Academic Study on Media Bias in Financial Newspapers
Posted by Eddy Elfenbein on February 8th, 2010 at 1:21 pm

Media Bias in Financial Newspapers: Evidence from Early-Twentieth-Century France

Abstract:
The financial market was well developed in France in the years before World War I, and there were many newspapers that provided information to investors. Yet commentators at the time faulted the financial press for inaccuracy and biases, which they linked to the existence of payments made by companies for coverage in the editorial section. This paper tests whether the payment scheme induced a systematic bias in the coverage of companies listed on the Paris stock exchanges by newspapers. The results show that, although firms’ media coverage was affected, the performance of firms actually touted by the press was good. Thus, the media bias can also be explained by newspapers choosing the companies’ exposures according to their editorial policy.

Mortgage Bankers Association Sells Headquarters at Big Loss
Posted by Eddy Elfenbein on February 8th, 2010 at 11:58 am

Ouch.

On Friday, CoStar Group Inc., a provider of commercial real estate data, announced that it had agreed to buy the MBA’s 10-story headquarters building in Washington, D.C., for $41.3 million. The price is far below the $79 million the trade group says it paid for the glass-walled building in 2007, while it was still under construction. The price also is far below the $75 million financing that the MBA received from a group of banks led by PNC Financial Services Group Inc. to finance the purchase.

Telegraph: Roubini Gets It Wrong
Posted by Eddy Elfenbein on February 8th, 2010 at 11:49 am

There’s finally some big media pushback against the Great Predictors, all of whom missed one of the greatest stock rallies in history:

Never mind what Nouriel Roubini, the New York economist credited with having seen the economic meltdown coming, is predicting for next year – surprise, surprise, he’s pessimistic – let’s take a look at what he forecast at the time of the World Economic Forum in Davos this time last year.
Er, well, the great sooth sayer and now standing feature of this mountain top conference for the elite of business and finance thought that even if governments and central bankers did everything right in terms of fiscal and monetary policy, we’d all still be in recession across the advanced economies for all of 2009 and 2010. And for sure, the S & P was going to 600. Admittedly, it did get as low as 650, but now it’s back above 1,000. If you’d listened to Mr Roubini, you would have missed out on one of the greatest stock market rallies ever. As for recession, some economies were growing again by the second quarter of last year, and even Britain is now showing marginal growth.
Still, these forecasting errors are perhaps forgiveable for one who got the big call spot on. Except that he was making it as far back as 2002. Which all goes to show that if you say something consistently enough for long enough, eventually you will be proved right.

(HT: TBI)

The Goldman/AIG Battle
Posted by Eddy Elfenbein on February 8th, 2010 at 11:44 am

The must-read story of the weekend was Gretchen Morgenson and Louise Story’s account of the battle between Goldman Sachs and AIG.
I have no independent love for Goldman Sachs and I’m perfectly happy to portray them as the villain. Still, I keep finding myself being attractive to another narrative—Goldman was smarter than everyone else.
Yves Smith and Tom Adams have more.

Oopsie!
Posted by Eddy Elfenbein on February 6th, 2010 at 3:45 pm

There was a confusing story but apparently 1 million people lost their jobs yesterday.
No wait, that’s not it. It turns out that the government reported that 1 million people lost their jobs yesterday.
No wait, that’s not it either. The government updated their jobs stats yesterday for the last six years and it turns out the Labor Department was off by 1 million.
And for this, no one in the Labor Department lost their job.

Odd Lots
Posted by Eddy Elfenbein on February 6th, 2010 at 1:42 pm

The snow is still coming down in Washington. We’re well over eighteen inches now. The snow started coming down about 11 am yesterday and is expected to stop sometime tonight.
Since I’m snowbound, here are a few links to pass on:
Football games have 11 minutes of action.
Not sure what this is, but it’s cool.
So it turns out Blankfein’s bonus wasn’t $100 million, just $9 million.
Arnold Kling and Nick Schulz at Cato.
Fresno tops list of ‘drunkest’ cities in America
What are the odds of a cow making it to the Super Bowl?
Barry Ritholtz on the economics of book writing.
Gen Y too lazy and unfocused to hire
Moe Tkacik on credit crisis literature.

Update on Turn-of-the-Month Investing
Posted by Eddy Elfenbein on February 4th, 2010 at 10:00 pm

A few of you asked if the turn-of-the-month gains were mainly caused by the turn of the year. It turns out that January is the big winner, but other months also did very well.
Here are the average gains for each seven-day turn-of-the-month period (the month listed is the month being turned to):

Here are the numbers:

Earnings Update
Posted by Eddy Elfenbein on February 4th, 2010 at 8:21 pm

Here’s a quick note on the latest earnings forecasts from S&P. For 2009, it looks like the S&P 500 will earn $57.03 a share. A year ago, Goldman Sachs cut its 2009 EPS forecast from $53 to $40.
S&P’s current forecast for 2010 EPS is $77.94. That means that the market is currently going for 13.6 times this year’s earnings. If you compare that to AAA bond yields which are averaging about 5.3% now, I think stocks look very good here.

Los Angeles 1781 – 2010
Posted by Eddy Elfenbein on February 4th, 2010 at 1:01 pm

This is just too depressing:

After struggling for eight hours to counter a rapidly growing budget shortfall, the Los Angeles City Council put off a decision to cut 1,000 jobs Wednesday and, through other actions, managed to add $4 million to the problem.
Unable to take more straightforward action on a shortfall that has grown to $212 million this year, the council voted to seek another list of possible job cuts and, after hearing pleas from a chamber packed with protesting employees and residents, promised not to act on layoffs for 30 days.
Members also postponed the elimination of three city departments as they search for new sources of revenue, including uncollected debts and federal stimulus funds.
Council leaders had hoped to strike a compromise between the group’s budget hawks, who have been calling for layoffs for more than a week, and the doves who sought to save the jobs of civilian employees. But Councilmen Greig Smith and Bernard C. Parks, who favored the job cuts, said the series of votes had only added to the crisis.

Back to 1070
Posted by Eddy Elfenbein on February 4th, 2010 at 10:40 am

The S&P 500 is back to where it was late Friday, around the 1070 to 1075 area. This also puts us back to where we were about two months ago. Personally, I want to see the market pull back because I’m in a buying mood. I’ve also been very pleased with Nicholas Financial‘s (NICK) positive response to its earnings. The last two days have seen heavy volume.
Also, Reynolds American (RAI) had an awful earnings report, but don’t worry about it. I was expecting bad news. That’s why the stock is so cheap. The important news is that they’re forecasting $4.80 to $5.00 per share. If that forecasts holds up, RAI should be much higher by the end of the year.