I refer to your financial world - don't fall for all that advertising for one-stop 'shopping' for financial products. If you want to be able to survive hard times, which we now all know DO occur once in a while, you need to keep strong barriers between your various assets and financial tools.
Why ?
The main reason is the "Right of Setoff". Financial institutions have this legal right. Suppose you have a bank account, a small CD and a credit card all at the same bank. You borrow on the credit card to pay for something needed - like to repair your car. Then you lose your job and eventually can't pay the credit card. Then the bank can take your CD, take all your funds in your checking account and apply it to the credit card balance, and then close your checking account.
Now they've really screwed you. You have to go to check cashing services to cash checks from part-time jobs now.
BUT, suppose you applied Bunkerman's strategy to your financial life. Your checking account is at one bank, your small CD at another and your credit card somewhere else. Now you have bad luck and lose your job. Eventualy the credit card payment can't be made, but you are much better off. They can put it out to collection and harrass you, BUT that bank will have much trouble getting access to the funds in your CD and your checking account. They have to sue you first - and that costs money and takes time. You can get that CD out and convert it to cash and put it under your mattress. You can keep small balances in your checking account and it can be protected, too. That bank really won't care that you defaulted on a credit card, so long as you don't bounce a check.
You are far, far better off. You have islands of safety. You can still live a normal life.
Separateness applies to mortgages, too. Don't get a mortgage from your own bank, OR from a bank from which you have a significant credit card or CDs. Same reason.
Have several credit cards from different places - you don't have to use them, just have them. I have several and rotate my usage to give them all a bit of business.
Don't open a brokerage account at any bank that you do other business with.
All this especially applies to business accounts. Keep that bank separate, too. These walls will protect you if trouble hits.
By the way, all this separateness helps you maintain privacy, too.
Do I trust banks ? Nope, no way ! Keep them at arm's length.
EXCEPTION: you can get a home equity loan from the same lender as your first mortgage. That is a bit of an advantage for you, as you can refinance the first mortgage leaving the second mortgage in place (IF you have enough equity & income). Why ? The home equity lender can re-subordinate the second lien of the home equity loan and let the new first mortgage step to ahead in lien priority. That will never happen if the home equity line is with another bank.
Actions
Still riding my Brontosaurus, waiting for a sighting of that water hole out there.
PS: Checked with Krypto .. she wants me to sell a bit of Euoprean stocks. A weak signal, but I'll comply given where the markets are. Also, I see TIPs is over 108, so I'll sell more of those, too. All proceeds to cash as no buy signals exist.
Word of the Day
"Maugre" - preposition [$100] archaic - used by George Washington in private letters, a person who had no formal schooling. Related to the French word, malgré, of same meaning.
Maugre means in spite of, notwithstanding.
Sentence: Maugre all those ads from banks, never give them more than one piece of your financial business. They will stab you in the back at the worst possible time.
Showing posts with label financial management. Show all posts
Showing posts with label financial management. Show all posts
Tuesday, September 14, 2010
Friday, July 16, 2010
A Superior Fund Manager
Here's a photo of Krypto languishing on the couch, contented after making some more well-timed trades in her Krypto Fund. Yesterday she put in sell orders for some US, European and Emerging Market stocks. She had been wanting to do those trades for a few days, but I was being a bit too patient. So she growled at me yesterday AM after some poor manufacturing news data, and I complied at once.
Krypto likes being a couch potato. When not playing with her nephew, Sky, or herding sheep, or running agility trials, she just loves to spend all her time sleeping on the couch. [Those are dummy shells in the background near the fireplace - a 3" Naval training round and a dummy 90 mm recoiless rifle shell.]
News
Super-beefer piranha GS [Goldman Sachs] settles with the SEC, pays $500+ million. I hope the SEC keeps the investigation going at other firms. These sleazy deals must end.
GOOG misses earnings. They are spending a fortune on what ? Wasting it on fruitless efforts to enter new market. They've morphed in another MSFT.
Word of the Day
"Eponymous" - adjective [$10]
Eponymous means 1. of or relating to the person for whom something is named; 2. of or relating to one whose name is so prominently connected with something as to be a figurative designation for it.
