Steve,
How do you feel about our general stock holdings in regards to being heavily weighted in the broadcast entertainment, communications and wireless communications area? Though we do hold American Apparel. I'm not suggesting this is good or bad but is there a reason for this sector over others, do you feel that this is a safe place to be right now???

Northlake's approach is to combine index based investments with selected media and telecom stocks. The idea is that the index based investments, usually making up at least 70% of stock portfolios, provide plenty of diversification so that a more narrow focus can be used on the balance. I believe that a narrow and deep approach to individual stocks makes the most sense as it has become increasingly difficult to gain a competitive edge if you spread your knowledge too broadly.

Right now, media and telecom are heavily out of favor which makes it hard to find any winning ideas. In this market, any winning ideas are tough to find! However, I'd still rather research there than go to areas where I'd just be guessing.

Media in particular is viewed as consumer discretionary expenditure so it is sensitive to investor perception on the economy. Right now that makes life difficult in the sector. To compensate I am keeping extra cash and limiting holdings oto just 4-6 stock vs. a more normal 6-8.

WHAT IS GOING ON WITH THE MEDIA GROUPS IN GENERAL AND WITH CETV IN PARTICULAR? I THOUGHT WE WERE NEARING A BOTTOM,BUT NOW I DON'T KNOW.CETV WAS DOWN $9 TODAY ON NO BAD NEWS.IS THE MARKET IN A MELTDOWN?

Media in general is being sold hard because advertising lags the economy. That means that cuts are just starting.

CETV is feeling a buyer's strike and the wrath of shorts. In general, I think that many markets are behaving poorly. Thus, I would not read too much into the price signals. $57 may be the right price for CETV in the near-term or it may be more or less but the price is also being buffeted by factors that have absolutely nothing to do with the daily operations of the company. I think that is the case. I added 500 shares in my own account yesterday at $58.50. I plan to flip those shares for $3-7 profit in the short-term. I am not selling any of my large position.

The market is in panic. It may yet get a lot worse but when it feels like panic a bottom is usually close at hand. However, right now price action is dictating and that is dangerous given the trend.

CETV IS DOWN TO $51 TODAY WITH NO BAD NEWS FOR CETV IN PARTICULAR IN SIGHT.ARE ANY OF THE HEDGE FUNDS LIQUIDATING THEIR POSITIONS IN THE STOCK?

I have spent all morning checking in with the company, analyst, and other holders. Obviously there is large seller and short sellers. I believe they are wrong but the decline is feeding on itself and eliminating the willingness of buyers to step into as they assume maybe their analysis is wrong.

There are lots of issues that could be real such as Russia, Ukraine, the dollar, the economy in Eastern Europe. Each could impact growth in 2H08 and possibly the guidance for this year. At $50 almost all of it go wrong and the stock is too cheap.

But for now sentiment matters so until sentiment improves either because the potential negatives lift for the stock rallies it will be tough to turn it around. I still believe the stock is worth north of $100 based on 2008 results even if those results are not quite as good as I expect.

I know you called but I am too busy to call back right now. Maybe later today or Monday.

CETV IS DOWN AGAIN THIS MORNING.IT IS DOWN TO LESS THAN 33% OF ITS MAXIMUM STOCK VALUE?IS THERE NO END TO THE BLEEDING IN SIGHT?

The stock rallied from yesterdays low of $36 to $45 in the last hour. If it had closed at $40 yesterday it would be up today. Given the volatility you need to extend your time horizon when trying to analyze what and why it is moving. You also need to forget that it was at $125. All that will do is sour your mood no matter what the stock does.

Even if reported growth next year is flat because of dollar strength, the stock is very cheap. If investors gain confidence that in local currency next year is going to up the stock will start to reflect the long-term growth story again.

The stock is broken now which means it won't bounce as quickly and is subject to down moves on any selling. Potential buyers are staying away because it acts so badly so until it firms up it is going to struggle. The question is what will firm it up and when. In the short-term I don;t have the answer to that but I do think that the 10/23 analyst meeting will be far far more positive than the current stock price suggests.

