Aj2009

Insurance Industry in 2009: Race for Survival

Thank you for all the information.
P&C line is safer than others for its shorter duration--the insurer doesn't need to buy longer term assets to match their liabilities--that is why most of them escaped from last year. I am not quite sure it will last though.
One thing: if the auto sale is dropping, the auto insurance premium should also drop too.
The unemployment will also affect the worker's compensation line.

If P&C is the only safe bet, other will compete more aggressively, which is not a hard thing for those established insurers.
This administration is trying very hard to find revenue everywhere by raising taxes on utilities, cigarette companies--I don't know how long it will take auto insurance is a gold mine for them. And it is can be done--the Canadian only has state-run auto plan for every driver.Or at least they can grab personal line and leave the more dangerous commercial line to the industry.
Yes, I admit this goes too far.
I just have another problem for AFL. Do they write policy for American or Japanese since they generate most revenue in Japan?

Rambus's Litigation-Based Business Can't Last

Well, even the author has been wrong in so many details, I am sure it shows how outsider( ignorant as I ) should valuate such stock:
1. Litigation result is unpredictable. You can see Rambus was suing foreign companies and the supreme court was ruling in Rambus's favor. It may or may not have some political play there.
2. The memory chip industry for PC is declining. Even the sale for iphone or smart phone is not quite encouraging in near term--although the whole tech industry is betting on that.
3. On the other hand, it might be a good acquisition candidate.

The intellectual property is a very touchy topic. I am sure some Chinese companies steal more from US, yet we rarely heard such case brought to court. Justice shall reign supreme only in the dream land.

Weekly Good News Roundup

Still, thanks for sharing those ideas. All those info can be read either positively or negatively.
1.Since During past 100 years we only have 1929 for comparison, I really doubt those statistics tell us something.
2.Do you factor out seasonal effect of those Manufacturing Data? New order usually comes in spring which is higher than fall.How about yoy comparison?
3.I don't know about wall street,but silicon valley are planning some layoff next season. They are not done with it.
4.As to retail growth: if you weigh all the retailer including wmt, you still get negative --of course you can say it is decreasing but at a slower pace.
We can interpret that way: people still find it hard to save for the raining days so they continue to spend.
In fact if more people switch from whole food to WMT, that is a clear sign how frugal we are obliged to be--not a necessary good sign.

The Ugly Truth About Unemployment

About inflation:
I beg to ask: Inflation is not defined as absolute $ term. If you can eat Red lobster and watch a movie last year, but can only eat at home and play video, I will call that "Inflation".

2009: By Far the Worst Start to a Year Since 1900

I have also read the Dow again: from high Dow 350 in Nov 1929, it finally reached the bottom at Dow 50 in July 1932. It rose a little then fell again to Dow 50 in March 15 1932 right before FDR took office.
It took more 3.5 years and a president's term to finish the fall during which time the whole Europe sank into complete shamble.
The event afterward -world war II is not comparable not because the big Power are more moral today but because any large scale war is deadly to the whole human being.


We hope for a quick painless recovery and this false hope will kill us--how much disappoint can we endure?

We only see the stock price fell from last two years, yet we have not see enough bankruptcy in business. People are panic but not that depressed. The strong retail data in January and February only indicates how ignorant the common people (me included) are. Banks are "comfortable" with the increasing saving rate and seem hope the trend will continue--do the realize the sudden jump of saving maybe comes from 401k, mutual fund or pension fund?

I think the April-May earning season should give us a little rally:
1. G20 meeting in April might send some positive message even just morale encouragement;
2. Most companies (other than retail,utility, and industry) should see the cost-saving programs works finally. They will miss the revenue but beat the earning--since earning estimate has been lowered too far.
3. Then comes the critical point: I do hope those company with healthy balance sheet should restructure the debt during this season just to protect themselves. After that the rest year will see more earning missing from the companies and people begin to adjust what is fair earning multiple for business:it
will bring more desperation to the market--more people laid off; more store closed;
4 Next year, even China shall begin to suffer from the pain.

Well, it is just my fantasy.I hope we won't go that far.

My Shot at Siegel: The Science Isn't Sticky

To Ricard's:

I don't know where his original words are, but if you consider industry standard of p/e ratio, I can offer you an example.

Take company A and X with size 40 b and 4 b respectively.

If A gain $10 and X loss $10 , still s&p will gain
gain=40*10-10*4=360

But dow index will gain zero.
Those two in dices are calculated differently.

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The original Siegel piece is just plain wrong. Here's an example using his same figures:

Let's say there is one corporation called S&P500 Inc. This corporation has two subdivisions, Jones Apparel, and Exxon. Jones is a relatively small apparel company compared to the oil giant Exxon. But, if Exxon earns $10 billion this year, and Jones loses $10 billion, I don't care what the size of their business are. The fact is, S&P500 Inc. broke even.

