Month: September 2008

Categories
China

China Mobile Group got robbed

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Last Updated on September 29, 2008 by stlplace

According to Chinese news, China Mobile’s ultimate parent, the China State Asset Management Co. (CSAM), took 50 billion Chinese Yuan (about 7.30 billion USD) from China Mobile Group (the parent of China Mobile Limited, NYSE: CHL; HKSE:0941), and gave it to China Telecom. For CSAM, this is merely put money from left pocket to right pocket, because both China Mobile and China Telecom are majority owned by CSAM. But for CHL shareholder like me, this is merely another highway robbery, orchestrated in the name of “balance of power in China telecom industry”.

China Mobile Limited CHL

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Categories
Investing

Stock lesson VIII: WaMu fiasco

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Last Updated on September 29, 2008 by stlplace

Think you are unlucky being US tax payer, paying $700 billion to bail out wall street. Think the poor Washington Mutual (NYSE: WM) shareholder and bond holder, they are left with almost nothing.

And yours truely, after been in the US stock market for almost 5 years, is one of the WM shareholders. Looking back, this is a mistake largely self made and I could avoid it if I used more brain a bit more. Here was my rationale and how I did it:

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Categories
Life Tips

What’s your favorite gas station?

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Last Updated on September 29, 2008 by stlplace

I used to go to Shell gas station. One reason is when I started to driving in 1998, I heard from fellow graduate students that “Shell gas is the best”. Another reason is there is a Shell gas station near my home.

But after I tried the BP (British Petrolum, formerly Amoco) station lately, I changed my mind. It seems to me BP invigorate gas lasted longer than the Shell gas, at least to my 2001 Nissan Altima. I guess it could be one time thing, as BP invigorate contains some additives to clean up the engine, which the Shell could not do for some reason.

Bottom line is, I am going to try it for a while, and see if this effect lasts.

BP invigorate performance pic

Categories
401k and Personal Finance

What’s your leverage ratio?

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Last Updated on September 22, 2008 by stlplace

I think I found the root cause of this whole financial crisis, just like the Wall Street investment banks, hedge funds, AIG (NYSE:AIG), Washington Mutual (NYSE:WM), the problem is American home buyers/consumers are overly leveraged. Note I used the word home buyers, not owners, because theoritically the banks (oh, to be precise, the Chinese, the Japanse…) owned the mortgages, most American buyers put very little downpayment. This problem is not isolated to the home mortgages, it has been extended to the auto loans and cosumer credit too. So I would not be surprised to see if those two things blow up in the near future.

This also bring an interesting question, related to the current heated debate on the bailout bill: Paulson (aka King Henry) does not want any string attached to his bailout plan, arguing that wihtout bailout the credit market will collapse and we will be all worse off; Democrats argues that we need to bailout the home owners (oh buyers, or speculators) too at the same time we bailout the wall street.

The bottom line is: we are both overly leveraged. While I saw the Lehman Brothers has 40:1 asset/equity ratio, what’s the American consumers leverage ratio? I remember more than 7 years ago I bought a car with zero downpayment, that’s an infinite leverage ratio. Seriously speaking, I think the old rule 3:1 for buying a house should still apply: in others words, people should buy a house about 3 times gross income. OK, I am talking about the solvency measurement here.

The aftermath of bailout

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Categories
Economy Investing

Perspectives on Bailout and Credit default swap CDS

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Last Updated on September 19, 2008 by stlplace

Ron Paul had an interesting perspective on this topic.

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Categories
Master Series

In Buffett we trust: II

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Last Updated on September 19, 2008 by stlplace

In this turbulent market, most of my stocks took hits, from China Mobile (NYSE:CHL) to Arch Coal (NYSE:ACI), to Chesepeake Energy (NYSE:CHK), Marathon Oil (NYSE:MRO), not to mention the once-high-flyers such as Sohu (Nasdaq:SOHU) and Wuxi Pharma (Nasdaq:WX), both of which I already sold. At the same time, I am happy to see my two shares of Berkshire Hathaway (NYSE:BRK.B) stood calm, and even went up a bit. Why?

