Archive for 2008

  • Mahler’s Symphony 5: mvt. 4
    , April 11th, 2008 at 7:34 pm

  • So this Banker Walks Into a Bar
    , April 11th, 2008 at 11:04 am

    Who knew the Fed was so darn funny.
    Well OK, not that funny, but the central bank released its transcripts from 2002 and I’ve collected some highlights.
    —
    MR. STOCKTON. Thank you, Mr. Chairman. I was impressed at the last meeting with the creative language used by many members of the Committee to describe the economic outlook. So this morning I thought I’d try my hand at explaining the forecast using some of that language. To begin with the current quarter, I can report that—as the saying apparently goes—there has been about as much pumpkin as we had earlier anticipated though there is clearly less pumpkin now than in the third quarter.
    CHAIRMAN GREENSPAN. It turned out to be seedy.
    —
    MR. MCTEER. Mr. Chairman, I’m going to miss Jerry Jordan’s anecdotes and vignettes, but I might note that in this case I think he’s behind the curve. We’ve already done the research and found that forklifts are indeed a leading indicator, but backhoes are a lagging indicator.
    CHAIRMAN GREENSPAN. It’s still a very uplifting thing.
    From November 6, 2002
    —
    MR. MOSKOW. For instance, the corrugated box industry, which had been showing signs of strength, now has flattened out, you could say. Or you could say that those manufacturers now view the box as half empty rather than half full.
    —
    CHAIRMAN GREENSPAN. You say that with a smile? For the official record, we will indicate that he smiled.
    —
    Moreover, we had a fascinating exchange at our recent advisory council meeting between the steel workers’ union leader and one of the country’s leading duck farmers. The issue was how retaliation to the steel tariffs by some of our trading partners is hurting other subsidized industries.
    CHAIRMAN GREENSPAN. What a “fowl” thought!
    —
    MR. JORDAN. Actually we were in Covington, Kentucky, so there were a lot of references to what it was like over half a century ago when the Chairman played with a band there. In fact, it was pretty exciting.
    CHAIRMAN GREENSPAN. I don’t know if I should admit to this, but in the back room there were very peculiar things going on.
    —
    MS. BIES. However, since I still have a house in Memphis for sale, I’m less inclined to believe that there’s a widespread bubble.
    MR. GRAMLICH. Is that house for sale?
    MS. BIES. Oh yes.
    VICE CHAIRMAN MCDONOUGH. Still.
    CHAIRMAN GREENSPAN. Are you bidding?
    MR. GRAMLICH. No, I’m just pointing out that there’s a bubble.
    —
    MR. BERNANKE. Mr. Chairman, I appreciate your analysis. I’m just wondering how you’re going to get all of that in the statement!
    CHAIRMAN GREENSPAN. I wrote it in disappearing ink!
    —
    CHAIRMAN GREENSPAN. Okay, I’ll try my best. I can’t guarantee that what I say will always come out the way I want it to. But I’ve been around long enough that I can put more words into fewer ideas than anyone else I know!

  • The Final Frontier
    , April 11th, 2008 at 10:17 am

    The theme for today is bankruptcies. Frontier Airlines (FRNT) is filing for bankruptcy. Until a few minutes ago, I was an embarrassed shareholder of Frontier. The stock had done so poorly that I had basically ignored it in my portfolio. It was part of my first tracking list in 2005 before I formalized my Buy List at the beginning of 2006. Now I’ve just taken a 95% loss. Let us never speak of this again.

  • Linens ‘n Things Expected to File for Bankruptcy
    , April 11th, 2008 at 10:03 am

    One of Bed Bath & Beyond‘s (BBBY) major competitors, Linens ‘n Things, seems to have come to the end of the road. The WSJ said that the company is expected to file for bankruptcy protection by Tuesday.
    Two years ago, the company was part of a private equity buyout from Apollo Management, which has filed to go public (or as DealBook calls it, an Un-IPO). Bed Bath & Beyond is down a bit this morning but I don’t see how a competitors’ bankruptcy can be all that bad.

  • Deep Inside an SEC Filing
    , April 9th, 2008 at 9:05 pm

    Ever heard of CHDT Corp. (CHDO)?
    Me neither.
    Anywho, I was reading their 10-K (page 29) and I came across this under the discussion of country risks.

    While dramatic anti-trade shit in Chinese policy or laws would seem to be clearly against the best interests of China and its current economic trends, China has a central government with the authority to make such changes.

    It’s true. That shit would be so totally fucked up.

