• This Just In…
    Posted by on July 1st, 2008 at 3:18 pm

    Multivariate Markov Switching With Weighted Regime Determination: Giving France More Weight than Finland
    Um…no duh!

  • Worst First Halves Since 1971
    Posted by on July 1st, 2008 at 3:05 pm

    Here are the ten worst first halves since 1971, going by the S&P 500’s total return:
    Year…………………Gain
    2002………………-13.16%
    2008………………-11.91%
    1973………………-10.38%
    1974………………-10.17%
    1982………………-7.83%
    2001………………-6.70%
    1984………………-4.90%
    1977………………-4.38%
    1994………………-3.39%
    1981………………-0.95%

  • Grasso Wins
    Posted by on July 1st, 2008 at 2:51 pm

    It’s hard to see multi-millionaire as victims, but Eliot Spitzer’s (aka Client #9) crusade against Dick Grasso was contemptible and an abuse of the legal system. The case against him was thrown out today. Last week, the court threw out four of the six claims against Grasso. The other two were dismissed today.
    The New York Stock Exchange awarded Grasso a pay package worth $190 million. Is that too high? Probably. Is it illegal? Of course not.

    “My reaction is, I told you so,” Langone said today in a telephone interview. “There was never a case here. What more can we say? The enormous waste was a travesty.”

    One final note on Mr. Spitzer. When he checked in the Mayflower Hotel for his meetings with Ms. Dupree, he used the nom de bork, George Fox. That’s one his friend’s names.
    Classy guy.

  • I Think this Chart Sums It Up Well
    Posted by on July 1st, 2008 at 10:31 am

    image688.png

  • Who’s to Blame?
    Posted by on July 1st, 2008 at 9:40 am

    Who’s responsible for all the problems in the financial sector? Stephen Schwarzman has an novel idea — blame the new accounting rule, FASB 157:

    FAS 157 represents the so-called fair value rule put into effect by the Federal Accounting Standards Board, the bookkeeping rule makers. It requires that certain assets held by financial companies, including tricky investments linked to mortgages and other kinds of debt, be marked to market. In other words, you have to value the assets at the price you could get for them if you sold them right now on the open market.
    The idea seems noble enough. The rule forces banks to mark to market, rather to some theoretical price calculated by a computer — a system often derided as “mark to make-believe.” (Occasionally, for certain types of assets, the rule allows for using a model — and yes, the potential for manipulation too.)
    But here’s the problem: Sometimes, there is no market — not for toxic investments like collateralized debt obligations, or C.D.O.’s, filled with subprime mortgages. No one will touch this stuff. And if there is no market, FAS 157 says, a bank must mark the investment’s value down, possibly all the way to zero.
    That partly explains why big banks had to write down countless billions in C.D.O. exposure. The losses are, at least in part, theoretical. Nonetheless, the banks, in response, are bringing down their leverage levels and running to the desert to raise additional capital, often at shareholders’ expense.

  • The Buy List’s Mid-Year Report
    Posted by on June 30th, 2008 at 9:53 pm

    Ugh, we choked at the last minute! Going into today, the Crossing Wall Street Buy List had a comfortable lead over the S&P 500. But today, we collapsed. The S&P 500 rose by 0.13%, but our Buy List lost (yuck!) -1.49%.
    Today was the worst relative performance for us all year.
    For the year, the S&P 500 is off by -12.83% while our Buy List is now down -13.47%. The Buy List’s daily volatility is 6.27% greater than the S&P 500.
    Including dividends, the Buy List is down -13.16% while the S&P 500 is down by -11.91%. Roughly, that translates to an annual dividend yield of 2.12% for the S&P 500 and 0.72% for us.
    If you recall, the rules of the Buy List let me select 20 stocks at the beginning of the year and I’m not allowed to make any changes throughout the year. Right now, just three of our 20 stocks are in the black. The biggest loser by far is Unitedhealth Group (UNH), which is down by nearly 55%.
    Here’s a look at how all 20 stocks have done.
    Stock……………………………………Profit
    Medtronic………………………………2.94%
    FactSet Research Systems……….1.18%
    Aflac……………………………………..0.27%
    Leucadia……………………………….-0.34%
    Amphenol……………………………..-3.21%
    Donaldson…………………………….-3.75%
    Bed Bath & Beyond…………………-4.39%
    Joseph A. Banks……………………..-5.98%
    Clarcor………………………………….-7.56%
    Sysco……………………………………-11.86%
    Danaher………………………………..-11.90%
    Stryker………………………………….-15.85%
    Fiserv……………………………………-18.24%
    Moog…………………………………….-18.71%
    WR Berkley……………………………-18.95%
    Lincare………………………………….-19.23%
    Harley-Davidson………………………-22.37%
    SEI Investments………………………-26.89%
    Nicholas Financial…………………….-29.60%
    UnitedHealth……………………………-54.90%

  • Let’s Hear It for Round Numbers
    Posted by on June 30th, 2008 at 4:29 pm

    The Dow closed today at 11,350.01 and the S&P 500 closed at 1280.00.

  • The Oil Boom Comes to Beverly Hills
    Posted by on June 30th, 2008 at 1:10 pm

    This is news to me. There are oil wells in Beverly Hills!

    “In the Middle East you might have 300 barrels of oil per cubic acre, but in the Los Angeles Basin you might have 4,000 barrels per cubic acre,” says Mike Edwards, vice president of Denver-based Venoco Inc., which has 24 active wells in the Beverly Hills area, including one alongside Beverly Hills High School. “In terms of the land that produces oil, the basin is very rich.”

    Come to think of it, I really doubt there’s much oil in Appalachia.

  • Worst June Since the Depression
    Posted by on June 30th, 2008 at 12:02 pm

    Who’s ready for this June to end? Count me in!
    This looks to be the worst June for stocks in 78 years. Here are the S&P 500’s total return for the 20 worst Junes since 1928:
    Jun-30……..-16.24%
    Jun-08……..-8.55% (through Friday)
    Jun-62……..-8.03%
    Jun-02……..-7.12%
    Jun-39……..-6.07%
    Jun-50……..-5.49%
    Jun-69……..-5.42%
    Jun-37……..-5.04%
    Jun-70……..-4.82%
    Jun-65……..-4.73%
    Jun-91……..-4.57%
    Jun-28……..-3.85%
    Jun-46……..-3.70%
    Jun-61……..-2.75%
    Jun-94……..-2.47%
    Jun-01……..-2.43%
    Jun-51……..-2.28%
    Jun-72……..-2.06%
    Jun-63……..-1.88%
    Jun-82……..-1.74%

  • Behavioral Economics
    Posted by on June 30th, 2008 at 11:53 am

    If you want to read a long (and I mean looong) article on behavioral economics, then I suggest this 10,000-word opus by Alan Wolfe for The New Republic. The article is a look at two books, Happiness: A Revolution in Economics and Predictably Irrational: The Hidden Forces that Shape Our Decisions, but it will tell you a lot of the emergence of behavioral economics. I disagree with some parts and I think he frames the issues in an oversimplified way. Still, it’s an interesting read.
    Here’s a sample:

    Ariely and his colleagues set up a stand and offer Lindt truffles for 15 cents and Hershey’s Kisses for a penny: 73 percent of their customers choose the former, 27 percent the latter. Then they lower the price of the truffle to 14 cents and offer the Hershey Kiss for free, and now 69 percent choose the Kiss and only 31 percent the truffle. Calculating utility cannot explain this result. In both cases, the cost difference is identical. So it seems that we attach an almost mystical meaning to the idea of getting something for nothing. Zero is not just another number. It plays tricks with our rational minds.