Big Mike's Contrarian Investing Blog

The end of VB.NET, long live C#

When Visual Studio.NET first came out, I immediately predicted that C# would surpass VB.NET as the preferred .NET language. Unlike many of my predictions which didn’t pan out (the first time I saw the internet, I said “no one will ever be interested in this besides hardcore nerds”), I was dead-on with my C# prediction. And it was a pretty bold prediction at the time, because most people moving to .NET were Visual Basic 6.0 programmers, so it seemed natural, to some, that VB.NET would be the default .NET language.

But there were two major factors that caused me to predict the eventual triumph of C#:

(1) VB never had the respect of people who considered themselves to be “real” programmers. It was unlikely that this would change just because Microsoft added a .NET suffix. C#, on the other hand, very closely mirrored Java, and was named after C++ another very “real” language, so it started life with immediate credibility.

(2) As I first explored VB, I was disappointed to discover that Microsoft, instead of making a clean break, left in a whole lot of bad legacy VB stuff so code would be backwards compatible. Furthermore there were really weird and arbitrary distinctions made between VB.NET and standard terminology in other object oriented languages. For example, VB never had abstract classes before, so when creating a new keyword to indicate an abstract class, why not call it “Abstract”? But no, that was too obvious. They had to call it “MustInherit.” It was clear that the people concerned with “reality” would look down upon the new VB.NET just as they did with the old Visual Basic.

Let’s fast forward to the present day. I just did a search on Monster.com for jobs in the New York City area, and discovered that a search for “C#” produced more than four times as many results as a search for “VB.NET.” (C#, unfortunately, is still lagging behind Java, as there were nearly twice as many results for “Java.”) It’s pretty clear that the future for VB.NET programmers is unemployability unless they can successfully reposition themselves as C# programmers.

The differential between C# and VB.NET will probably continue to grow. I doubt that there are many brand new companies or projects starting out in VB.NET. There is the perception, true or not, that C# programmers are of higher quality than VB.NET programmers, so companies will choose to do their new projects in C# in order to have access to higher quality programmers. Most of the VB.NET work is for companies who originally had VB 6.0 and stupidly bought into the idea that VB.NET was the natural next step.

If you’re a new programmer, there’s no reason to start out with VB.NET. Not only are there a lot more jobs available in C#, the syntax of C# is more useful to know because it will make it easier to decipher code in syntactically similar languages such as C++, Java, and JavaScript.

Buying more DROOY [DROOD]

I noticed that there was $1600 of cash in my IRA account, exactly enough money to buy another 2000 shares of DRDGOLD Ltd. (NASDAQ: DROOY). Done. (Hopefully this is too tiny of an investment to jinx the company. I've had really bad investing luck the past year.)

DROOY is one of those companies you really want to call by its pronouncable ticker symbol and not by its corporate name. And the new name sucks, I liked the name a lot better when it was Durban Roodeport Deep.

Goodbye Pogo, Hello Chesapeake

Pogo Producing Company (PPP) was bought out only a few days after I purchased the stock! I only made a small profit off this deal.

I sold my PPP today and invested the money into Chesapeake Energy Corporation (CHK) instead. CHK has a low P/E ratio and management predicts increasing production.

Buy Celebrate Express (NASDAQ: BDAY)

Celebrate Express, Inc. (NASDAQ: BDAY), seems to be a struggling company, but underneath dissappointing earnings is a very strong balance sheet, with $3.70 net current assets per share, even after a $1.25/share special dividend was paid out in April. The company also has growing revenues. Activist shareholder Stephen Roseman of Thesis Capital management has been buying a lot of shares during the last few months. A while back, some big investors (including Stephen Roseman) announced they were going to try to sell the company or take it private, but that didn't pan out, so the stock price sank to the bargain it is today.

Buy Media Sciences International

Another stock pick for you: Media Sciences International (NASDAQ: MSII).

This is a rare case where I recommend a growth stock and not a value stock. The problem with most growth stocks is, how do you really know that the stock will keep growing? As soon as a company demonstrates it's no longer growing, the share price plummets and investors get burned.

Media Sciences International sells generic refill cartridges for color laser printers. They have this market to themselves. There are companies selling generic refills for inkjets and for black and white laser printers, but none have ventured into color laser printers, so MSII has a big head start.

At this point in time, it's a no-brainer to predict that this market is growing. Color laser printers are coming down in price, and gaining increasing penetration into businesses as well as homes. I'd buy a color laser printer, myself, if only I had the room for it.

The only dangers for MSII are (1) some other company enters this market; and (2) MSII loses patent infringement lawsuits (Xerox has sued them)--and even though MSII will probably win, the lawsuits are a drag on earnings for such a tiny company.

Bill Fleckenstein, you suck!

I've long followed Bill Fleckenstein, but I've begun to suspect that his advice is bad. After all, he always screams "sell sell sell" yet somehow the Dow is pretty close to an all time high.

CXO Advisory Group has the bad news. Bill's recommendations have been right only 24% of the time. In fact, if you always did the opposite of what Bill says, you'd do pretty well. Few stock market gurus reach a 76% accuracy rate!

Bill writes in his most recent column:

I don't know when the party in the stock market is going to end. But given all the leverage, and given all the trend-following, risk-seeking, quick-triggered, hot-money operators out there, I don't see any way that we can avoid a crash or crashlike experience. I cannot emphasize strongly enough that the leveraging up of America is over. But the de-leveraging and the problems associated with that have only just begun.

It sounds pretty scary, but given Fleckenstein's lousy track record, I have my doubts.

New stock picks

After selling off my oil and gas investments, I had a lot of cash lying around, and I realized that TD Ameritrade was paying me a really lousy interest rate. I thought about putting all of it into a short term bond ETF, but then it occurred to me that a great investor like me can surely do better than that. So here are some of the stocks I purchased:

Tyco Electronics Ltd. (TEL) - Tyco Electronics just split off from Tyco International. This purchase is based solely on the fact that the electronics part of Tyco has a low P/E ratio. Management is predicting a low growth rate. A basic value stock. This is a rare case where I invested in a large cap company.

Empire Resources Inc. (ERS) - A tiny company (99.86 million market cap at this moment) that resells semi-finished aluminum. Why don't the buyers just skip this middleman and go directly to the aluminum mills? I don't know, but Empire Resources seems to have a history of steady income and a low P/E ratio. It's one of those value stocks that big funds with billions of assets can't invest in.

Pogo Producing Co. (PPP) - Wait, didn't I swear off oil and natural gas stocks? Well, I suppose it was a mistake to want to be completely out of this sector. PPP has a low P/E ratio compared to its peers and recently completed a favorable sale of some of its non-core assets.

Spherion Corp. (SFN) - A temporary and permanent staffing company with a market cap of $525 million. It seems to be a poorly run company, but it's really cheap from a balance sheet perspective, and it's not losing money - in fact it had eight consecutive profitable quarters - so it seems like a good opportunity to buy and hope that management improves or the company is purchased by someone else.

I will post even more stock picks later this week.

Iran and the oil risk premium

Oil is surging. I sure regret selling my oil stocks.

The current price clearly represents a risk premium associated with the British soldiers being held by Iran. The worst case scenario (or best case from the perspective of investors long oil) is that a war with Iran results in Iran cutting off oil supplies from the Persian Gulf, which would cause an unprecedented spike in oil prices. I’m not the only person who knows about this worst case scenario. It’s factored into the current price.

Holding these sailors hostage is a pretty dumb diplomatic move. If Iran’s goal is to obtain nuclear weapons, Iran ought to be laying low until such weapons are finally ready. Then Iran can act all belligerent and say, “Ha ha, we have nuclear weapons, what are you gong to do about it?”

It also doesn’t make sense to piss off the British. When Argentina pissed them off by taking over the Falkland Islands, they went to war against them.

The most likely resolution is that Iran will give the sailors back, there will be no cutoff of oil, and prices will retreat.

Sold more HEC

Since I purged my portfolio of oil and gas stocks, the stocks I sold have gone up, while the ones I kept (half of HEC, TRLG, LIZ) have gone down.

So I have no doubt that, by now, no one is listening to my advice.

Today I got rid of more of my HEC. There are sill 20,000 shares in my IRA, but at the current low price of 0.40 that's worth bubkes.

The theory still remains that the global recession to be caused by the coming crash in real estate will cause the price of everything to go down.

Bill Fleckenstein says the economy is tanking

Bill Fleckenstein says that the economy is tanking, on account of the collapse in the housing market.

I wonder if he's still bullish on gold and silver?