glassbox

Goldman Sachs' (GS) CEO explains why he pays more: It's because my guys make more money, duh. "What people fail to mention is that net income generated per head is a multiple of our peer average. The people of Goldman Sachs are among the most productive in the world."

The point is not on how much is generated per head but how much per head is given to generate the how much. The more capital one is given, naturally the more one will make. So, is it the ' one head' that makes the money or the capital?

Rumors that Wells Fargo (WFC -3.4%) may be in trouble.

Have been seeing a lot of rumours on the negative side of late.....think that shorts are desperate.

Agree that SA should not be allowing such unsubstantiated rumours.

Short selling in S&P 500 stocks remains below historical averages, but bearish bets are above average in the healthcare, industrial, financial and materials sectors, Jefferies says in a report this morning. Firm says insider buying remains 'virtually nonexistent.'

Winsun33, you are probably right on that assumption that insiders are not expecting any increases in their stock price. However, by making that assumption, you are also assuming that the insiders believe that whatever is happening in the company should cause the stock price to increase.

I think that the lack of insider buying could be symptomatic of perhaps a disillusionment with stock prices reflecting the state of the company. As it has been shown, stock prices has been moving largely on changes in systemic risk and insiders have realised that buying their own stock does not create any additional alpha for their own portfolios.

I for one, for personal diversification feel that if I am already employed by the company or receive substantial compensation from the company - one should not buy more of their own stock, rather, I would look to perhaps 'diversify' to buying an unrelated stock.

As such, I rather not try to read too much into this to get a sense of the state of the company - I believe other indicators are better gauges.

When Companies Short Their Own Securities

Hi Tom! Agree with you that CDS spreads arising from an unregulated marketplace only serves to give a false sense of stability to those who claim their risks are hedged. Looks like the industry has not learnt from the previous disaster.

Marc Faber: 'It Will All End in Disaster'

His prediction will always come right, after all, there are only 2 things in life that is certain: death (gloom) and taxes! Its easy to spend your life predicting doom, its much more difficult to spend your life being useful to mankind.

Mark-to-Market: A Rule That Begs to Be Broken

With mark to market, you allow the tail to wag the dog. Is that what we want?

There is going to be a lot misallocation of resources as a result - the capital allocation is spoilt. I'm not saying it caused the current problems but its certainly no better (or in fact worse) that its predecessor - historical convention. At least, the latter has existed for centuries....

Five Economic Misconceptions

Very good points Rick. I'm with you that smaller regional banks should rule the day. Afterall, they are more likely to be 'realistic' as compared to the narcissistic Wall Streeters shuffling paper assets.

The World's 50 Safest Banks in 2009

A correction to my comment above - except for HSBC.... which only moved its domicile from Hong Kong about 10 years ago???

The World's 50 Safest Banks in 2009

Not a single English bank! This is so sad....

Investment Landscape's Fabric Is Fraying

The market's gone crazy with allowing anomalies which does not help in value building. Equities value are allowed to be brought down unnaturally with the allowance of short sellers (whether borrowed or not) whilst bonds are slightly better with no direct shorting - although one can attempt to set up a proxy exposure via the CDS markets.

At this rate, its no wonder equities have been seeing the 'tail wagging the dog' phenomena - values are being established by a small group of players to the detriment of the larger group that chooses to stick by an investment.

A Solution for the Bad Asset Pricing Problem

Hi Tom! I completely agree with you that those who have made money shorting stocks and deploying destructive practices have withheld capital. In fact, I'm of the opinion that all shareholders (and regulators will have to be the initial sponsor of this movement) should impose a much higher cost of borrowing scrips for shortsellers.

In my opinion, short selling in the current environment is highly lucrative - only because it cost so little to borrow and there is no need for one with a short position to disclose his position (with the excuse that it would make it unprofitable for hedge fund managers and the likes to do their research - what an excuse!). In times like these, capital should be deployed constructively, not destructively.

The US government should not allow the same hedge fund managers who made tonnes of money so called 'cleverly' shorting stocks and buying CDS that created this huge imbalance and putting jobs and stability at risk to be allowed to buy anything at the distressed prices they want.

I firmly believe money should only be made, and cleanly made by creating value, real value that comes in hard work, belief and faith and resilence...not by exploiting a market abberation or inefficiency that these 'intelligent' people know that by doing so, will result in a depression like scenario.



On Feb 09 07:21 AM Tom Armistead wrote:

> This is a bad proposal.
>
> For over a year, those who expect to profit from the destruction
> of the US economy have spread news of doom and gloom, shorted finaincial
> stocks into oblivion, spread rumors and manipulated CDS spreads.
> Meanwhile they have withheld their capital from constructive uses,
> in the expectation of gorging on the proceeds of fire sales.
>
> I am at a loss to understand why the US Government should spend taxpayer
> money to line the pockets of these vultures by agreeing to fund their
> feast.
>
> Better to deprive them of their prey by creating a fair price for
> these assets, many of which are worth far more than what the market
> will pay. I am a small time investor and I can't see why the hedge
> funds should be funded to buy AAA debt at distressed prices. It's
> not supposed to work that way.
>
>
>

Citigroup: The End Draws Near

Citi is certainly very big. The sad thing is that it currently does not have a good top management that is able to manage this behemoth well, and its taking its toll on its employees and its clients. Stock price these days is quite a separate thing. Meanwhile, I will buy it only I see some real leadership at the top,

'No Bank's Books Are Trusted': Bloomberg's Weil is Imagining Things

Tom, short term price movements tell you very little of the real fundamentals for the simple reason that its a case of the tail wagging the dog. Stock prices is the tail. The company is the dog. The capital markets have all gone upside down and many have lost focus....sadly....

Two World Views: Buffett vs. Lahde

Do you think one can afford to be a hermit for ever? With all the right things that Ladhe thinks he has done over the last few years, I'm surprised that he is just prepared to sit and wait. I would think he would have moved on to more meaninful ventures or work. Certainly hope that he will see with gratitude the blessing he has had being intact with the current disaster and instead of sitting and waiting, do something good.

Amity Shlaes: Paulson Plan Bring On Accounting Deja Vu

The problem with mark to market and short selling and the hosts of like mechanism is that it attempts to establish a price for that asset based on the last done transaction. We all know that one sparrow does not make spring but this is exactly what is happening to the capital markets. We have allowed the proliferation of tools that has completely distorted pricing all in the name of efficiency. How else could we have have done this? I really don't know but I do agree with formerhawk that the market integrity as a efficient and optimal allocator of capital and resource (for the longer term) should be re-established. We have allowed traders and short term casino mentality to take over, to the detriment of everyone - including the same people who are proponents of this mentality.

Casino thinking should be restricted to the casino and not get into people's 401Ks and pension.