Believe it or not, she does. The link to an Amazon.com entry is right there in the article.
In the Aurora Theater the Men Protected the Women. What Does that Mean?
http://www.slate.com/blogs/xx_factor/2012/07/23/aurora_dark_knight_shooting_the_men_protected_the_women.html
Monday, July 23, 2012
Shorting Best Buy
Recently, Best Buys' (BBY-NYSE) compensation consultant quit after the company granted bonuses to a large proportion of management without any performance basis. The bonuses were granted without any ties to performance, past, present, or future.
This speculation follows immediately: Perhaps BBY did this because management believes that if it tied the bonuses to performance that it would be very difficult for their managers to meet those performance targets. Hence, the environment is so difficult that even management believes future results will be very poor. Even worse, it might be that bonuses are being given out as a kind of pre-bankruptcy severance to their hard-working employees, because management is so concerned about future earnings they can't count on cash flow to cover future bonuses. In their estimation, it is best to tap the cash reserves now, to give employees a chance to plan ahead, hunker down, build savings, just in case the business explodes over the next several years.
This is not a move that sends out signals of confidence. BBY is under assault from web-based commerce, especially Amazon.com. Most electronics, computer, music, video, and technology goods are black box products. They either work or they don't, and there is often little need for after-sales service.
I will say this about BBY employees: I usually find that they are well-informed and helpful. I've never been pressured to buy something I didn't want. Still, it doesn't take a showroom to put your name on a pre-release sales list, and 2-day shipping at no cost (Amazon Prime) beats the 8 mile drive to the nearest store any day. Unless I need it immediately. Which I rarely do.
This speculation follows immediately: Perhaps BBY did this because management believes that if it tied the bonuses to performance that it would be very difficult for their managers to meet those performance targets. Hence, the environment is so difficult that even management believes future results will be very poor. Even worse, it might be that bonuses are being given out as a kind of pre-bankruptcy severance to their hard-working employees, because management is so concerned about future earnings they can't count on cash flow to cover future bonuses. In their estimation, it is best to tap the cash reserves now, to give employees a chance to plan ahead, hunker down, build savings, just in case the business explodes over the next several years.
This is not a move that sends out signals of confidence. BBY is under assault from web-based commerce, especially Amazon.com. Most electronics, computer, music, video, and technology goods are black box products. They either work or they don't, and there is often little need for after-sales service.
I will say this about BBY employees: I usually find that they are well-informed and helpful. I've never been pressured to buy something I didn't want. Still, it doesn't take a showroom to put your name on a pre-release sales list, and 2-day shipping at no cost (Amazon Prime) beats the 8 mile drive to the nearest store any day. Unless I need it immediately. Which I rarely do.
LIBOR is not a free lunch
The latest banking scandal has some people yawning, some yapping, some yelling. Overall, there seems to be a clear lack of outrage except among those who have an incentive to find a reason to be outraged. What to think? Frankly, this case smells. All the telltales indicate that this is a false scandal. LIBOR is an interest rate derived from information volunteered by various banks periodically. What do the banks get for their effort? Nothing, really. The information they supply costs them time and effort, and they get nothing in return.
LIBOR is a free lunch, an attempt to concoct an important benchmark interest rate from voluntary statements of a few banks. What incentive do they have to tell the truth? Apparently, the incentive is jail time if they lie, and nothing if they don't. So for the bankers, it is a negative sum game. Is it any wonder that Libor Case Documents Show Timid Regulators? The regulators must have been wondering whether it was an April Fools joke. You can imagine them talking to the walls, as though the pranksters were hidden nearby: "Okay, okay, come on out guys! What's the catch? Tell me what the joke is!"
Since there is no way to predict the outcome of the investigations underway, and there is little reason for those of us who are not LIBOR experts to suddenly learn a bunch about what it is and how it works, our net investment thesis is something between short everything having to do with banks and governments and I don't care and I am going to ignore the whole thing. You could make a case that random and capricious prosecution of impolite behavior (certainly Barclay's attempted "manipulation" of LIBOR at least qualifies as impoliteness) indicates that those in the know among regulators of the financial industry are short the banks and intend for other investors to sell out at the bottom.
It could be foolish to expect that LIBOR will last much longer. Do we need a benchmark rate built on the assumption of a free handout of information?
