flamorte

Obama vs. McCain: Who's Better for Dividend Investors?

The arguments against McCain (on this message board) assume that if he is elected, the Congressional Democratics will raise the tax on dividends more than the 20% currently proposed by Obama because a Republican is President, while on the other hand, if Obama is elected the majority Democrats in Congress will abide by Obama's currently proposal.

I don't even know what to say....

What the President Didn't Say

It may be that the President is telling us that the over-riding concern of all, as a nation, is not that of "just the taxpayer", rather that it is problem for all of us, that is, the poor, the weak, the elderly, the children, those that pay a lot of taxes, and those that pay none.

Understand that he may have intentionally left out the term "taxpayer" for good reason. A good start may be to pick up a book about the Great Depression and read about actually happened, how people spent every minute seeking not only jobs, but just food and basic needs for their families. The government took possession of personal assets...the order of things, i.e. communism vs. democracy, was taken to the brink. "Seeking Alpha" then meant enough food to eat, and a place to call home. Please take a look at what "bad times" really means, when the system really has a breakdown, then come back and post an article on what "Seeking Alpha" may mean in the face of the challenges confronting us this hour.

The Presidential Speech, in Context

Mr. Jansen,

Our President spoke about an economic (not financial) crisis significant enough for him to command the presence of our nation of people. He is telling us that the well-being of present and future generations are in jeopardy, asking both the people and their elected representatives to act responsibily and with alacrity.

Your article is worse than a waste of time, rather it is an insert of nonsense to an otherwise worthy website. It is a demonstration of insensibility and foolishness in a time of national need. People who act like you have done here, in these times, need to go away, and make way for persons whose opinoins and thoughts will help all of us make the best decisions we can, given the time and information we have been given. I suspect it is the influence of fools like you that have helped bring us to the predicate we now face.

Shame on you - we have had enough. There is a saying, that among a crowd, the one to speak first and loudest is the one who knows least.

Morgan Stanley: Exploding the Short-Seller Myth

Sorry, accidentally exited preceding comment. To continue:

The increased price volatility of a stock (associated with naked short selling) has particular implications for bank stocks, which are inarguably more vulnerable to rumor-mongering than other types of issues. A "run on the bank" is as "old as the hills", and nothing in the way things are done today has changed that. Therefore, concerted short-selling of bank stocks will, justifiably, always raise the concern of market manipulation, as is evidenced by the comments here, and (I suspect) by the actions of the SEC this week.

By the way,

Morgan Stanley: Exploding the Short-Seller Myth

There is obejctive research on the matter as well as years of marklet experience. They do not always coincide.
Christopher L. Culp, an adjunct professor of finance at the University of Chicago’s Graduate School of Business, wrote a paper early this year in the economics of naked short selling. Here is a link to the faculty bio web page, and that will lead you to the article:

www.chicagogsb.edu/fac...

In brief, the effect on supply and demand of naked short selling is to increase marked volatility, much like the effect of margin leverage on an account, or on a position on the SML security margin line. It does not, per se, lead to a market pricing inefficiency.

What the article does not address is behavioral finance, by which I mean the age-old practice of making a "run on the bank". I think what several people here are alluding to is that this increased volatility of the price of a bank stock, subject to heavy naked short-selling, price cuass a market panic, and if targeted by large hedge.

Performance for Harvard, Yale Endowments in 2008

I am a Yale SOM grad, and was fortunate enough to speak to David Swensen at length about the endowment fund and its strategy. He may not always be right, butr he is not mendacious in his representation of his fund's methodology.

First, remember that he is not promoting himself - others are. He is accountable to the board of the fund, and has no interest in publc opinion. True, he has written two books, but in the end, he has foregone compensation from the private sector that would be a double-digit multiple of what he is currently paid by Yale.

OMG

He makes no pretense about his asset allocation method - it may be that the people interpreting his method make their own assumptions. He is clear about the fact that his fund invests in illiquid assets that cannot be readily marked to marklet. He is clear that his method is not readily replciated by the means available to the "ordinary investor. However, he has deveoped some investment principles that have seem to have universal validity.

As for large cap U.S. stocks, well, it is public knowledge that the Yale endowment is invested in 10% U.S. equities, across the scale of market capitalization size.

No, the Yale endowment does not allow for short selling, and if you read Mr. Swensens book, you will find that, along with other famous invest managers, he would agree with the adage that "no one gets rich selling short". Whether it is market volatility, randomness or government intervention, in the long run, trying to time the market on short trades is a losing proposition for the small investor.

I wish it wasn't so (long/short trading is a lot of fun), but in the end, the fact that we are a nation in a growth stage (so far) make it so. I short successfully from time-to-time, but whatever Success I have had is ostly luckl. Maybe that will change as baby-boomers age and there is a generational net liquidation of the equity asset class, but that is speculation for now.

"Contrarian@coalmine", and others. read the man's own words before passing judgement. He is a better trader than you acknowledge.

A Look at Private Equity in Public Hands

BX and the other stocks listed have a high correlation with the S&P 500 - about 87-90% according to a study I did at the beginning of 2008 - and so do not serve as a private equity asset class when making a diversified portfolio according to an asset allocation plan.

JPMorgan: Why I'm Selling Short

Unfortunately, many of the articles on the SeekingAlpha website cite technical analysis to support their hypotheses. Easy to do, easy to understand, however, not true to the concept underlying the financial term "alpha", which refers to the difference between a stock's expected return and its required return according to the security market line, a concept derived from the CAPM (capital asset pricing model). The CAPM is the precisely what moved Wall St. analysts away from technical analysis.

Technical analysis is not supported by quantitative evidence. There are some short-term qualtitative phenomenom well explained in the study of "behavioral finance". Most technical "analysis" is subject to selection bias, referencing, e.g., it always amazes me how the building head-and-shoulder became a "failed head-and shoulder", or how technical "analysts" use a wide range of moving averages, e.g. 45 day M.A. instead of a 50 day EMA, when it seems to support the conclusion they are looking for.

If you do not have the statistical skills to evaluate outcomes based on technical analysis, another approach is to take a look-back six months from now, at stories like this one on JPM. Do it, and you will learn that investing based on technical analysis does no better than chance, if that ...

As for the specifics of this story,well, the comments made before me are right on. Small investors pay high commissions and spreads relative to their small positions. They often do not use derivatives to limit their risks, (e.g. interest payment, timing ex-dividend ). Trying to time short-term short trades on relatively high-dividend stocks with strong insitutional support is a losers game.