Archive for 2007

  • James Simons on C-Span
    , February 26th, 2007 at 2:38 pm

    Here’s a clip of James Simons, the legendary hedge fund manager, at yesterday’s National Governors Association’s Winter Meeting. Simons is a former math professor and founder Renaissance Technologies which runs the Medallion Fund.
    I know he’s a genius and a multi-billionaire, but he still looks like he belongs on Seinfeld. Couldn’t you see him playing one of Jerry’s uncles or something? Maybe it’s me. Anyway, Simons begins speaking about nine minutes into the clip.

  • Fed on Hold for all of 2007
    , February 26th, 2007 at 10:57 am

    A new survey of economists shows that the Fed will stay on hold for much of the year. The National Association for Business Economics finds that:

    1. Growth in gross domestic product is now expected to average 3.1% over the four quarters of 2007.
    2. Headline consumer-price inflation will decline to less than 2.0% in 2007, largely as a result of lower oil prices. This would be the lowest inflation rate in five years.
    3. The “core” inflation rate, which excludes food and energy prices, is expected to hold steady at 2.3%.
    4. The nation’s unemployment rate should average 4.7% this year, only a tad higher than the 4.6% rate in January.

    I’m not so sure growth will be that strong. The fourth-quarter GDP will be revised on Wednesday, and everyone expects a major downward revision. The only question now is how bad will it be. I’m expecting around 2% growth. The original report pegged GDP growth at 3.5%. This could mean that the economy experienced three straight quarters of below-trend growth. Unless things change, I expect the Fed to cut interest rates sometime this year.

  • Giuliani Takes the Lead
    , February 25th, 2007 at 4:40 pm

    At Tradesports, the “futures” prices for Rudy Giuliani to win the GOP Presidential nomination just surpassed those of John McCain. Still, the futures market indicates that both candidates have less than a one-in-three chance of winning the nomination. Meanwhile, Mitt Romney is closing the gap but he has a long way to go.
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    On the Dems’ side, Hillary Clinton still had a big lead:
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    I think the markets may be underestimating Senator Obama’s chances. I have no special insight here; it just seems that way. I should add that my judgment in these matters is pretty bad.

  • Snow in DC
    , February 25th, 2007 at 4:30 pm

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  • A Euphemist Takes a Bow
    , February 25th, 2007 at 3:26 pm

    From the vaults of The New York Times:

    A EUPHEMIST TAKES A BOW
    October 21, 1981
    The Reagan Administration’s fiscal euphemist has been run to ground. He is Lawrence A. Kudlow, who says he coined ”revenue enhancement,” the euphemism for tax increase used by the White House last month.
    Mr. Kudlow, the chief economist of the Office of Management and Budget, is defiantly unrepentant. ”I gave them another one, ‘receipts strengthening,’ ” he boasted today.
    Mr. Kudlow, a smoothly fluent man of 34, said his career as a euphemist began in the drafting of the ”fact sheet” that the White House issued to explain its request for $3 billion more in tax revenues and $13 billion in budget cuts.
    Why didn’t the White House call a tax increase just that? ”There’s no better way to sell economic theory than by the euphemistic route,” he says.

  • 15 Get a Mac Ads
    , February 23rd, 2007 at 10:03 pm


    John Hodgman is brilliant.

  • Buy List So Far
    , February 23rd, 2007 at 6:46 pm

    Thanks to Donaldson, our Buy List eeked out a slight gain despite the overall market’s sell-off. For the year, the Buy List is up 3.36% compared with 2.32% for the S&P 500 (not including dividends).
    Here’s how our stocks have done year-to-date:
    Bed Bath & Beyond (BBBY) 11.73%
    Respironics (RESP) 11.10%
    FactSet Research Systems (FDS) 10.75%
    Jos. A Bank Clothiers (JOSB) 10.43%
    Amphenol (APH) 9.26%
    Donaldson (DCI) 8.47%
    SEI Investments (SEIC) 6.70%
    Graco (GGG) 6.69%
    AFLAC (AFL) 5.63%
    Fiserv (FISV) 4.33%
    Biomet (BMET) 2.71%
    Danaher (DHR) 2.25%
    Varian Medical Systems (VAR) 2.17%
    Fair Isaac (FIC) -1.25%
    UnitedHealth Group (UNH) -1.30%
    WR Berkley (BER) -1.68%
    Harley-Davidson (HOG) -2.07%
    Medtronic (MDT) -4.04%
    Nicholas Financial (NICK) -6.44%
    Sysco (SYY) -8.19%