Eliot Spitzer writes in Larry Kudlow Says the Libor Conspiracy Has No Victims. That’s Grotesquely Wrong (sorry, I misplaced the URL) that there is massive harm done in this case. People are quite astute at perceiving damage to themselves done by others. Some are astoundingly good at it, spotting eleven out of every three cases of negligence or inconvenience that occur. The remedy will be an unexpected consequence: LIBOR will go away, and we all--Spitzer, you, me, and all the other people who have mortgages and car loans--will have to rely on much fuzzier (and more expensive) estimates of short-term borrowing costs.
LIBOR is a free lunch, an attempt to concoct an important benchmark interest rate from voluntary statements of a few banks. What incentive do they have to tell the truth? Apparently, the incentive is jail time if they lie, and nothing if they don't. So for the bankers, it is a negative sum game. Is it any wonder that Libor Case Documents Show Timid Regulators? The regulators must have been wondering whether it was an April Fools joke. You can imagine them talking to the walls, as though the pranksters were hidden nearby: "Okay, okay, come on out guys! What's the catch? Tell me what the joke is!"
Since there is no way to predict the outcome of the investigations underway, and there is little reason for those of us who are not LIBOR experts to suddenly learn a bunch about what it is and how it works, our net investment thesis is something between short everything having to do with banks and governments and I don't care and I am going to ignore the whole thing. You could make a case that random and capricious prosecution of impolite behavior (certainly Barclay's attempted "manipulation" of LIBOR at least qualifies as impoliteness) indicates that those in the know among regulators of the financial industry are short the banks and intend for other investors to sell out at the bottom.
It could be foolish to expect that LIBOR will last much longer. Do we need a benchmark rate built on the assumption of a free handout of information?
Eliot Spitzer writes in Larry Kudlow Says the Libor Conspiracy Has No Victims. That’s Grotesquely Wrong (sorry, I misplaced the URL) that there is massive harm done in this case. People are quite astute at perceiving damage to themselves done by others. Some are astoundingly good at it, spotting eleven out of every three cases of negligence or inconvenience that occur. The remedy will be an unexpected consequence: LIBOR will go away, and we all--Spitzer, you, me, and all the other people who have mortgages and car loans--will have to rely on much fuzzier (and more expensive) estimates of short-term borrowing costs.
Tuesday, July 17, 2012
Government didn't build that
There are a lot of Government employees and elected officials who draw paychecks. Many of them attribute their positions of privilege and power to their own intelligence and correct political beliefs. But their seemingly justifiable perches over the people is an illusion. There are a lot of smart citizens out there. Let me tell you something, there are a whole bunch of hard working entrepreneurs and skilled workers in America.
If you were elected to office, a lot of people along the line gave you a lot of help. There was a businessman or inventor somewhere in your life. Somebody helped to create this unbelievable American engine of production and commerce that thrived despite Government intervention. All of the money that Government spent on roads and bridges, that came from hard working people and entreprenuers. Contractors with expertise and skills built them, the Government didn't. If you are in a local, or state, or the national Government, you didn't build that. The PEOPLE and BUSINESS made that happen.
If you were elected to office, a lot of people along the line gave you a lot of help. There was a businessman or inventor somewhere in your life. Somebody helped to create this unbelievable American engine of production and commerce that thrived despite Government intervention. All of the money that Government spent on roads and bridges, that came from hard working people and entreprenuers. Contractors with expertise and skills built them, the Government didn't. If you are in a local, or state, or the national Government, you didn't build that. The PEOPLE and BUSINESS made that happen.
Friday, June 15, 2012
The Utility of Commentary on Business News Articles
Take your pick of news supplier, and odds are that they allow comments on their articles where readers can write their responses. Whatever value this might have had in theory, in practice it has shown to be pretty much worthless as a source of additional factual information. Nearly 100% of all comments offer nothing in terms of new information; no anecdotes, no statistics, no interpretations of data, nothing on the actual factual information revealed in the article, if indeed there was any.
Instead, readers are opinionated, rash, pig-headed, and abusive. They are politically-motivated, writing extremely slanted opinions that have only the remotest connection to the article.
The net effect of maintaining comments, in many cases, is a dead loss to society. Writing the comments drains the time of the writer. Such comments certainly waste the time of the reader, who is better off ignoring all of the comments because they do not inform. Overall, news organizations would benefit their readers by eliminating their comment sections on articles.
Instead, readers are opinionated, rash, pig-headed, and abusive. They are politically-motivated, writing extremely slanted opinions that have only the remotest connection to the article.
The net effect of maintaining comments, in many cases, is a dead loss to society. Writing the comments drains the time of the writer. Such comments certainly waste the time of the reader, who is better off ignoring all of the comments because they do not inform. Overall, news organizations would benefit their readers by eliminating their comment sections on articles.
