Archive for July, 2009

  • Altria Is Still Cheap
    , July 9th, 2009 at 11:03 am

    Just another quick note on Altria (MO). The stock is still very attractive at this price. MO is going for less than 10 times this year’s estimate. The dividend currently yields 7.8% and it could be raised soon. Earnings are due two weeks from yesterday.

  • Meep! Meep! Meep! Meep! Meep!
    , July 8th, 2009 at 2:52 pm

    Apparently, someone hurt Beaker’s feelings.

  • One From the Time Machine
    , July 8th, 2009 at 1:17 pm

    Less than nine years ago:

    President Clinton: The United States on Track to Pay Off the Debt by End of the Decade
    Today, President Clinton will announce that The United States is on course to eliminate its public debt within the next decade. The Administration also announced that we are projected to pay down $237 billion in debt in 2001. Due in part to a strong economy and the President’s commitment to fiscal discipline, the federal fiscal condition has improved for an unprecedented nine consecutive years.

    Clinton wasn’t talking about balancing the budget or even reducing the debt, he meant paying off the debt. The only time the government has been debt free was in 1835 and 1836.

  • Pope Proposes New Financial Order Guided By Ethics
    , July 7th, 2009 at 10:55 am

    The AP reports:

    Pope Benedict XVI called Tuesday for a new world financial order guided by ethics, dignity and the search for the common good in the third encyclical of his pontificate.
    In “Charity in Truth,” Benedict denounced the profit-at-all-cost mentality of the globalized economy and lamented that greed has brought about the worst economic downturn since the Great Depression.
    “Profit is useful if it serves as a means toward an end,” he wrote. “Once profit becomes the exclusive goal, if it is produced by improper means and without the common good as its ultimate end, it risks destroying wealth and creating poverty.”

    Hmm…sounds interesting, but what exactly are these “ethics.” I think I read about them in a history book.
    Meanwhile, in breaking news from last July: Weak US dollar hits papal profits:

    The Vatican made a loss last year as the weaker dollar reduced the value of donations from the faithful in the United States.
    Almost a quarter of the $79.8m (£40.4m) worth of offerings it received came from collections made in US churches.
    But as the dollar lost 15% of its value against the euro, the Catholic Church’s governing body made a loss of 9.1m euros (£7.3m: $14.3m) in 2007.

    At least there’s one person named Ben who’s long the dollar.

  • Pro Golfers and Amateur Investors
    , July 7th, 2009 at 10:20 am

    After being in this game for a few years, one statement I can make with absolute certainty is that the worst investor in the world is the person who’s down slightly in a lousy stock. I’ve seen this countless times and it’s painful to watch. Maybe you’ve been this person, I know I have.
    The problem with being down slightly in a loser stock is that the investor refuses—absolutely refuses!—to take a loss. Determination, which is normally a good trait, works against you. You wait and wait and wait, but the stock still sucks. The fallacy is that the stock doesn’t know you own it or where you bought it. Your entry point is completely unrelated to the stock’s quality. Many new investors don’t grasp this basic point.
    The reason why this is so dangerous is that it reflects one of our strongest cognitive biases. In this case, it’s mental accounting. In our minds, we maintain a strict balance sheet or wins and losses. We think that selling for a loss is admitting defeat. In a sense, it is but experienced investors know that taking a loss can be a very smart move. It’s often far easier to recoup your losses in a new high-quality stock then waiting for the same old dud to finally turn around. Successful isn’t just managing your winners, it’s also about managing your losers.
    This probably explains why market technicians often see stocks make short-term highs at similar levels because the folks who bought at the previous peak are determined to unload their shares for a gain, no matter how puny.
    A recent study found that pro golfers suffer the same bias. PGA golfers are significantly more likely to make a par putt than an identical birdie putt. In golf, the rules are simple—a shot is shot. But the golfers don’t see it that way. Par is to be expected and birdies are a gift, therefore the pros are more conservative in their birdie putts than in their putts for par. The numbers say this is a bad move, but the pros do it anyway.
    Not surprisingly, the difference comes down to length. The golf pros tend to bring their birdie putts up short. However, the easy tap in for par doesn’t come close to making up for their conservatism. The study’s authors calculate that the average PGA pro could take a full stroke their game for a 72-hole tournament. If a Top 20 player did this, it would improve their yearly haul by over $1 million.
    Remember that a shot is just a shot, and a stock is just a stock. Where you bought it doesn’t matter to where it’s going.

  • Deutsche Bank Spied on Board Members and Shareholder
    , July 7th, 2009 at 8:46 am

    Oh dear lord:

    An investigation commissioned by Deutsche Bank has revealed that Germany’s largest bank spied on several of its management board members, supervisory board members and on at least one shareholder. The 150-page report was prepared by legal firm Cleary Gottlieb Steen & Hamilton.
    Like Deutsche Telekom and Deutsche Bahn, which have also been hit by internal snooping scandals, it seems that Deutsche Bank also succumbed to a mixture of paranoia and megalomania.
    Leading executives at the bank hired external “specialists” to solve their security problems — some of them real, some of them imagined — and those specialists in some cases resorted to dubious methods.

    It’s 2009. Do they really think this will never come to light?

  • Relative Strength By Industry Group
    , July 6th, 2009 at 3:42 pm

    Here’s a look at the relative strength of the ten S&P 500 industry groups since the beginning of the year. I took each sector index and divided it by the S&P 500, and based that to 100 at the start of the year.
    image829.png
    What’s interesting is that only three of ten sectors are leading the market this year. What’s also interesting is that since April, it looks like a logjam. This is important because it shows that stocks are highly correlated among themselves — no group is really standing out.
    In the hedge fund biz, it’s all about finding out who’s doing something that everyone isn’t.

  • News from Japan
    , July 6th, 2009 at 12:32 pm

    Bloomberg reports:

    Porn Downloads Strain Japan Phone Network, Prompt DoCoMo Curbs

    Here’s a snippet:

    Global revenue from pornography on mobile devices will more than double to $4.9 billion in the five years to 2013, while music sales will grow by about a third, said Juniper, which provides global research on the telecommunication industry and includes Finland’s Nokia Oyj, the world’s largest maker of mobile phones, Apple and Microsoft Corp. among its clients.
    “We can’t see customers’ data but can surmise the biggest portion of it is probably movies,” said KDDI spokesman Keiichi Sakurai. “We can’t deny the possibility those movies include adult content.”
    Customers have complained about stoppages or slow Web access, mainly around midnight when traffic from “heavy users” spikes, Sakurai said. Japanese carriers spent $74 billion building their networks since 2000, based on data provided by Wireless Intelligence, a London-based researcher.
    Japan has more than 1,000 companies producing adult-content movies, generating about 17,000 titles last year, said Tim Smith, who’s worked in Japan’s telecommunications industry since 1999 and is chief executive officer of 3G service company Sairis Group KK.

  • The Male Recession
    , July 6th, 2009 at 12:28 pm

    Since March 2007, the unemployment for males over the age of 16 has risen from 4.5% to 10.6%. For females over the age of 16, the rate has increased from 4.3% to 8.3%. The advantage women have over men has grown from 0.2% to 2.3%. Of course, getting rid of men saves you more money.

  • Meet Gerry Pasciucco
    , July 6th, 2009 at 11:49 am

    Meet Gerry Pasciucco, the head of AIG’s Financial Products unit. His job: “unwind AIGFP’s portfolio of 44,000 often complex, long-dated derivatives with a notional value of $2 trillion, close the unit, then fire what remained of its 428 employees and resign.”