Rhunzzz

6 Comments

    • ON: Fri Oct 10th 16:39 PM
      Commented on:
      Recapitalization and the Implicit Treasury Guarantee
      The way I see it, preferred stock has certain advantages over debt and common stock, from the point of view of stabilizing financial institutions.

      1. Flexibility. A bank who misses an interest payment is in default, but it can miss a preferred dividend so long as it makes it up later (if the pref. is cumulative). Also, the bank does not necessarily have to pay back the principal for the preferred, it has the option of calling it.

      2. No voting rights. The government does not want to be in a position where it must actually be running the banks, nor does it want to be seen as having such rights, nor does it want to dilute the common shareholders.

      Am I right on this?
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    • ON: Wed Oct 8th 09:12 AM
      Commented on:
      Britain's 'TARP': Taxpayers Locked in to Potential Upside
      The British plan is so much better than TARP. A quick, instant injection of capital that allows for the taxpayer the potential for upside. TARP has taken long enough to pass, and now, while the Treasury has to figure out on a CASE BY CASE basis how much to pay for EACH toxic asset, it's taking way too long for the money to get where it's needed.
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    • ON: Mon Oct 6th 10:32 AM
      Commented on:
      Opportunity in Emerging Markets Amidst This Panic
      The problem is - neither VWO nor EEM will rise again till US investors start regaining their optimism, no matter how well the actual emerging market countries are doing macroeconomically (with regards to growth or balance of payments). So in the meantime, it's a real leap of faith - neither VWO nor EEM really pays out sufficient dividends to bolster fragile faith with cold hard cash.
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    • ON: Thu May 15th 23:28 PM
      Commented on:
      Want to Fix the Fed? Get Rid of It
      Hmmm. I'm a monetary neophyte here but wouldn't eliminating fractional-reserve lending mean that banks can only lend out money that none of their depositors could call on?? In effect banks would only be able to lend money from fixed/time deposits, not from current or savings accounts, as though the reserve requirement were 100%. That would result not just in a credit crunch, but a credit black hole.
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    • ON: Thu Apr 10th 22:14 PM
      Commented on:
      FFA: A Closed-End Fund That's Not Too Defensive
      I've always wondered about these "managed distribution" closed-end funds. They may give an irresistible yield and discount, but ultimately how sustainable are the payouts? And when most of them that I have seen trade at perennial discounts to NAV, one wonders - why continue to invest in something which causes your principal to shrink over time?
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    • ON: Wed Apr 9th 04:55 AM
      Commented on:
      Why Fundamental Indexes Lagged Cap-Weighted in '07
      I can't help but think of John Bogle's comment that, over time, growth and value will have their own turns in the financial wilderness (or in the sun), and therefore costs should be the overriding consideration.

      The Powershares FTSE RAFI funds are expensive at >70 basis points. The WisdomTree funds are better priced, but they still can't beat Vanguard's <20 basis points. The idea of fundamental weighting makes a lot of sense to me, but those expense ratios make me hesitate.
      View article »
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