WHO: Pandemic Flu Alert Level Raised Thursday, April 30, 2009
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William D. Cohan: House of Cards Tuesday, April 28, 2009
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Here is another interesting link to FORA.tv. They interviewed William D. Cohan, about his book House of Cards: A Tale of Hubris and Wretched Excess on Wall Street.
Synopsis: On March 5, 2008, at 10:15 A.M., a hedge fund manager in Florida wrote a post on his investing advice Web site that included a startling statement about Bear Stearns & Co., the nation’s fifth-largest investment bank: “In my book, they are insolvent.”
This seemed a bold and risky statement. Bear Stearns was about to announce profits of $115 million for the first quarter of 2008, had $17.3 billion in cash on hand, and, as the company incessantly boasted, had been a colossally profitable enterprise in the eighty-five years since its founding.
Ten days later, Bear Stearns no longer existed, and the calamitous financial meltdown of 2008 had begun.
How this happened – and why – is the subject of William D. Cohan’s superb and shocking narrative that chronicles the fall of Bear Stearns and the end of the Second Gilded Age on Wall Street…
Please click here to view the video.
What is interesting about the interview is that, as opposed to a classical book review, Cohan talks through his views and comments freely on the whole situation adding some interesting perspectives and additional context.
For those of you who are intereted in our review of his previous book on Lazard, please click here.
Swine Flu Excuse Monday, April 27, 2009
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As everyone seems to be desperatly trying to find and contain pockets of swine flu around the world and prevent a pandemic / subsequent public panic, markets signal a lower open and a lot of nervousness…
Whilst market commentators are busy discussing what impact this will have on individual travel or commodity stocks…. the question we would like to raise is : “Are the markets really reacting to this specific news or would any excuse be good enough to highlight the fact that the recent bear market rally has run out of gas?”
We will soon find out..
Trump: Banks not lending… Friday, April 24, 2009
Posted by ei-forum in Miscellaneous.3 comments
Despite politicians trying to get us to buy the fact that banks are lending, most market participants are confirming that this is simply not true!
Not only are they not lending to retail customers or corporation but they are still not lending to each other at anything like a normal rate of interest …
As Mr. Trump so kindly put it: “The banks are not lending money. There’s no money out there, no matter how strong you are, no matter how good your deal is, if you go to a bank today they virtually laugh at you if you’re asking for money.”
Sad but true…
George Soros – For the Record Tuesday, April 21, 2009
Posted by ei-forum in Investing.add a comment
Here is a discussion with Soros on his investment fund, coming out of semi-retirement in 2007 and how he had to actively manage his investments and shift strategies in order to come out with a profit.
Soros, who is one of the ultimate global marco investors is always worth listening to. He is still worried about the risk of a deeper contraction if the system falls apart.
He stresses the importance of a global and co-ordinated approach to tackle this crisis. He then goes on to talk about the beginning of what he calls ‘financial protectionism’… and how it will be very important for the stronger countries to not only worry about themselves but make sure they help the weaker ones in order to guarantee the global co-ordinate approach and avoid a much deeper melt-down.
He then discusses about the outlook for Brazil, India and China where he thinks the time to invest is approaching but he is still in no hurry in looking at Russia again….
In fine, he talk about his theory of reflexivity.
Corporate Credit Wednesday, April 15, 2009
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Despite a lot of suffering in the past years, Corporate Credit is starting to look attractive. Most market commentators have been talking about this and that it is time to pick up some bargains with pretty good yields. However, as usual, the key question is how to do this and minimize risk exposure?
As most of our readers know, we still feel that we are probably only halfway out of the tunnel and that is why we would prefer to gain exposure through an ETF. One option could be the iShares iBoxx $ Invest Grade Corp Bond (LQD).
The important thing is to focus on Investment Grade companies and to make sure you have a margin of safety as, even the best companies, are being downgraded in this uncertain market environment. In any case, even though default risk is there also for these companies, the default rate on >BBB/Baa is quite low… currently around 5%. Therefore, there should be some room for exposure to this segment in most portfolios.
Fund summary from Yahoo!Finance:
The investment seeks investment results that correspond generally to the price and yield performance of a segment of the U.S. investment-grade corporate bond market as defined by the iBoxx $ Liquid Investment-Grade index. The fund typically invests at least 90% of assets in the bonds of the underlying index, and at least 95% of assets in investment grade corporate bonds. It may also invest in bonds not included in the underlying index. The fund may also invest up to 5% of assets in repurchase agreements collateralized by U.S. government obligations, and in cash and cash equivalents. It is nondiversified.
Please read our disclaimer.
Wanda Sykes Bailout Plan Tuesday, April 14, 2009
Posted by ei-forum in Investing Humor.add a comment
Someone just sent us this link and it’s definitely worth a look – quite funny!
Unfortunately, the embed function has been disabled so you”ll have to click here to go directly to the YouTube page.
Enjoy!
Nassim Taleb: words of wisdom Wednesday, April 8, 2009
Posted by ei-forum in Miscellaneous.add a comment
Once again, Taleb tells it as it is.
He argues that the banks are essentially like utility companies, as they perform essential functions like the safeguarding and availability of your capital and this implies that they simply cannot be entrusted with risk taking.
Risk taking should be limited to special vehicles (i.e. hedge funds) that do not endanger the system and do not need/ask to be bailed out… essential creating a two tier system:
You can see the whole video – Nassim Taleb and Daniel Kahneman: Reflection on a Crisis – here.
We strongly recommend the whole video as is it really fascinating. Furthermore, you get the added benefit of Daniel Kahneman, which is a big treat!
Enjoy!
Mike Mayo is Back! Monday, April 6, 2009
Posted by ei-forum in finance.add a comment
Mike Mayo is back and he is still exposing the weaknesses of the banks and the troubles they are facing.
He initiated coverage of 11 large banks and gave all of them “underperform” or “sell” ratings – here are some of his calls:
- Bank of America – underperform
- Citigroup Inc – underperform
- JPMorgan Chase – underperform
- Comerica Inc – underperform
- Wells Fargo & Co- underperform
- BB&T Corp – sell
- Fifth Third Bancorp – sell
- KeyCorp – sell
- SunTrust Banks Inc – sell
As you can imagine, he is not very optimistic and focuses on his belief that loan losses will eventually be bigger than those we had at the time of the Great Depression.
With earning season coming up and what are definitely not going to be pretty numbers, investors should prepare themselves for some sideways trading ranges that could be pushed decisively lower on further bad news.
Economic Cycle Clock Friday, April 3, 2009
Posted by ei-forum in Investing.add a comment
We were discussing this with one of our readers and thought that it might be a good idea to post it for the benefit of all:
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