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  • Stewart vs. Cramer: A Cheap Shot [View article]
    Stewart owes Cramer nothing any more than Saturday Night Live owes something to someone they skewer. These are not news shows, and they don't need to pretend to be fair and balanced any more than Limbaugh. They have an agenda, and that's fine: ratings.

    While I don't think Stewart is smart enough about the markets to be the one to Monday morning quarterback ANYONE here, you have to admit...the clips of all these getting it SO wrong are funny and sad to watch.

    They are wonderful reminders that, at the end of the day, you have to DO YOUR OWN HOMEWORK. You don't buy Bank of America just because Cramer said on TV that it's going to $60.

    The moment Stewart downplayed the importance of the stock market as an indicator as to how things are going, he 100% lost me as someone whose opinion matters.

    Cramer, Stewart, Limbaugh, SNL...all ENTERTAINMENT. Nothing more. Do your own homework.
    Mar 15, 2009. 09:45 AM | 11 Likes Like |Link to Comment
  • Unemployment Is 18.0% NOT 7.7% [View article]
    I did more or less the same analysis late last year and came up with similar disappointing results:

    "So, when you hear on the news that there are 12.3 million unemployed people in the country, just know that this number does not include:

    (a) 8.3 million people who are working part-time but want a full-time job
    (b) 2.4 million people who want a full-time job but have not looked for one in the last month
    (c) Some percentage of the 3.6 million full-time college students who are 25 and older
    (d) The millions of people who want a full-time job but have either not looked for one in the last year or simply given up for good

    I’d say conservatively that means there are at least 25 million people who want something better for themselves in terms of a job, yet the economy does not afford them the opportunity."

    It's borderline criminal that the recent unemployment statistic is being trumpeted as a sign of how much better things are getting.

    More here:
    Mar 9, 2013. 09:13 AM | 6 Likes Like |Link to Comment
  • What Will the U.S. Economy Look Like in 10 Years? Look to Greece [View article]
    You could say the exact same thing about the US, save for the "foreign" banker reference.

    On Nov 28 03:53 PM nobby73 wrote:

    > I often read that the Greeks do not worry too much as they feel they
    > will find a way through this, but I am sorry to say my personal experience
    > tells me their citizens are unaware how their economy has been hollowed
    > out from the inside over the years. I have come across many situations
    > where naive officials have been fleeced by devious foreign bankers,
    > but in Greece's case, it was an inside job.
    Nov 29, 2009. 08:22 AM | 6 Likes Like |Link to Comment
  • Siegel vs. Standard & Poor's [View article]
    Yes, I read this in the WSJ, too (2/28/09, Letters to the Editor):

    In his "The S&P Gets Its Earnings Wrong" (op-ed, Feb. 25), Jeremy J. Siegel claims that Standard & Poor's systematically understates the earnings of the S&P 500. In his view, the recent losses of the financial companies in the S&P 500 should be discounted because of their diminished weights in the index.

    His argument, however, fails the simple tests of both logic and index mathematics. A dollar earned or lost is the same, irrespective of whether it is earned or lost by a big index constituent or a smaller one.

    Prof. Siegel's example of Exxon-Mobil illustrates why S&P's method of calculating earnings works. If large Exxon-Mobil earned $10 billion and small Jones Apparel lost $10 billion, index investors collectively -- and individually -- would bear a proportionate share of both Exxon's earnings and Jones's loss, despite the fact that the value of Exxon-Mobil's shares in the index portfolio is about 1,381 times the value of the Jones's shares.

    To use an analogy, we could hypothetically view the S&P 500 as a single company with 500 divisions, with each division having earnings and an implicit market value. The smallest of these divisions could have an outsized loss that wipes out the combined earnings of the entire company. Claiming that these losses should be ignored or minimized because they came from a less valuable division is flawed.

    Prof. Siegel's approach -- applying the weights based on market values to the results based on a company's earnings -- effectively mixes apples and oranges.

