Yes. Story Stocks is another trading and investing blog. As if we do not have enough of these already.

We do endeavor to leave our mark and that is by helping ordinary investors to make money in the market. It seems that the ordinary investor doesn’t have much of a shot these days, not the 21st world in which high frequency automated traders churn through the turnstiles buying and selling and creating a lot of confusion in the process.

It is true that there has always been an unlevel playing field. Professionals have always had the advantage over amateurs. This is still the case. It is worth pointing out that this isn’t to say that professionals are very good. Actually most professional investors, the kind that our audience has access to — mutual fund managers, mostly, are dreadful at their jobs.

Now, that’s not to say that mutual fund managers, investment advisors, financial planners, etc are not smart people. On average they tend to be smart, in the top quartile in intelligence from my interactions with them. However, there are several reasons why that’s not near good enough to actually do well at managing billions of dollars.

There are other folks, people working at very large money management firms, hedge funds for instance, who are not in the top quartile in intelligence but the top percentile. These folks tend to give an individual a better chance at making a good bit of money in the market, but sadly they are also likely to blow up the wholewideworld since they are smarter than everyone else and everyone knows that supersmart people come up with really dumb ideas.

In any event, the merits of hedge fund honchos and their analysts is really beyond the scope of this blog. Story Stocks is a blog about how regular people can make money in the stock market in the 21st century, at least in this decade. (Good luck as the century progresses.) If you have access to a hedge fund manager, then go away, you’ve already bought your guru.

For the rest of the world, like the remaining 99.something percent of us, we have to make a choice. Do we want a financial planner or mutual fund manager to play with our money or do we want to do it ourselves?

This blog is for people who want to manage their own money, grow their wealth and net worth through intelligent investment, and do so without paying some professional to take a cut of your money.

For people who are of the independent spirit, and honestly most people are not of the independent spirit, it is important to survey the field and see where you can get an advantage and how you can make money in this environment.

What we focus on more than anything else is something that most stock picking amateurs do not really realize (at least they don’t think about it this way) about the stock market. The stock market is people (mostly, still, for now). And people are more or less the same as they were 10, 20, 50 years ago.

Decisions about money are decisions about security, literally we see them as life or death decisions. Because of this, because of people, the stock market will always be inefficient. There will be many smart people who will tell you that this is not the case. Feel free to listen to them if you want. In fact, just buy a giant index fund, dollar cost average into it over a few decades, and then move your nest egg into a more ‘safe’ haven. After this you don’t need to go and find a smart person to listen to because that’s what they’ll tell you.

Also, you don’t need to pay a financial planner to invest your money in an index fund. You can do this yourself quite easily if you want to. But, people who plunk their cash into index funds are not who we write this blog to attract.

First, there is nothing inherently wrong with index funds or ETFs that track an index. On the contrary, the problem is that buying and holding is no longer a smart move. We’ll talk a lot about why this is no longer the case in our opinion. If you want to succeed you are going to need to be nimble and you are going to need to do more than simply accumulate shares in the total stock market. That’s our position, anyway.

Back to people: Because investing decisions are made by people they can be understood through the lense of human psychology, particularly evolutionary psychology and cognitive neuroscience. We are not scientists however, but the ideas of these disciplines are actually things all of us are already instinctively aware of, they are principles we all act on.

What we are saying is that these same principles apply to the stock market.

For instance, why do beautiful girls get asked to the prom more often than homely and obese girls? Who cares, they just do. For this reason certain stocks are more likely to rise in value, they are beautiful. We call them Story Stocks. If you can sum up a company’s business in two sentences and the idea sounds both interesting and easily understood, you have a potential story stock.

Of course there is a lot that goes into making a decision about investment. We don’t look for stocks that are the ‘prettiest’ and invest. There are three components to our method that all individual investors should keep in mind.

