ATLBob

CIT: The Fleecing Continues

With all due respect, the time to sell shares in CIT was some time ago. There have been many clear signals to avoid and/or sell CIT and realize at least a modest payment for shares before the entire house of cards collapsed. Anyone who held on or who purchased CIT shares hoping for a miracle wasn't investing: they were gambling and hoping for the best. From a Company perspective, the pre-packaged bankruptcy is the most 'clean' means of regrouping and having a fresh start; unfortunately, that reality equates to a complete wipe-out for any shareholders who unwisely held onto shares of CIT.

The Volt May Put General Motors in the Driver's Seat Again

I understand why GM and other electric car manufacturers are citing MPG ratings in marketing their cars, regardless of how meaningless MPG is with an electric vehhicle. The bottom line for consumers will be the RANGE of each car when it's fully charged: how many miles can you get with a single charge?. If you are a daily short-range commuter an electric car might be your future vehicle of choice; however, if you need to take a real road-trip, this won't be the car for you.

Have We Forgotten That Savings Is a Good Thing?

Some interesting observations. I do find it amusing that for several years, the media seemed filled with stories lamenting the low savings rate in the U.S., compared to the rest of the world. Now these same myopic media outlets proclaim that our increased savings rate is in someway 'hurting' the economy, wall street, the recovery, etc.

Certainly,( in the short term) the opportunity cost of increased savings has been a reduction in the rate of discretionary spending; however, I think that in the long term, increased personal savings helps form a much more solid foundation for the economy, vs. an economy supported by unsustainable HELOC and credit card spending.

In time, we'll see that those who always saved will spend once they've determined that they are in need of a particular good or service.

Those who are new to saving will likely be paying-down debt, perhaps establishing an emergency fund, and will start to give serious thought about what they need vs. what they want before they run out to buy that new toy.

Those who fail to learn the lessons from personal deficit spending via HELOC's and credit cards will find it more and more difficult to fund their purchasing whims, but some will find a way.

In any case, the economy will eventually win.

Paul Volcker: The Voice in the Wilderness

On Jun 29 07:41 AM Alan Young wrote:

> Mark, you've got to stop with the "money doesn't grow on trees" line.
> We all know that money grows in Fed computers, which require much
> less input (land, water, energy) than trees.
>
> Aside from that, thanks for another powerful piece of history.

Yes: the money does 'grow' from the Fed and is not harvested from trees: however, one can safely say that this particular crop of money has been highly fertilized by the legislative and executive branches.

Nice article, by the way.

Berkshire Hathaway Options Trading Could Facilitate Speculative Behavior

Individual (small) investors trading options on Berkshire Hathaway?

"I'll never understand why TRADERS always seem to invent new ways to lose money when the old ones worked just fine". (With apologies to Wells Fargo's Chairman Richard Kovacevich who said this about bankers)

Behavioral Thoughts on Home Buying

"...The only plausible theory I can come up with is that the buyers perceived an exceptional opportunity to purchase housing at favorable prices. Did they do so on the assumption that prices were about to begin a march back? Is the meme that you can’t lose money long term buying real estate so firmly ingrained that no amount of empirical evidence to the contrary will diminish it or are they simply grabbing an opportunity to buy shelter?"

I think you're on track with the exceptional opportunity and favorable price concept, and that the buyers are planning to stay there for awhile (shelter) or they are longer-term speculators (not flippers) who can afford to wait for the real estate market to appreciate The reality is that sellers discovered in a most painful way that you can lose money on anything (including real estate) if you can't afford the luxury of waiting for the time when it's recovered its value.

Earnings Preview: Disney

I've been considering buying some DIS stock for my grandchildren and since it had been three years since our last visit, I wanted to take another up close and personal look at Disney World as part of my research/due diligence. Over the course of two days last week (one at EPCOT and a second at Hollywood Studios) my wife and I saw clear evidence that much of the fairy dust in the House of Mouse was gone and it had become somewhat less of a "Magic Kingdom".

We noticed significantly more litter throughout the parks, and the restrooms, entrances to rides/exhibits, and general pedestrian areas were less clean than they were the last time we visited three years ago. There was a time when you were waiting in line and looked up and around, you noticed how clean, dust free and polished everything was--this is no longer the case in Orlando. The amount of gum on the ground was testimony to the hygiene habits of the guests as much as it was evidence that Disney's cast has stopped caring about creating that "special" experience. There seemed to be fewer people assigned to keep the park clean, and those we saw actually cleaning up were much slower, older and acted like they were less concerned with sweeping up and more concerned about punching out for the day. The second area of concern was the general attitude and demeanor of the cast members themselves, with the exception of those who were actually engaged in some sort of performance activity. Whenever we interacted with a cast member who was selling, serving, directing on/off a ride, or giving directions, we wondered what had happened to all of the smiles, positive attitudes and the willingness to convey that they would do almost anything to ensure that your visit was memorable and special? It was almost as if we were visiting some other Mega Amusement park and not in the Disney we have always loved during our previous visits.

I understand that Disney is subject to the same economic and cost cutting stress as every other business during a recession (perhaps more due to the limited discretionary capital available to most families today) and I wouldn't presume to tell them how to crunch the numbers within their operations. I would suggest that, if Disney truly wants to continue to 'market the magic', they should consider cutting costs from operations that don't directly impact the guest experience at their theme parks.