    David M. Blitzer
    Managing Director, Chairman of the Index Committee
    Standard & Poor's
    New York

    On Feb 28 12:09 AM Ricard wrote:

    > I really don't get Siegel's point:
    > "Suppose on a given day the only price changes in the S&P 500
    > are that the largest stock, Exxon-Mobil, rose 10% in price and the
    > smallest stock, Jones Apparel Group, fell 10%. Would S&P report
    > that the S&P 500 was unchanged that day? Of course not. Exxon-Mobil
    > has a market weight of over 5% in the S&P 500, while the weight
    > of Jones Apparel is less than .04%, so that the return on Exxon-Mobil
    > is weighted 1,381 times the return on Jones Apparel."
    > "Yet when S&P calculates earnings, these market weights are ignored.
    > If, for example, Exxon-Mobil earned $10 billion while Jones Apparel
    > lost $10 billion, S&P would simply add these earnings together
    > to compute the aggregate earnings of its index, ignoring the vast
    > discrepancy in the relative weights on these firms. "
    > This is as it should be. Siegel goes way off thinking that earnings
    > should be weighted like price. In his example, Jones Apparel with
    > that enormous loss vs market cap would have an equally enormous negative
    > EPS, which then would require weighing. If done properly, you'd come
    > up with the same number had you simply done what Siegel accuses S&P
    > of 'improperly' doing.
    > Or, you could choose to eliminate price weighing on the index. Exxon
    > gains $30 billion in market cap, great, the index goes up by 30 billion
    > points (around 10% move upward). Jones loses $20 million in market
    > cap, great, the index goes down by 20 million points (around 10%
    > move downward).
    > Think of it this way - If GE's financial division reported a $30
    > billion loss, while its manufacturing reported a $15 billion gain,
    > GE as a whole would report a loss. Even if you weighed the loss of
    > the financial division vs its size compared to GE, you'd still get
    > a negative P/E for the firm. There's no way to avoid this simple
    > fact.
    > Siegel's point is utterly ridiculous. Middle school math students
    > could do better.
    Mar 1, 2009. 10:02 AM | 5 Likes Like |Link to Comment
  • New Fed Data: Economy Drowning In Federal Debt [View article]
    Such hypocrisy. Beyond words, really.
    Mar 11, 2013. 09:31 AM | 4 Likes Like |Link to Comment
  • The 10 Most Valuable U.S. Companies vs. Treasury Yields [View article]
    What is the point of this article? You're comparing a company's return on market capitalization to Treasury yields? Why?
    Dec 3, 2009. 08:39 AM | 4 Likes Like |Link to Comment
  • The Proposal to Limit Commodity Positions Will Hurt Free Markets and Economic Growth [View article]
    Speculators are needed in the commodity futures markets to provide liquidity so that hedgers can manage their income or expense. However, speculators should not have the power to set the prices artificially.

    The price of oil and gasoline should be based on the demand for those products by those who actually buy and use them, not the demand for their underlying futures contracts.

    Does anyone really think that the "real market" for oil pushed it to $140 followed by a $100 drop? Nonsense.
    Jul 29, 2009. 09:09 AM | 3 Likes Like |Link to Comment
  • Banks Are Unwilling to Solve REO Problems [View article]
    I'm not so sure that the accounting on these transactions really reflects the losses.

    When the bank forecloses, they order up a "broker's price opinion" (BPO) from a Realtor's office to see what the house should sell for.

    Problem is, many BPOs are wildly inflated as the real estate office tries to "buy the business" by putting a value out there that makes the lender happy, even though the reality is that the true value of the property could be 20-30% less.

    If these assets are on the books at the BPO price, then there are still plenty of losses that will be taken when the properties are finally sold.

    I think one reason that some houses remain off the market is that they are not in marketable condition. Most of the foreclosures that I've seen need at least all of the cosmetics and appliances, and in a market where there are so many choices out there, these properties can't compete. (Unless they are sold to an investor, in which case the price they will get is even lower still than the BPO, meaning there will be even more losses.)

    Either way, 600,000 homes is not really that many homes, relatively speaking. In early 2008, there were about this many home sales each month, so I don't think the number is that big.

    Any my experience with RealtyTrac data is that it is very out of date and often incorrect. If that's the source of this information, then I'm already skeptical.

    Apr 12, 2009. 09:40 AM | 3 Likes Like |Link to Comment
  • Rep. Kaptur's Balancing Trade Bill Is On The Right Track - But It Needs Teeth [View article]
    An interesting philosophy. However, if you wish to import goods, you need to be aware of the consequences. We can't continue to run huge trade deficits in the pursuit of "saving money, living better" while sending our neighbors to the unemployment line -- and then being asked to provide unemployment, housing, health care, and food stamp benefits. One way or the other, we pay. Personally, I would prefer to pay higher prices and have fewer things, and then NOT rely on the federal government -- oops, I mean the taxpayer -- to make up the difference. Economic issues aside, though, isn't it somewhat hypocritical for a nation to talk so much about its disgust for communism while at the same time supporting it financially?
    Mar 7, 2013. 08:18 AM | 1 Like Like |Link to Comment
  • In Earnings Season, Who Cares About the Unemployment Rate? [View article]
    To ignore a 10%-plus unemployment rate seems foolish to me. Not to mention, we all know that the *real* story surfaces when you include the underemployed and those who have simply given up.

