.jpg)
.jpg)
.JPG)
Subject of North Korea Results in a Nuclear Reaction from Readers
*** Addressing comments from yesterday’s editorial
*** Inside today’s Boiler Room
Dear American Capitalist Reader,
Yesterday’s commentary about the escalating North Korea conflict and the negative effects on investment portfolios has brought a lot of activity to my e-mail inbox. Many readers agree something needs to be done with the regime and using fear of economic sanctions is not the answer.
Surprisingly, others argue that it’s the communist regime’s right to possess weapons of mass destruction. I suppose these readers would rather protect terrorists than American lives, but maybe they’re just confused about how critical the situation really is.
Other readers had a hard time understanding why I would call the U.N. Security Council “goofy.” They didn’t particularly like this adjective and would rather me stay away from the so-called name-calling. Ok. Well, how does “spineless” sound to those readers?
There was further evidence to support this word when describing the Security Council that appeared on the news wires this morning. Kofi Annan told President Bush he should have a sit-down with Kim Jong-il and discuss North Korea’s nuclear program. Wouldn’t this be the United Nations’ job? Is Mr. Annan scared about making a house call to visit Mr. Kim? Seems spineless to me.
At least Annan did make a proactive attempt to help defuse the situation when he told reporters, “I would urge the North Korean authorities not to escalate the situation any further. We already have an extremely difficult situation.”
That’s just great, Mr. Annan. Here’s an idea: How about taking the red eye tonight on the United Nations’ 747 and including some U.N. analysts and a few of my readers and make a stop in Pyongyang to come up with a solution. Don’t send in the United States to do your dirty work. Simply do your job!
North Korea vs. Iran
There are some critical differences between this North Korean conflict and the banter going on between the world and Iran. For one, Iran owns the ultimate weapon: oil. Ahmadinejad feels that if the U.S. escalates tensions with Tehran, he can simply shut off the spigot and strangle the American economy with sky-high oil and gasoline prices. His only vulnerability with this strategy is there are other places in the world that can supply the commodity, which prevents him from having a monopoly on the sector.
Kim Jong-il, though, is running his country into the ground, which makes him incredibly desperate. He has what so many other countries want: nuclear dominance. He doesn’t have a bread-and-butter product like oil to provide endless royalties; but he does have a product that can provide a one-time cash infusion into one of the most poverty-ravaged regions on the planet.
The one and only item that can help keep Mr. Kim in control is we know where he lives. We can’t find bin Laden, but if Kim Jong-il decides to sell a warhead or two to al-Qaida, the U.S. and its allies will most certainly end the tyranny once and for all. Kim Jong-il has got to know this, which should provide some reassurance to the world that he may keep his new toys to himself.
FOX News wants to hear what Diligent Investor has to say
This topic is not going away anytime soon. As a matter of fact, it’s such a hot-button topic, all of the major news channels plan on discussing it on many of the weekend talk shows.
I have been invited to discuss the North Korean situation and its effect on investment portfolios this Saturday, October 14. I will be on the FOX News Channel’s Cashin’ In with Terry Keenan at 11:30 a.m. EST, and I would recommend anyone who has an interest in the subject to tune in. I intend to discuss some of my readers’ comments and dispute their claims that the North Koreans will have no bearing on Wall Street and the rest of the world.
Wishful thinking, I say.
Until tomorrow,
Todd M. Schoenberger,
Senior Equities Analyst, Diligent Investor
Over to Ian Cooper with more…
Profiting from Controversy
When the word “controversy” is raised among gaming circles, this controversial company’s name can’t be too far behind. It’s still months away from releasing the next installment of the most controversial and intense releases to legions of fans, but already the anticipation is mounting, and the parental groups are lining up to protest, indirectly promoting the latest game.
And it doesn’t hurt that a multibillionaire corporate raider just bought 800,000 shares.
By October 17, 2006, shares of one beaten-down software company are likely to come back with a vengeance when its parent-scaring subsidiary releases its long-awaited software. When it released its controversial Grand Theft Auto game in 2001, the stock ran from $4 to $10; in 2002, it ran from $22 to $23.50; in 2004, it ran from $16 to $21; and in 2005, it ran from $18 to about $22 in a month’s time.
But come October 17, 2006, RockStar Games’ Bully will be released, and could help refill the gaping bearish gap left at $16 -- a possible 45% short-term return for patient shareholders.
Is any publicity good publicity?
If you’re Mel Gibson… uh, no. But look at what negative publicity can do to video game sales.
Grand Theft Auto III sold 11 million games annually.
Grand Theft Auto: Vice City sold 13 million annually.
