• Government report questions rescue claims
    Posted by on October 5th, 2009 at 8:09 am

    Remember when the government gave $125 billion to nine large banks and said not to worry because the banks were healthy? Yeah, about that.

  • Summers Profile in the New Yorker
    Posted by on October 5th, 2009 at 7:49 am

    I admit I haven’t yet read Ryan Lizza’s massive profile on Larry Summers in the New Yorker. When I say “massive,” I’m not joking—this thing is over 11,000 words.
    I hope to get to it later today.

  • Stocks Are Wrong But Roubini Is Right
    Posted by on October 5th, 2009 at 7:04 am

    Bloomberg quotes Nouriel Roubini, “Markets have gone up too much, too soon, too fast.” Well, that’s one way of putting it.
    I think it’s more accurate to say that Roubini’s forecasts were too bearish for too long.
    So how’s the market been doing for the last seven months?

    The global equity rally has added about $20.1 trillion to the value of stocks worldwide since this year’s low on March 9. Governments have poured about $2 trillion of stimulus into the global economy while central banks have cut interest rates to close to zero in efforts to revive growth.
    “In the short run we need monetary and fiscal stimulus to avoid another tipping point and to avoid deflation, but now this easy money has already started to create asset bubbles in equities, commodities, credit and emerging markets,” Roubini said. “For the sake of achieving growth stability again and avoiding deflation, we may be planting the seeds of the next cycle of financial instability.”

  • “California is on the verge of becoming the first failed state in America.”
    Posted by on October 4th, 2009 at 3:23 pm

    From the Guardian:

    California has a special place in the American psyche. It is the Golden State: a playground of the rich and famous with perfect weather. It symbolises a lifestyle of sunshine, swimming pools and the Hollywood dream factory.
    But the state that was once held up as the epitome of the boundless opportunities of America has collapsed. From its politics to its economy to its environment and way of life, California is like a patient on life support. At the start of summer the state government was so deeply in debt that it began to issue IOUs instead of wages. Its unemployment rate has soared to more than 12%, the highest figure in 70 years. Desperate to pay off a crippling budget deficit, California is slashing spending in education and healthcare, laying off vast numbers of workers and forcing others to take unpaid leave. In a state made up of sprawling suburbs the collapse of the housing bubble has impoverished millions and kicked tens of thousands of families out of their homes. Its political system is locked in paralysis and the two-term rule of former movie star Arnold Schwarzenegger is seen as a disaster – his approval ratings having sunk to levels that would make George W Bush blush. The crisis is so deep that Professor Kenneth Starr, who has written an acclaimed history of the state, recently declared: “California is on the verge of becoming the first failed state in America.”

  • 47% of Households Pay No Income Tax
    Posted by on October 2nd, 2009 at 3:15 pm

    The Tax Policy Center reports that 47% of American households pay no federal income tax. The original figure was 38% but it was bumped up thanks to the stimulus.
    Actually, the number is a little misleading since it excludes payroll taxes. The Tax Policy Center says that once that’s factored in, 24% of households are tax free.

  • Update on First Day of the Month
    Posted by on October 2nd, 2009 at 11:25 am

    Yesterday was a tough beginning for the month of October. September also started on a downbeat. However, the strategy of investing on the first day of the month has been a big winner this decade.
    Cumulatively, the market is up over 20% on the first day of the month while the S&P 500 is still down about 30% for the decade.
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  • All About Naked Short Selling
    Posted by on October 1st, 2009 at 10:59 am

    Naked short-selling is one of those topics that gets people angry mostly because they don’t understand it. It’s not counterfeiting. In fact, it helps the market a great deal and it’s almost exactly the same as regular shorting.
    Fortunately, John Carney has spelled out the details in a great post: Everything You Ever Wanted To Know About Naked Shorting But Were Afraid To Ask.
    Here’s more on naked shorting from the SEC’s website:

    Naked short selling is not necessarily a violation of the federal securities laws or the Commission’s rules. Indeed, in certain circumstances, naked short selling contributes to market liquidity. For example, broker-dealers that make a market in a security4 generally stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers. Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example, if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time.

  • Buy List YTD
    Posted by on September 30th, 2009 at 10:55 pm

    Three quarters are now on the books. This was the best quarter for stocks in 11 years, and the best two-quarter gain in 34 years.
    For the year so far, our Buy List is up 33.87% and including dividends it’s up 34.87%.
    For comparison, the S&P 500 is up just 17.03%, and with dividends it’s up 19.26%.
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  • Turns Out, the Gem of Tanzania Is Just a Rock
    Posted by on September 30th, 2009 at 4:31 pm

    There could be a metaphor in here:

    One of the strangest tales in the history of company accounting looks increasingly likely to end with a fabled gem being downgraded to an unusual paper weight.
    The Gem of Tanzania, a large ruby whose £11m valuation once underpinned the finances of a failed company with yearly turnover of £103m, may be worth as little as £100.

    (Via: Felix)

  • Fake Press Release Causes IMAX Shares to Surge
    Posted by on September 30th, 2009 at 2:29 pm

    In today’s pre-market, shares of IMAX (IMAX) rose as much as 6% on the news that it was being acquired by Disney. There’s one problem. It’s not being acquired by Disney. The press release was a scam.
    Whoever did, just cut and pasted the press release for the Marvel purchase and added the name IMAX. Smart move! They also added this sentence, “If you can get in at a good price tomorrow morning at the open, it maybe something to ask the advise of your broker on.” Gee I wonder what gave them away.
    I’m guessing now they better seek the advise of their lawyers.