1. Easily understood businesses that can capture the imagination can gather critical mass and make you a lot of money.

2. The realities of economics make certain investments unsuitable to the big boys (for a while) but provide an advantage to the small player. We can get into a small company that a mutual fund simply will not invest in. The won’t invest not because the company’s stock isn’t necessarily a good buy but because of structural realities, this company is not an worthy of their time.

3. If you look at the field and play the odds properly you can win at this game so long as you understand the rules. Always play the odds and cut your losses. All investors, speculators and stock-grubbing computer algorithms are wrong. They are wrong a lot. The key is to be not so wrong when wrong as you are right when you are right.

So that’s a bit of an explanation about how we plan to cover the market for our readers. We will look at individual stocks, options, and combinations of stocks and options. Also by stocks we refer to issues traded on the exchanges during open hours, they may be treasury-related securities, REITs, commodity-related securities, ETFs — We’re calling them stocks for ease.

Expect to see some fundamental analysis as we look at the investing landscape and try to anticipate opportunities for profit. Expect us to be wrong and wrong often. Of course being penny-wrong 100 times doesn’t matter if you are dollar-right just once.

Thanks for reading.

How often does a company with $160 million in debt and nearly $17 million in losses in fiscal year 2006 capture my attention? Rather infrequently I must confess. However, the IMAX corportation has achieved the status of an exemption. IMAX controls a niche in the specialty exhibition business, and they may finally be leveraging that status into prolonged profitability and growth.

In December, IMAX announced a deal with AMC Entertainment to install 100 digital projection systems in theatres in 33 American markets. In July of 2008 the company will roll out the first 50 units. In January they followed this pact with the announcement of 12 more screens in China and the Phillipines. This deal increases the IMAX footprint by nearly 40%. And certainly caught my attention. But as I thought about the IMAX story further I came to a couple of conclusions.

For some time the motion picture industry has been struggling to attract viewers to theatres. Over time, and you can really go back decades, film attendance has been trending downward. There’s perhaps a myriad of reasons for this from competition from television and the internet to increasing sophistication of in home entertainment systems. However, IMAX, by the nature of 40 by 75 foot screens, provides an experience that can not be replicated in the home. It provides a unique experience for the consumer and it’s larger-life-life nature compliments the blockbuster film, both live action and animation. Evidently, moviegoers agree.

IMAX recently announced that box office receipts for 2007 topped $145 million, up from $8 million just five years before. Hollywood studios are increasingly incorporating IMAX exhibition into their broader release plans for their largest, most commercial offerings. Five of the ten highest grossing motion pictures of 2007 were also released in the IMAX format, with up to 13% of the total box office originating from IMAX exhibition. This seems likely to continue as IMAX continues to expand operations worldwide.

I subscribed to a newsletter from the Motley Fool not too long ago and received a copy of their Stocks 2007 publication. One of the companies highlighted, Marchex, purchased more than 100,000 domain names in 2006 for over $150 million. After this purchase, the company owned well over 200,000 unique URLs on the this world wide web.

Well, this got me to thinking, as there are only so many usable configurations of letters and numbers that might be suitable for such a thing. I wondered, how much can a portfolio of 200,000 domains be worth?

We’ll get to that in a moment. For the time being, Marchex has parked the vast majority of their sites and littered them with some pay-per-click ads. To be sure they’re not the most appealing destinations. But so what. They have 200,000 of them. Try lasvegasvacations.com or airbag.com to get an idea.

So, as is rather a lot like me, I wondered further: If Marchex paid $155 million for about 100,000 URLs and their current inventory numbers around 200,000 is it fair to reasonably infer that the entire portfolio could be currently valued at around $350 million? Seems reasonable. And the company holds $37 million in cash in its deposits. And the market cap of the entire enterprise? $325 Million.

So the land (so to speak) is worth $350 million and the $35 million in cash is good for, well, $35 million but the company as a whole is valued at $325 million? Plus there’s a 1% yield and revenue for 2006 clocked in at $127.8 million… Hmm… These numbers indicate there could be some room for upwards growth.

Consider my interest piqued in the Marchex story.

Disclosure: I do not own shares in any company mentioned.