Sentence: The eponymous Krypto Fund is outperforming many, many hedge funds year-to-date; the beefer managers are rather overpaid as Krypto provided superior performance for dog biscuits.
Tuesday, June 29, 2010
Hey, Timmy !
I'm calling to Timmy Geitner, the US Treasury Secretary. Take a look at the yields on the 10 year US Treasury Note - under 3% ! And the yield on the 30 year US Treasury Bond is under 4%. !!
That means the world wants US long term debt.
You, Timmy Geitner, should start selling it hand over fist. Refund all those T-bills and short term T-Notes with stable, long term debt. That will help the US long term solvency and lock in historically low rates. Act like a CFO - fund your needs when the market wants your debt. That means NOW !!!
The United States Treasury should sell hundreds of billions of 10 year notes and 30 year bonds.
Actions
Futures are down big early this morning. More turmoil in Europe. Krypto has cash to invest but wants lower prices. One thing she will not be buying: TIPs and long term taxable bonds. Those are now in the range of "Certificates of Confiscation" - very poor long term prospects.
Word of the Day
"Conduce" - verb [$10] (one of many words formed from -duce; I call them the 'duces')
Conduce means to lead or tend to a particular and usually desirable result: contribute.
Sentence: Selling hundreds of billions of long term debt at today's low rates to refinance short term T-bills will conduce great stability for US funding and increase the strength of the US dollar as a reserve currency and source of world stability and solvency.
That means the world wants US long term debt.
You, Timmy Geitner, should start selling it hand over fist. Refund all those T-bills and short term T-Notes with stable, long term debt. That will help the US long term solvency and lock in historically low rates. Act like a CFO - fund your needs when the market wants your debt. That means NOW !!!
The United States Treasury should sell hundreds of billions of 10 year notes and 30 year bonds.
Actions
Futures are down big early this morning. More turmoil in Europe. Krypto has cash to invest but wants lower prices. One thing she will not be buying: TIPs and long term taxable bonds. Those are now in the range of "Certificates of Confiscation" - very poor long term prospects.
Word of the Day
"Conduce" - verb [$10] (one of many words formed from -duce; I call them the 'duces')
Conduce means to lead or tend to a particular and usually desirable result: contribute.
Sentence: Selling hundreds of billions of long term debt at today's low rates to refinance short term T-bills will conduce great stability for US funding and increase the strength of the US dollar as a reserve currency and source of world stability and solvency.
Friday, June 11, 2010
Attention CFOs !!!
Today I giving orders to corporate CFOs (Chief Financial Officers).
I know you may be sitting on top of a mountain of cash per today's WSJ article: "U.S. companies are holding more cash in the bank than at any point on record, underscoring persistent worries about financial markets and about the sustainability of the economic recovery. The Federal Reserve reported Thursday that non financial companies had socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26% from a year earlier and the largest-ever increase in records going back to 1952. Cash made up about 7% of all company assets, including factories and financial investments, the highest level since 1963."
And some of you have sold notes & bonds to raise cheap money. BUT most are making a fundamental error. When long term money is cheap, GET IT AND GET AS MUCH AS POSSIBLE.
Sell long term bonds - lock in low rates for 30 year bonds. Fund all your foreseeable and unforeseeable funding needs for the next ten years with fixed rate debt with terms at maturities of at least 10 years, preferably 30 years. Prefund any maturities coming with the next five years. DO IT !!!
Stay away from floating rate debt and short and intermediate term maturities. If you want lower floating rates for awhile, do a short term interest rate swap against the long term bonds.
Give the CEO a war chest to use to build and grow the company NOW as record low fixed rates. This will increase the value of your company immeasurably over time.
Now for investors ... wait, don't buy that long term debt. Let the pension funds and insurance companies and mutual funds who have to buy do the buying. Wait. Soon the US economy will start to perk up - maybe late this year, and then rates will start to rise. If you buy now, you can easily lose one or two year's of interest in price declines. Wait.
Actions
I'm tempted to buy some BP, but will wait. IF the oil spill hits the beaches on the west coast of Florida, I think BP will go to zero as the damages will be incalculable.