If you use Siegel's argument, the $10 billion Exxon earned would have been weighed more heavily than the $10 billion that Jones lost because Exxon is a much larger segment in the S&P 500. But this is utter nonsense, and defies middle school mathematics.

Please try to explain how Exxon's size here would translate to a net gain on the S&P 500. You can'

Premier Wen: China Is Ready to Significantly Expand Stimulus

I suspect those bad feelings will spread.
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I agree with this.But the biggest problem for mainland China is the relationship with Taiwan is improving.
The current Taiwan government is quite willing to compromise.
India is really loading the gun to China by several ban on Chinese import. As for Indonesia or Malaysia, they compete with foreign investment from America or European by cheap labor but they also export natural resources to China---they are the lowest level in the "food chain". Give or take, I don't think they shall raise big issue.

Time to Buy China, Copper, the Canadian Dollar and Oil

To plumstupid:
*

Tacit permission? Oh Really? Citations please. Preferably from someone inside China not some kool-aide drinker on Wall St.

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I can't give you the citation, yet most Chinese banks (the big 5 other than the Taiwan or Hongkong banks) are partially controlled by Chinese government.


Just like the state-owned companies. They do have some public traded companies listed in the exchange--but the best are still owned by the state.

In Chinese market ,some of the companies have big insider owner (more than 15%) and they are allowed to buy the lowest level last year and scoop the gain.

China and America with two different system are quite the same : power =money.


I do think China will show the recovery earlier, but remember they are still dependent on the consumer side in America . They gain on the cheap raw material but should suffer from top line of the pricing since now consumers are more price sensitive. With other labor intensive countries in South Asia, now the labor cost in China is competitive again compared with 2 years ago.Maybe they won't lose or gain much on this export.

As for the infrastructure building in their stimulus plan, it won't benefit America directly. The only thing we can make sure is the price in Walmalt will rise so the inflation is not quite a problem. --That's why they don't want protectionism. It will hurt every player in this global economy.

To pin the hope on another country is not a good idea. We create the problem and we shall solve it or kill it.

Of course compared with American stock market, Chinese's local market (not hang shen) is a better play.

2009 Depression Will Be Nothing Like 1929

To # Jonny Rotten :
I agree we live a much better era than 1929 no matter how bad it is now. But for those who still have the memory of financial security just 2 years ago, the big gap is very had to live up with.
The depression in 1929 was partly solved by world war II. I guess the comparison between now and then is quite natural--at least it offers a BIG warning: try to cooperate with other countries, try to be more independent in energy.
As for the development of technology, it surely makes life easier but it won't necessarily make people happier.

As to the author: I don't know if short amzn is a good idea even from valuation point you are right. Now the stock price is crazier than ever before. I sometimes think if the analysts cut the earning estimate down so that each company can beat it, will that be a better place for "long"? So any company still show "growth" is already quite expensive. As long as the faith holds, it will continue to be so.

Joy Global: Backing Away From Its Buyback

Those companies use stock buy back sometime because everybody else does it.

Apollo's Big Dirty Secret Exposed

Yes, I do think this article show how biased the author is. Though I do concern about other education company with high p/e (coco, ceco especially).

If most of the 401 k exists because there is a loop hole in the tax code, I don't criticized Apollo's propaganda and the way they take advantage of the student loan issue.

Well, at this moment, the market seems can't take the any negative info. The whole block of "education" stcok loses its grip.

The Bubble of Uncertainty Is About to Burst

Two scenarios: 1 you don't know if you are doomed or not; 2 you are quite sure you have no hope.

I really don't think the latter case is better.

Apollo's Big Dirty Secret Exposed

I am more concerned about job placement program lacked in those for-profit company.
Since the management know the company is for profit, those who want to attend the program majorly comes from 1: company remittance; 2 government student loan;
The enrolled students usually find a certificate from online school is passable to land a job.
Now with such high rating of employment, even those who has skill set are fired. Those still in the program will find it even harder to get a job (the hiring company often like newbie for less pay in normal cases, but now they don't even need to worry about the pay scale.

Yamana Gold: A Volatility Lover's Dream

To ED K


A suprise for me with Auy would be if they even met their earnings estimate,well,we will see!!!!!!

Now you should have the last laugh. The company finally nail it while others report disappointing earning.

My only concern is the whether the price for gold is sustainable.
if you add most gold company are also producer of copper whose price has dropped quite a lot recently, I really don't know if the demand should chase the price higher.

Exhaustion from the Economic Data

To JC09058 :
I really like your suggestion.Though I am not quite sure we are in the bottom, or even we are how fast we can climb out it.
We often imagine how bad the future will be and when it comes the first reaction is to find who's fault; then the majority will sink into desperation; and then hopefully we can decide we really need to do something.
Thank you.