  • Ugh….
    , April 9th, 2008 at 4:26 pm

    Bed Bath & Beyond (BBBY) just reported that it earned 66 cents a share for its fourth quarter.
    Here are the earnings results going back a few years:

    Quarter Sales Gross Profit Operating Profit Net Profit EPS
    May-99 $356,633 $146,214 $28,015 $17,883 $0.06
    Aug-99 $451,715 $185,570 $53,580 $33,247 $0.12
    Nov-99 $480,145 $196,784 $50,607 $31,707 $0.11
    Feb-00 $569,012 $238,233 $77,138 $48,392 $0.17
    May-00 $459,163 $187,293 $36,339 $23,364 $0.08
    Aug-00 $589,381 $241,284 $70,009 $43,578 $0.15
    Nov-00 $602,004 $246,080 $64,592 $40,665 $0.14
    Feb-01 $746,107 $311,802 $101,898 $64,315 $0.22
    May-01 $575,833 $234,959 $45,602 $30,007 $0.10
    Aug-01 $713,636 $291,342 $84,672 $53,954 $0.18
    Nov-01 $759,438 $311,030 $83,749 $52,964 $0.18
    Feb-02 $879,055 $370,235 $132,077 $82,674 $0.28
    May-02 $776,798 $318,362 $72,701 $46,299 $0.15
    Aug-02 $903,044 $370,335 $119,687 $75,459 $0.25
    Nov-02 $936,030 $386,224 $119,228 $75,112 $0.25
    Feb-03 $1,049,292 $443,626 $168,441 $105,309 $0.35
    May-03 $893,868 $367,180 $90,450 $57,508 $0.19
    Aug-03 $1,111,445 $459,145 $155,867 $97,208 $0.32
    Nov-03 $1,174,740 $486,987 $161,459 $100,506 $0.33
    Feb-04 $1,297,928 $563,352 $231,567 $144,248 $0.47
    May-04 $1,100,917 $456,774 $128,707 $82,049 $0.27
    Aug-04 $1,273,960 $530,829 $189,108 $120,008 $0.39
    Nov-04 $1,305,155 $548,152 $190,978 $121,927 $0.40
    Feb-05 $1,467,646 $650,546 $283,621 $180,980 $0.59
    May-05 $1,244,421 $520,781 $150,884 $98,903 $0.33
    Aug-05 $1,431,182 $601,784 $217,877 $141,402 $0.47
    Nov-05 $1,448,680 $615,363 $205,493 $134,620 $0.45
    Feb-06 $1,685,279 $747,820 $304,917 $197,922 $0.67
    May-06 $1,395,963 $590,098 $148,750 $100,431 $0.35
    Aug-06 $1,607,239 $678,249 $219,622 $145,535 $0.51
    Nov-06 $1,619,240 $704,073 $211,134 $142,436 $0.50
    Feb-07 $1,994,987 $862,982 $309,895 $205,842 $0.72
    May-07 $1,553,293 $646,109 $154,391 $104,647 $0.38
    Aug-07 $1,767,716 $732,158 $211,037 $147,008 $0.55
    Nov-07 $1,794,747 $747,866 $203,152 $138,232 $0.52
    Feb-08 $1,933,186 $799,098 $259,442 $172,921 $0.66

  • Irony Overload
    , April 9th, 2008 at 1:55 pm

    Here’s a report from Bear Stearns on falling business optimism.
    (Via: RCM)

  • Stocks Against Bonds
    , April 9th, 2008 at 1:31 pm

    I recently received the latest Ibbotson Yearbook in the mail the other day. If you’re not familiar with it, the book is a great source for long-term returns of different asset classes (click here for more info).
    What I find interesting is that the spread between the returns of stocks and bonds really isn’t that much. I think would surprise many investors that boring bonds have held their own. Over the last 40 years, stocks have beaten bonds by a final score 10.5% to 8.4%.
    The difference is theoretically due to greater risk for stocks. (Note: This is different from the usual equity risk premium which looks at stocks versus T-bills. Here I’m looking at stocks and long-term corporate bonds.)
    Here’s a chart I made of stocks and long-term corporate bonds. The only difference is that I stretched out the bond returns by 2% a year.
    image642.png
    These two lines have tracked each other remarkably closely. In the 1970s, bonds took a big lead over stocks, and in the late 1990s, stocks shot ahead of bonds. Besides that, it’s been pretty close. You can also see that the market rally of the 1980s really wasn’t much of a bubble, nor is today’s market out of whack by historical standards.
    Let me add that I do not think this is a good way to time the market.

  • The Joys of Living in Washington
    , April 9th, 2008 at 1:02 pm

    I went out for lunch just now and my entire house started to rumble. What was it?

    (more…)

  • Passing Along Without Comment
    , April 9th, 2008 at 11:35 am

    I apologize for including the first few tedious paragraphs but they’re needed for the surprise coming at the end.

    Climate change tops list of risks to insurers
    Potential climate change is the greatest strategic risk currently facing the property and casualty insurance industry, according to an Ernst & Young report. Demographic changes and catastrophic events follow closely behind.
    For the study, Strategic Business Risk 2008, Ernst & Young and Oxford Analytica interviewed more than 70 industry analysts from around the world to identify the emerging trends and uncertainties driving the performance of the global insurance sector over the next five years.
    The Top 10 risks identified were: climate change; demographic shifts in core markets; catastrophic events; emerging markets; regulatory intervention; channel distribution; integration of technology with operations and strategy; securities markets; legal risk; and geopolitical or macroeconomic shocks, a release says.
    Many of the risks are interlinked, a company release notes, and raise questions about how these risks will change what companies offer customers, the way that they offer their services and where.
    The analysts identified five additional emerging risks (not part of the Top 10) that have the potential to become as significant during the next five years.
    These include: over reliance on model-based risk management; threats to industry reputation; losing the war for talent; increasing exposure to global regulatory heterogeneity; and the possible emergence of entirely new risks.