Word of the Day
"Homeostasis" - noun [$10]
Homeostasis means a tendency towards relatively stable equilibrium between interdependent elements, esp. as maintained by physiological processes.
Sentence: I doubt the markets will achieve homeostasis until hedge funds are regulated heavily and have much less money. Until then, asset allocation trades will rule: buy low, sell high AND sell high, buy low. You must do BOTH.
I know you may be sitting on top of a mountain of cash per today's WSJ article: "U.S. companies are holding more cash in the bank than at any point on record, underscoring persistent worries about financial markets and about the sustainability of the economic recovery. The Federal Reserve reported Thursday that non financial companies had socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26% from a year earlier and the largest-ever increase in records going back to 1952. Cash made up about 7% of all company assets, including factories and financial investments, the highest level since 1963."
And some of you have sold notes & bonds to raise cheap money. BUT most are making a fundamental error. When long term money is cheap, GET IT AND GET AS MUCH AS POSSIBLE.
Sell long term bonds - lock in low rates for 30 year bonds. Fund all your foreseeable and unforeseeable funding needs for the next ten years with fixed rate debt with terms at maturities of at least 10 years, preferably 30 years. Prefund any maturities coming with the next five years. DO IT !!!
Stay away from floating rate debt and short and intermediate term maturities. If you want lower floating rates for awhile, do a short term interest rate swap against the long term bonds.
Give the CEO a war chest to use to build and grow the company NOW as record low fixed rates. This will increase the value of your company immeasurably over time.
Now for investors ... wait, don't buy that long term debt. Let the pension funds and insurance companies and mutual funds who have to buy do the buying. Wait. Soon the US economy will start to perk up - maybe late this year, and then rates will start to rise. If you buy now, you can easily lose one or two year's of interest in price declines. Wait.
Actions
I'm tempted to buy some BP, but will wait. IF the oil spill hits the beaches on the west coast of Florida, I think BP will go to zero as the damages will be incalculable.
Word of the Day
"Homeostasis" - noun [$10]
Homeostasis means a tendency towards relatively stable equilibrium between interdependent elements, esp. as maintained by physiological processes.
Sentence: I doubt the markets will achieve homeostasis until hedge funds are regulated heavily and have much less money. Until then, asset allocation trades will rule: buy low, sell high AND sell high, buy low. You must do BOTH.
Friday, May 8, 2009
Stress Tests
The point of these stress tests seems to have been to put the government's imprimateur on the financial strength of major US banks to enable them to raise DEBT in the public market without government backing. Theoretically, doing stress tests AFTER a major recession has hit is rather dumb. After all, reserves are designed to be used in recessions, not created. In recessions one wants banks to have already been strong enough to survive and lend. For example, even a AAA entity will certainly look worse financially in a severe economic trough than it did before the downturn.
But Timmy and presumably Ben wanted to reassure lenders TO BANKS [sic] that the banks are strong and even in a further leg down can survive. This is because they want to extract the government from the position of guaranteeing bank debt, money markets, and on and on. This makes sense, but of course we all know now that prior accounting rules, regulations and capital rules did not look to the future, but to the past. Banks could go to the market's casinos to play and trade and try to pad the pay of their internal hogs.
Hence the stress tests were done and we now "know" that some are fine and some need capital in the form of common equity. I think this crisis also puts the lie to preferred stock as core equity (whatever you call it) for a bank. The point is that cutting a preferred stock's dividend would be a sign that bank is likely insolvent, while cutting the dividend on common stock is not seem that way: it can be seem as bolstering current operations.
So in the future, I'd think government regulations will force banks to hold much more capital as common stock and cut back on preferred stock. By the way, in the 1990 recession, Elmer decided that preferred stock was a great source of capital for banks. Sighhhh.
For investors, all else being equal, this means lower growth rates for banks as the common equity base will be larger. What banks need to do is cut the pay of huge numbers of their bankers, particularly traders, who really make money using and risking the stockholders' money. Stockholders much be better compensated for the risks they bear.
