najdorf

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  • Fannie and Freddie: Finally a Light at the End of the Tunnel?
    The government did not entirely take over FNM and FRE. They are in conservatorship and the government controls a large stake in the companies (i.e. the existing common shareholders got massively diluted).
    Sep 27 15:28 pm |Rating: 0 0 |Link to Comment |View article
  • Time Not for a Bailout, But for Nationalization
    Two questions for know-nothing troll:

    How do you know how much skin the author has in free market enterprises?

    What ideas in this post are more theoretical or less practical than the Paulson plan or the House Republican plan?

    The post provides concrete recommendations and you flip out because there are books behind the author in his picture. It's ok - avoid all educational institutions and keep voting for politicians who are as dumb as you are. Count yourself lucky that W. appointed people with records of success in business and academic endeavours (Paulson and Bernanke) to bludgeon the politicians into fixing the problem. At least he's smart enough to know that Treasury and the Fed are more significant to his way of life than FEMA and the Department of Education.
    Sep 27 15:09 pm |Rating: 0 0 |Link to Comment |View article
  • We've Crossed the Line from Capitalism to Socialism
    Cara Ellison: Are you really taking the position of an Enron defender in 2008? The company went bankrupt and top executives were convicted of fraud. You're going to need to do a little better than "there was a very deliberate business purpose": what was it? Also, if Skilling was in the business of "[trying] to get people to see Enron for what it was", please explain why he committed fraud, resigned just ahead of bankruptcy, and dumped his stock for personal gain.
    Sep 21 14:53 pm |Rating: 0 0 |Link to Comment |View article
  • The Artificial Inflation of Stock Prices, Due to the Short Selling Ban
    Mikebrah/studdy: Do you guys really think that on Monday you can trade profitably on information that makes front-page newspaper headlines all over the world on Friday and the weekend? The news of the last few days was a huge boon for anyone who was long financials before Thursday. Further news will create further rallies or a renewed downward slide. But the old news is in the prices: GS up 20% on Friday, BAC up 22% to mid-March levels, WFC and USB at 52-week highs, CATY having touched back over 30 (a personal interest of mine).

    3Q earnings are going to be disastrous for some companies, what with writedowns from exposure to FNM/FRE/LEH/AIG, new marks on assets based on continued housing price declines and cheap distressed sales, high costs of capital, and the freeze-up of a lot of financial business. While people may look forward to good earnings next year, at least some of the currently high prices could get knocked down in short order as people fear for the near-term earnings and take trading profits.
    Sep 20 19:32 pm |Rating: 0 0 |Link to Comment |View article
  • Morgan Stanley in the Crosshairs
    Goldman's: Do you have any evidence whatsoever? No? Ok.

    I don't know why it's so hard for all of you to understand that shorts don't drive stable, profitable companies into bankruptcy. There's a huge amount of competition in the markets, and you don't find a lot of dollar bills that only cost 50 cents because people tend to snap those up. If shorts drive a stock down to half its true value, there are tons of value investors looking to buy that stock. If the company has articulate management with some capital to deploy, they can buy back shares or make a few insider purchases, then try to make shares scarce so that shorts can cover. Ultimately you get a squeeze and the share price rebounds back to where it ought to be.

    What shorts do is hasten the end of companies that are limping along, that can't make any credible presentation to investors regarding solvency and profitability, that can't afford to buy back any shares, that no value investor will touch.

    Naked shorting should be illegal because it makes no sense (selling something you don't have - take it to the options market, not the stock exchange). Now that it's taken care of, please stop obsessing over the non-existent problem of conventional shorting.
    Sep 18 00:55 am |Rating: 0 0 |Link to Comment |View article
  • What Will Fannie / Freddie Mean for Monday?
    daytrading: Bondholders are not equityholders. They are debtholders. If FNM/FRE did not make good on their debt it would be a default and lead to bankruptcy. Then you'd have problems with CDSs, other countries' relations with the US, bank solvency, massive damage to bond funds, etc. Anybody still holding the common today is a speculator and deserves what they get. The same is not true of debtholders - FNM and FRE debt has been second only to Treasury debt for a long time and it's a much more significant issue than the price of the stock.

