Credit Crisis

I was watching CNBC today when I heard one of the guest today use the term “socialize the losses” when talking about bailing out the auto industry. Of course we all know that he is right and that’s what the US government has done with the Financial industry and are now looking towards the auto industry to do the same thing. But he said it with such a negative connotation that it really caught my eye. I know free market idealist have really been bashing the bailout and so have people on the other side such as writer Naomi Klein with her new article in Rolling Stone “The new trough“.

Hulu.com has become a major disruptive technology in the field of online video that is now dominated by youtube. Hulu has been around for a year but is only now beginning to make mainstream traction and become a force within itself. Youtube right now is still hundreds of millions of viewers beyond hulu but when it comes to a niche of more sophisticated content viewers hulu has build itself a niche that will be hard to breach.

The service offers you the ability to watch TV, Movies, and Clips all from within the comforts of your browser. So you may ask what makes this different than all of the other places where I can view content? First of all it is a collaboration between different media companies so that means you can watch a variety of these shows legally for free. Also the service provides up to date content for a lot of your favorite shows, so in case you miss any shows that day, just wait a couple of hours and it will be available on the site for viewing. For the ability to watch up to date shows there is one penalty cost though, commercials. You get a quick commercial break that last about 15 seconds once or twice during the viewing of the show. The commercials are relatively painless and I think regular TV should take note on how smoothly the commercials slide in and out.

The one drawback on the service comes from the movie section of the site. They do not have the greatest selection of movies compared to similar services such as Netflix’s Watch Now service. Also the commercials are a lot worse in the movie section than it is in the TV section. When I was watching the TV shows I saw one or two commercial breaks, maybe even three. The movie I watched had at least eight to ten commercial breaks and they were all the same commercial. Watching the same commercial eight to ten times even with beautiful women can be a bit nerve wracking. Other than that I am a big fan of the service.

While the market is in a downturn we will be focusing on innovative businesses as well disruptive technologies that we think can withstand the downturn of the market. Hopefully these will provide you inspiration on knowing that even though the overall economy is bad, by being smart you can still prosper.

If you follow the link you will find an interview with CEO of Hulu.com, CEO Video

I’m a big believer in knowing a little about the market before you jump in, even if you are using a broker or relying on your 401k plan to get you through your golden years. I am not speaking about becoming a financial whiz kid, I am just speaking about knowing the very basics so that you won’t get swindled when dealing with your personal finances. Today I thought I would start off with a term that you hear all the time when people are discussing a companies value. This term is P\E Ratio.

The P\E Ratio simply means Price to Earnings Ratio. Okay what’s that mean? That means that you take the current price of what a stock is trading at and then you divide it by the EPS. Okay what’s an EPS? EPS simply means Earnings Per Share. The earnings per share of a stock is how much of a companies profit is placed on a single share of stock. I will go more in detail of EPS in another tutorial but for right now let’s stick with the P\E Ratio stuff. So as I was saying before you simply divide the price of a stock by it’s EPS. Let’s give an example.

We have Company A and it’s stock price is at $25 a share. Now we go look up Company A on finance.google.com and we find out that the EPS is at $1.25. Now we take the price of the stock and divide it by $1.25. It would look like this 25/1.25 = 20. So we have found out that our P\E Ratio is 20. Most investors look for high P\E Ratios as part of the formula to determine if a stock is a good buy or not. A multiple of 20 depending on industry is definitely a stock that you wuold want to take a look at.

The last question you are probably asking yourself now that you know what the P\E Ratio is and how to calculate it is, “Why is it important?”. A P\E ratio is important because it usually indicates how much earnings a company is expecting to make in its future. An investor that is looking at a stock’s P\E that is 20 is willing to pay $20 for every $1 of a companies current earnings. That is because he is expecting that company to grow. There is one word of caution though, when looking at a stock to purchase use the P\E Ratio only as a comparison indicator not the whole story. You want to check a companies pass P\E and also it’s rivals in the same industry P\E. That will give you a better picture of the stocks future earnings.