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Matthew Rafat

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  • Commodities, Cap and Trade and Natural Gas [View article]
    jack kreg: you ignore the fact that not all of America's oil use is used by cars. Of the approximately 20 million barrels of oil consumed each day, 40 percent is used by passenger vehicles, 24 percent by industry, 12 percent by commercial and freight trucks, 7 percent by aircraft, and 6 percent in residential and commercial buildings. (See Energy Information Administration (EIA), Annual Energy Outlook 2004.)

    Thus, America can reduce oil consumption by relying more heavily on natural gas for industrial use (24%) and residential/commercial building use (6%). 30% is a significant slice of the energy pie.

    I agree that natural gas will not entirely replace oil use in the industrial sector any time soon; however, the cap and trade program provides incentives to reduce oil use in the industrial and residential/commercial building sectors. If the program is successful, American will reduce its reliance on oil for at least 30% of its energy consumption. As such, my comment stands.
    Jul 9 03:16 PM | Likes Like |Link to Comment
  • The Congressional Bailout of Madoff's Investors [View article]
    On WallStreet: you do not cite the law that allows the SIPC to charge transaction fees on securities transactions. Please include a citation. Also, your proposal fully reimburses all of Madoff's direct investors. As far as I know, the SIPC coverage is limited to 500K per direct investor and should continue to be limited to a total of 500K per direct investor. Maintaining or even reducing the 500K limit makes sense, because it creates incentives for investors to spread their wealth among different brokers/brokerages, thereby gaining a minimal form of diversification. Anything that promotes diversification is a good thing. Post-Madoff, we shouldn't have to hear the words, "too big to fail."

    logicalthought: I understand your point; however, insurance coverage is a non-moral issue. If you have an insurance policy and some event triggers the policy, whoever issued the policy should pay. Here, the taxpayer may become the insurer because the banks and other SIPC members failed to properly fund the SIPC. SIPC members only had to pay $150 per year into the SIPC fund. (That's not a typo--it really is only $150.) The proposed new law only increases the amount to $1,000. Why not increase the minimum annual assessment to $5,000 or $10,000 per year until the SIPC fund reaches a reasonable amount?

    The only part of the proposed bill I like is section (d), which creates civil and criminal penalties for misrepresenting SIPC membership or protection. However, even this part is watered down, because the penalties are too low. The maximum financial penalty is only $250,000 and the maximum prison term is five years--hardly enough to faze a future Madoff. You almost have to wonder if white collar criminals have a PAC or group of lobbyists.
    Jul 5 09:09 PM | 3 Likes Like |Link to Comment
  • Madoff's Investors Don't Deserve Compensation or Sympathy [View article]
    In case anyone is interested, I've written a follow-up to this article that explains the SIPC in more detail:

    Jul 3 01:54 PM | 1 Like Like |Link to Comment
  • Madoff's Investors Don't Deserve Compensation or Sympathy [View article]
    User 349707: if you're going to make wild accusations, stop hiding--print your full name like I do when I write something here. Also, try to provide some evidence or statements that support your statements. You haven't done so--and you won't be able to.
    Jul 3 01:53 PM | 3 Likes Like |Link to Comment
  • Reactions to My Madoff Rant: No Apologies [View article]
    Gregman2, how much do you know about the SIPC? Turns out that the taxpayer is on the hook when funds are inadequate to cover claims:

    Jul 3 01:42 PM | Likes Like |Link to Comment
  • Reactions to My Madoff Rant: No Apologies [View article]
    User 439971 writes, "The IRS was by far the biggest beneficiary of the Madoff fraud." First, you are ignoring the tens of millions of dollars spent in law enforcement time and resources solely to benefit several thousand Madoff investors. We, the taxpayers, pay for the DOJ, SEC, and other government watchdogs. When they use our money to focus on matters that primarily benefit an educated, affluent group, people ought to be upset.

