• The SEC takes on the First Amendment
    Posted by on July 14th, 2008 at 9:51 am

    Philadelphia, 1787:

    Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

    The SEC Yesterday:

    The Securities and Exchange Commission today announced that the SEC and other securities regulators will immediately conduct examinations aimed at the prevention of the intentional spread of false information intended to manipulate securities prices. The examinations will be conducted by the SEC’s Office of Compliance Inspections and Examinations, as well as the Financial Industry Regulatory Authority and New York Stock Exchange Regulation, Inc.

  • The Feds Step In
    Posted by on July 14th, 2008 at 9:47 am

    The government moves to help Fannie and Freddie:

    Alarmed by the sharply eroding confidence in the nation’s two largest mortgage finance companies, the Bush administration on Sunday asked Congress to approve a sweeping rescue package that would give officials the power to inject billions of federal dollars into the beleaguered companies through investments and loans.
    In a separate announcement, the Federal Reserve said it would make one of its short-term lending programs available to the two companies, Fannie Mae and Freddie Mac. The Fed said that it had made its decision “to promote the availability of home mortgage credit during a period of stress in financial markets.”
    An official said that the Fed’s decision to permit the companies to borrow from its so-called discount window was approved at the request of the Treasury but that it was temporary and would probably end once Congress approved Treasury’s plan. Some officials briefed on the plan said Congress could be asked to extend the total line of credit to the institutions to $300 billion.

  • After Hours: Mississippi John Hurt
    Posted by on July 11th, 2008 at 3:43 pm

    Don’t let the market gives you the blues. Have a listen to the great Mississippi John Hurt.

  • Not Since 1982
    Posted by on July 11th, 2008 at 1:23 pm

    For the first time since August 18, 1982, the S&P 500 might be lower than it was 10 years before.
    The S&P 500 has been as low as 1,225.82 today. Today could be our lowest close since June 13, 2006. And if we go below 1,223.69, it will be our lowest close since November 9, 2005.
    We’re already lower than where we were on the last day of trading in 1998. Here’s a look at how we’re doing this July (red line) compared with July 1998 (blue line):
    image693.png
    Even if don’t break a 10-year trailing close this month, it will probably happen soon. The market is still over 19% below its March 2000 high. Are we going to be 24% higher 20 months from now?

  • Jeremy Siegel on the Bear Market
    Posted by on July 10th, 2008 at 9:39 am

  • World’s Smallest Violin
    Posted by on July 10th, 2008 at 8:48 am

    Louise Story sits down with a contrite John Devaney.

    One by one, John Devaney sold his treasures, hoping to forestall what was in the end inevitable. He sold his Renoir and his Gulfstream, his home and his helicopter. Even his cherished yacht — gone.
    But on Wednesday Mr. Devaney, who made and then lost a fortune trading mortgage investments, finally called it quits. He shut his hedge fund, and told his investors that all their money was gone too.
    “I’m devastated, I’m totally devastated,” Mr. Devaney said by telephone from Aspen, Colo feel horrible that I’ve lost my own money and that so many people who saw the skills I have and trusted in us have now been hurt.”

  • The Warren Buffett Rap
    Posted by on July 9th, 2008 at 12:14 pm

  • Correlation Doesn’t Mean Causation
    Posted by on July 9th, 2008 at 9:59 am

    I’m not blaming anyone. I’m simply relaying the facts. In other words, I report, you decide.
    image692.png

  • Best Headline of the Day
    Posted by on July 8th, 2008 at 5:22 pm

    Thank you, Associated Press:

    U.S. exports cigarettes, bras, bull semen to Iran
    U.S. exports to Iran grew more than tenfold during President Bush’s years in office even as he accused it of nuclear ambitions and sponsoring terrorists.
    America sent more cigarettes to Iran — at least $158 million worth under Bush — than any other product.
    Other surprising shipments during the Bush administration: brassieres, bull semen, fur clothing, sculptures, perfume, musical instruments and military apparel.
    Top states shipping goods to Iran include California, Florida, Georgia, Louisiana, Michigan, Mississippi, New Jersey, North Carolina, Ohio and Wisconsin, according to an analysis by The Associated Press of seven years of U.S. government trade data.
    Despite increasingly tough rhetoric toward Iran, which Bush has called part of an “axis of evil,” U.S. trade in a range of goods survives on-again, off-again sanctions originally imposed nearly three decades ago.

  • The S&P 500 Priced in Eggs
    Posted by on July 8th, 2008 at 1:31 pm

    Felix Salmon links to a chart by DeForest McDuff of the S&P 500 priced in eggs. McDuff writes:

    Investment returns matter only to the extent that you can buy more “stuff” in the future. The U.S. stock market has been slowly losing real purchasing power for almost a decade, with no signs yet of a trend reversal.
    It’s true that the prices of hard assets like oil, gold, and omelettes have been increasing rapidly, but this is a direct consequence of decades of underinvestment in these asset classes. If you’re not thinking about investing in terms of purchasing power, then you’re playing the wrong game.

    This is correct, however, I caution against looking at the stock market in the price of some commodity. This is a subtle but important point. A lot of financial analysis involves developing a “feel” for the numbers.
    The problem of pricing the market in terms of some commodity is that it often involves two data sets with very different characteristics. Equity prices are tied to corporate profits and therefore cyclical. At least in theory. Commodity prices, however, are often marked by price disruptions, meaning dramatic price spikes. If you look at the long-term chart of nearly every commodity, you’ll see a few large spikes followed by long periods of not much.
    That’s why when you compare stock prices to a commodity, it often tells you less about equity prices and more about the commodity. From my experience, the most often used example is gold. For the last 35 years, the prices of gold has been a wild ride from around $30 to over $800 back to $250 and then up to $1,000. The stock market can be wild but nothing like that. Also, gold doesn’t pay dividends where the market does. It may not be much each quarter, but if you’re looking at a chart going back a few decades, it does add up.
    Think of it this way. A commodity is a thing. In 1,000 years, gold will still be gold. But equity is what you do with the thing to make money. If you make enough money, you can buy more things. A stock can own a commodity, but a commodity can’t run a business.