Month: March 2009

Categories
Stocks

Lots of noise lately

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Last Updated on March 22, 2009 by stlplace

AIG bonus. 90% tax. Clawback (that’s new word for me). Goldman Sachs.

The bank rescue (aka toxic assets) plan
Tim Geithner (WSJ op ed March 23) My Plan for Bad Bank Assets;

NY Times article;
WSJ article.

Paul Krugman (the recent Nobel Economics winner) comments (one, two)

Meet the press, Face the Nation and ABC “this week” all talked about this and its implications. So as Fox.

A twist on Coke/Huiyuan story
The China minister of commerce said the outcome does not mean China is now not welcoming foreign investments. This is a merger between two foreign companies (Coca Cola in the US; Huiyuan in Cayman Island). As you may know many Chinese companies are set up in Cayman island (for tax purpose). In other words, the minister is re-emphasize this is purely a monopoly case. Just like the EU rejected the GE/Honeywell merger a while ago.

Categories
Economy

Protectionism on the rise?

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Last Updated on March 31, 2009 by stlplace

(Update 31March09) Wells Fargo is saying they may cut foreign staff (source: marketWatch).

(Original) I was expecting Coca Cola’s proposed Huiyuan Juice acquistion go through, but obviously things did not turn out as I expected. While the free trade people in the US are upset by this, they should remember in 2005, the US congress shut down China CNOOC proposed buy of US oil company Unocal. Signs of more protectionism in the US (besides the anti-free trade measures in the stimulus bill, recent trade dispute with Mexico).

Debate on H-1B
On the other side of the pacific.

(Financial Times) BofA withdraws job offers to foreign MBAs; (Forbes) Chuck Grassley hurts America.

Durbin-Grassley anti H-1B bill; (Economy Times) Microsoft reply to the bill; (Seattle Times) Proportion of H-1B workers at Microsoft won’t change after layoffs.

A twist
Interestingly (on the other hand), I read from WSJ, that some people proposed encouraging the immigrants to buy houses in the US to prop up the slumping housing market. Seriously I do think this country could use more money/investments from the world.

Categories
video

A conversation about AIG

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Last Updated on March 27, 2009 by stlplace

From Charlie Rose, March 17. A conversation about AIG with Hank Greenberg former chairman and CEO of AIG, Carol Loomis Senior editor-at-large of “Fortune”, Gretchen Morgenson of “The New York Times” and Meredith Whitney.

Continue reading “A conversation about AIG”
Categories
video

CBS 60 minutes

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Last Updated on March 22, 2009 by stlplace

It appears CBS 60 minutes have hit two runs in a row. Last Sunday they had current Fed chairman, Ben Benanke on the show. This coming Sunday, they will have President Obama. Also, Mr. Obama is going to appear at Jay Leno’s Tonight show this Thursday 3/19. Those two shows (I mean 60 minutes vs. Tonight show) are totally opposite in terms of their style: 60 minutes is usually serious while Jay Leno’s late night talk show is light hearted.

With the leaders started appearing in public, talking up about the economy, maybe the worst of the financial crisis finanlly is over? 🙂

Watch CBS Videos Online

(CBS 60 minutes show last Sunday, about 43 min in full length. I include the full show because I think the other topic eat healthy is also VERY important).

Categories
Stocks

Stock buy backs got Borders into financial trouble

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Last Updated on March 15, 2009 by stlplace

google finance (NYSE:BGP) cash flow, note the numbers in bold

In Millions of USD
52 weeks ending 2008-02-02 52 weeks ending 2007-02-03 52 weeks ending 2006-01-28 52 weeks ending 2005-01-23
Issuance (Retirement) of Stock, Net 7.60 -122.70 -238.30 -132.50
Issuance (Retirement) of Debt, Net 43.40 303.30 -1.40 6.80

I has been a Borders customer for a long time, just feel sad to see my favorite bookstore got into such a big financial trouble. But again, they (the former management) kind dig a hole themselves: bought back stocks from year 2004 to 2006 (spent $132.5 m, $238.2 m, $122.7 m). Then scambled to borrow $303.3 m in year 2006, and borrow and issue stocks in year 2007 (too little too late).

Business wise, I think the popularity of iPod/iTune almost killed the music CD sales, and the rise of Amazon (low cost) affect book side of business.

