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NEW YORK (
InvestorPlace) -- There are these little things called "secular trends" that all investors must be aware of.
For example, there is a secular trend toward viewing entertainment on mobile devices and computers, which is one reason why television viewership and the volume of movie admissions have dropped during the past 10 years.
Another secular trend is that people are abandoning newspapers, and for that reason you should sell all your newspaper stocks. The trend is your friend. Newspapers are not trending toward growth. They are contracting. Here's why, and a look at the stocks to sell.
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Thanks to the Internet, people can get their news whenever they want, wherever they want. Mobile devices are the new instant newspapers: They provide up-to-the-minute news, whereas newspapers provide day-old news.
Moreover, content providers are entering the field all the time, and a good story can come from anywhere, not just
The New York Times.
And in the case of fabulous blogs that publish stories that do not hew to what I consider to be the left-wing bias of most newspapers, people have started to realize that the truth is out there -- but not in the mainstream media.
Then you have the convenience factor. It used to be that you went to the bagel store on Sunday and read that bulky newspaper. Now you can go the bagel store and read your iPad.
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As a result of these factors, eyeballs have migrated away from newspapers to the Internet. Circulation has fallen dramatically. In the first quarter of 2010 -- just choosing a random quarter -- the Audit Bureau of Circulations showed a 9% drop in circulation. That included a 23% drop in circulation for the San Francisco Chronicle. In the past six months, newspapers saw a 5% drop.
When circulation falls, advertisers spend their dollars elsewhere. Newspapers are also really expensive to run, whereas Web sites aren't nearly as expensive.
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How bad is it?
Washington Post Company(WPO) hit a high of $983 a share in late 2004. It has never come close to that price since, and today shares trade at $330. In its most recent quarter, it reported a 20% drop in ad revenue. Even online revenue was down, by 14%.