stlplaceI was a bit surprised to see the anti-Ameren (local ulitily company) TV ads (link here), which shows an old person, feeling stressed by the potential 40% rate hike of electricity by Ameren. This thing reminds me of the political Ads during campaign season.
Interestingly enough, Ameren is fighting back with its own Ads.
(Update Apr 2). April Fool’s day was yesterday but Financial Fool’s day continues. FASB just lifted the strict mark to marke rule (business week; market watch).
(Original) This is NOT what I am saying, but this is essentially the bankers and their friends in congress are saying these days. Tomorrow FASB will vote on fasb 157 E. Note the (in)famous House Financial Service Committee (headed by Mr. Barney Frank, the same committee grilled Mr. Liddy on AIG bonus) had a hearing on “Mark to Market” accounting rule a few weeks ago. In the hearing some lawmakers pushed for changes.
The fat cats in Wall Street has enjoyed the upside of the “Mark to Market” (M2M) rule in past few years, collecting billions of dollars when the time was good. Now they are saying this M2M rule is unfairly reflecting the value of bad loans, hurting the capital of banks, and thus hurting the economy. Why did not we hear all these arguments when they were collecting all the money? Essentially they are saying they like the excitement of ONS, but they don’t like (getting) AIDs? Why don’t they stay away from ONS at the first place?
They are all in stock funds.
Old 401k (Hewitt): down 11.8%
Rollover IRA (Vanguard): down 11.78%
New 401k (Vanguard): up 133.97% (this is due to new contribution, I started new 401k in Nov 08, so there is an easy comparison here)
Noticed my portfolio balance in Vanguard is about even compared to the end of 2007, when I started the Rollover IRA. Consider this is after I made signigicant new 401k contribution since Nov 2008. So much for long term investing concept. I need to rethink how to better managing my retirement account.
S&P is down about 11.7% in this quarter.
(Update) Big bro started to act now.
(Original) We all know the stock rating game: I mean those “buy”, “hold” and “sell” rating usually issued by sell side (brokeage) analysts. They are mostly not objective, because at the end of the day the dealers want to sell you more stocks, regardless they are good or bad. At the height of this analyst game is Goldman “conviction buy”, my question for them is why there are no “conviction sell”? Presumably, one can use a sell list to short stocks?
Oh well, Michael Lewis, the former Soloman bond salesman, described the analysts in his “Liar’ Poker” very well. So I won’t keep beat on them. My focus on this little article is on the credit rating (bond rating) game. We all know the credit rating agencies (agencies may have mislead some to think they are independent organization, they are really for-profit companies) have been under attack for the debale of housing/mortgage markets because they had been slept in the same bed with the issuers of MBS (mortgage backed securities).
I sold my remaining BRK.B share last week, and got some US bank (NYSE: USB) shares instead. The main reason I sold BRK.B is:
1) I don’t really understand the valuation of the business, which is 50% insurance + 50% manufacturing, housing, retailing etc. I have no idea for insurance and the whole thing is too complicated (big) for me.
2) I feel while Buffett escaped the worst market in 2008 with relatively few wound, he has appeared too much in public (CNBC?), and may have spent too much time with people he felt comfortable with (CEOs of Goldman Sach etc.). In other words, I hope he spend more time in Omaha, doing his thing/improving himself, rather than “start get into bubble”.
For the similar reason, I decided not to worship him in Omaha this May, although I understand the chance of seeing the great investor becomes slimmer and slimmer as time goes (as I told my wife 🙂
That’s OK, at least I voted with my best judgement. I will explain why I voted against some of the directors if you are curious.
(update) CNNMoney appears to agree with me. When did I sound like MSM (main stream media)?
Obviously, that’s how the US goverment thinks. When bailing out the AIG, they were saying AIG is a systematic important institution, and they just could not let it fail. And here is the bailout (handout details).
The promotion ends Monday March 30, for new customer only. $25 will appear in acct shortly after opening. Need to use the Check Card once to get the remaining $50. As I understand US bank does business mostly in Midwest and Northwest. Check out bank branch locations from their web site.
No additional conditions such as direct deposit etc.
Disclosure: I just opened one this morning; I also hold a few shares of US bank stock (NYSE: USB) at this time.
Also collected here.
1. Why invest in Utilities? Does not Utilities need a lot of capital, what’s the difference between Utilities and the original Berkshire (BRK.A, BRK.B) textile business? You did explained in your letter that utilities can deploy capital for a decent return. And I read this old article “Why Buffett is buying utilities” from MSN money (Jim Jubak). Do you agree some of what Jim said?
2. Why keep American Express (NYSE:AXP) and Moody (NYSE:MCO)? Don’t we see the permanent demage of consumer credit, and the rating companies? How about Wells Fargo (NYSE: WFC)? Why not sell all Bank of America (NYSE: BAC) shares (noticed you did sell half last year)?
3. Derivatives. There are a lot crititics on this, and you have explain this very well in the shareholder letter. But, as I read “Poor Chariles Almanack”, Charile is much more cautious on derivatives, and its systemantic risk (chain effect of credit risk form counter parties). What’s your comments on over the counter derivatives market in general?
Will add more questions when it pops up.
Disclosure: I sold my remaining BRK.B share yesterday. No positions on the other stocks being mentioned.
Unbelievable shot at the end of 1st half. Link here.
Actually coach Anderson did ask players do those long range shoots in practice. It surely paid off.
Time to do some homework, amid all these AIG bonus (Yahoo Tech-ticker; NY Times op ed), and toxic asset plan (Krugman vs. Geithner craziness). I decided to calm down and took a look at US Bank (bancorp) (NYSE: USB; company IR page).
Articles I read from seekingalpha
Amit Kumar: Bank stocks: invest or trade?
Martin Hutchinson (money morning): Wells Fargo and US Bancorp: hitch a ride with those two
Patrick Garot: Repaying TARP: life for USB and NTRS?
I learned about US Bank a few years ago after the FirstStar merger. My coworker told me that this is the only bank named after “US/United States” after Sept 11 (she implied no more bank will be approved using similar name). Later on I visited US bank branch with my roommate because he was US bank customer. I applied US bank visa card %0 balance transfer last year. They approved my card quickly and gave me a generous credit line 🙂
I will add my investment thesis later on.