Its a Nou Day!

For those of you that have been following the take over announcement from Microsoft to purchase Yahoo!, here is some more information…

As a Yahoo! share holder, I was nervous to see the “personalized” letter from Jerry Yang letting me know that “everything is OK” and encouraging us to “not worry about anything” and hang on to our shares. Come on Jerry, if everything was OK then why was the stock down to $18 when Microsoft came in and made the offer??? Seriously, if you think you can run the company better than Microsoft then I agree, lets hold tight and continue to take our chances in the managerial form that the company currently exists. But, lets face it, although Yahoo! is a good company its NEVER been run like a Microsoft and I think it could use a little more structure ESPECIALLY during these current economic times. As Benjamin Franklin was quoted, “The definition of instanity is doing the same thing over and over and expecting different results.” Clearly, if we ignore the offer and continue to run the company in the same manner, this would be insane!

The definition of instanity is doing the same thing over and over and expecting different results.

- Benjamin Franklin | Insanity Quote

Its really obvious to see with the news that came out today that Microsoft is NOT going to back down on their quest to take over Yahoo!. From what I see, Yahoo! is focusing on the negatives whereas the synergistic effects between the two companies could do wonders in the on going battle against Google.

Of course, as the news states, Yahoo! is STILL not interested in participating in the merger hence the investor confidence has dwindled. At the time of this posting, the stock has slid 2.5% to $27.65/share and it looks like it may be closing at this level barring any earth shattering news. As someone who understands the value of “teamwork”, I too am getting a little nervous. If Yahoo! continues to ignore this gesture for growth, we may find their value back at $18/share should Microsoft pull out. (see: Insanity!)

So, once again… Jerry, I think its time for you to realize that this is an evolutionary move and it would be best if you focus on the positives. PLEASE stop thinking that this is a move to undermine the fiber of OUR company and realize that being stubborn will only cost ALL of us in the long run.

I’m going to give you a few more days for you to figure this out and if it doesn’t look like your actions are centered on maximizing the share holder value of OUR company then I’m going to sell as well!

If you need some expert strategic advice, feel free to contact me (I actually live right down the road from you!) Not only am I a share holder, I have also given your company probably close to over $100,000 in the past few years! Of course I wont list my phone number, but you are a smart guy and Im sure you can get ahold of me!

Today was what I call a typical Nouday in the comic called, ‘Our Life’…

It all started promptly at 7am when Coco politely let us know that it was time for her to go outside for the first of her 20 plus daily visits to “go potty”. Since Noushas mom’s flight was scheduled for today, we needed to get the house in order…not too much cleaning is needed since we tend to keep a clean house but it did need a little refreshing. With the dog barking at us to prepare her breakfast, Nousha was busy cooking one of her world famous Persian dishes while I made sure Noushi’s room was in order. Coco was then ‘reminded’ (again) to ‘go outside’ so as to prevent our newly cleaned carpets from becoming used as her personal dumping ground. We scrambled to get out of the house by 11am so we could walk her for 3 miles around the Lafayette Reservoir. This, by the way, is generally no easy task! Although she is a fantastic walker and minds what we tell her, she is so cute that we cant go more than 100 feet before being repeatedly stopped and asked if “we can pet your dog?”. We can typically hear it coming a mile away and it usually starts off with, “awww, what a cute boxer!”. By the way, she is a PUGGLE (1/2 Pug, 1/2 Beagle!)…yes, she is a puppy…and she is 4 months old! As soon as we get our shirts printed with the answers to these common questions, it may be a long time before we can walk her without interruption!

