stlplaceLast Updated on October 18, 2008 by stlplace
I am a big fan of CBS 60 minutes. This weekend it explains the Credit Default Swap (CDO) market, and how it backfired and brought down the Bear, Lehman, and AIG. One nice thing about this CBS video (link here), is one does not need formal finance education to understand it. The video lasts 12 min.
Last Updated on October 4, 2008 by stlplace
Maybe things are not as bad as it seems. This afternoon we visited West County mall to check out things. We have not been to the malls for quite a while.
Apple Store
At the Apple store, I saw a big crowd as usual. This made me wondering: what recession? Although I am happy with my 2nd gen iPod Nano (refurbished), and have no plan to buy iPhone, I am sure there are plenty of people checking out the MacBook, new iPod Nano etc.
Maybe all these recession and 1930 depression talk was to get Congress pass the $700 b rescue bill?
Warning: don’t jump into AAPL stock simply from my observation. You could get hurt badly and I could not help you. Also, I don’t think we can judge the soundness of economy just by going to one mall. We need more economy and market data: job, interest rate, stock market and most importantly the credit market.
Last Updated on October 5, 2008 by stlplace
Here is the Google video. He also talked about the financial crisis, human psychology in terms of bubble, herd mentality etc. which is my favorite part (but I have to admit I am one of the herd). The interview last about 54 min.
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”.
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:
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.
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
Last Updated on September 19, 2008 by stlplace
Ron Paul had an interesting perspective on this topic.
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)
Last Updated on September 17, 2008 by stlplace
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!