Brotherly Love

By |2014-09-05T14:38:49+00:00December 14th, 2009|Global Market Update|

$10 billion dollars. And it may not even cover the tab. In a little-known incident, the author C.S. Lewis was once approached by a local pub-owner, who asked him to make good on the bar-bill his brother Warnie ran up the night before. Lewis was devoted to his sibling and was deeply concerned about his drinking. Embarrassed by the attention, he growled to the man while he dug for the change, “You could have waited.” In the same way, Abu Dhabi is picking up [...]

Managing Women

By |2014-09-05T14:37:36+00:00December 11th, 2009|Global Market Update|

Do women make better stock-pickers than men? Recently, a couple of prestigious journals took up the question. Institutional Investor examined whether women hedge fund managers outperform their male counterparts. At the same time, the Financial Analysts Journal published an article whether woman stock analysts make more accurate earnings forecasts than men. The first study showed that from 2000 through 2009 hedge funds run by women produced about a 9% return, versus a 6% return for their male-run counterparts. The analyst study showed that women [...]

Bonus Babies

By |2014-09-05T14:36:05+00:00December 10th, 2009|Global Market Update|

So London is taxing big bank bonuses, and France is close behind. Who do you think is next? France’s President joined England’s Prime Minister to announce a special surtax of 50% on bank bonuses in excess of $40 thousand. This is on top of the 65% or 70% marginal tax rates that highly compensated individuals in Paris and London already enjoy. The two leaders clearly implied that they hope the U.S. will follow suit. According to one official, the tax is intended to discourage [...]

Greece is the Word

By |2014-09-05T14:35:01+00:00December 9th, 2009|Global Market Update|

Greece is in the news. The small Mediterranean nation was downgraded by Fitch on Monday and put on Creditwatch by S&P. At issue is the ability of the Hellenic Republic to service its debt – which is denominated in Euros. Since the Greeks don’t control their own currency, they can’t just print more. Greece is one of the weakest of all the EU members. But because it didn’t enjoy the real estate boom, it’s not seeing that much of a bust. The problem has [...]

Cleaning House

By |2014-09-05T14:33:26+00:00December 8th, 2009|Global Market Update|

This fall our family took a long-term guest into our home. As one of the by-products, my wife and I spent a lot of time cleaning house. What we found was illuminating: lots of precious treasures turned out to be nothing but junk. Even the local thrift store wouldn’t take it. We thought some of it had value, but when you looked closely, it was really worse than useless. In the same way, investors ought to examine their long-term financial plans regularly. Are your [...]

Micro – what?

By |2017-07-17T12:35:20+00:00December 7th, 2009|Global Market Update|

Remember microfinance? That was the global trend around tiny loans that was supposed to transform the developing world. One and two-person firms would get loans of less than a hundred dollars, and that loan would enable them to ramp up their business. The world’s biggest banks jumped on board the idea, and it looked like the future had no limit. Over a hundred million have taken out loans and billions have been lent, and a Nobel Prize has been awarded. But are poor people [...]

Tip, Tip, Away!

By |2014-09-05T14:31:38+00:00December 6th, 2009|Global Market Update|

Well, it wasn’t supposed to be this way. Apart from a couple of cock-eyed optimists, no one expected unemployment to fall. Why is that? Part of the reason is that forecasting an economic turn is notoriously difficult. If you want to be an economic forecaster, just pick the trend and guess that it will continue. Chances are, you’ll be as accurate as at least 50% of the economists out there. Of course this can’t take into account saturation, tipping-points, and economic nudges that a [...]

God and Mammon

By |2014-09-05T14:30:37+00:00December 3rd, 2009|Global Market Update|

Is nothing sacred? That’s what I wondered when I read about the former bishop of the Mormon Church who pled guilty to federal fraud charges. Shawn Merriman faces up to 20 years in prison for allegedly bilking investors out of $21 million dollars. I know, it pales in comparison to the $65 billion Madoff scandal. That one after all also includes a couple of suicides. But there’s something particularly distasteful when religious leaders—who are charged with giving spiritual and moral guidance—use funds given in [...]

BAC to the Future

By |2014-09-05T14:30:05+00:00December 2nd, 2009|Global Market Update|

Well Bank of America is no longer a ward of the state. Score one for the bankers. Bank of America announced yesterday that they are paying back the entire $45 billion in TARP funds they received from the Treasury last year. In the depths of last winter, there we some question as to whether Bank of America could survive. Now they plan to sell assets and boost their equity by selling restricted stock and senior debt. So with America’s biggest bank no longer in-the-hole [...]

Lucky or Good? (Part 2)

By |2014-09-05T14:29:24+00:00December 1st, 2009|Global Market Update|

Are mutual fund managers just lucky? Or really good? A recent study by an index fund company found--surprise--that index funds outperform actively managed funds. Ken French and Eugene Fama looked at the aggregate performance of all actively managed mutual funds and compared it with the market, both before and after fees. They found that before fees the active funds did add a little value. But their fees sucked all that up, and then some. In the aggregate, actively managed funds after fees underperformed a [...]