Markets
A minor dip yesterday, but this morning futures are up. I really want a good sized pullback, preferably a lot more than a one day wonder. I'd like a good two week, three wave A-B-C pullback to some support level or some Fibonacci level. I want to get back to 150% long at a point of lower risk.
To accomplish this, I have cast my best market drop voodoo spells:
1. I publicly ( and honestly) proclaimed the recession is over - a very bullish call.
2. I bought a fine new car - an SUV really. Very decadent, but Mrs. B wanted it.
This should infuriate the market gods and cause a sizable pullback. I await it with plenty of skim to invest. I guess this will also test whether the market gods read this blog ;) If they do, they will propel the market much higher to frustrate me.
Word of the Day
"Subserve" - verb, transitive [$10]
Subserve means 1. to serve as an instrument or means of; 2. to promote the welfare or purposes of.
Sentence: Timmy's stress tests subserved the governments desire to extricate itself from extensive bank debt guarantees.
Le Mot du Jour
"Sommer" - verb, regular -er conjugation.
Sommer means (transitive) to command or enjoin [~ qn de faire qch -> to command or enjoin somebody to do something]; (intransitive) to add.
La Phrase: (adapted from Le Monde) L'administration d'Obama somme quelques grandes banques se renforcer leur capital.
Sentence: The Obama administration is commanding some large banks to strengthen their capital.
But Timmy and presumably Ben wanted to reassure lenders TO BANKS [sic] that the banks are strong and even in a further leg down can survive. This is because they want to extract the government from the position of guaranteeing bank debt, money markets, and on and on. This makes sense, but of course we all know now that prior accounting rules, regulations and capital rules did not look to the future, but to the past. Banks could go to the market's casinos to play and trade and try to pad the pay of their internal hogs.
Hence the stress tests were done and we now "know" that some are fine and some need capital in the form of common equity. I think this crisis also puts the lie to preferred stock as core equity (whatever you call it) for a bank. The point is that cutting a preferred stock's dividend would be a sign that bank is likely insolvent, while cutting the dividend on common stock is not seem that way: it can be seem as bolstering current operations.
So in the future, I'd think government regulations will force banks to hold much more capital as common stock and cut back on preferred stock. By the way, in the 1990 recession, Elmer decided that preferred stock was a great source of capital for banks. Sighhhh.
For investors, all else being equal, this means lower growth rates for banks as the common equity base will be larger. What banks need to do is cut the pay of huge numbers of their bankers, particularly traders, who really make money using and risking the stockholders' money. Stockholders much be better compensated for the risks they bear.
Markets
A minor dip yesterday, but this morning futures are up. I really want a good sized pullback, preferably a lot more than a one day wonder. I'd like a good two week, three wave A-B-C pullback to some support level or some Fibonacci level. I want to get back to 150% long at a point of lower risk.
To accomplish this, I have cast my best market drop voodoo spells:
1. I publicly ( and honestly) proclaimed the recession is over - a very bullish call.
2. I bought a fine new car - an SUV really. Very decadent, but Mrs. B wanted it.
This should infuriate the market gods and cause a sizable pullback. I await it with plenty of skim to invest. I guess this will also test whether the market gods read this blog ;) If they do, they will propel the market much higher to frustrate me.
Word of the Day
"Subserve" - verb, transitive [$10]
Subserve means 1. to serve as an instrument or means of; 2. to promote the welfare or purposes of.
Sentence: Timmy's stress tests subserved the governments desire to extricate itself from extensive bank debt guarantees.
Le Mot du Jour
"Sommer" - verb, regular -er conjugation.
Sommer means (transitive) to command or enjoin [~ qn de faire qch -> to command or enjoin somebody to do something]; (intransitive) to add.
La Phrase: (adapted from Le Monde) L'administration d'Obama somme quelques grandes banques se renforcer leur capital.
Sentence: The Obama administration is commanding some large banks to strengthen their capital.
Thursday, March 5, 2009
Rome Wasn't Built in a Day
All the past studies of interest rates cuts and stimulus show that they take around nine months to have an effect. March 2009 minus nine months is June 2008. In June, 2008, the Fed was cutting rates, but not enough. And the wimpy Q2 2008 stimulus was still hitting consumer purses. And gasoline prices were sky high heading to $4/gallon.
