One More Round of Letters to the Editor
In Case You Missed It
By the time you're reading this, I'll be on my way to Acadia National Park in Maine where I plan to spend the better part of a week camping, hiking and communing with nature. I like to do a lot of research before vacations for two reasons. One, it gets me excited weeks (and months) before the trip, so by the time I'm leaving, it's like Christmas morning. And two, knowing a lot about where I'm going allows me to maximize what I can do when I get there. I also like to know a bit of history about each place I visit. So today, I'm going to tell you a little about the history of Acadia National Park.
The park is found on the Atlantic coast of Maine and takes up much of Mount Desert Island, other associated smaller islands and a part of the nearby mainland. The town of Bar Harbor is also located on Mount Desert, which was originally inhabited by the Wabanaki people.
In total, the park consists of 30,300 acres on Mount Desert Island, 2,728 on Isle au Haut and 2,366 on the Schoodic Peninsula. The area includes mountains, an ocean shoreline, woodlands and lakes.
In the more than 400 years since Samuel de Champlain observed a high-notched island with mountains rising out of it, the area has remained largely unchanged. President Woodrow Wilson created the park on July 8, 1916, and it was named Sieur de Monts National Monument. It became a national park in 1919 and was renamed Lafayette National Park, in honor of Marquis de Lafayette, an influential supporter of the American Revolution.
The park was renamed again on January 19, 1929, finally becoming Acadia National Park. It is the only national park in New England and the first park on the east side of the Mississippi River.
From 1915 to 1933, John D. Rockefeller, the wealthy philanthropist, financed, designed and directed the construction of an extensive network of carriage roads throughout Acadia. The network encompassed more than 50 miles of gravel carriage trails, 17 granite bridges and two gate lodges, all of which are still in use today.
Acadia National Park suffered a devastating fire in 1947 that destroyed 10,000 acres. Re-growth was mostly allowed to occur naturally and it has been suggested that the fire has actually advanced the beauty of the park, adding diversity to tree populations and depth to its scenery.
One of the most famous features of Acadia National Park is Cadillac Mountain, standing at 1,528 feet. It's the highest point within 25 miles of the coastline of the Eastern United States.
It's commonly believed that Cadillac Mountain is the first place in the United States to be struck by the sun's rays each morning. However, the mountain only sees the first sunrise in the fall and winter. Many tourists still trek to the top to see the "nation's first sunrise," and I'll probably be one of them. Even though I know the truth, it won't change the beauty of watching the sunrise from the top of a mountain.
(In case you're interested, during most of the spring and summer, the sun rises first on Mars Hill, 150 miles to the northeast. For a few weeks around the equinoxes, the sun rises first at West Quoddy Head in Lubec, Maine, the easternmost town in the United States.)
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I've discussed the tumult plaguing the newspaper industry several times recently and after today, I'll let the topic rest unless something noteworthy happens. But first, I want to share a few more of your letters because they express some ideas that haven't been voiced here before. Thanks to everyone for writing in, I appreciate you taking the time to share your insights with me and your fellow readers.
To read all of the past issues I've written about the newspaper industry and see how others responded, go to our Web site archives: http://www.cabot.net/Issues/CWA/Archives.aspx . If you haven't shared your view yet, you can do so by sending me an email or commenting on our blog, http://www.iconoclast-investor.com
The newspaper industry is in trouble for myriad reasons. It is not clear to me that daily newspapers will survive in large or mid-sized markets with a few exceptions. It is clear to me that the demand for accurate information will continue, but a new profit-model will have to emerge.
The largest problem facing newspapers right now are these ... in what I think is the proper order:
** Collapsing ad revenues, especially in employment, real estate and auto categories set off by one of the worst post-World War II recessions.
One cannot have housing starts slump by two-thirds, auto sales (whether General Motors, Ford, Toyota or Honda) fall by more than a third from 2008 levels and still have a growing economy. Add to that the shock of crude oil hitting $147 a barrel and gasoline topping $4 a gallon last summer.
** A collapse in display advertising as those advertisers weathering the recession choose to communicate directly with readers either through the Web or the mail.
** A paradigm shift in the delivery mechanism of news that is affecting not just newspapers but radio and television as well.
The Internet has made not only more information possible. It also allows the reader to do his own filtering of the information he deems credible. Thus, alienated readers can ignore the daily newspaper. One result: Left wing and right wing readers can simply ignore what anyone else is saying. It also allows some of the most vile myths and untruths to move around without challenge.
** The large numbers of young readers who do not read newspapers because they don't find newspapers relevant to their own lives. Nor, for that matter, do they find telephone books useful. They can get everything via their laptops and, soon, their smart phones.
** The fact that most women in the United States and other developed economies now work outside the home. That deprives newspapers of what was a core audience. They stopped reading newspapers because they don't have time, either.
The emergence of the Web and related technologies took the newspaper industry by surprise, much as the emergence of airlines destroyed the passenger business of American railroads.
Top managements of major newspaper chains were not trained to search out technologies that would replace expensive investments in printing presses and production systems in newsrooms and advertising departments. The New York Times (not the company) actually was an exception to the rule. The same surprise afflicted broadcasting operations, which is why local news on air (on television or radio) is also a shrinking business.
Moreover, the managements of many newspaper companies overpaid for acquisitions or used precious cash to pay for expensive stock buybacks--decisions made at the behest of investment bankers and short-sighted stockholders. Or they sold their companies to operators who did not know how newspapers work and who had borrowed far too much money to make the deals.
At the same time, credibility is a problem for managements with their employees when they continue to flog the idea that the business is sinking when, in many cases (Gannett for one), the cash flow is still quite positive.
The recession is the biggest short-term problem that newspapers face. However, the change in the technology paradigm both in terms of delivery of news and how news is consumed is enormously profound. Even when the economy moves into recovery--probably next year--the challenge for all news organizations will be to find new business models that will generate the revenue necessary to pay for the expense of newsgathering.
As a former stockholder of, and subscriber to, the New York Times I would like to correct what I see as a misconception to your analysis of the problems of the large city newspapers. In one word they dumbed-down. I cheated on the one word but I couldn't think of a one-word substitute to use. When I started reading the NYT in 1935 at eight I struggled using a dictionary to understand what I was reading. And, had to follow some convoluted reasoning and sentence structure. One day 40 years later I was reading my morning paper and I reminisced about the old days and I made a discovery. The sentences were five to eight words long and if there was more than 1 polysyllabic word in a paragraph I couldn't find it. When speaking to my few surviving friends I was surprised at the unanimity of the opinions. They don't specify the same problems but everything from the crossword puzzle to the front page comes under attack.
Stupidity is the general opinion.
I am puzzled at the frame of reference. Yes large dailies have been disappearing. That is sad and a loss to our society. Small locals and specialty magazines will survive. It's not the same, you say. True. How will national stories be covered? By electronic media. Perhaps by USA Today. Not as good? Agreed, but there it is. But all those who eschew the NY Times because there is a liberal bias are the type of people who just want to have their way and don't want to hear about the other side of the story ... the kind of people who just had their way when we trusted industry to regulate itself and consequently put America in a financial crisis that we may never recover. So part of that legacy is people cutting back on their newspapers. But part of the reason large dailies are disappearing is that they insisted on covering the individual crime, ignoring the major crimes and trends which are significant.
Blaming it on unions is surely an easy out; scapegoating. The smarmy tricks of the NYT management and ownership illustrate why unions came into being; a way for ordinary people to fight the monumental greed, megalomania, and lack of morals and ethics of the super rich. Our schools have done a disservice by downplaying the class system in this country. Our newspapers, likewise.
The one thing which I have not seen is any concern over the loss of a platform for cartoons. Nash brought down Boss Tweed with just cartoons.
If the newspaper industry is to make any money it must do what it did in the past, dig into everything. The paper must become the trusted source of information not just a three-day-old rewrite of the Internet. The newspaper must, on the Internet or not, give the customer new reliable information that you cannot get anywhere else. Years ago the newspaper was something you had to read each morning seven days a week; today it is something that you put in the trash and hope you did not pay for. For the newspaper to be anything other than a waste of time, we will have to hear arguments on what paper is best. These arguments will have to be at the level of what ball team is best, to put life back into the paper. I miss the paper and do my reading on the Internet but it would be nice to have a "paper."
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In case you didn't get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, I have links below to each issue.
Cabot Wealth Advisory 6/22/09 - Never try to Catch a Falling Knife
On Monday, Paul Goodwin wrote about why most people are invested solely in mutual funds and three reasons for owning individual stocks. Paul also discussed why you shouldn't just buy any old stock that's dipped in the recent market correction. Paul finished by writing about a Chinese (don't be fooled by the name) dairy stock with potential. Featured stock: American Dairy (ADY).
Cabot Wealth Advisory 6/25/09 - Cyclical versus Secular, Bulls versus Bears
On Thursday, Michael Cintolo wrote about why it's not worth debating whether we're in a secular or cyclical bear or bull market. Mike discussed why he thinks we're in a new bull market and what you should be doing now. He finished by writing about a stock that he thinks is a potential big winner. Featured stock: STEC Inc. (STEC).
Cabot Wealth Advisory 6/26/09 - Two Stocks to Bank On
On Friday, J. Royden Ward wrote about what he sees wrong with the way the current banking system is set up in the U.S. Roy offered some solutions, such as breaking up large banks that are deemed "too big to fail." Roy finished by recommending two strong bank stocks that aren't bogged down by the current mess most banks are in. Featured stock: Hudson City Bancorp (HCBK) and Wells Fargo (WFC).
Until next time,
Editor of Cabot Wealth Advisory
Editor's Note: Cabot Top Ten Report is the #1 source of new stock ideas, like past winners Crocs, First Solar and Apple, just to name a few. As the editor, Michael Cintolo always has his eye on the market, looking to discover which stocks are going to be the leaders of the new bull market. Every Monday, Mike provides subscribers the market's 10 hottest stocks, including a detailed fundamental and technical analysis. If you're ready to discover the strongest stocks in the market today, Cabot Top Ten Report is right for you. Click here to get started today!
P.S. Don't forget to follow us on Twitter http://twitter.com/IconoInvestor and check out our blog at http://www.iconoclastinvestor.com!