Pershing Square (Bill Ackman) has a 33.62% stake in Borders (gurufocus). BTW, his BGP holding has dropped 96% of its value, according to Gurufocus.

Categories
video

The man who knew (CBS 60 minutes)

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Last Updated on April 30, 2020 by stlplace

(Update 04-30-2020) The below CBS 60 minutes link are no longer valid. But I found a CNBC video from Harry on GE (another ponzi scheme, I agree).

(Original 03-12-2009, note the market low on 03-05-2009) Harry Markopolos blew the whistle on Madoff long time ago. But sadly SEC did not listen. Here is the CBS 60 minutes video.

Harry did a mathematical simultation to prove Madoff is a crook. For ordinary investors, I think of the signs I mentioned earlier (too good to be true; 10% annual compound return is very hard to achieve etc.)

Watch CBS Videos Online

Categories
Stocks

This emperor has no clothes

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Last Updated on March 12, 2009 by stlplace

Cramer Stewart saga goes on.

Madoff will go to jail, for life. He deserves it. Just thinking how many people (esp. the older people) lives turned upside down because of his ponzi scheme.

How many clothes-less emperors still out there?

Lesson for ordinary investors
Refer to John Bogle, 6 lessons for investors. Get self educated: get a little finance and psychology lessons, so that one knows more than Dow (S&P should be the real benchmark), compound annual return of 10% is not bad at all, fear and greed etc.

I also think there are 3 types of financial advisors in money management business.

1) Crooks like Madoff and Allen Stanely: this is minority.

2) Most people fell into this category, mediocre. I remember one of my colleagues told me last Sept. his broker told him buy GE at around $22, because he thinks that’s a bargain price for a blue chip like GE. Oh well, we all know how it worked. Most brokers are people who passed series 7 or 63 tests, but have not much idea of accounting and finance. They learned about stocks mostly from CNBC or something like that. How can an average investor beat the market by listening to those guys (or ladies)?

3) The heros. Buffett was one (he had a partnership before the Berkshire Hathaway, in a broad terms, his Berkshire is still in money management business). Peter Lynch. Bill Miller (before 2007).

Categories
CFA

Mark to market hearing

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Last Updated on March 12, 2009 by stlplace

A bunch of politicians (accounting newbies) questioning accountants
C-span video here.

All right, more finger pointing. Now people (oh, I mean Wall Street and their friends at Washington) are blaming mark to market (wiki), for the financial crisis.

This is almost same as blaming starbucks for one’s coffee addiction problem. Coffee, if consumed modestly, is good. But if one drinks more than 6 cups a day, he/she basically will get caffeinated.

Similar thing can be said to M2M, M2M is not the cause of this downward spiral, the overly leverage IS.

When politicians started play with accounting rules, I think rational investors will become really nervous.

Categories
Economy

Greenspan: not my fault

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Last Updated on March 12, 2009 by stlplace

Alan Greenspan, the former Fed chairman wrote an article The Fed Didn’t Cause the Housing Bubble on WSJ to defend himself. He was saying his low fed rate from 2003 to 2005 is NOT the cause for the housing bubble, and current financial crisis. Interesting stuff. I remember Oct. Anderson Cooper (CNN) did a series of 10 most wanted culprit for (financial) collapse, and Mr. Greenspan was No. 6. The English article on CNN360 is not easy to get, here is Chinese translation.

greenspan pic

Anyway, I don’t want to get into those political stuff. My point is, probably he has his share of mistakes. Of course, he is not alone in all this. It takes a meltdown of the whole system for us to get here, from regulators including the broader goverment (democrats and republican; congress and presidents), from business to consumser, from wall street to main street, from US to China,…each made some convenient choice without thinking the long term.

But the human nature when we hear the blame, we will say: no, not my fault.

Psychology 101: denial is the first response we hear bad news.

Categories
video

Tang Wei Zhen: Chinese Madoff

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Last Updated on June 13, 2020 by stlplace

(Update 06-13-2020) The links below no longer work. This is one nature of the internet: nothing lasts forever. Here is a new article Tang Wei Zhen.

(Original) Tang Wei Zhen 唐炜臻 (company) claimed to be Chinese Buffett (as shown in the following 11’24” video, link here). But apparently he is Chinese mini-Madoff. Chinese story here (hutong9).

Couple points to spot warning signs:

Continue reading “Tang Wei Zhen: Chinese Madoff”