So why does anyone thing the economy should already be showing signs of a turn ?
I suppose the shorter news cycles and hyperventilation on the financial press and other press leads the naive to expect quick results. Some efforts DID produce quick results. Hank the Tank and Battleship Ben's superlative work in October did prevent the banking system from collapse. Libor rates have fallen greatly and the risk of default by money market funds has receded. Commercial paper markets are looser and corporate bond markets are again seeing issuance.
But we must await the rest of the effects to hit in Q2 and Q3 of 2009. And Obama's stimulus will not hit hard until at least Q3.
I wait and think and pick my stocks. Over this year I will put all new cash to work in stocks as I am quite underweight there. Not by choice, but my substantial remaining fixed income investments are unfortunately locked in non-tradable investments. I've done all the easy re-balancing I can do and must do the rest with new money.
That's a reality of running a real fund, not a paper one. My Krypto Fund is mixture of several retirement accounts, taxable accounts and annuity-like investments (TIAA as Mrs. B was an academic). TIAA and its real estate fund cannot be withdrawn and used to re-balance. Neither can my old whole life policy.
Word of the Day
"Lubricious" - adjective [$10] from the card file
Lubricious means 1. smooth, oily, slipper; 2. lewd, prurient.
Sentence: I suppose it's no surprise that the many US congressmen and state legislators are lubricious in both senses of its meaning: they prey on young women or boys, grease their supporters with payoffs (aka earmarks) and are greased with bribes.
Le Mot du Jour
"Douleur" - noun, feminine.
Douleur means pain.
La Phrase: Pourquoi est-ce que la droite recommende d'habitude la douleur pour l'homme du commune pour réparer l'economie du pays?
Sentence: Why does the right usually recommend pain for the common man to repair the national economy?
So why does anyone thing the economy should already be showing signs of a turn ?
I suppose the shorter news cycles and hyperventilation on the financial press and other press leads the naive to expect quick results. Some efforts DID produce quick results. Hank the Tank and Battleship Ben's superlative work in October did prevent the banking system from collapse. Libor rates have fallen greatly and the risk of default by money market funds has receded. Commercial paper markets are looser and corporate bond markets are again seeing issuance.
But we must await the rest of the effects to hit in Q2 and Q3 of 2009. And Obama's stimulus will not hit hard until at least Q3.
I wait and think and pick my stocks. Over this year I will put all new cash to work in stocks as I am quite underweight there. Not by choice, but my substantial remaining fixed income investments are unfortunately locked in non-tradable investments. I've done all the easy re-balancing I can do and must do the rest with new money.
That's a reality of running a real fund, not a paper one. My Krypto Fund is mixture of several retirement accounts, taxable accounts and annuity-like investments (TIAA as Mrs. B was an academic). TIAA and its real estate fund cannot be withdrawn and used to re-balance. Neither can my old whole life policy.
Word of the Day
"Lubricious" - adjective [$10] from the card file
Lubricious means 1. smooth, oily, slipper; 2. lewd, prurient.
Sentence: I suppose it's no surprise that the many US congressmen and state legislators are lubricious in both senses of its meaning: they prey on young women or boys, grease their supporters with payoffs (aka earmarks) and are greased with bribes.
Le Mot du Jour
"Douleur" - noun, feminine.
Douleur means pain.
La Phrase: Pourquoi est-ce que la droite recommende d'habitude la douleur pour l'homme du commune pour réparer l'economie du pays?
Sentence: Why does the right usually recommend pain for the common man to repair the national economy?
Wednesday, February 25, 2009
The Looting
First, I guess Obama doesn't like $10 words. The Blabberg reporter-ette is practically gushing about his use of simple, monosyllabic words. Maybe he knows his audience.
Back to the looting ...
This story about the Merrill Lynch bonuses gets sleazier and sleazier.
WSJ: "Monday's court filing alleges that the board set the bonus pool on estimates that were off by $7 billion. Once Merrill had a better indication of the firm's fourth-quarter performance, Mr. Thain didn't go back to the board to give them the chance to reduce the bonus payout "even though results are suppose to be a key component in setting bonus pools," Mr. Cuomo claimed in the filing."