    Second, you are wrong in saying that Madoff's investors will only get back what they paid to the IRS. After the CPAs and tax lawyers are done, many Madoff investors will get credits for much more than they actually paid. These changes will result in taxpayer-funded windfalls for early Madoff investors. For example, let's say you invested $5,000 with Madoff in 1975. Over time, your investment becomes $50,000. The problem is, most Madoff investors will submit claims for the full 50K, even though their original investment was only 5K.

    Also, you misinterpreted my article and somehow conflated widows with banks. I talked about "the general media's sympathetic coverage of Madoff's investors." In my previous article, I linked to a WSJ article that focused on a small, select group of investors who were not representative of a typical Madoff investor. If you review the actual list of investors--or, as the WSJ calls it, "Madoff's *Victim* List," the typical Madoff investor was not a poor widow.

    Bottom line: Madoff's investors didn't invest in a fund directly available to the public, like a Vanguard or T. Rowe fund. It isn't a crisis of confidence or a public interest issue when fund managers, trusts, corporations, private banks, and rich people go "off-the-grid" to find a sure thing. Investors may choose to go "off-the-grid" if they want; however, if their exotic investment fails, why should taxpayers' money and resources be involved?
    Jul 2 07:03 PM | 2 Likes Like |Link to Comment
  • Madoff's Investors Don't Deserve Compensation or Sympathy [View article]
    From Reuters:

    "Walker-Lightfoot, a lawyer in the SEC's Office of Compliance Inspections and Examinations, sent emails to a supervisor saying information provided by Madoff during her review didn't add up and suggesting a set of questions to ask his firm, the report said. One of Walker-Lightfoot's supervisors on the case was Eric Swanson...Swanson later married Madoff's niece."

    Here are some quick responses to the comments above:

    1. Someone wrote, "If you were one of those who lost a lifetime's savings, your article would have a slightly different sentiment." Perhaps you are right; however, I diversify my investments and I buy investments available to the public. I do not and cannot invest in hedge funds or other non-transparent clubs.

    2. Two people have criticized my grammar and spelling--please point out specific mistakes. One person wrote that "investors like you and I could not get Madoff" should have been written as "investors like you and me..." I disagree, but I will check my Strunk and White manual later.

    3. An anonymous person implied that I would feel differently had Madoff's investors been of a different religion, more specifically Islam. That's the kind of irrelevant, divergent thinking that Madoff's investors want to avoid if they want any chance of sympathy. People are upset because of perfectly rational factors:

    a) Madoff's investors should have diversified their investments;

    b) Madoff's investors are receiving special treatment from the government in the form of special tax breaks (paid for by general taxpayers) and more-than-usual government resources;

    c) Madoff's investors are seeking to portray themselves as poor widows when most of them are probably still more affluent than 95% of Americans (take a look at Madoff's client list, and you'll see many trusts, private banks, foundations, corporations, and LLCs);

    d) most Madoff investors would not have invested heavily with Madoff unless they believed he had an unfair edge or special connections unavailable to the public investor;

    e) Madoff's investors believed Madoff was using investment strategies unavailable to the general public (they were right--it just wasn't the strategy they expected);

    People are also upset because they see a fundamental shift in values. In the old days, the rich believed they had a duty to do public service. They recognized that capitalism necessarily results in winners and losers, and the government could not solve the problems of vast inequality and disparate opportunities by itself. Look at Theodore Roosevelt, John D. Rockefeller, Jr., and John Pierpont Morgan. It's hard to remember now that JP Morgan bailed out the federal government, but it really did happen.

    I'm not saying all rich persons have lost their moral compasses. Eli Broad, Warren Buffett, Ted Turner, and Bill and Melinda Gates are doing wonderful things, but most of us work hard every single day and will probably never be worth millions of dollars, or even one million dollars.