    While we're at it, in order to understand the impact on banks we have to look at:

    a. how much preferred and common stock they hold (though any bank still holding FNM or FRE common should also be taken over by the government, as they have failed risk management) - this will be way down tomorrow.
    b. how much FNM and FRE debt they hold - this will be way up tomorrow and is a significantly larger pot than the above pot.
    c. how this affects bank's access to capital and ability to securitize mortages (complicated, may take some time to figure out).
    Sep 07 16:20 pm |Rating: 0 0 |Link to Comment |View article
  • Fannie, Freddie Headed for Conservatorship
    palsboss: What on earth are you talking about? 2006 wasn't a high for many stocks, but even still, who is close to their high 2006 share price? Not BAC, WFC, C, WB, or any other major retail bank. Not LEH, MER, or any other major investment bank (GS is close, but they're down significantly from 2007 levels). FNM, FRE: still way down of course. AIG: hurting. Believe me, no one is ignoring the fact that the financial sector is in a hole. The rallies of the last few months have been anticipations of recovery a year or two down the line. If you're looking for maximum profits, you can't wait until everything looks sunny to buy.

    Anyone investing and following the news has been anticipating a FNM/FRE bailout for a while now. The possible negative effects and the other problems in financial companies were already reflected in the low prices. Financials rose on the news because the markets prefer certainty and the bailout sounds like a relatively measured and well-planned effort rather than a midday "Oh noes!!! FNM and FRE are worth nothing!!!" announcement. Even still financial prices are very low, and more institutions will fail. Investors are buying because companies that don't fail will be worth significantly more in the future.
    Sep 06 12:39 pm |Rating: 0 0 |Link to Comment |View article
  • Liquidity (Literally)
    camquin: Of course gas prices have more of an impact on consumers than milk prices due to greater per capita consumption of gasoline than of milk, but that's not the point of the article. You have a huge amount of control over how much gasoline you use, and using 20 gallons (which means ~600 miles of driving or an inefficient vehicle) is a product of a series of choices about where to live, where to work, and how to spend your free time. Also, most people still spend more at the grocery store than the gas station, so the comparison is valid if you look at a basket of grocery store goods.

    The bottom-line here is that gas isn't all that expensive; you pay less for a gallon of a non-renewable moderately scarce commodity that has to be drilled out from deep in the earth and shipped halfway around the world than you do for a beverage that is made from renewable, common and locally-available inputs. This discrepancy suggests that in the long run gas might become significantly more expensive (as it becomes scarcer). Gas only seems expensive today because our society was built around the expectation of endless cheap gas (live in a 4000 sq. ft oil-heated house in New Hampshire and commute to Boston daily? Sure, sounds great! Spend 2 hours every day idling on the LA freeways? Where do I sign?!). As we adjust consumption in response to price signals, Americans will feel short-term pain but long-term benefits.
    Sep 02 22:09 pm |Rating: 0 0 |Link to Comment |View article
  • Where Are the Bank Failures in This Financial Crisis?
    I'm a little hesitant about calling BSC a bailout. Really it was a government-supported takeover by JPM - the money came from JPM and the government just backed-up the deal without directly putting out cash. The only people who took losses were BSC shareholders (who were adequately informed of the risks of investing in BSC) and those who invested in BSC hedge funds (who probably weren't adequately informed of the risks, but should have known better than to invest in heavily-leveraged funds with minimal track records and little real hedging).

    FNM and FRE are a bit different, but at this point we know the common is probably wiped out (again, these holders knew the risks) and the debt is supported (as it should be, given that it's fairly low interest debt that has supported the common good of cheap mortgages). Remember that FNM and FRE hold pretty well-collateralized portfolios - even in a worst-case scenario the government just winds up holding a bunch of houses that it has to put on the market when the economy rebounds. Also remember that the seemingly huge asset price declines in housing and the stock market are just rolling us back to 2003-2005 levels, and there was no real fundamental reason for the run-up in asset prices during 2006-2007, so really the money everyone is losing is money that they didn't exactly have in the first place.

    Or the sky is falling! If that's more fun for you all....
    Sep 01 20:59 pm |Rating: 0 0 |Link to Comment |View article
  • Questioning Obamanomics
    buyitcheap: You realize that military members are educated by the same educational system as everyone else, right? The fact that the military accepts pretty much only high school grads seems to indicate that the military sees value in our educational system. If our high schools didn't teach anything, the military would be snapping up all the high school dropouts who need jobs and will work cheaply.

    Davidlentz: I'm pretty sure your flat tax would require either greater government borrowing or large spending cuts. A large portion of American taxes are paid by those in the tax brackets over 30%, and you're talking about giving them a big tax cut. To the extent that you balance this cut, you do so by raising taxes on the middle class. Good luck convincing a majority of Americans to vote for that plan (although it's concievable that they really are that stupid). Also, term limits sound like a great idea to people until you realize how much more incompetent your politicians could be. Go watch a state legislature in action and tell me that you'd be comfortable with all these people rotating through the US Congress and the few competent members of state legislature leadership being replaced by people like the first-termers.

    petyaczar: Your statistic is completely made up. There is no way that 65% of Americans don't pay personal income taxes. First of all, everyone pays taxes somehow (property, sales, SS, etc.), but you specified personal income so we'll talk about that. Sure there are 300 million people in America, but some people don't have earned income: homeless people,sick or disabled people, children, students, stay-at-home parents, and the plain lazy folks. We can't charge income taxes to these people. About 90 million tax returns pay tax each year in the US. You can't just divide 90/300 and say that the rest pay no tax, because the 90 includes married couples, dependents, etc. There are about 45 million tax returns that pay no income tax, but it's a bit of a stretch to say that these constitute tax evasion: a large portion of them are probably from kids with summer jobs, single moms with 3 kids and low income, retirees living on a small fixed income, etc. If you really want to try to gather support to raise taxes on these groups, feel free. I would start with the single moms because you can probably get the sexist, racist and Christianist voters behind you. Try to find a single mom driving a Cadillac and use her as your poster child. Those welfare queens just won't let our hedge fund managers live in peace!
    Aug 31 14:08 pm |Rating: 0 0 |Link to Comment |View article
  • Five Reasons to Buy Nuveen Floating Rate Income Fund
    I don't know much about the fund, but the loss of more than 20% is in the past. A new investor doesn't take this loss and gets the dividends. Feel free to buy high if you like that plan better though.
    Aug 31 13:08 pm |Rating: 0 0 |Link to Comment |View article
  • Hedge Fund Manager's Notebook: Why Hummers Are Greener Than Hybrids, and Tech & Homebuilders May Be a Buy
    Let's slow down on the "used Hummer is better than a new Prius" argument. First of all, the supply of used cars is not really affected by demand - you can't create more used Hummers by buying one. On the other hand, you can create more new Prius's by buying one (one TM manages to get production in line with demand - you can be sure they're working hard on that one). Also, in the long run, your purchase of a new Prius can create greater availability of used Prius's for those who can't afford a new car.

    Furthermore, 1,000 gallons of gasoline is not a huge savings compared the amount of gasoline you use over the life of a new car. Let's say someone drives 10,000 miles per year. If they're getting 10 mpg, they will use 1,000 gallons of gas. If they're getting 40 mpg, they will use 250 gallons of gas (saving 750). So the alleged "savings" of the Hummer will be cancelled out after a little over a year.

    You can make this argument more effectively by comparing a used conventional Honda Civic to a hybrid SUV. If anyone tells you that their hybrid SUV is environmentally friendly, please ignore everything they say in the future.
    Aug 29 16:36 pm |Rating: +1 0 |Link to Comment |View article
  • 11 Top Canadian Dividend Stocks Available as ADRs
    hwood: Your list is reasonable from MO onwards. Those are all fairly safe stocks that are unlikely to cut dividends or inflict significant loss of capital on shareholders. But are you really comfortable when you look at the BAC balance sheet or the PFE pipeline?

    Also, there's a difference between Canada and countries like BRIC. Canada is like USA North: our economies are intertwined, language and culture are the same (excepting Quebec and Tim Horton's vs. Dunkin Donuts), trade is almost entirely free, governments fairly similar, etc. If anything, I would say Canada is safer than the US and potentially higher-growth - if anything further goes wrong in the US, a lot of people will be thinking about moving to Canada, doing more business in the north, or leaning more heavily on them for the resources we need. The only thing Canada needs to be the next hot country is a little bit of global warming. If every place was 10 degrees hotter, British Colombia or New Brunswick would look a lot more appealing relative to Arizona and Florida.
    Aug 29 16:24 pm |Rating: 0 0 |Link to Comment |View article
  • Apple: Great Company with Lofty Valuation - Due for Pullback
    Can we declare a moratorium on "OMGZ!!!! YOU ARE SHORT!!! THIS ARTICLE IS SO BIASED!"? Would you rather read articles by people who are throwing out ideas without actually trading on them? Why would advice be better if the person writing wasn't sure enough to be short when they think the price will go down and be long when they think the price would go up? There are lots of articles written by neutral observers - analyst reports, Morningstar, etc. On a blog site you're going to see people talking their own positions, and there's nothing wrong with that. Only those who fail to disclose or make false arguments should be criticized.

    Does anyone really think that a weakly-written blog criticism of AAPL is going to bring the stock price lower? David Einhorn struggles to talk the ALD share price lower, and he gave a well-publicized speech, wrote a book, and actually makes sense in both. If you believe that random internet chatter can make AAPL stock cheaper, you should be happy, because it will create buying opportunities for you.

    JosephKr: Your argument would apply to any stock. Do you mean to suggest that buying puts is objectively better than shorting shares? Why does short-selling still exist, and why do well-known, successful investors practice it? Also, buying puts has the same upside potential as selling short - the profit limit occurs when the stock goes to $0.

    To those who talk up cash: Of course a company should have some cash, but a company like AAPL really should not be sitting on this much cash. If your reason for investing in stocks is to have claim on a big pile of cash, why not invest in a long bond or CD? Investors get no dividends from AAPL, so the only way they make a profit is through growth of the company. Cash earning 2 or 3% is not going to produce the 20%+ growth that AAPL stockholders expect. That cash must be either distributed as dividends or applied to AAPL growth. The sooner the better - it would be nice if they don't have to take the MSFT route of offering a one-time $3 dividend that does nothing but knock $3 off the share price and incur taxes/reinvestment requirements for investors.
    Aug 19 12:02 pm |Rating: +1 0 |Link to Comment |View article
  • Money Managers and the Berkshire Hurdle
    To say that BRK is in the financial sector is to over-simplify. First of all there's a distinction between insurance companies and banking companies. Secondly, a huge portion of BRK's book value comes from Buffett's stock picks, which of course include picks like KO (along with some big financial positions like WFC and AXP).

    Secondly, you can't really blame Buffett for the low share price of any given moment. He can't control what investors are willing to pay for the company or for its stock holdings. He can only create value, which the price will reflect in the long run. He's the quintessential buy-and-hold investor, and if you don't fit into that profile then you shouldn't be a BRK shareholder. It's not the same as holding a mutual fund with 300% turnover, where you should blame the manager if he underperforms the relevant indices.
    Aug 18 22:34 pm |Rating: 0 0 |Link to Comment |View article

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