• Nardelli Quits Home Depot
    Posted by on January 3rd, 2007 at 10:03 am

    And he’s taking his money with him.

    Vice Chairman Frank Blake, 57, will replace Nardelli, effective immediately, Home Depot said in a statement today. Nardelli, 58, will receive $210 million in severance payments, the company said.
    Home Depot has lost market share to Lowe’s Cos. during Nardelli’s six-year tenure, its shares have declined 7.9 percent and the company is headed for its smallest annual gain in profit in at least nine years.
    “Ultimately the board felt the negativity associated with Nardelli was an impediment to his and the company’s success,” said Daniel Popowics, an analyst with Fifth Third Asset Management. “This is a surprise. I thought Nardelli carved out some time for himself to turn things around.” The Cincinnati firm manages $21 billion, including Home Depot stock.
    Nardelli, who joined Home Depot from General Electric, became a lightning rod for critics of excessive executive pay. Nardelli was the only board member to appear at the company’s annual meeting last year, where the size of his pay package was questioned.

    In the press release, the company stated exactly what Nardelli is going to get.

    Nardelli and the Company have agreed in principle to the terms of a
    separation agreement which would provide for payment of the amounts he is
    entitled to receive under his pre-existing employment contract entered into
    in 2000. Under this agreement, Nardelli will receive consideration
    currently valued at approximately $210 million (including amounts which
    have previously been earned or vested). This consideration will include a
    cash severance payment of $20 million, the acceleration of unvested
    deferred stock awards currently valued at approximately $77 million and
    unvested options with an intrinsic value of approximately $7 million, the
    payment of earned bonuses and long-term incentive awards of approximately
    $9 million, the payment of account balances under the Company’s 401(k) plan
    and other benefit programs currently valued at approximately $2 million,
    the payment of previously earned and vested deferred shares with an
    approximate value of $44 million, the payment of the present value of
    retirement benefits currently valued at approximately $32 million and the
    payment of $18 million for other entitlements under his contract which will
    be paid over a four year period and will be forfeited if he does not honor
    his contractual obligations.

  • World War II Ends
    Posted by on January 2nd, 2007 at 3:32 pm

    The Brits pay off their war debt to us.

    Under the arrangement, the US handed a financial lifeline to Britain, allowing it to secure oil, food, arms and other military equipment on credit to help the war effort. Though other countries also benefited under the programme — a $48 billion project — Britain received the largest chunk of aid.
    When the war finished, the economist Maynard Keynes — by then the government adviser Lord Keynes — led a delegation to the U.S to agree repayment for those materials for which it had been charged and to secure a loan of $4 billion. He warned that Britain had been left facing a “financial Dunkirk”.

    Still, I was kinda hoping we could send over a couple repo guys. Nothing big. Maybe a few castles.

  • The Do Something Congress
    Posted by on January 2nd, 2007 at 1:26 pm

    Andrew Roth of the Club for Growth ran the numbers on 2006. When Congress was in session, the S&P 500 went up 2.25%. On days when it wasn’t it session, it went up 11.56%.

    So you’re probably asking yourself, “Was this just coincidental?” The cynics out there would say no. And the cynics would be right. Long term empirical evidence says that correlation does, in fact, mean causation. According to two economists, Mike Ferguson of the University of Cincinnati and Hugh Douglas Witte of the University of Missouri at Columbia, if you had invested $1 in the Dow Jones Industrial Average back in 1897 when the index first started and conducted the In/Out Session schemes until the year 2000, here’s how much money you would have:
    In Session: $2
    Out Session: $216

  • “Cautiously Optimistic”
    Posted by on January 2nd, 2007 at 11:12 am

    One of my favorite media phrases is “cautiously optimistic.” It means nothing while it sounds important. Can you think of a situation where it wouldn’t apply? (Apocalypse to Strike Earth, Experts Cautiously Optimistic). See! You can’t go wrong.
    A few years ago, Neil Westergaard wrote:

    What a great all-purpose, meaningless qualifier to keep from looking stupid. It’s much better than just saying “I don’t know.” It implies that that the person really does know something important, but is being conservative and careful in the distribution of information, holding back the unverifiable facts for the good of the republic.
    Or covering their behinds.
    “Cautiously optimistic.” If the economy goes into the dumper again, we can say our earlier caution was warranted. If things pick up, we were right to be optimistic and “knew it all along.”

    Which brings me to today’s New York Times:

    Economists Cautiously Optimistic About 2007

    I hope they’re right.

  • How Will the Dow do in 2007?
    Posted by on January 2nd, 2007 at 10:58 am

    The new-and-improved Wall Street Journal asks its reader how will the Dow do in 2007?
    Here are the results as of 11 a.m.:
    Up more than 10%…………………..24%
    Up 5% to 10%………………………..45%
    Up less than 5%……………………..15%
    Down less than 5%…………………..4%
    Down 5% to 10%……………………..5%
    Down more than 10%………………..7%
    This stikes me as somewhat conservative.

  • Happy New Year!
    Posted by on January 1st, 2007 at 12:08 am

    818,304 visitors for 2006.
    Thank you all!

  • Economics Discovers Its Feelings
    Posted by on December 31st, 2006 at 8:10 pm

    Here’s a fascinating article from the Economist:

    If people are bad at recalling their feelings, they are worse at predicting them. They fail to anticipate how a person feels after moving to a new city, losing a limb or winning a jackpot. Prisoners imagine that solitary confinement will be worse than it really is; mothers-to-be think the pain of childbirth will be more bearable than it typically proves to be. And it is not just unusual events that trip people up. According to Mr Kahneman, people struggle to predict how their appetite for ice-cream, low-fat yogurt or music might change in the course of a week of enjoying them. If man is an iron-balance that weigh pains and pleasures, the scales are sadly askew.

  • Footnote of the Year
    Posted by on December 31st, 2006 at 6:12 pm

    Michelle Leder has awarded the Footnote of the Year:

    But in the end, it came down to this post from April 10 on Aaron’s Rent (RNT). As I footnoted at the time, getting the company that you work for to spend nearly $1 million teaching your sons to be race-car drivers as Aaron’s executive Bill Butler did is an interesting use of shareholder money. But calling it an marketing expense really reached a new nadir.

    Oh dear lord. Here’s the proxy.

  • S&P Expects Q4 Earnings Growth to Slow
    Posted by on December 31st, 2006 at 5:39 pm

    S&P released this on Friday:

    The fourth-quarter operating earnings for the S&P 500 is on track to post its lowest year-over-year gain in over four and a half years, announced Standard & Poor’s today. Estimated fourth-quarter 2006 earnings of $22.08, or $199 billion in aggregate, would represent a 9.4% gain over the $20.19 reported for the fourth quarter of 2005 – marking the first single-digit earnings gain for the index since the first quarter of 2002. However, Standard & Poor’s expects full-year 2006 to be the best year ever for operating earnings, with a projected 14.9% gain over 2005.

  • Deanna Brooks Wins Playboy Stock-Picking Contest
    Posted by on December 31st, 2006 at 2:50 pm

    deanna.jpg
    Congratulations to Deanna. Her portfolio was up 43.43% for the year.
    Deanna’s five stocks were Hauppauge Digital (HAUP), Pfizer (PFE), Yamana Gold (AUY), Petroleo Brasileiro (Petrobras) (PBR) and IBM (IBM).