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Tech stocks - Wednesday, September 10, 2008

Charles Schwab Can Sleep Well Tonight…

Seeing the market tumble today on the news of Lehman Brothers (LEH:NYSE) inability to raise capital only left us wondering why this stock hasn't collapsed sooner. After all, why would anyone with $5 billion give it to Lehman? At this point, they would be better off trying to sell the computers and desks of the people it recently laid off on eBay (EBAY:NYSE) to raise capital. Telling their employees sell candy bars door-to-door might yield better results than sending the company's execs to grovel at the doorstep of every private equity firm and foreign bank that is not suffering from the mortgage crisis. With the latest news, we think the head honchos at Lehman might have to promise to leave the company forever before anyone even considers bailing the company out.

In all fairness, today's plummet in the market really had nothing to do with Lehman Brothers and everything to do with investors getting excited about an event that should not have encouraged people to buy. We are of course referring to the U.S. government's "mercy killing" of Fannie Mae (FNM:NYSE) and Freddie Mac (FRE:NYSE). Since the move didn't directly change any of the factors that are currently affecting the housing crisis, we still can't believe that investors saw this as a sign that the country was on the rebound. Unfortunately, until this country truly starts to recover from this mess, we expect to see many more "false starts" in the future.

Instead of trying to break morose feeling around the market with a solid buy recommendation, we decided to spend another day at TechCrunch 50 and try to find some comfort in a company that we could eventually invest in. Lord knows the market isn't currently providing the tech:stocker staff with the means to be angel investors.

We were a little excited to see the five companies in the Finance and Statistics session. With Lehman poised to leave the game, we kind of hoped there was a company who would give Fidelity Investments and Charles Schwab (SCHW:NYSE) a run for their money. While we have tremendous respect for both, there's nothing wrong keeping both of them honest with some competition.

First up was PERSONALRIA. If for some reason you have some cash to invest but don't have a financial advisor, PERSONALRIA has a network of prescreened registered investment advisors waiting to invest your money. These eager investment advisors list their investment style, portfolio holdings, and welcoming picture in hopes of acquiring your investment dollars. PERSONALRIA takes .5% off the top for fees. We see this site as a refugee destination for investment advisors who barely make the grade at American Express (AXP:NYSE). Anyone considering finding an investment advisor at this site should invest in an index fund at Vanguard and call it a day. Needless to say, Charles Schwab won't be losing any sleep over this one.

Next up was Emerginvest. Basically, this company is aimed at day traders who are bored with the U.S. stock market. Applying the theory that it is always sunny somewhere in the world, Emerginvest helps investors discover where the action is. If the U.S. stock market stinks, look elsewhere for opportunity. Employing a world "heat map", Emerginvest shows you where you should be sending your American dollars and where you should stay away. The site also collects news stories to support its heat map and help keep investors informed. While this initially sounds interesting, investing in foreign economies is tricky business. Contrary to popular belief, the SEC is not a worldwide entity and Sarbanes Oxley is two meaningless names outside of the U.S. Take our advice, leave investing in foreign companies to professionals. Fidelity should see an uptake in their International Discovery Fund (FIGRX) by the second quarter of next year if anyone tries to invest internationally using this site.

And if investing real money has become boring, ExchangeP has the answer for you. Instead of spending your precious time researching public companies so you can make wise investments that will allow you to send your kids to Harvard, ExchangeP wants you to spend your time researching private companies so you can buy and sell their "stock" on the company's site to win valuable prizes. I'm not joking. While the idea is cute and we really enjoyed the CEO's enthusiasm and theatrics during his presentation, not only did we wonder how they were going to make money, but if anyone would want to buy ExchangeP's stock if they listed it on their site.

Next up was Me~Trics. We actually thought this company had a little hope for the future. You aren't sleeping at well at night? Me~Trics lets you plug-in as many variables as you want – blood pressure, drinking, exercising, work day, portfolio performance, sex life – and let's you monitor how these affect your sleep and draw conclusions. While the obsessively compulsive will be married to this site, there's also a chance that more casual users will use this for weight loss and how to curb any negative behaviors they might have. I'm still not sure how Me~trics is going to make money, but if they answer that problem they might have a winner.

The conference organizers displayed some showmanship by saving the best for last, iCharts. Did you know that there are 40 million charts online and over 900 billion charts online? Neither did we. iCharts not only helps you take existing charts and provide the ability to manipulate them as you see fit, but it also helps you make new charts without having to struggle with Excel and PowerPoint. Having created many charts in our day, if they truly have the ability to save users time, this is a winner. We weren't sure why iCharts wanted to be the "YouTube of charts", but we do see a real business model here. Lehman Brothers would be wise to invest any spare change they can scrape up in this company.

In our next post we will discuss TechCrunch 50's "best in show".