  • Gold Vs. the Fed
    , February 23rd, 2007 at 1:11 pm

    B-Riz is in the Zone:

    In this corner, weighing 195 pounds, standing 5 foot 10, hailing from Washington D.C. via Harvard, MIT and Princeton, New Jersey, wearing the M1 green trunks, the Charlemagne of Currency, the prince of paper, the bearded bard of the Fed, monarch of monetary policy, Benjamin GOLDILOCKS Bernanke!
    And in the opposing corner, weighing 2046 metric tonnes — one ounce at a time — the shiny, precious, storehouse of value, the standard for monetary exchange, the most malleable and ductile of the known metals, that master of disaster, hailing from most of the world, that dense, soft, shiny, yellow metal, GOLD.

  • Values Hidden in Plain Sight
    , February 23rd, 2007 at 10:51 am

    Many investors think that to be successful at investing requires lots of time and very advanced research on companies. But I’m surprised how often great values are perfectly obvious to anyone who is simply paying attention. Malcolm Gladwell recently wrote in the New Yorker that Enron’s financial mess was visible to people who looked for it.
    Consider the case of Pfizer (PFE). Obviously, the company has problems. It just announced that it’s cutting 10,000 jobs. But now the stock is below $26 a share. After its latest earnings report, Pfizer said it was projecting adjusted EPS of $2.18 to $2.25 for 2007, and $2.31 to $2.45 for 2008. If the company’s forecast is accurate, this means that the stock is going for about 10 or 11 times next year’s earnings. That’s pretty cheap. On top of that, the dividend yield is 4.4%, which isn’t far behind a Treasury bill.
    I’m not necessarily saying that Pfizer is a great buy here, or that a forward P/E is the end of any analysis. But the key information here isn’t any state secret we’re talking about. We’re using information right from the company. They’re telling is what to expect, and the shares are still falling.
    Another example is Amgen (AMGN). Historically, this has been a rapidly growing company. Today, the stock is going for about $66 a share. The company recently said that it expects 2007 EPS to be in the range of $4.30 to $4.50 (not including 10 to 12 cents for stock options). That’s means the stock’s “earnings yield” (the inverse of the P/E ratio) is over 6%. That’s certainly worth looking into.
    I don’t know what either stock will do over the next 12 months. But if they do well, I’m sure some investors will kick themselves and say, “if they had only known.”

  • Greenwich Family Values
    , February 23rd, 2007 at 10:10 am

    From the AP:

    A Greenwich mortgage broker who admitted she helped her college-age son recruit investors in a multimillion-dollar hedge fund scam pleaded for a reduced sentence Thursday, downplaying her role and blaming her son and others.
    Ayferafet Yalincak, who pleaded guilty last year to conspiracy to commit wire fraud, is scheduled to be sentenced March 2. Her 22-year-old son, Hakan, faces up to 50 years in prison for managing the scheme when he is sentenced March 27.
    Prosecutors say Hakan Yalincak charmed his way into the exclusive world of Greenwich high finance by posing as an heir to a wealthy Turkish family, shuttled counterfeit checks across the world and brokered deals with a Kuwaiti financier. Prosecutors said investors lost more than $7 million in the fake fund, an amount he contests.
    Ayferafet Yalincak, who faces up to 5 years in prison under guidelines, asked for a short sentence in court papers filed Thursday. She rejected a presentence report that concluded Hakan’s fraud stemmed from the negative role model she provided.

    She’s got a point. If he blamed it on his kids, then she would be a role model.