I'm hoping that last weeks experience was simply collateral damage resulting from the recent decision that "...reorganized many behind-the-scenes operations at its U.S. theme parks due to the recession. Redundant operations were streamlined, and voluntary buyouts and layoffs at the U.S. parks division shed about 1,900 employees." If so, Disney can certainly correct these guest experience weaknesses and return to their previous place on top of the Theme Park world.

Capital One Defies Even Constanza Logic

There have certainly been predatory late fees, way too much fine print and many indiscriminate changes to terms and conditions applied by the credit card companies, and I'm fine with reasonable legislation outlining guidelines to protect consumers that also allows the companies to engage in a profitable business. The root cause of the problem continues to be that too many people carry high credit card balances because were not prudent with the use of their credit cards when the economy was humming and credit was easy and available. Whenever you run up your card balance for purchases that you WANT, you accept the risk that if your economic circumstances change (i.e.--you lose your job, your bank cancels your HELOC due to the decline in real estate valuation), you won't have the available capital or capacity to pay your bill on time, and you won't have enough credit left to help pay for the things you NEED. The moral of the story is simple: pay down your credit card debt ASAP and then only charge what you can afford to pay-off in full each month.

First American and First National: No Housing Boom Necessary

Nice article: well written and logical. I also own FNF and will continue to do so for the same reasons you noted: it is a cash cow that is transaction driven. It is a bit disappointing that you got the name wrong: FNF is Fidelity National Financial, not First National Financial.

Cramer's Mad Money - Buy Bank of America (3/10/09)

Cramer has the same dedication and attention span related to any individual stock as a four year old does when watching a 30-minute cartoon show. This is OK as long as you remember that Cramer (who is a really smart and experienced guy in addition to being a CNBC entertainer) is essentially an 'uber trader' and not a long term investor. Unless you define long-term as one week.

Between all of the emotional, bipolar rants on government policy or pleas to buy/sell a particular position or a particular industry, Cramer often discusses some informative and educational investing and trading concepts that can be helpful to those with limited financial experience.

Watch Cramer for the entertainment value and the occasional financial lesson, but don't base investing decisions on what he says. By the time a particular stock is praised or reviled by Cramer, the time to act has generally already passed and the audience needs to remember 'caveat emptor'.

Accept him for what he is (entertainer, educator and trader) and make your own informed, researched investment decisions and only take the risks that are appropriate for your financial position, goals and timeframe.

Learning from Buffett Quotes

Great article--Warren's annual letters always make me smile and wonder why other CEO's are afraid to be so candid and straightforward.

These must be great times for all of the Buffett bashers, who always seem to crawl out from under a rock on those rare occasions when Berkshire hits a bump in the market. Just like the talking heads in the media, the bashers gleen a phrase or two from the annual letter and then interpret and spin them to show that Berkshire has lost its edge and/or that the buy and hold philosophy is no longer valid.

Unfortunately for the bashers (and fortunately for those of us who are long on Berkshire and Buffett) Buffetts investment philosophy has consistently proven itself over time, a track record that is likely to continue.

S&P 500 5% Days

Interesting chart.

If you're a trader, I guess that the current 'conventional wisdom' that says to sell the pops and buy the drops must still apply.

If you're an investor, this chart suggests remaining on the sidelines until the market determines if we're approaching a real bottom, or if this is just another dead cat bounce.

Johnson & Johnson: Dividend Stock Analysis

Agree, and I am also long JNJ.

Buffett remarked in his recent letter to shareholders that he had sold JNJ reluctantly, in order to use the cash to take advantage of another lucrative investment opportunity.

GM's Next Last Chance

In simplistic terms: It seems to me that whenever the US has faced an economic/financial crisis, the turn-around point was always precipitated by the fall and subsequent failure of the companies who had contributed to the problems, or who were already the 'walking-wounded' as a result of the economic downturn.

In every case, there was the usual gloom and doom from the media, lots of foot-dragging, hand-wringing and pontificating from congress and the executive branch, but ultimately some entities were sacrificed on the public alter after some definitive action was finally taken. This generally resulted in the termination of the entity and perhaps a 'purp walk' for a few well-deserved individuals. Banks that went belly-up during the S & L crisis, Enron, WorldCom, etc. all come to mind.

Today it looks like GM, Chrysler, AIG, and Citigroup would appear to be the among the most likely/deserved candidates for sacrifice via a structured bankruptcy process, with the possibility of restructure and rebirth into some smaller form that is able to function and compete without a government handout.

Wall Street Breakfast: Must-Know News

Great quote: What is the source/who said it?

On Mar 03 09:25 AM know nothing wrote:

> "You cannot legislate the poor into freedom by legislating the wealthy
> out of freedom. What one person receives without working for, another
> person must work for without receiving. The government cannot give
> to anybody anything that the government does not first take from
> somebody else. When half of the people get the idea that they do
> not have to work because the other half is going to take care of
> them, and when the other half gets the idea that it does no good
> to work because somebody else is going to get what they work for,
> that my dear friend, is about the end of any nation. You cannot multiply
> wealth by dividing it."