    The bottom line here is that the only way to go back to the good old days is to reinflate the credit bubble. That is NOT going to happen any time soon.

    My mother just looked into a small HELOC, and I learned that -- at least in her county -- Chase Bank, for example, is limiting their HELOC LTVs to 60%. SIXTY PERCENT. When I expressed my amazement, the representative told me, "Oh, it's even lower than that in most of Florida."

    And we all know that consumers are deleveraging, if not by will, then by force as accounts are closed or credit lines reduced.

    None of this is going to change as long as people are either out of work, underemployed, or nervous about their current employment situation. And with a 10%-plus unemployment rate (and more likely a real number of 15-18% when you include the underemployed and those who have given up), we're not about to reignite consumer spending any time soon.

    I really do think we're in for a 5-10 year period of near-zero and zero growth. That should put quite a damper on PE ratios, assuming there's any "E" to even consider...
    Oct 9, 2009. 08:50 AM | 1 Like Like |Link to Comment
  • Time To Refinance: Mortgage Rates Lowest Since 1971 [View article]
    I really think the 30-year mortgage rate for 2009 will bottom out below 4%, maybe as low as 3.5%.
    Mar 22, 2009. 08:14 AM | 1 Like Like |Link to Comment
  • How to Not Pay the AIG Bonuses [View article]
    I think everyone needs to know exactly what these bonuses are for before we can say what is right.

    Some of these bonuses are for $1,000. I don't think anyone getting a $1,000 bonus had much of a hand in the downfall of AIG. And I'm betting that it's a lot of money to the recipient, perhaps enough to make mortgage payment.

    And if someone is a top producer or earner for AIG and they're entitled to a $1 million bonus, then they should get that, too. (Won't the feds be taking 40% of it back, anyway?)

    What's clear here is that bonuses should not be paid for poor performance, and if "contracts" allow such payments in the absence of a positive outcome, then we have even more insight as to why AIG is in the shape it's in today, don't we?
    Mar 16, 2009. 09:01 PM | 1 Like Like |Link to Comment
  • Weekly Jobless Claims Closing In On 5 Year Low [View article]
    I have not spent much time looking at "initial jobless claims," so please keep that in mind as it relates to my comment.

    Having said that, there's a downward trend in this number, and that does look good. The question I have is, "At some point, don't we start to run out (or low) on people who can file an 'initial' jobless claim?"

    Again, there's a downward trend that looks good, and it coincides with a decrease in the reported unemployment rate. However, we all know that the "official" unemployment rate is misleading at best when one takes into account those people who have fallen off the grid altogether and those who have part-time work but want a full-time paycheck. Add in the people who have gone on SSDI and those who are over 25 and back at college full-time (you have to think they would rather be working), and you have about 25 million people who are not working full-time but would probably prefer to be.

    I think what I am looking for as far as signs that there is optimism in the numbers are (1) an increase in the labor force participation rate and (2) a decrease in participation in programs such as food stamps. At the moment, those numbers are not trending the right way for me to have that optimism.
    Mar 15, 2013. 10:20 AM | Likes Like |Link to Comment
  • Unemployment Is 18.0% NOT 7.7% [View article]
    Actually, we've both gone beyond U-6. As for where they've gone, I think you'll find part of the answer in the increase of applications for disabled workers' benefits (up from 5 million in 2000 to almost 9 million today) and the number of students over 25 years old (almost 4 million strong, many of whom I'm sure are back at school for economic reasons).
    Mar 10, 2013. 08:54 AM | Likes Like |Link to Comment
  • Five Foolish Fears About Taming the National Debt [View article]
    What exactly is credible about this plan? This plan is an absolute joke, and it's all right there for anyone to see in Figure 16.

    They're forecasting GDP to increase 58% between 2010 and 2020, but federal revenue is forecast to increase by 123%. Can someone please explain why federal revenue needs to grow at a rate more than DOUBLE that of the growth of the economy?

    Even using this esteemed Commission's estimates, and even using this huge increase in federal revenue, we'll STILL be running $300 billion to $400 billion deficits for the next decade. That's no typo -- the next DECADE. The federal government does not have a revenue problem, it has a spending problem.

    And what's worst of all...the plans to raise revenue, those are a mortal lock. When they work to increase revenue, that money is as good as coming into the Treasury. But those spending cuts? I think history has proven to us that those are elusive at best.

    We're going to end up increasing both federal revenue AND federal spending. You can COUNT on it.
    Dec 8, 2010. 11:07 AM | Likes Like |Link to Comment