Thursday, May 17, 2012
Austerity to End With No Investment Plan in Place
Now that the elections in France are over, it is clear that the voters want an end to austerity. Assuming that governments in France and elsewhere agree to increase spending, deficits will increase. A significant portion of the increased spending will go to transfer payments, not investments. Growth rates will move only slightly. Inflation will increase. The Euro will decline in value relative to the dollar and remnibi.
European inflation may influence U.S. inflation. Therefore, it is prudent to shift into inflation-resistant investments, especially income-producing real estate, consumer goods stocks, railroads, and other companies that have big moats around their business model.
---
Some older news related to the ending of austerity in Europe:
Bundesbank’s Weidmann Says What No Politician Wants to Hear
http://www.bloomberg.com/news/2012-04-22/bundesbank-s-weidmann-says-what-no-eu-politician-wants-to-hear.html
Hollande Vows Not to Ratify Euro Pact, Auguring Merkel Clash
http://www.bloomberg.com/news/2012-04-25/hollande-says-france-won-t-ratify-euro-fiscal-pact-as-it-stands.html
Europe awaiting France to temper austerity: Hollande
http://www.reuters.com/article/2012/04/25/us-france-election-idUSBRE83I0EZ20120425
European inflation may influence U.S. inflation. Therefore, it is prudent to shift into inflation-resistant investments, especially income-producing real estate, consumer goods stocks, railroads, and other companies that have big moats around their business model.
---
Some older news related to the ending of austerity in Europe:
Bundesbank’s Weidmann Says What No Politician Wants to Hear
http://www.bloomberg.com/news/2012-04-22/bundesbank-s-weidmann-says-what-no-eu-politician-wants-to-hear.html
Hollande Vows Not to Ratify Euro Pact, Auguring Merkel Clash
http://www.bloomberg.com/news/2012-04-25/hollande-says-france-won-t-ratify-euro-fiscal-pact-as-it-stands.html
Europe awaiting France to temper austerity: Hollande
http://www.reuters.com/article/2012/04/25/us-france-election-idUSBRE83I0EZ20120425
Will Greece Be Ejected from the EU?
(As usual, I am looking for the objective observation. This is not a prescription for what I think should happen, it is observation of what is likely to happen. Failing to stay objective is a mistake that costs money.)
Voters in Greece are rejecting austerity. The newly-elected government failed to coalesce this week, so there will be new elections in June. Predictions are that more seats will go to left-leaning parties which will, of course, deliver policies requested by the Greek people.
Greece would like to remain within the euro zone. It benefits from the stability of the Euro. By comparison, returning to the drachma would likely result in inflation, and most Greeks believe that returning to the drachma would be a disaster.
If you are a Greek citizen, why would you vote for austerity? It causes a loss of Government jobs. And why would you vote to lose the Euro and switch to the drachma? You wouldn't. That would result in inflation. If you were in their shoes, you too would want to have your cake and eat it.
Therefore, Greece will ask the euro zone countries to continue supplying money while it suspends interest payments. Voters in other countries will reject this scenario. They will reject the additional taxes required to maintain this state, by voting out politicians if necessary. The politicians in these other countries will then need to make a choice: Leave the euro zone themselves, or request that the EU act as a unit to prevent Greece from using the Euro. This will lead to the EU pushing Greece out.
Germany will get 99% of the blame, even if the vote to expel is unanimous.
Stocks in U.S. markets are in a correction at present in anticipation of these events. The greatest part of the discount is from uncertainty over the method of Greece's exit and the ramifications for the rest of the euro zone. I have no way of calculating the correct discount. The greatest turbulence and discount in prices of stocks will be now, when there is a lot of uncertainty. Once the news of the separation occurs, stocks will rise as uncertainty recedes.
It has already been reported by various news services that banks in Greece have been preparing for several years for a possible return to the drachma. Greece's central bank owns the necessary printing presses for printing new drachmas, if it has to.
Over the past week Greeks have pulled nearly a trillion Euros from banks in Greece. This is capital flight, a run on the banks, confirming that the common expectation among voters themselves is that Greece will be departing from the euro zone.
Voters in Greece are rejecting austerity. The newly-elected government failed to coalesce this week, so there will be new elections in June. Predictions are that more seats will go to left-leaning parties which will, of course, deliver policies requested by the Greek people.
