Archive for October, 2008

  • S&P 500 Volatility
    , October 14th, 2008 at 12:36 pm

    I’ll spare you 1,000 words and give you the picture.
    image719.png

  • Nassim Nicholas Taleb Gets Angry
    , October 14th, 2008 at 11:03 am


    I think I’m one of very few people who isn’t impressed by Nassim Nicholas Taleb. I have the suspicion that The Black Swan is one of the great unread books of modern times. I can’t prove this, but I’ve read the book and it’s one of the most arrogant and incoherent books I’ve ever read. The Black Swan is so bad that it’s nearly unreadable.
    Taleb really has one idea—that financial market returns don’t follow a normal distribution. OK, I got it. That’s all that he’s complaining about in this clip. For the record, this isn’t Taleb’s idea. A much better book is Benoit Mandelbrot’s, The Misbehavior of Markets.
    At around five minutes into the clip, the interviewer asks, “Climate change, civil liberties, do these now go out the window in the face people losing their jobs and homes?” Yes deary, that’s exactly what it means.
    Here’s a short review I did of The Black Swan.

  • J&J Beats the Street
    , October 14th, 2008 at 10:05 am

    Well, not everything is a disaster out there. Johnson & Johnson (JNJ) just reported earnings of $1.17 a share, six cents better than estimates. The company also raised its full-year guidance, which sounds more impressive than it is since there’s just one quarter left this year. But still, they’re holding out well against the Apocalypse. On Friday the stock traded as low as $52.06. Today, it’s over $65.

  • Wreck-javik
    , October 14th, 2008 at 9:53 am

    Poor little Iceland. The country is probably best described as a hedge fund with a vote in the UN. The stock exchange there was shut down for three days and it just reopened. Down 77%.

    Kaupthing Bank hf, Glitnir Bank hf and Landsbanki Islands hf collapsed this month with debts equivalent to as much as 12 times the size of Iceland’s economy. The three banks accounted for about 76 percent of the ICEX 15 Index’s value prior to the nationalization.
    The OMX Iceland 15 Index fell 2,317.23, or 77 percent, to 687.39 as of 11:48 a.m. local time. Five of the 13 other stocks in the index didn’t trade, while the five that did account for about 7.1 percent of the index’s value.
    Trading was halted since Oct. 9 after the measure lost 30 percent in nine days as the country’s financial system collapsed. Iceland’s delegation started talks in Moscow today to secure an emergency loan of as much as 4 billion euros ($5.47 billion) from Russia.
    The country should seek aid from the IMF and later apply for European Union membership and adopt the euro, Foreign Minister Ingibjorg Solrun Gisladottir wrote in Morgunbladid on Oct. 13.

  • Financial Planner Advises Shorter Life Span
    , October 13th, 2008 at 11:52 pm

    From The Onion:

    After reviewing his client’s income, assets, and personal budget Tuesday, Morgan Stanley financial adviser Henry Dalton determined that Jason Hutchinson, 43, could make the best use of his portfolio by dropping dead at the age of 62. “Taking account of inflation and the rising cost of living versus the projected direction of the economy in the coming decade, I told Mr. Hutchinson that he could significantly reduce his spending by simply living less,” Dalton said. “After looking at his investments, I calculated that he really shouldn’t live a day over 62—or 59 if he wants a funeral.” In order to help his client plan for his financial future, Dalton presented Hutchinson with several of the company’s comprehensive suicide packages.

  • Krugman Wins Nobel Prize
    , October 13th, 2008 at 9:52 am

    Congratulations to Professor Krugman. For the record, I’ve often criticized Dr. Krugman on this blog, but not due to his work in economics. I think he’s a brilliant economist and his prize is well-earned. His political commentary, however, is often bizarre and juvenile. I think something in him snapped when George Bush became president. Perhaps the change in administration will get his political writing back on track.

  • Alec Baldwin, Stockbroker
    , October 10th, 2008 at 10:14 pm

  • The VIX is at 75
    , October 10th, 2008 at 2:16 pm

    I don’t even know what to say anymore. Hopefully, there will be a strong rally into the close. Maybe if Nouriel Roubini said he’s a buyer…ok, I doubt that will happen.
    Here’s an idea: Maybe the stock market should open at 3 and close at 3:50.

  • So Does this Mean We’re Not Going to Have $200 Oil?
    , October 10th, 2008 at 1:24 pm

    Sigh. It seems like only yesterday that everyone had a prediction for oil. Actually, it practically was yesterday…or at least, six months ago. Today oil dropped below $80.
    Sooo…let’s take a walk down the memory lane, shall we?

    An Oracle of Oil Predicts $200-a-Barrel Crude
    Arjun N. Murti remembers the pain of the oil shocks of the 1970s. But he is bracing for something far worse now: He foresees a “super spike” — a price surge that will soon drive crude oil to $200 a barrel.
    Mr. Murti, who has a bit of a green streak, is not bothered much by the prospect of even higher oil prices, figuring it might finally prompt America to become more energy efficient.
    An analyst at Goldman Sachs, Mr. Murti has become the talk of the oil market by issuing one sensational forecast after another. A few years ago, rivals scoffed when he predicted oil would breach $100 a barrel. Few are laughing now. Oil shattered yet another record on Tuesday, touching $129.60 on the New York Mercantile Exchange. Gas at $4 a gallon is arriving just in time for those long summer drives.
    Mr. Murti, 39, argues that the world’s seemingly unquenchable thirst for oil means prices will keep rising from here and stay above $100 into 2011. Others disagree, arguing that prices could abruptly tumble if speculators in the market rush for the exits. But the grim calculus of Mr. Murti’s prediction, issued in March and reconfirmed two weeks ago, is enough to give anyone pause: in an America of $200 oil, gasoline could cost more than $6 a gallon.
    That would be fine with Mr. Murti, who owns not one but two hybrid cars. “I’m actually fairly anti-oil,” says Mr. Murti, who grew up in New Jersey. “One of the biggest challenges our country faces is our addiction to oil.”
    Mr. Murti is hardly alone in predicting higher oil prices. Boone Pickens, the oilman turned corporate raider, said Tuesday that crude would hit $150 this year. But many analysts are no longer so sure where oil is going, at least in the short term. Some say prices will fall as low as $70 a barrel by year-end, according to Thomson Financial.

  • October 10 in Bear Market History
    , October 10th, 2008 at 10:52 am

    Two bear markets ended on October 10th. One in 1990 (at 2365) and again in 2002 (at 7,181.47).
    The latter one ended at 10:10 am on 10/10.