ANTS

Australian senators turn up the opposition to a proposed $19.5B investment in Rio Tinto (RTP) by Chinalco (ACH) in a video ad calling on the goverment to block Rio's asset sales to "foreign governments." "You sell the milk not the cow, and we should be selling the minerals and not the mine."

Keep in mind that RIO management turned down a share offer from BHP at something like 3.5:1 on the basis that the offer undervalued RIO. They have since canned some major iron ore mines and the share relativity is now around 2:1.

RIO was once regarded as the greatest mining company in Australia. Now, with the assistance of US management, it isn't.

Analyzing the Nasdaq Streak

I think Greensleeves shows that working on "streak analysis" is hard work.

I have found that a dynamic valuation model is a better way to go. You can use any formula that appears appropriate but it must contain an earnings revision and market premium component. As a stock (or index) is going up,it is a combined reaction to earnings revisions (either disclosed or about to be disclosed) and changes in premium (or market sentiment).

For example analysts may be upgrading earnings, but the market is not reacting, and therefore the premium is high. At some point, the market accepts these revisions and the premium shrinks. The stock then goes for a run because the new valuation will have both higher earnings and lower premium. There are many market dynamics of this nature which are worth following.

It is the dynamic interaction between these two components, once identified and quantified, that leads to superior forecasting.

Case-Shiller Housing Numbers: The Rate of Decline Is Decreasing

From an Australian perspective, house prices in the US appear to us to be dirt cheap for the size and standard of construction.

We sometimes think it would be worthwhile selling our home in Brisbane and moving to California, until we factor in health insurance.

How Stock Market Indices Underperform

So, why is it that active management cant outperform the "underperforming" index. More to think about.

It really is all Greenspan's fault, Susan Lee writes. "This attempt to exculpate himself is not convincing. The Fed failed to confront something that was evident. It can't be blamed on global events."

Here here Moresby. Ill tell you where these journalists were at the time - buying condos on cheap credit to flip to the next bunny.

All of this is to remind me of the "Tale of the Ancient Mariner". The moral is exactly the same, but alas not the literary merit.

The Fate of General Motors' Rick Wagoner

While there may be some empathy for Wagoners plight, the fact is he has been at GM for 30 years, 9 years as CEO and the company has been in continuous decline for all of those 9 years if not before. He got to the top doing what?

GM was actually built up during the depression wasn't it? Probably by a CEO who were very good.

The US corporate system/shareholders should be appreciative of this event, and hope that history repeats.

Ousting Rick Wagoner Won't Solve GM's Problems

Years ago, the CEO of British Leyland wrote a book on his attempt at restructuring that company "Beyond the Brink"

It showed how bad a company can get, and how a good executive can turn it around, albeit with much angst. A good read for GM's new CEO.

Book Review: Getting Off Track by John B. Taylor

Im not convinced. The articles states that after the Bernanke testimony, the crisis deepened........and consequently policy makers made the situation worse.

The situation worsened, but how are we to know that they made it worse. It is possible that the finance industry became aware of the full depth of the problem after the policy makers disclosed it. Transparency has been an issue in all of these goings on.

To blame policy makers for making it worse, one must show that doing nothing would have made it better. I dont know, but I suspect that doing nothing would have had some pretty bad consequences with counter party failures all over the place.

What NCAA Basketball Upsets Teach Us About Trading

Unlike the other comments above, I like what Brett says.

I adopt a system which uses what i consider statistical advantage, and it works very well in backtesting. Since 2 Jan, this system has been up almost 8% on the S&P, but then things go wrong and we fall back, but still in front.

In real time, its very hard to run a concentrated portfolio which beats an index, because there are always stocks which drop 10% in a few days which ruin the story. Try as i might, it has proven impossible to eliminate this feature. Is it just the trouble with concentrated portfolio's ??

Greed? It’s the American way. "Let’s face it. If we look in the mirror, we will see those AIG bonuses staring right back at us."

Thae argument put forward in this article is fallacious.

If these executives had the thoughts ascribed, and insisted on a contract to secure their future, then they were, in normal circumstances, stupid. In normal circumstances, these employees must have considered what would happen if AIG went into bankruptcy. These employment contracts and payments would be part of a huge pile of unsecured creditors, expecting to be paid nothing at all.

It looks to me very likely that these contracts could have been considered only on the basis of a bailout being the most likely outcome.

Market Is Entering Rough Waters

I think we have seen temporary bounces at times over the past few months. To my mind, they were in response to lower aLIBOR spread, and some similar indicators that showed a slight thaw in the credit markets.. Then at some point, this spread reversed slightly, then came the Merrill/BOA fiasco and in Europe, RBS at about the same time, and bingo, it was clear that things were getting worse.

There just has to be a resolution to the bank/insurance crisis. We have to believe that all the bad news is out, and especially from now on, no more rabbits in the hat. Unfortunately, some commentators, such as Rubini, are clearly indicating continuation of bad news.

So, no substantive uptick for many months yet.

Sorkin's Questions to Bank CEOs, Answered

In respect of how to pay CEO's...over a long period of time, I have never worked at an organization where I thought the CEO was anything special, much less worth a salary of millions. In fact, a bit like the Moby Dick story, I often thought that getting rid of the captain may have saved the ship and crew.

So what to do? let the employees have a substantive say. They are the ones who see the true worth of the CEO's contribution.

Best Time Ever to Trade Options Leads to...Lower Volume?

Odds, thank you. I didn't mean to be critical, its just that I adopt this strategy, and I have been losing quite successfully in the past 6 months, and with hindsite have been trying to adopt better strategies. Certainly this is one.

Best Time Ever to Trade Options Leads to...Lower Volume?

Fact is that with downside risk so high, the chance of losing capital far exceeds the income potential of selling calls. In addition, stock price moves are quite volatile in either direction, masking any trend while instilling a high degree of non diversifiable fear. The current market is not a good one for this strategy at all.

I haven't investigated this myself, but it is likely that call and put backspreads which capitalise on fast up or down moves with limited downside would yield the best results.

Twenty-Two Years of Job Creation Wiped Out in a Single Day

AlexS, on becoming more like Europe.

Dont forget, Europeans could always escape to the USA for a better opportunity. Where are you going to go?