Hogs at the trough ... vikings looting the monastery ...
Smash that window and grab the loot before the cops arrive.
So how well run was Merrill Lynch ? Here's a clue:
FT: "Ineffective internal controls at Merrill Lynch caused the firm to understate its 2008 losses by more than $500m, the investment bank said on Tuesday in its annual report. Merrill, which was acquired by Bank of America on January 1, shocked investors last month with the disclosure of a $15.3bn loss for the fourth quarter of 2008 and full-year losses of $27.1bn. But in its revised figures, Merrill disclosed that its losses for 2008 were $27.6bn."
"The additional $500m in losses appear to have come from the discovery that Merrill used a flawed model for measuring the value of derivatives that were used in its hedging strategy."
"Auditor Deloitte & Touche concluded that Merrill had “not maintained effective internal control over financial reporting” as of the end of 2008."
"According to the annual report, the discrepancy in valuation involved internal swaps used between Merrill and its affiliates. In 2008, the report said, Merrill “began using a different set of yield curves to value certain intercompany swaps”.
"In its opinion, Deloitte said “several mitigating internal controls were not operating effectively and therefore failed to identify the intercompany difference that resulted” from reliance on the two different yield curves. In addition, Deloitte said Merrill management did not apply proper accounting guidelines to one hedge entered into during the fourth quarter, involving long-term borrowings."
In simple terms, one arm of the firm valued the SAME swap to be $500 million more than another part. Obviously that entire "swap valuation" cesspool is a complete shambles.
Does anyone else smell a fraud ?
Word of the Day
"Dichotomy" - noun [$10] from the card file
Dichotomy means a division or the process of dividing into two especially mutually exclusive or contradictory groups.
Sentence: Washington's ruling class has yet to realize that a dichotomy exists between a successful bank and one run according to government rules, viz. that a private bank must make a PROFIT. Profits are the key to resolving the financial crisis.
Le Mot du Jour
"Souhaiter" - verb; regular -er conjugation
Souhaiter means 1. to wish for; 2. (+ que) to hope that
La Phrase: En buvant mon café ce matin, je souhaitais que M. Geitner lise toujours ce blog.
Sentence: While drinking my coffee this morning, I was hoping that Mr. Geitner always reads this blog.
Back to the looting ...
This story about the Merrill Lynch bonuses gets sleazier and sleazier.
WSJ: "Monday's court filing alleges that the board set the bonus pool on estimates that were off by $7 billion. Once Merrill had a better indication of the firm's fourth-quarter performance, Mr. Thain didn't go back to the board to give them the chance to reduce the bonus payout "even though results are suppose to be a key component in setting bonus pools," Mr. Cuomo claimed in the filing."
Hogs at the trough ... vikings looting the monastery ...
Smash that window and grab the loot before the cops arrive.
So how well run was Merrill Lynch ? Here's a clue:
FT: "Ineffective internal controls at Merrill Lynch caused the firm to understate its 2008 losses by more than $500m, the investment bank said on Tuesday in its annual report. Merrill, which was acquired by Bank of America on January 1, shocked investors last month with the disclosure of a $15.3bn loss for the fourth quarter of 2008 and full-year losses of $27.1bn. But in its revised figures, Merrill disclosed that its losses for 2008 were $27.6bn."
"The additional $500m in losses appear to have come from the discovery that Merrill used a flawed model for measuring the value of derivatives that were used in its hedging strategy."
"Auditor Deloitte & Touche concluded that Merrill had “not maintained effective internal control over financial reporting” as of the end of 2008."
"According to the annual report, the discrepancy in valuation involved internal swaps used between Merrill and its affiliates. In 2008, the report said, Merrill “began using a different set of yield curves to value certain intercompany swaps”.
"In its opinion, Deloitte said “several mitigating internal controls were not operating effectively and therefore failed to identify the intercompany difference that resulted” from reliance on the two different yield curves. In addition, Deloitte said Merrill management did not apply proper accounting guidelines to one hedge entered into during the fourth quarter, involving long-term borrowings."
