Wallstrip Promo’d on Fast Money
Posted by Eddy Elfenbein on March 23rd, 2007 at 8:30 am

Here’s the show with DR himself.

The Blackstone Group’s Prospectus
Posted by Eddy Elfenbein on March 22nd, 2007 at 4:13 pm

From the SEC’s Web site. Here’s a sample:

Our Growth Strategy
We intend to create value for our common unitholders by:
•generating superior investment performance across our asset management platform;
•growing the assets under management in our existing investment fund operations;
•expanding our asset management base by raising new investment funds;
•increasing our investment of our own capital in our funds;
•expanding our advisory business; and
•entering into complementary new businesses.
Why We Are Going Public
We have decided to become a public company:
•to access new sources of permanent capital that we can use to invest in our existing businesses, to expand into complementary new businesses and to further strengthen our development as an enduring institution;
•to enhance our firm’s valuable brand;
•to provide us with a publicly-traded equity currency and to enhance our flexibility in pursuing future strategic acquisitions;
•to expand the range of financial and retention incentives that we can provide to our existing and future employees through the issuance of equity-related securities representing an interest in the value and performance of our firm as a whole; and
•to permit the realization over time of the value of our equity held by our existing owners.

This Just In…
Posted by Eddy Elfenbein on March 22nd, 2007 at 11:09 am

Human Beings Still Important at Citigroup

Applying Warren Buffett’s Investing Philosophy to Basketball
Posted by Eddy Elfenbein on March 22nd, 2007 at 10:54 am

Courtesy of Heat coach Pat Riley:

Coach Pat Riley said he would be surprised if his players weren’t keeping an eye on the standings.
“I think there’s no doubt that this week or the next two weeks are going to determine a lot of positioning,” he said. “So, it’s like looking at the stock market every day.
“We can’t get preoccupied with it, because sometimes that gets in the way of playing games.”

The Impact of Interest Rates on Equities
Posted by Eddy Elfenbein on March 22nd, 2007 at 8:32 am

Now that the Federal Reserve has lifted its tightening bias, I wanted to take a look at the impact of lower interest rates on the stock market.

Since 1962, there have been 11,250 days when stocks and bonds have traded on the same day. The yield on the 90-day Treasury rose on 4,845 days, fell on 4,925 days and stayed the same on 1480 days.

On all the days when the T-Bill yield rose, the S&P 500 lost a combined 61.9%. Annualized, that works out to a rate of -4.9% (just capital gains, not dividends).

On the days when the T-Bill yield fell, the S&P gained a combined 1,739.1%, or 16.1% a year.

Interestingly, the market did the best when rates stayed the same. The S&P gained 182.3%, or 19.4% a year.

With long-term rates (10-year T-Bond), the impact is much more dramatic.

The 10-year yield rose on 4,885 days for a combined S&P loss of 98.8%, or -20.5% a year. That’s basically a bear market.

The yield stayed the same on 1529 days for a combined S&P gain of 89.4%, or 11.1% a year.

But here’s the kicker: When the 10-year yield fell (4,836 days), and long-term bonds rallied, the S&P 500 gained an amazing 86,631%, or 42.5% a year.

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.

Looking at the Sell-Off
Posted by Eddy Elfenbein on March 22nd, 2007 at 8:21 am

The S&P 500 is now down 0.99% since February 26, the day before the big plunge. Here’s how the ten S&P industry groups have fared:
Telecom……………..1.04%
Utilities………………0.59%
Industrials…………-0.40%
Staples……………..-0.58%
Energy………………-0.61%
Healthcare…………-1.12%
Tech………………….-1.24%
Materials……………-1.31%
Financials…………..-1.52%
Discretionary………-1.82%

European Central Bank Uses Cartoons to Indoctrinate English-Speaking Youths
Posted by Eddy Elfenbein on March 22nd, 2007 at 7:58 am

Before CNBC moved into animation, the European Central Bank had its own cartoon. Those fun-loving bankers in Frankfort gave us Alex, Anna and the adorable Inflation Monster in the teen-oriented Price stability: why is it important for you? What else could any euroteen want? (Besides actual price stability, a job, etc.).
I wonder if our Fed would ever make a cartoon. Something tells me Bernanke is seriously into Anime. Just a hunch.
(Hat Tip: The Mess That Greenspan Made and Is Apparently Continuing to Make.)

Michelle Williams’ Father Beats Extradition
Posted by Eddy Elfenbein on March 22nd, 2007 at 7:42 am

Michelle Williams, the actress who got an Oscar nomination for Brokeback Mountain, and also played Jen Lindley in Dawson’s Creek (and most importantly, is Heath Ledger’s girlfriend), is also the daughter of Larry Williams. Papa Williams is a famous stock market trader-slash-guru. (You can check out his Web site at www.ireallytrade.com.) He’s sort of a legend in the world or commodity traders — Larry even has his own eponymous indicator, the Williams %R.
Well, Larry Williams found himself in a bit of hot water with the IRS. They say he owes $1.9 million in taxes. He was arrested last month in Australia, fought extradition. And won.

Williams last year challenged the validity of a notice issued by then federal Justice Minister Chris Ellison authorising a magistrate to rule on the US extradition request.
He argued that Senator Ellison acted on advice from the US which did not identify precisely enough the alleged conduct for which his extradition was sought.
A Federal Court judge dismissed that challenge, but Williams has successfully appealed the decision to the court’s full bench.
Justices Roger Gyles, Jim Allsop and Robert Buchanan today overturned the earlier Federal Court order, declaring Senator Ellison’s notice invalid.
“In the present case, the material before the minister did not even include a statement of the elements of the United States offences,” the judges said.

Ironically, my indicator, the Elfenbein Quotient, is a ratings system for episodes of Dawson’s Creek. Small world.

Heyday
Posted by Eddy Elfenbein on March 22nd, 2007 at 7:15 am

I went to see Kurt Andersen last night at Politics and Prose. He’s the host of Studio 360 and one of the founders of Spy.
I’m about halfway through Heyday his latest book which is a rollicking historical novel set in 1848. I highly recommend it. Even if you’re not a history nut like me, I think you might enjoy it.
The year 1848 is one of those years where it seems like history went into overdrive, and everything changed so quickly. I don’t think we’ve had a year like that since 1968. I particularly like how Andersen makes you feel like you’re in an age where anything is possible. You can’t help feeling that you want to go back in time.

WallStrip on Starbucks
Posted by Eddy Elfenbein on March 22nd, 2007 at 6:58 am

Today, Lindsay goes on a Starbucks (SBUX) run.
If someone came up to me a few years ago with the business plan of selling overpriced coffee, I would have thought they were crazy: “Sir, I assure you that the American people are far too intelligent to fall for something as transparently phony as a triple latte!” Sadly, this is why I’m not a bazillionaire.
What else can be said about Starbucks? It’s a great American success story. Fifteen years ago, the stock went for about $21 a share. After five 2-for-1 splits, that works out to a split-adjusted price of 67 cents a share. SBUX’s 52-week high is $40.01 a share. That’s about a 60-fold gain.
But trouble could be brewing (BA!). The stock has fallen 25% twice in the past year. Howard Schultz, however, isn’t giving in easily:

Schultz, who lamented a nearly 10 percent slide in the company’s stock in the past year, asked shareholders not to lose confidence in the world’s largest specialty coffee retailer.
“I’m here to tell you that I believe that there’s never been a better time to be a Starbucks shareholder,” Schultz said. “We are building Starbucks for the long term, and I would hope that after 15 years…you would give us the same trust that you have in the past.”

Here’s the long-term chart: