Owen

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    • Wed Nov 26th 15:11 PM
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      Rating: 0 0
      Commented on:
      Cross-Listing Shares No Longer Makes Sense - McKinsey
      There have never been stringent requirements for "deregistering&qu... from the NYSE. In fact, if a company delayed its quarterly report long enough, it would be automatically delisted, without filing a single form. What has changed, however, is that following Sarbanes-Oxley and other draconian new rules, it became prohibitively expensive for some companies to keep their NYSE listing. Respected businesses like Danone or Bayer don't need to pander to small US investors to have access to the capital they need. Others investors--institution... mutual fund, and non-US can buy the shares just as easily on European exchanges.
      View article »
    • Wed Nov 26th 06:55 AM
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      Rating: 0 -1
      Commented on:
      The Risk Premium Puzzle, or Dividend Investing for Math Nerds
      Through 40+ years of bull and bear markets, Berkshire Hathaway has never paid any dividends, and yet markets keep valuing it based on the intrinsic value of the businesses it owns, knowing it will never pay any dividend either. Hedge funds are among the biggest owners of BRK; they're not interested in "the glamor of stock ownership". They expect return on investment, and with Berkshire, they get it aplenty.

      There is no point in trying to force-fit reality into the dividend growth model. The model was a good starting point for financial theory, but reality just isn't that simple.


      On Nov 25 10:55 PM AlexR wrote:

      > I think that's the whole point we all have been missing. In "normal" and
      > low-priced markets, no company would have the "audacity" of offering zero
      > dividends. That only happens during secular mega-bubbles. Once all the
      > glamor of stock ownership is gone, stocks will fall until their dividend yield is
      > meaningful. And without the cheap financing from the credit bubble, no
      > market force will be powerful enough to arbitrage the dividend away.
      View article »
    • Tue Nov 25th 19:00 PM
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      Rating: 0 -1
      Commented on:
      The Risk Premium Puzzle, or Dividend Investing for Math Nerds
      Indeed, but dividends can just as easily be a disguise for what should properly be called "return of capital".


      On Nov 25 04:45 PM searcher wrote:

      > Retained earnings can prove to be evanescent due to the profligate
      > or desultory husbandry of management. "A bird in the hand...”
      View article »
    • Tue Nov 25th 12:53 PM
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      Rating: +1 0
      Commented on:
      The Risk Premium Puzzle, or Dividend Investing for Math Nerds
      Good article. However, the dividend growth model, popularized in the first half of the previous century, falls apart in the face of successful companies paying little or no dividends. In the 1940s, publicly traded companies paid out most of their earnings in dividends, whereas now the payout ratio is less than one third.

      Apple, Dell and Berkshire are all highly valuable companies, despite the zero value the dividend model implies for them. When you own a business, you own its retained earnings too, not just the dividends it spins off. In fact, retained earning are more valuable than dividends, since they're only taxed once, and at a more favourable rate than dividends are.

      That being said, the article still stands correct if you replace all instances of 'D' (Dividends) with 'E' (Earnings). The formulas are all correct, and the risk premiums are even more compelling.
      View article »
    • Fri Nov 21st 17:51 PM
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      Rating: +1 0
      Commented on:
      5-1/2 Ways to Make the Market Rally
      Yes, burning witches or hanging short-sellers at the village square always cheers up the crowd in times of gloom. Economy, schmeconomy.
      View article »
    • Fri Nov 21st 14:36 PM
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      Rating: 0 0
      Commented on:
      Bond Market: Unsafe at Any Yield?
      Good article, and a brilliant title, James! Most here are probably too young to be familiar with Nader's original.
      View article »
    • Tue Nov 18th 09:12 AM
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      Rating: 0 0
      Commented on:
      Yang Steps Down as Yahoo's Valuation Ebb and Flow Continues
      This is good news. Now if only Jerry can pay shareholders the $23 Billion that he cost them over the past year, it would be perfect.

      Managers who care more about protecting their pet company than about serving the interests of their shareholders are a net liability. It's hard not to develop an emotional connection with the company you run, especially if you founded it, but once it is clear that this emotion clouds your vision and makes you act irrationally, it is time for the board of directors to act, and act fast.
      View article »
    • Mon Nov 17th 17:19 PM
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      Rating: +2 0
      Commented on:
      John Hussman: The Market Is Not in Uncharted Territory
      I read John Hussman's commentary on his funds' web site on a regular basis. He is one of the few money managers (and analysts) who can rightly claim, "Told you so!"

      His strategy of holding high quality stocks, combined with hedging against market revaluation using SPX Put options has paid off handsomely this year, making his fund one of the most successful in the industry. This is even more impressive considering it has lower risk than the market.
      View article »
    • Thu Nov 13th 14:53 PM
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      Rating: 0 0
      Commented on:
      The Treasury's $10B 30-year bond sale draws a yield of just 4.31% - the lowest ever - as buyers show little interest. Indirect bidders, including foreign central banks, bought 18% of the offer, down from 43% at the last sale.
      Low yield means high demand. If buyers really had little interest, the bond prices would be lower, driving the yields higher. Time to review your bond basics.
      View news story »
    • Tue Nov 11th 17:30 PM
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      Rating: 0 0
      Commented on:
      Comparing Valuations in China and the U.S.
      Where do you get the P/E figure of 20.21 for the S&P? I'm looking at this week's issue of Standard & Poor's newsletter. Based on their figures, the current (today's close) level for the S&P500 is trading at a P/E of 12.3 using 2008's earnings, and a P/E of 9.6 using 2009 consensus estimates. Your figure of 20.21 implies earnings of $44.40, almost half of what the most pessimistic analysts see. Where does this number come from?
      View article »
    • Tue Nov 11th 14:43 PM
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      Rating: +1 0
      Commented on:
      What's Happening to the Fed Funds?
      The Fed tries to control short term rates by having the NY Fed act as a market-maker in the overnight repo market. As any market maker can tell you, this works well when volumes are small compared to the MM's pool of liquidity, but falls apart once volumes exceed their short-term internal capital resources.

      Daily balancing and weekly Bill auctions keep the NY Fed well supplied, but during a single day, a sudden inflow of tens of billions of securities tendered can easily shift the actual rate by several basis points away from the target rate. Remember, the Fed is a very large market participant, but it is just one among many other large players.
      View article »
    • Tue Nov 11th 11:00 AM
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      Rating: 0 -5
      Commented on:
      Tuesday Outlook: Commodities, Emerging Markets
      YR Dog,

      Yes, I must be The Insider Shill who drove up the entire market 5% on large volume after the close on Friday. I am also Jack the Ripper and the Easter Bunny.

      Stupidity always hits a nerve with me. I can assure you that if I had access to insider information which I could lawfully use, I would use it without hesitation.
      View article »
    • Tue Nov 11th 10:02 AM
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      Rating: +1 0
      Commented on:
      Stocks vs. Bonds: An Update for the Current Market
      JasonC,

      Stone Fox Capital was talking about the _earnings_ yield of the S&P, not the dividend yield. Based on which estimates you pick for this year's earnings, the S&P is earning between 8 and 11%, corresponding to a P/E between 9 and 12.

      The equity risk premium measures the difference between the earnings yield of equities and the yield on bonds. In most cases, risk-free treasuries are used for the calculation, but triple-B can be used as well, and even with the current high yields for corporate bonds, equity is still offers a substantial yield advantage.
      View article »
    • Tue Nov 11th 07:43 AM
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      Rating: +2 0
      Commented on:
      Overstock.com's New Disclosures Show Company Financial Reports Were a 'Joke'
      Over two years ago, the activist fund manager Manuel Asensio told the world that Overstock.com was cooking the books. Did the SEC listen to him? Yes; they fined him for spreading rumours to manipulate stocks for the purpose of short selling.

      People don't want the truth. We close our eyes, shut our ears, and hope for the party to go on as long as possible. That's why we are now spending more resources on hunting down naked short sellers than catching crooked executives.
      View article »
    • Tue Nov 11th 07:28 AM
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      Rating: 0 -6
      Commented on:
      Tuesday Outlook: Commodities, Emerging Markets
      We have laws against trading US securities based on non-public information about these companies to which the insider trader has access. There is, however, no law against trading such securities based on advance knowledge of the actions of a foreign government. It is perfectly legitimate under US law for people close to the Chinese or any other foreign government to use such government information for their advantage in trading US securities.

      It may be "crap", as you call it, but it's part of the game. Insiders are not there for you to "trust" (or mistrust); they are there to make money off you. They play under exactly the same set of rules as you do, but armed with more information than you have. Live with it or find a new profession.
      View article »