Archive for May, 2009

  • The Market Punishes Greed
    , May 16th, 2009 at 6:25 pm

    From George Will’s column:

    Studying the Internet site Stubhub, which is owned by eBay, Harrington monitored the secondary market in Ohio State University football tickets for the Oct. 25, 2008, game against Penn State that was attended by a stadium record crowd of 105,711. Stubhub acts as a broker, charging 15 percent from buyers and 10 percent from sellers, who can charge whatever they choose. Generally, a ticket’s value depends on the seat’s location — the lower in the stadium and the closer to the 50-yard line the better.
    Harrington collected two sets of information, one on Oct. 13, 12 days before the game, the other on Oct. 21, four days before. On Oct. 13 there were 346 sellers offering 682 tickets. Eight days later, 411 sellers were offering 845 tickets. In the interval, Ohio State beat Michigan State and undefeated Penn State beat Michigan, intensifying fans’ interest in the game.
    Yet the average price of the tickets offered declined from $359 to $304. This was partly because the quality (seat location) of the remaining tickets declined. Also the number of selling days was becoming smaller. Seats at entertainment events are, like airline seats, a perishable inventory: When the plane takes off, or the game begins, the value of an unsold ticket becomes zero.
    A greedy seller — one who priced his tickets too high — was less likely than other sellers were to sell them two weeks before the game. Hence he had to resort to much deeper discounts than others did as game day, and the potential worthlessness of his assets, drew near. The larger the number of seats available in the secondary market, and the more transparent that market is, thanks to the Internet, the more likely it is that greed will be punished.

  • Steven Pinker on The Cognitive Niche
    , May 16th, 2009 at 12:18 am

    Here’s Part 1 of the always fascinating Steven Pinker discussing the Cognitive Niche:

    Part 2
    Part 3
    Part 4
    Part 5
    Part 6

  • Stock Returns and Employment
    , May 15th, 2009 at 1:32 pm

    From 1947 through 2007, the nations’ unemployment rate was under 6% about two-thirds of the time, and over 6% the other one-third of the time.
    For the time the rate was under 6%, the stock showed an annualized real return of 3.7%. When the rate was over 6%, the real return jumped to 17.3%.
    The moral of the story is one I’m sure you already knew: Rotten times are great times to invest.

  • Depressing Stockton!
    , May 15th, 2009 at 10:33 am

    Clusterstock has an uplifting slide show of the most-depressing places in America. If you were thinking of moving to East St. Louis, this may cause you to think again.
    (Warning: It’s depressing)

  • Friday Rallies
    , May 14th, 2009 at 4:23 pm

    The S&P 500 has rallied for the last five straight Fridays. That’s pretty impressive that there are buyers going into the weekend, and I think it signals some important confidence in the market.
    So what’s the record for consecutive “up” Fridays? It turns out, we’re not even close. This is one of those Dimaggio-like records that may never be topped. From April to September 1955, the S&P 500 rose for an astounding 22 straight Fridays!
    In the 1950s, Friday was almost a guaranteed money maker. During the decade, the market rose on 63% of the Fridays. The cumulative return was 138% over effectively two years (one-fifth of a decade).
    For many years, the stock exchange had a brief Saturday session but that was eventually ditched in the early 50s.

  • Not Regina!
    , May 14th, 2009 at 2:24 pm

    Zero Hedge has this ultra-cool map of Chrysler dealership closures.
    States that are big losers are:
    * Pennsylvania: 53
    * Ohio: 47
    * Texas: 45
    * Illinois: 43
    * Michigan: 40
    * California: 31
    * New Jersey: 30
    * Florida: 29
    * New York: 26

  • 8 Bedroom/7 Bathroom House for $675,000
    , May 14th, 2009 at 1:00 pm

    Here’s a great deal on an 8 bedroom/7bathroom Tudor home. It has a three-car garage and a koi pond.
    About the location….

  • Merrll Lynch Goes After Zero Hedge
    , May 14th, 2009 at 10:18 am

    This is not good news:

    Now that Merrill Lynch has upgraded every single REIT and has a price target of +/- infinity, (conveniently pocketing over $100 million in the process), the company can focus on more pressing issues at hand (and no, not redecorating Thain’s legacy office in the neo-uber-criminal style). Instead, the bank has sent not one, not two, but a whopping six cease and desist orders to Zero Hedge. As the recently acquired bank can finally afford to pay lawyers again compliments of its REIT analysts, it has decided to pursue the source of all evil: all those David Rosenberg posts Zero Hedge has published, that seek to educate and provide some color to otherwise confused and CNBC abused readers and investors.
    If it is any consolation, now that David is literally out of the building, ML can sleep soundly that ZH will only focus on the bank’s daily REIT upgrades (no, we have not forgotten about those) as it is alas the only source amusement coming out of doomed mother Merrill.
    So, dear readers, please be aware that the following six posts will be removed at some point tonight as Zero Hedge is unable to underwrite and collect on average $10 million per REIT dilution events and thus afford any lawyers (except potentially for White & Case’s Tom Lauria).
    http://zerohedge.blogspot.com/2009/05/parting-thoughts-from-rosenberg-ver-10.html
    http://zerohedge.blogspot.com/2009/05/shooting-shoots.html
    http://zerohedge.blogspot.com/2009/05/look-back-at-week.html
    http://zerohedge.blogspot.com/2009/04/are-fed-and-markets-on-same-page.html
    http://zerohedge.blogspot.com/2009/04/spin-on-6-gdp.html
    http://zerohedge.blogspot.com/2009/04/busy-day-for-reit-analysts.html
    As for the 500 or so websites that fervently and automatically repost and redistribute ZH content, well, those we have no control over.

  • See! I Told You This Was a Bigus Rally!
    , May 13th, 2009 at 4:02 pm

    image804.png

  • The Yield Curve Knows Best
    , May 13th, 2009 at 11:53 am

    Caroline Baum is one of my favorite columnists. She has an article on one of the best economic forecasters out there. His name is Dr. Yield Curve.

    The yield curve, or spread, has several things going for it:
    First, it’s a leading economic indicator, officially added to the index designed to predict the economy’s ebbs and flows in 1996. It was a leader well before that, even though it was unofficial.
    Second, what you see is what you get. The spread is never revised, always available and in no way proprietary.
    Third, and most curious, the majority of economists don’t get it. They see rising bond yields in isolation — without paying attention to what that price-setter, the Fed, is doing at the front end of the curve.
    It’s the juxtaposition of short and long rates, not their level, that conveys information about monetary policy.
    In a July 2008 working paper, San Francisco Fed economists Glenn Rudebusch and John Williams examined the tendency for professional forecasters to ignore the spread. They compared the forecasts provided by the Survey of Professional Forecasters (SPF) to that generated by a simple, real-time model based on the yield spread.
    Guess who won? And it wasn’t even close.

    Two years ago, I looked at the impact of the yield curve on the stock market and I was stunned to find:

    Probably the most fascinating stat is that all of the stock market’s net capital gains have come when the 10-year yield is 65 or more basis points above the 90-day yield (that happens about 70% of the time). The yield curve hasn’t been that positive in 15 months.
    Anything less than 65 basis points, including a negative yield curve, works out to a net equity return of a Blutarsky. Zero Point Zero.

    Today the spread is out to nearly 300 basis points.