Greece would like to remain within the euro zone. It benefits from the stability of the Euro. By comparison, returning to the drachma would likely result in inflation, and most Greeks believe that returning to the drachma would be a disaster.
If you are a Greek citizen, why would you vote for austerity? It causes a loss of Government jobs. And why would you vote to lose the Euro and switch to the drachma? You wouldn't. That would result in inflation. If you were in their shoes, you too would want to have your cake and eat it.
Therefore, Greece will ask the euro zone countries to continue supplying money while it suspends interest payments. Voters in other countries will reject this scenario. They will reject the additional taxes required to maintain this state, by voting out politicians if necessary. The politicians in these other countries will then need to make a choice: Leave the euro zone themselves, or request that the EU act as a unit to prevent Greece from using the Euro. This will lead to the EU pushing Greece out.
Germany will get 99% of the blame, even if the vote to expel is unanimous.
Stocks in U.S. markets are in a correction at present in anticipation of these events. The greatest part of the discount is from uncertainty over the method of Greece's exit and the ramifications for the rest of the euro zone. I have no way of calculating the correct discount. The greatest turbulence and discount in prices of stocks will be now, when there is a lot of uncertainty. Once the news of the separation occurs, stocks will rise as uncertainty recedes.
It has already been reported by various news services that banks in Greece have been preparing for several years for a possible return to the drachma. Greece's central bank owns the necessary printing presses for printing new drachmas, if it has to.
Over the past week Greeks have pulled nearly a trillion Euros from banks in Greece. This is capital flight, a run on the banks, confirming that the common expectation among voters themselves is that Greece will be departing from the euro zone.
Tuesday, May 15, 2012
Family Vacation or Budget Deficit?
In the Wall Street Journal Demetria Gallegos writes about taking a vacation with her four daughters without her husband. She wrote about differences of opinion over affordability and location (Los Angeles and Disney), but appears to have skipped many other issues. Issues like control (did he have any input into planning?), frequency of their Los Angeles trips (is this the fifth trip there?), proximity to relatives (hers?), style (shopping and Disney trinkets vs. history and culture), trip efficiency ($ per day), and budget (was money saved for this trip, or is it coming from credit cards?). The responses tended to be polarized, with perhaps half of the commentators castigating the husband, and the others supporting him. Several were quite harsh, suggesting the wife divorce the husband.
One of the dangers of frugality is that other people attack it. It is difficult enough for some of us to refrain from spending money we shouldn't spend. When we do, we are being sensible. Ben Franklin would be proud. A penny saved is a penny earned. When other people attack that frugality, it is much easier to give in to the criticism and resume overspending.
Something more than "good parenting" was at stake in this article. Most of us know that a good shared experience can pay dividends for the family for many years. Time passes, and you cannot get it back. Children grow up, and if you don't seize the initiative to travel with them, you won't get that opportunity later. It evaporates.
What was missing from the article, though the author implied that her husband did understand all of that, was any discussion about whether this trip would be a memorable trip. It is possible that the husband calculated that circumstances would result in a poor "memory" payoff for the cost involved. Certainly those commentators eager to attack him gave no consideration at all to this payoff calculation.
The bigger issue is the people dynamics. It is possible to be sensible and do the right thing about your finances, to be great at getting high returns from both expenses and investments, and still someone will come along and berate you for reasons that are emotional. You were happy, but now they are doing all they can to make you believe that you were wrong for being happy.
I have to wonder about some of those commentators. Did they really have other motives in making those comments? An over-spender may be anxious to force others to also overspend, as a way of justifying their behavior. Or it may be simple competitiveness: They want the husband to be as miserable and broke as they are. How dare he escape the vacation dilemma with money left over! Something tells me, however, that there is something even more sinister than that afoot.
One of the dangers of frugality is that other people attack it. It is difficult enough for some of us to refrain from spending money we shouldn't spend. When we do, we are being sensible. Ben Franklin would be proud. A penny saved is a penny earned. When other people attack that frugality, it is much easier to give in to the criticism and resume overspending.
Something more than "good parenting" was at stake in this article. Most of us know that a good shared experience can pay dividends for the family for many years. Time passes, and you cannot get it back. Children grow up, and if you don't seize the initiative to travel with them, you won't get that opportunity later. It evaporates.
What was missing from the article, though the author implied that her husband did understand all of that, was any discussion about whether this trip would be a memorable trip. It is possible that the husband calculated that circumstances would result in a poor "memory" payoff for the cost involved. Certainly those commentators eager to attack him gave no consideration at all to this payoff calculation.