At the Reservoir we discover that its a Persian Holiday. Well, Nousha knew this and of course I forgot that she had told me about this last week. Forgetting is not one of better qualities but I think its understood that I’m allowed to do this from time to time :)

Since Noushi’s plane was scheduled to arrive at 1pm, we drove to pick up flowers (typical Persian event upon airplane landing :) as we sped to the airport. Yes, we were late but, as I said above, I attribute that to all the distractions we get while trying to walk our dog. Never the less, we arrived at the airport 30 minutes after the plane arrived. Noushi wasn’t there so we waited, and waited, and waited… After 3 hours I began to think there was something wrong, although Nousha assured me that its typical for Persians to get a LOT of questions at Immigration. Since it took her cousin about 2 hours to get through the line last month I didn’t question this. I did, however, ask Nousha if her phone was on and got a quick assurance that it was! At this point there was nobody else waiting at the gate so as I went up to the ticket booths to get some answers, Nousha realized that her phone was “stuck”. After a quick reboot she received a message from her mom that was sent BEFORE we drove to the airport that which infomed us she was still in Amsterdam and will be in on Monday NOT Sunday! Needless to say, I did my best to not think about the fact that we just sat at the San Francisco airport for the better part of a beautiful day! (Luckly Coco slept the whole time and didn’t get harrased as usual!)

So, tomorrow we do it all over again…

Its all over the news right now, in case you haven’t heard, Bear Stearns is in serious financial troubles. Just a few weeks ago their stock price was hoovering around $100/share…today it closed at $4.81 after 2 HUGE drops. As a former stock broker, Ive had a few friends asking me what is going on. One friend in particular is very nervous due to a substantial position in one of their funds. The reason for this huge disaster has to do with their risky investing in sub-prime loans. Essentially they took a huge gamble that didn’t pay off. For those of you that are not familiar with ‘Sub-Prime’, its a term that refers to the credit status of the borrower (being less than ideal), not the interest rate on the loan itself. Investors purchase these sub-prime loans because they tend to have a higher yield (interest rate). The higher yield is compensation for the added risk. Unfortunately Bear Stearns decided to place too much of their portfolio in these loans and since they are defaulting, their value is going down.

Not only has their stock value declined, I just read that they are not allowing their investors to pull their funds from their accounts so even if you have money with them, you may be forced to watch it dissappear before your eyes. On top of the already depressed economy, this type of poor business decision does NOT bode well with the investment community!

Although this is just one opinion, I predict that the worst is not over for the United States. Inspite of the bogus “economic stimulus package” that was talked about by our fearless leader, the combination of high oil prices and low consumer confidence are leading me to believe that we will be seeing more defaulting loans before the the economy finds a balance.

What should you do in times like these? I suggest that you take a serious look at your current investment portfolio and consider what is called a “flight to quality”. This is where you shift your investment dollars to vehicles that offer greater safety at the expense of yield. Instead of investing in the latest and greatest high-flying stock or high-yielding bonds, consider moving to investment that have been proven to withstand recessionary periods.

Although I dont get paid to give out financial advice (anymore). I would recommend lower yielding (and possibly insured) bonds and money markets at this time. If you like the stock market and feel that you are still at the age where you can financially withstand the ups and downs, then consider the core companies that can weather these bad times. Food and alcohol companies have always done a good job of getting through the financial storms because, lets face it, people still need to eat AND during bad times Americans tend to drink more alcohol…as funny as it sounds! Two example of this would be Costco (COST) and Anheuser-Busch (BUD). They have both fallen from their highs along with the rest of the market but they have great business models that cater to the current market conditions. Also, during times like these, be sure that your portfolio is well balanced and you don’t put all your “eggs in one basket”.

Disclaimer: Once again, I do not get paid to be a financial advisor but I did spend many years analyzing the market and did at one point manage almost $50 million dollars of my clients money…so please do your own due diligence before doing anything, especially during this type of market!

Sunday was supposed to be a “Napa” day but due to the weather we decided to do something exciting BUT not in the rain. Since Reza was in town and it was Gaelles last day in the United States for awhile, I thought it would be fun to do a little racing! I surprised everyone with a trip to GoKart Racer in Burlingame. Yep, I won the race but then again Ive done this a LOT more times than they have. By the way, these aren’t just “go karts”, they are VERY fast, 270cc Honda powered mini cars. All the governers have been removed on the carts which allows you to accelerate to speeds of up to 40 MPH! The G forces that you encounter in the turns are enough to give you sore muscles the next day, even if you happen to be in good shape. I didnt get many pictures since I left the good camera at home but I highly recommend you visit them when you are in San Francisco!