Demise of another sector

Nowadays, e-commerce has become the norm reaching to almost each aspect of our life. With the fast pace advancing of new technologies making e-commerce more and more customers-friendly and easy for doing all kinds of business and activities online, many traditional business sectors are dying, either lowly or quickly. We know the retail industry relying on physical stores or malls is going down fast. Another sector is also following the path and will soon become the history of the past. I’m sure you will agree with me that the traditional newspaper industry, while still available, may totally disappear in the near future at least not in the current format! Are you still reading newspaper, especially the paper ones? Hardly you will see anyone around you, either on the street or in hotels etc, is reading newspaper anymore. There are so many sources of news these days available online with a lot of them free of charge and I don’t know how the subscription-based newspaper industry, even in the electronic format can effectively compete to survive. Not only about the costs as a major hurdle for them, the slower pace of reaching out to readers with news will also make them obsolete. As a saying goes, when you see the news on the paper, it is outdated already.

 

From the trading perspective, betting for a slow motion demise of the news industry is likely a good choice. Given the uncertainty of when this downside risk will accelerate, one idea is to buy the long-term out-of-the-money puts that can be used as a hedge for your long portfolio. Without much money involved, it may potentially bring you 5-10 times money back if indeed the downward trend starts to pick up. One can consider to buy such puts for Gannett (GCI), the holding company for USA today and NY Times or News Corp (NWS), owner of The Wall Street Journey.