1.SINCE THE RECESSION HAS NOT FULLY HIT THE ECONOMY,DON'T YOU THINK WE ARE NOT NEAR THE END OF THIS BEAR MARKET
2 THE MARKET APPEARS TO BE VERY SICK SELLING ON NORMALLY GOOD NEWS E.G RATE CUTS.DO YOU THINK MUCH CAN BE GAINED OUT THIS LATE POINT IN SELLING IN WEAKNESS AND BUILDING UP A SIGNIFICANT CASH POSITION?
3.NORMALLY,A REASONABLE WAY TO WEATHER THIS TYPE OF MARKET WOULD BE TO STAY IN REASONABLE PORTION OF VERY GOOD STOCKS/COMPANIES UNTIL THE RECESSION/BEAR MARKET IS OVER SO THAT THESE GOOD STOCKS COULD REGAIN THEIR VALUE-DO YOU BELIEVE THAT THIS WOULD STILL BE THE CORRECT STRATEGY IN THIS ONCE INA LIFETIME SITUATION?

Bears and sellers are in control until the market improves and forces them to start covering or back off. That is short-term. As for the link between the market and recession, the conventional wisdom is that the market bottoms 6 to 9 months before the economy emerges from recession. Given what central banks are doing I still think that can be 2H09 which means we could bottom between now and year end. October is often the bottom. We'll see.

I believe it is too late to sell unless you need to spend the money in the next few months.

When the market goes parabolic (up or down) as it is doing now, good companies get thrown out with bad. I still maintain that current prices do not necessarily reflect reality.

This could be it. The next great economic collapse. That has been the problem the whole way down --- everyone knows that there is a reasonable possibility that we have hit economic Armageddon. This causes sentiment to get more and more negative on every news item and every failed rally. However, I just don;t think the world is ending. If that view sets in then we will rally and stabilize. That is what I believe will happen.

1 THE MARKET IS FALLING APART AGAIN AND IS DOWN ABOUT 350. IS THERE ANY CHANCE THAT THIS FREEFALL IF CONTINUED COULD JEOPARDIZE CETV AND/OR MICC 'S EXISTENCE?
2.MICC AND CETV HAVE ALREADY HAVE BOTH GONE DOWN MUCH MORE THAN I THOUGHT POSIBLE ON NO BAD INDIVIDUAL NEWS?ARE THERE ANY PRICES LOW ENOUGH THAT IT WOULD CAUSE YOU TO CONSIDER SELLING CETV AND/OR MICC?

I see no chance 0% that CETV's existence is threatened. There is no price at which I would sell anywhere near $34.

I've never looked at MICC's cash flow or debt so I can;t speak to its financial strength.

There is really not much to say. I've been wrong so far on these stocks and the market. Something will trigger a rally. I just hope it is soon. The market seems to be discounting a very very deep recession. If the financial system stabilizes soon that will not necessarily be the case.

1 SHORT TERM, KEN HEEBNER IS PREDICTING THE GREATEST STOCK SNAP BACK IN OUR LIFETIMES. HE FEELS MUCH OF THE PRESENT DROP IS DUE TO FORCED REDEMPTIONS BY HEDGE FUNDS AND WILL QUICKLY REVERSE WHEN THESE REDMPTIONS ARE FINISHED.
2 LONG TERN, BRANSON AND OTHER FEEL THERE WILL BE NO GROWTH IN THE MARKET FOR YEARS AS THE MARKET EVENTUALLY COMES BACK TO LIFE FROM THE EMBERS
DO YOU AGREE WITH EITHER OR BOTH OF THESE PREDICTIONS?

I believe there will a massive one or day rally that could pull back 15-20% of recent losses. That would still leave us way down by the way. But the open interest in the S&P futures has exploded which might mean that people are overhedging their longs. When it reverses those shorts will have to be covered fueling a very rapid rise.

However, we need to get this rally soon. It does less and less good for it to happen if it starts form 8000 or 7000 or 6000.

The bigger issues is what happens once we stabilize. The severity of the crisis is such that it has impacted future growth more than I thought it would. I think has become unrealistic to expect much in stock returns beyond the initial sharp snap back but once we within 6 months of renewed economic growth the next bull market should begin. Will that be in mid 09, late 09, 2010, 2001? That is question that just can;t be answered right now.

THE MARKET IS SO FAR STILL NEGATIVE FOR THE DAY,BUT HAS TURNED AROUND NEARLY 700 POINTS ANTICIPATING MORE GOVERNMENT ACTION THIS WEEKEND.
IS THIS CAPITULATION AND THE BEGINNING OF A RALLY WITHIN A BEAR MARKET.