User 283977

What’s My Payment?

LOL - Your comment reminded me of a great quote from the movie Mr. Blandings Builds His Dream House…

Ms. Stellwagon says advertising makes people who can't afford it... ...buy things they don't want with money they haven't got.

High Frequency Trading: Legally, It's Called Churn

Its one thing to provide information, its an entirely different thing to provide knowledge. This is why I value your articles so much. Thank you Tyler!!

Candidates to Replace GM, Citigroup in the Dow

The purpose of an Index is that it is representative of what you are trying to measure. As a consequence, there should be representatives from key sectors of the US economy.

If all they want to do is to make a substitution, I would replace GM with a steel company like Nucor (NUE) or US Steel (X). While I was at it I would also remove City (C) and replace it with Wells Fargo (WFC) or Bank of America (BAC).

As to the effect of the replacements on the Index valuation, remember it’s a 'scaled' average. So when replacements are made, they change the scaling.

If they really want the Dow Index to be representative, then they need to consult with a technical expert that is an expert in the design of representative Indexes.

Citigroup's Doomed IT Strategy

In my experience dealing with technical operations, Felix is correct. Reducing overlap between systems is easier said then done. For one thing, as Bricki points out, many of the people that designed the legacy systems are gone. This in conjunction with peoples reluctance to properly document their systems means people need to figure out what each of the systems is doing, and the complex pattern of how any particular system interacts with other systems residing in different departments, divisions, or even companies. Add to that cross department managerial jealousies, turf protection, politics, and the lack of resources to make changes while simultaneously supporting the legacy system, and you end up with glacial if any progress. Alternatively, they might try to build a new, integrated system, which will be in development forever. Basic rule of thumb, estimate your costs and multiply by 10. Considering its Citi, multiply by 100.

What to Expect if GM Doesn't Learn from Chrysler

All of those GM dealerships that are going to be cut are protected under state laws. It seems un-realistic to think that negotiations with all of those dealerships are going to be accomplished in the next 19 days (by June 1). While if they go bankrupt, they minimize obligations. It seems that bankruptcy is inevitable. The question is why continue the apparent charade that bankruptcy can be avoided? What does that additional time buy?

Understanding What Buy and Hold Really Means

My takeaway from your article is that buy and hold is not equivalent to buy and forget. That all investments need to be actively managed. Did I miss something?

Citi and Bank of America Lead the Decline

Well said Wilson and Ranchr!

Consumers Confident Wells Fargo Will Survive

What proportion of that increase in core deposits came from people moving their money out of Washington Mutual in the fourth quarter? If they are in such great shape why has their stock dropped by 25% since the beginning of the year? Its recent upward movement was spurred by the prospects of the creation of a bad bank" which will allow them to off load all of their bad investments onto the tax payers.

Nationalizing Bank Losses

That was supposed to say commodity, not communities. Hey JohnA1, how about sharing some of that blood pressure medicine?

Nationalizing Bank Losses

Exactly why can't these banks be allowed to go into bankruptcy? They are not lending now, so exactly who is benefiting from these bank bailouts? It can't be the common stockholders, they are nearly wiped out. The only people left seem to be the bond and commercial paper holders. How much of those bond and commercial paper holdings are owned by foreign entities? Is that the reason behind the bailouts? Is it because if those people get a haircut, they will no longer invest the benefits of all of those dollars the American people have been paying for imported products and communities? If they get a haircut, what would they do with their other American investments?

At the MINIMUM, before any more tax payers money is given out, the public should be told exactly why these banks can't be allowed to go into bankruptcy. Its past time for one of our public representatives to write a bill that makes it the law that no further issuing of TARP money can be made in the absence of complete disclosure by the Government. Lets see who votes for and against? That should clear the air a bit.

The Fed's Decision: A Desperate Statement

I think it would be useful to identify the primary stake holders for corporate entities such as C. By doing that, we might better understand why our government is so set on not letting C go into bankruptcy. Following the money often results in enhanced understanding.

Obama's 'Bad Bank' Plan Is a Turning Point

A modelling approach would be based on discovering an indirect way to either value the assets or ascertain their risk level. If that can't be done, then appeals to a "modelling" approach are nothing more then public relations spin. An excuse for the government to purchase assets that banks don't want to own anymore at the taxpayers expense, with no basis for valuation. A pig in a poke approach.

I assume these assets have some kind of descriptive wrapper. In other words, they are not something akin to Monopoly money with a value printed on it. What information is included on the descriptive wrapper? For example, with a mortgage based derivative product, how much information is there with respect to linking the summary value of the batched group of assets to the underlying mortgages? A major part of the modelling task would be to discover what information is useful with respect to predicting value or risk.

So is it spin or is it doable? If it is doable, would the predictive accuracy be better than chance? I think BEFORE the government uses tax payer money to purchase these assets, they need to be more transparent to the tax payers with respect to their proposed asset valuation modelling approach and its predictive accuracy. Right now it seems they are just throwing out a catch phrase when in fact, they have no objective way to value the assets.

Should We Relax Capital Requirements?

First more transparency... you can't manage something if you can't measure it.

Don't Chase High Yielding Stocks Blindly

I agree with you DividendMachine. Great article on good investing practices. The dividend payout ratio is equal to the yearly dividend per share divided by the earnings per share. This article provides a useful guideline for that number. For standard equities, 50% is the guideline. For example, today, BAC's stock dropped to 10.65. Its dividend payout ratio is now at 223%. A signal that the dividend yield is putting pressure on the stock.

There are lots of places where you can just enter the stock and look up its dividend payout ratio. For example: www.dividendinvestor.c.../

This site also provides the dividend payout ratio 5 year average. That lets you compare the stocks historical dividend payout ratio with its current value. BAC's 5 year dividend payout ratio is 50%. This gives a good picture of the pressure on that dividend at todays stock price. For BAC, the stocks price decrease has increased its dividend payout ratio by a factor of 4.5 times…. these are tough times for financials…

Fast Money Recap: 100 Trades for 100 Days (1/13/09)

GE:
I have been getting increasingly uncomfortable with GE and the financial part of their business model. I bought GE as a long term investment and was attracted to their dividend. GE seems to be well positioned for an infrastructure play, but I am very uncomfortable with their seemingly broad financial market exposure. Their dividend yield is currently at 17%. EPS is $2.02 while the dividend is .61 per share per quarter.

There was another article on SA that made the point that if GE maintains their dividend, its likely they will loose their AAA rating. There is logic in that, and if push comes to shove, their board should select the AAA rating over maintaining an accidental dividend yield of 17%. I still think GE is a good infrastructure play, and whatever their dividend ends up as, its still going to be good.

However, I agree with Guy Adami, GE is too heavy on the financial side with its associated unknown risks. I sold my GE position for alternative infrastructure plays.