The Tycoon Report

Monster! Beware...

Wednesday, April 23, 2008 | Wayne Mulligan

Could There be a "Monster" Lurking in Your Portfolio?

The other day, on TickerHound.com, a member asked:


I haven't thought about this company for a long time. But once I started to really take stock of our current economic climate and Monster's business model, I began to see why I needed to tell all my friends to double check their portfolios and make sure they weren't holding onto any shares of this one.

Monster Worldwide (Nasdaq: MNST) is one of the world's largest online job databases. The company is one of the few successful holdouts of the dot-com era, and performed rather well after the market began to make a comeback in 2003.

The stock went from a low of $8.57 per share in March of 2003 to a high of $57.40 in April of 2006 - that's a 569% return in under 3 years. Not bad, not bad at all.

But to keep all this in perspective, the stock was at $91 a share in March of 2000. So over the course of 6 years, the stock was actually down about 37%. Reason being: the recession of 2001 and the subsequent multi-year bear market that followed.

Monster, being so tightly correlated to the job market, got hit so hard because as unemployment went up and companies stopped hiring, their site provided very little value to employers and employees alike.

So now, we're at the beginning of 2008, it's pretty obvious we're heading into a recession (no one knows how bad this could get) and I feel like I've seen this movie before.

Many people would tend to agree - Monster's already down about 30% since the beginning of 2008.

Some may call that oversold, I call it "the tip of the iceberg".

If we were simply talking about an equities market "correction", then I'd say we'll be coming out of the downturn by the 3rd quarter. But we're talking about a crisis in the credit markets here - we haven't had to deal with this since the 70's and when you stack inflation on top of it we're looking at a "perfect storm" scenario.

So this isn't even a matter of performing deep financial analysis or picking apart the chart to identify a pattern. Let's use some common sense (an underused asset in many investors' tool boxes) here and see if we can figure out what's going to happen to Monster... I think asking ourselves a few questions will be a good way to proceed:

• Do you think companies are going to be hiring aggressively or laying people off?
• Do you think they're going to want to pay to list their jobs or will they simply use word of mouth to attract the relatively small number of employees they might hire?
• Is it a good sign or a bad sign when 3 - 4 top executives leave the company over the last 3 months?

I feel like I'm watching a rerun of 2001 here, and Monster's on its way to $10 per share!

Now, I've never been one to go short a stock... it's just not something I'm comfortable doing.

But you should definitely have a look at your portfolio, because if you have "a Monster" lurking in there, it'd be a smart move to rid of it and get rid of it quick!

Two EXCITING New Features For You...

Another week and another set of new features getting pushed out the door! Wow, we're getting good at this, huh?

First up is our new "Active Links" feature. A special thanks goes out to Oldman, Sundarkambam and MNSL - these guys really stayed on top of us and made sure we (eventually) added this feature to TickerHound.

Essentially, Active Links allows you to insert live links to other pages directly into your Questions and Answers that users can actually click on. Just make sure they start with, "http://" and you'll be all set. So now you can reference other web pages, older questions, etc. without having to copy and paste the entire thing.

Thanks for the feedback guys!

And our next addition is one that I've personally wanted to add for a while. We're pretty happy with this utility and we hope you'll use it, and use it often (you'll see why I say that in a minute).

In an effort to make it easier for you to help spread the "TickerHound Gospel" and be the most popular and seemingly most intelligent person in your group of friends, we've created a new function for TickerHound - "Invite a Friend".

With our new Invite a Friend feature, you can quickly type in a few email addresses and TickerHound will shoot off an invitation email to your buddies. Then, if they decide to heed your words of wisdom and join the TickerHound community, we'll immediately notify you which of your friends joined the site.

Now, we know how hard it is to remember EVERYBODY's email address...I forget my own once in a while, but that's another story...so we've also created a simple "Import Contacts" feature. With this cool little tool you can import your contacts from your Yahoo!, AOL, Gmail, Hotmail or MSN account right into TickerHound. You can even upload your Microsoft Outlook contacts folder!

All we need you to do is enter your login info and we'll do the rest. And DO NOT WORRY... we don't save any of your personal info or the email addresses of the people that we invite on your behalf. We send a single email and that's it. Everything is deleted from our records after that.

So to get started inviting your friends to TickerHound (and help them take their investing knowledge to a whole new level), go to the link below:

http://www.tickerhound.com/invite

And to make this interesting, we have a special announcement...

For those who get the most friends to join, we're going to give a special "gift" to show our appreciation. So for the Top 3 TickerHound Evangelists (the members who get the most people to join), we'll be giving away 250 Bonus Points EACH! So if you ever wanted to get your name up on the Top TickerHound's list very quickly, then this is your shot!

We'll be running this contest until May 1st, and then we'll tally the points up and see who comes out on top.

Good luck! Click here to get started now.

Top TickerHounds

The Top TickerHound's list didn't change much this week - Grudun is still climbing the charts taking the top spot for the 3rd week in a row! Congrats buddy...but I seriously hope to see some new contenders step up to the plate and see if they can challenge this guy.

I haven't seen answers of this quality since EthanR first came to the TickerHound community! Very impressive stuff.

Then we have Oldman as one of our top answerers yet again...this guy just doesn't stop, consistently out there sharing his knowledge and helping people every chance he gets. It's truly inspiring.

And finally we have warren back on the top of the list...here's another guy who's become a cornerstone of our little community. I'm sure everybody will agree that it's been great having him here.

Last Week's Challenge

Last Week's TickerHound Challenge questions got a decent response...was hoping for more, but I really enjoyed the depth of the answers. I know some folks were a little confused by a couple of the questions, but don't get too stressed...that was the point. I wanted to hear an argument and a well thought out response - not necessarily a single correct answer.

And I think if you read all of the answers from last week, not just the winning responses, you'll see that ALL of our answerers gave some amazing information that we can ALL benefit from.

My personal favorite was the answers to our first question

What happens to a stock portfolio if the dollar continues to depreciate?

The Best Answer went to MNSL - great job! But all of the other answers were fantastic as well...everybody did great. Click here to read them all now.

For our next question, Why or why not would a company pay dividends to shareholders? - the Best Answer went to our Top TickerHound, EthanR!

Again, this isn't to say the other responses weren't great as well - they all gave valuable pieces of information for every investor out there. So click here to read all of the answers and you decide which one really nails it.

And finally for the question, What is beta and HOW would it be relevant to a stock trade?, the Best Answer goes to MaverickInvestor! Click here to read his answer now.

Congratulations to all of the winners - you'll be receiving your 50 points shortly.

This Week's TickerHound Challenge

Again, for this week's challenge we're not looking for a single "right" answer - we're looking for somebody to make a solid argument and add value and insight to the community.

So good luck!

• Which sectors are you most Bullish on right now? - click here to answer.
• Which stock are you most Bullish on right now? - click here to answer.
• Which stock are you most Bearish on right now? - click here to answer.

50 Bonus points awaits you...Have a great week!




Wayne Mulligan
CEO
TickerHound