Grand Theft Auto: San Andreas (GTA:SA) was just as successful, selling 12 million copies in its first year out.
At $50 per game, GTA: SA did $600 million in revenue in year one. In fact, sales of this one game were so big that Take-Two Interactive even announced that it was a significant contributor to Q1 2005 numbers. Net sales for that quarter were $502 million, a 34% jump in a year. Net income was up 74% in a year.
RockStar Games, known for its violent, controversial and very popular, Grand Theft Auto games is unveiling Bully just in time for the holiday shopping season. The best part: the game isn’t out until October 2006 and already parental and anti-gaming groups are out in full force.
But I say, bring it on! It’ll only raise awareness for the game among millions of gaming fans, and bring in mega-sales for Take-Two’s subsidiary. In March, for example, the Florida Miami-Dade County School Board asked retailers not to sell the game to minors and asked the schools to warn parents about harmful effects of playing violent video games.
Even better, the end of this year is going to be one of the biggest seasons for those in the video game racket. When Sony releases its PlayStation 3 and Nintendo starts shipping the Wii, video game sales will go through the roof.
I love the Grand Theft Auto games. In fact, I’m one of millions that can’t wait for Bully to hit the shelves, and wouldn’t have heard about it if it weren’t for those groups and the media, which have a tendency to blow things way out of control.
But just why are people up in arms about a game?
Understandably, many are upset because they fear another Columbine-type situation. You see, the game’s main character is a 15-year-old boy who has to defend himself against school bullies at a fictional boarding school in the United States while dealing with nerds, jocks and authoritarians with weapons including baseball bats, stink bombs and bags of marbles.
According to The New York Times, “Anti-game activists claimed that it would encourage players to become bullies themselves. Even some executives at other game companies feared that Bully, coming from Rockstar, a company that has long been a lightning rod for politicians and others fearful of video games, would drag the entire industry into yet another quagmire of criticism.”
But that doesn’t mean the game won’t sell like flapjacks to millions of starving Ethiopians.
Following the billionaire’s lead
Billionaires aren’t dumb investors. If they were, they wouldn’t be billionaires.
Take Carl Icahn, for example. Here’s a rich guy known for buying up shares in companies and then pushing for major changes that may affect the company very positively. In recent quarters, he’s bought shares of Symantec and Cigna… and now, Take-Two Interactive.
According to an SEC filing, Icahn now owns a 1.1% stake in Take-Two. It’s unknown how he plans to positively affect the company after its recent legal issues, SEC and FTC investigations, and a grand jury investigation -- all of which are priced into the stock.
His piece of the TTWO pie does mean he’ll make his presence known at shareholder meetings.
There you have it. Two great reasons to be ultra-bullish on Take-Two shares: the October 2006 release of Bully and a multibillionaire’s purchase of 800,000 shares. Plus, as of late September 2006, more than 47% of the 72 million-share float was short. Shorts covering en masse come holiday shopping season could send the stock screaming much higher.
Top 5 Stocks
1. SimclarINC
(58.55%)
2. Vitalstream HLDGS
(23.91%)
3. Transemta CORP
(17.86%)
4. Monolithic Power SYS
(17.52%)
5. Hemosence INC.
(10.00%)
Top 5 World Markets
1. Turkey/ISE 100
(+1.74%)
2. Thailand/SET
(+1.70%)
3. India/Bombay 200
(+1.53%)
4. Sweden/OMX Stockholm 30
(+1.14%)
5. Spain/OMX Stockholm 30
(+0.94%)
Earnings Announcements
Adams Express, Costco Wholesale Corporation, Domino’s Inc, Genzyme Corporation, Harley-Davidson, Luby’s Inc, Pepsico Inc, Safeway Inc, Traffix Inc, and Winnebago Industries Inc are releasing earnings.
Brought to you by your Free American Capitalist
Unlock Dates for October 2006
10/23/06 – Corel Corporation is unlocking 6.5 million shares.
10/31/06 – Delek US Holdings is unlocking 10 million shares.
Brought to you by Extreme Volatility Speculator
Upgrades and Downgrades
BCE Corporation downgraded by Citigroup from Buy to Hold.
Genesis Microchip downgraded by Wedbush Morgan from Buy to Hold.
Healthways downgraded by Avondale Partners from Market Outperform to Market Perform.
Pactiv Corporation downgraded by JP Morgan from Overweight to Neutral.
BCE Corporation upgraded by UBS from Reduce to Neutral.
Global Payment upgraded by Robert W. Baird from Neutral to Outperform.
Palm upgraded by Matrix Research from Buy to Strong Buy.
Brought to you by Gressor