    Most of Madoff's investors got to the financial promised land and squandered their chance at permanent retirement. They did so voluntarily--no one forced them to violate basic investing rules and to invest heavily with Madoff. Thus, it is hard to stomach the general media's sympathetic coverage of Madoff's investors when so many Americans are homeless, out of work, and live paycheck to paycheck.
    Jul 2 02:12 PM | 4 Likes Like |Link to Comment
  • Madoff's Investors Don't Deserve Compensation or Sympathy [View article]
    EJL: I don't mind Madoff investors getting SIPC funds--the SIPC is funded by member broker-dealers, not taxpayers. Above all, the special tax breaks bother me, as well as the speed by which Congress changed tax laws to benefit Madoff's investors.

    I am also bothered that our government is spending so much time prosecuting Madoff when more urgent matters exist, especially ones that affect all taxpayers. When was the last time you saw the government move so quickly on issues that primarily impact middle-class and poor Americans?
    Jul 1 08:59 PM | 8 Likes Like |Link to Comment
  • Madoff's Investors Don't Deserve Compensation or Sympathy [View article]
    martyg: When people talk about widowers and senior citizens, I always think, "Where were the kids?" I help my parents manage their investments. Also, my mom usually sets aside her junk mail and financial offers, including credit card solicitations, for my review. Madoff may have unwittingly taught us another lesson--children and parents should work together to evaluate appropriate investments. In a world of sophisticated scam artists, it no longer makes sense for parents to shield their financial information from their children, who oftentimes have no idea what to expect until after their parents die. Perhaps post-Madoff, families will be more open about their finances and more willing to let grown children see their investments. In most cases, another set of eyes can't hurt.
    Jul 1 02:40 PM | 16 Likes Like |Link to Comment
  • Jack and Suzy Welch and Apollo Group [View article]
    Catcuffs01: you are absolutely right. Welch is lending his name to Chancellor University System LLC, not the Apollo Group. He was, however, impressed by the Apollo Group. The WSJ article said that "Mr. Welch says he was initially skeptical of online education, but has been impressed by the Apollo Group Inc.'s University of Phoenix."

    Mr. Welch actually lent his name to Grand Canyon Education, Inc. (LOPE). I'd never heard of LOPE before, so my brain jumped to the only online company I know about, which is the University of Phoenix. Thank you for correcting me.
    Jun 24 12:05 PM | Likes Like |Link to Comment
  • Views from Netflix's Annual Shareholder Meeting [View article]
    Netflix finally responded re: the issue of online captioning. For more, see here:

    Jun 13 02:51 PM | Likes Like |Link to Comment
  • Notes from Core-Mark's Annual Shareholder Meeting [View article]
    The more I think about the sin/stamp tax issue, the more I think I may have reversed the payment schedule. Perhaps CORE has to buy stamps first and then wait a month or more before receiving cartons to distribute. Otherwise, I am still unclear as to why CORE would make more money when the number of smokers decline. Any comments are appreciated.
    Jun 5 10:28 AM | Likes Like |Link to Comment
  • Views from Netflix's Annual Shareholder Meeting [View article]
    To Mitt Persons: you believe I have a "very large short position in NFLX." Your belief is false. I do not have any short positions in NFLX; if I did, Seeking Alpha would require me to disclosure such a position. As I indicated above, I own a tiny number of shares.

    Davis Freeberg: thank you for your comments. While there may be some digital rights management issues, Netflix's CEO clearly stated he would _not_ take an active role in encouraging captions. Without his support, or Netflix raising the issue with content providers, widespread use of online captioning will be delayed or may not occur. If you google "Netflix captioning online deaf," you will see that Netflix has known about this issue for years, and there is still no apparent progress.
    May 31 03:53 PM | Likes Like |Link to Comment
  • Review of Safeway's 2009 Annual Shareholder Meeting [View article]
    A picture of what was given to shareholders at the meeting is here:

    May 14 06:47 AM | Likes Like |Link to Comment
  • My Personal S&P Target - 950 [View article]
    Update: S&P hit my slightly revised target:


    I am mostly in cash and money market funds.
    May 7 01:17 PM | Likes Like |Link to Comment