The bigger issue is the people dynamics. It is possible to be sensible and do the right thing about your finances, to be great at getting high returns from both expenses and investments, and still someone will come along and berate you for reasons that are emotional. You were happy, but now they are doing all they can to make you believe that you were wrong for being happy.
I have to wonder about some of those commentators. Did they really have other motives in making those comments? An over-spender may be anxious to force others to also overspend, as a way of justifying their behavior. Or it may be simple competitiveness: They want the husband to be as miserable and broke as they are. How dare he escape the vacation dilemma with money left over! Something tells me, however, that there is something even more sinister than that afoot.
Corruption Perception Indices in the Eurozone
I was wondering about correlations between the country scores in the Corruption Perception Index compiled by Transparency International (http://cpi.transparency.org/cpi2011/results/#CountryResults) and national budget deficits. Here are the Corruption Perception numbers for members of the Eurozone, with 1.0 indicating very high corruption and 10.0 indicating zero corruption:
Austria 7.8
Belgium 7.5
Cyprus 6.3
Estonia 6.4
Finland 9.4
France 7.0
Germany 8.0
Greece 3.4
Ireland 7.5
Italy 3.9
Luxembourg 8.5
Malta 5.6
Netherlands 8.9
Portugal 6.1
Slovakia 4.0
Slovenia 5.9
Spain 6.2
Three Nordic countries not in the Eurozone have very high scores:
Denmark 9.4
Sweden 9.3
Norway 9.0
For comparison, the United States scores a 7.1 on this scale, just slightly ahead of France, but well behind Germany, Finland, and the Netherlands.
Greece has the lowest score among all Eurozone countries. The only other countries that are close are Italy and Slovakia.
Austria 7.8
Belgium 7.5
Cyprus 6.3
Estonia 6.4
Finland 9.4
France 7.0
Germany 8.0
Greece 3.4
Ireland 7.5
Italy 3.9
Luxembourg 8.5
Malta 5.6
Netherlands 8.9
Portugal 6.1
Slovakia 4.0
Slovenia 5.9
Spain 6.2
Three Nordic countries not in the Eurozone have very high scores:
Denmark 9.4
Sweden 9.3
Norway 9.0
For comparison, the United States scores a 7.1 on this scale, just slightly ahead of France, but well behind Germany, Finland, and the Netherlands.
Greece has the lowest score among all Eurozone countries. The only other countries that are close are Italy and Slovakia.
Wednesday, May 2, 2012
Trading Psychology Revealed by Share Buybacks
Share buybacks by companies stir up the emotions of some traders. It is a telling sign. Why would something as mundane as a change in the denominator get traders so stirred up? Perhaps this is one way to tell the difference between an investor and a trader: The investor looks at the relative price to value, while the trader looks for various technical factors surrounding the transaction. As to whether share buybacks are good or bad, the trader will almost always label them as "bad," while the investor will ask about the price relative to book value or enterprise value.
The pseudonymous "Jaded Consumer" writing at Seeking Alpha seems to have caught Motley Fool's Rick Smith thinking like a trader:
http://seekingalpha.com/article/549621-why-american-capital-is-buying-american-capital
For reference, here is the original Fool article, which doesn't really make a valuation-based case for criticizing an American Capital Strategies share buyback:
http://www.fool.com/investing/general/2012/04/12/2-stocks-that-are-wasting-your-money.aspx
In this situation, we have what might look like a turnabout: The supposedly sensible Motley Fool writer has been found to be trading, while the pseudonymous "Jaded Consumer" is offering much clearer thinking, and better writing as well.
It is worth mentioning that none of my comments here are intended to reflect on the relative merits of investing in AAPL or ACAS.
The pseudonymous "Jaded Consumer" writing at Seeking Alpha seems to have caught Motley Fool's Rick Smith thinking like a trader:
http://seekingalpha.com/article/549621-why-american-capital-is-buying-american-capital
For reference, here is the original Fool article, which doesn't really make a valuation-based case for criticizing an American Capital Strategies share buyback:
http://www.fool.com/investing/general/2012/04/12/2-stocks-that-are-wasting-your-money.aspx
In this situation, we have what might look like a turnabout: The supposedly sensible Motley Fool writer has been found to be trading, while the pseudonymous "Jaded Consumer" is offering much clearer thinking, and better writing as well.
It is worth mentioning that none of my comments here are intended to reflect on the relative merits of investing in AAPL or ACAS.
Subscribe to:
Posts (Atom)
