I asked one investment banker what might cause half of North America’s top corporations to default. No ordinary economic recession or natural disaster short of an asteroid strike could do it: no hurricane, for example, and not even ‘the big one’, a catastrophic earthquake devastating California. All he could think of was ‘a revolutionary Marxist [...]
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“Should Analysts Who Don’t Own Stocks Be Trusted?”
Remove the part about “Who Don’t Own Stock” and you’ve got a legit story. Another silly rule designed to prevent conflicts makes analyst guesses less trustworthy. You’ve almost certainly seen it: Every time an analyst on CNBC comes on to talk about a stock there is The Screen. We find out whether they own the [...]
“The Criminalization of Failure”
Great John Carney post at Dealbreaker.com. The cure is worse than the problem: “Of course what’s really happening here is that the hedge fund managers are taking the fall for the collapse of Bear, and the even broader reverberations from that, including the controversial merger, the bailout and the credit markets’ woe,” law professor Larry [...]
Protectionism for Profit – Now Doctors get in on the Racket
How can doctors get fat off the tax payer if the tax payer has a choice? MD lobbyists are preemptively shoring up their bottom line under the guise of safety. Add this to the existing list of readymade excuses to steal from the tax payer whose greatest hits already include, “it’s for the children,” and [...]
“Ever wonder why fund managers can’t beat the S&P 500? “
The headline quote from Gordon Gekko from the 1987 movie Wall Street show this has been common knowledge for decades: Fund managers cannot beat the index after fees. According to this Bloomberg article, consumers are finally starting to catch on: When Fidelity Investments opened the Magellan Fund in January to new shareholders for the first [...]
Oil Up Again
Previously a $5 move would be front page news. Now it’s just to be expected: Crude oil for July delivery rose $5.07, or 3.9 percent, to settle at $136.38 a barrel at 2:48 p.m. on the New York Mercantile Exchange. Oil reached a record $139.12 a barrel on June 6. Futures have doubled in 12 [...]
The Bear Collapse – WSJ’s Incredible Reporting
Outside of Fortune, very few publications write good business stories. The Wall Street Journal has interesting articles and does good reporting, but rarely writes about the internal drama of Wall Street in such a readable way. It’s like something Bethany McLean or Kurt Eichenwald would have written. Part 3 will be out tomorrow. Read part [...]
Bloomberg on the Swap Market
It is surprising how unsophisticated the swap market is as described in this Bloomberg article. It seems that, when it counts, no one really knows anything about pricing/trading this instrument. Not even the supposed experts. This section of the article is almost humorous. This is how literally 10’s of millions of guarantees are put into [...]
So you want to setup a P/E shop?
Very interesting interview from Knowledge@Wharton: The market events of August 2007 ended a robust 2003-2007 fundraising cycle. Currently, sentiment is one of caution. Thematically, investors are seeking counter-cyclical and risk-mediating investment strategies, such as distressed/turnaround and mezzanine. At the same time, investors recognize that their 2001-2003 fund investments outperformed due to the market conditions. Now [...]
“For the first time since Word War II, owning U.S. Treasuries is a riskier bet than owning German bonds.”
From The Daily Reckoning. This headline was the most important thing I read today. The follow with: On the basis of credit default swaps, which are used to speculate on a government’s ability to repay debt, the 10-year note reached a record high of 16 basis points on March 12. German bonds traded at 15 [...]
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