousands of dollars to make miniature white plastic garden gnomes. And I suspect a few people will buy these things (and the 3-D scanners, which are appearing in the catalogs), play around with them, and then get bored.

    For mass-production, however, the technology isn't there yet. And until things can be made out of something other than a brittle white plastic, it isn't going to be a "game-changer" of anything.

    Maybe someday, such technology will be ubiquitous. But figuring out when they will be - and what company to invest in - is the problem.

    Most likely, the largest companies in the business now, will be defunct by then. First to market is often last in the marketplace!

    ReplyDelete
  3. Motley Fool is still hawking this nonsense, more than a year later. They have changed the wording of the pitch somewhat. Instead of invoking Jay Leno, they now use the headline "Dear China, it's over"

    Of course, this is foolishness. Guess where these 3-D printers are being made? You guessed it, CHINA.

    Again, these devices can make parts out of plastic. They cannot assemble an entire iPhone on demand - or a car, or a computer, or whatever.

    I don't know who took over Motley Fool, but they seem to be hawking nonsense these days. Or maybe they were always that way.

    In 2000, they were touting a "mechanical" means of investing, using numbers alone:

    "The "Foolish Four" is a discredited[1] mechanical investing technique that, like the Dogs of the Dow, attempts to select the member stocks of the Dow Jones Industrial Average that will outperform the average in the near future.

    To identify the "Foolish Four," an investor determines the current dividend yield and current price for each of the 30 stocks comprising the Dow Jones Industrial Average. Then, the yield for each stock is divided by the square root of the stock's price. The stocks are ranked from highest to lowest using the number resulting from the division. The stocks ranking the second highest, third highest, fourth highest, and fifth highest in equal dollar amounts are bought. The highest ranking stock is not bought.

    Subsequent review of this technique[1] suggested that it was unlikely to outperform a simple indexing strategy, and, after an extended period of resistance, the Motley Fool discontinued its promotion in December 2000.[2]"

    You can't invest in stocks by looking at numbers. You might as well use Astrology or a dart board. You have to look at the underlying performance of the companies involved, and know something about the industries. Usually, this is far more information than an individual can research and accumulate in a lifetime.

    So again, stock-picking is for chumps. Or Motley Fools, if you will.....

    ReplyDelete
  4. By the way, the message I received today from "The Fool" was in my SPAM box, which says it all.

    You are going to get investment advice from a company that SPAMs people?

    If you do, you have no one but yourself to blame.

    ReplyDelete
  5. A reader asks: "Despite all the hype by Motley Fool, don't you think this technology has a great future?"

    Yes and no. If you've never worked in manufacturing or designed a product, I guess it is hard to appreciate why 3-D printing is not a "game changer" of anything.

    So let me give you an analogy that you might understand:

    Joe walks into his offices at TIME magazine and says, "Boss! We have a big breakthrough in technology! We can lay off all those pesky union employees and get rid of those giant four-color printing presses! We have a new technology that allows US to print the magazine without all that cost and overhead!"

    The boss replied, "Really? What is it?"

    "Inkjet printers!" he replies, "Watch while it prints out an entire magazine!"

    (an hour later...)

    Boss: "Uh, Joe, this is great, but we can't spend an hour printing each copy of the magazine. Not when we have millions of subscribers!"

    The same is true for 3-D printing. You want to make a part with one, it can take hours - and it only makes a plastic part, at a part cost that is very high.

    If you are making a cell phone case back, it is still cheaper to injection-mold them from plastic, as you can make hundreds of parts per hour (unless you are Apple, and you needlessly make them of polished aluminum).

    3-D printing will be good for making some prototype parts or limited run pieces or custom pieces. But it can only make them out of plastic (just as the older models from the 1990's could only make them out of urethane).

    It can't make a circuit board, a semiconductor, a motor, or even a structural part. It can just make things out of one kind of plastic.

    Useful? Yes. A game-changer that will "Put China out of Business?" No. The machines are MADE IN CHINA.

    A lot of Americans will buy these cheap 3-D printers that are being sold in catalogs, make a few garden gnomes, and then shove them in a closet. If you are thinking of buying one for yourself, save your money.

    Motley Fool says, "Jay Leno has one!" Jay Leno also has the Blastolene Special. However, I doubt that we will all be driving aluminum cars powered by 18-cylinder tank engines, anytime soon.

    Sadly, much useful technology is hyped this way, which tends to damage the reputation of the technology in question - and technology in general.

    Consider, for example, the Segway....

    ReplyDelete
  6. I wonder how Jay Leno feels about his name being used in this pitch. I doubt he is giving investing tips, as Motley Fool claims.

    Rule of Thumb: If Motley Fools says to do X, then do the opposite, instead. I don't know what happened to them, but they seem to be running a carnival there in Alexandria, these days.

    One born every minute!

    ReplyDelete

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