(Fox interview David Sokol, Chairman of MidAmerican Energy, a Berkshire Hathaway holding)

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Categories
Investing

The great bailout of 2008: bail, baby, bail

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Last Updated on September 17, 2008 by stlplace

aig bsc fnm fre leh mer logo

March 16: Bear Stearns, $29 billon

Sept. 6: Fannie/Freddie, $200 billion

Lehman Brothers: sorry baby no bail

AIG: $85 billion

Who is the next???

Essentially Fed/Treasury are transfering the downside risks from individual companies to the fed/treasury/greenbacks. Note the money pledged to support Fannie/Freddie/AIG could exceed the original number if the problem worsens.

I can only say: gold, baby, gold!

Categories
Stocks

AIG IS too big to fail

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Last Updated on September 17, 2008 by stlplace

At least that’s what Fed chairman Bernenke and Treasury secretary Paulson think, and the congress and president agree with them. But how about the shareholders and we the tax payers? The AIG shareholders are almost wiped out (slightly better than Fannie and Freddie), and the price tag is $85 billion for now.

So summary, the price tag of recent big financial firms fallout.

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Categories
Economy

Most severe crisis since the great depression

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Last Updated on September 15, 2008 by stlplace

and here is President Bush has to say this morning (source: yahoo):

“We are working to reduce disruptions and minimize the impact of these financial market developments on the broader economy,” Bush said in the Rose Garden, choosing to address the market turmoil at the top of an appearance with visiting Ghanian President John Kufuor. “The policymakers will focus on the health of the financial system as a whole,” Bush said.

In the weekend, the No. 4 US invesetment bank Lehman Brothers went under, the No. 3. US investment bank Merrill Lynch was bought by Bank of America under recommendation by Fed (Bloomberg news). The goal was to make the buck stop at the Merrill. No one wants to see the No. 1 Goldman and No. 2 Morgan Stanley go under.

But they only got a temporary break. The focus now is on AIG and Washington Mutual. The problem for GS and MS, with BoA got Merrill, no company in the world has the resource to buy GS/MS without any goverment help. And the US goverment set a precedent they are not going to bail out anyone (Lehman, for example).

Categories
Investing

Thinking GOLD now

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Last Updated on September 14, 2008 by stlplace

With the Lehman Brothers discussion underway in its 3rd day, and Asian market is anxious waiting for positive outcome. I am thinking otherwise. Regardless Lehman gets sold (as a piece or in several pieces), continue its business with bankrupcy in mind, this Lehman thing is just a tip of iceberger we are going to see. What? You may ask we already see Bear Stearns, Fannie and Freddie bailout, and that’s only the tip of iceberger? The problem is not only AIG, WaMu: the next two in the line; the problem is now I am afraid the dollar and the world financial market will collapse.

As we have seen from the difficulty of Lehman discussion, the key is US goverment is not going to provide any kind of finance support, as they did in the Bear, Fannie, Freddie deal (total $229 billion). For the goverment, they don’t want to do this due to two reasons: 1) Moral hazard; 2) The increasing debt on the US goverment and tax payers, and the the pressure on USD comes with it.

If the worst happens, nothing will be spared, except the gold (Wiki: ways investing in gold). Because before the 1970s un-pegging of dollar and gold happened, gold was the central banks reserve/deposit to print paper money. And if we could go back history a bit more, we know gold is the most widely used precious metal for money.

So, I am seriously thinking about the Gold ETF (GLD). Another way, if you are like my friend Sun, you can buy the gold bar from bullion direct.

Bullion direct gold bar

I am trusting the good old gold much more than the Lehmans, the wall street, the US goverment (treasury department, the federal reserve), will you 🙂