In simple terms, one arm of the firm valued the SAME swap to be $500 million more than another part. Obviously that entire "swap valuation" cesspool is a complete shambles.
Does anyone else smell a fraud ?
Word of the Day
"Dichotomy" - noun [$10] from the card file
Dichotomy means a division or the process of dividing into two especially mutually exclusive or contradictory groups.
Sentence: Washington's ruling class has yet to realize that a dichotomy exists between a successful bank and one run according to government rules, viz. that a private bank must make a PROFIT. Profits are the key to resolving the financial crisis.
Le Mot du Jour
"Souhaiter" - verb; regular -er conjugation
Souhaiter means 1. to wish for; 2. (+ que) to hope that
La Phrase: En buvant mon café ce matin, je souhaitais que M. Geitner lise toujours ce blog.
Sentence: While drinking my coffee this morning, I was hoping that Mr. Geitner always reads this blog.
Monday, December 15, 2008
A Wasteland
The path of the financial manager and CFO since the mid 1990s is littered with trash and rotten ideas.
Hedges funds are one of my favorite topics. Today's Financial Times brings more news that they are completely bereft of value. Citadel closes the exit gates, keeping investors' money until March. And innumerable hedge funds and funds of funds have lost money to Madoff's scam. It is simply amazing they never bothered to do any serious "due diligence". The laziness of the greedy and arrogant investment managers, lenders and the investors themselves seems endless. Investment and lending departments of major banks such as BNP and RBS seem to be victims; Man Financial, a major fund of funds plus numerous Greenwich-based funds were defrauded.
The Wall Street CFO shows his ignorance, too. The WSJ reports that Goldman, Sachs spent $26.5 billion on stock buybacks in the four years to the third quarter of 2008, which is not far from its current market capitalization of $27.6 billion. Many, many CFOs were culpable: members of the S&P 500 spend $1.7 trillion on stock buybacks in those four years. All buying at much higher prices than now, virtually wasting that huge sum. Current shareholders bear the burden of that outlay. Imagine the financial strength of those companies if their management had not been so foolishly greedy.
Markets
Charter rates for Capesize vessels jumped considerably as Chinese iron ore demand revived a bit. There were rumors of that last week as dry shipping stocks rose considerably. The rumors were true.
I am still working on Santa's list.
Word of the Day
"Welkin" - noun [$10] poetic
Welkin means the sky, the upper air.
Sentence: Now it is perfectly clear that the sophisticated hedge fund managers, CFOs and investment advisors mostly have simply been selling the welkin, not any sort of reality.
Hedges funds are one of my favorite topics. Today's Financial Times brings more news that they are completely bereft of value. Citadel closes the exit gates, keeping investors' money until March. And innumerable hedge funds and funds of funds have lost money to Madoff's scam. It is simply amazing they never bothered to do any serious "due diligence". The laziness of the greedy and arrogant investment managers, lenders and the investors themselves seems endless. Investment and lending departments of major banks such as BNP and RBS seem to be victims; Man Financial, a major fund of funds plus numerous Greenwich-based funds were defrauded.
The Wall Street CFO shows his ignorance, too. The WSJ reports that Goldman, Sachs spent $26.5 billion on stock buybacks in the four years to the third quarter of 2008, which is not far from its current market capitalization of $27.6 billion. Many, many CFOs were culpable: members of the S&P 500 spend $1.7 trillion on stock buybacks in those four years. All buying at much higher prices than now, virtually wasting that huge sum. Current shareholders bear the burden of that outlay. Imagine the financial strength of those companies if their management had not been so foolishly greedy.
Markets
Charter rates for Capesize vessels jumped considerably as Chinese iron ore demand revived a bit. There were rumors of that last week as dry shipping stocks rose considerably. The rumors were true.
I am still working on Santa's list.
Word of the Day
"Welkin" - noun [$10] poetic
Welkin means the sky, the upper air.
Sentence: Now it is perfectly clear that the sophisticated hedge fund managers, CFOs and investment advisors mostly have simply been selling the welkin, not any sort of reality.
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