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Sell low, buy high

August 13, 2011

The WSJ is running an article comparing today's second-by-second "iPad inverstors" to the day traders of the dot com bubble. The article's point, near as I can tell, is that volatility makes people worry more about the markets, and that people aren't comfortable without instant feedback. I have a suggestion for the WSJ: A decade […]

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Misreading misleading charts: Alaska edition

August 4, 2011

There's a headline making the rounds this morning that caught my eye because it seemed preposterous: "Apple Stock Helping the Alaska Permanent Fund More than Oil." It's everywhere, but the original instigator seems to be this USA Today article. It looks like nobody bothered to read (or understand) the Fund's actual returns. First of all, the Alaska […]

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A product only a banker could love

May 25, 2010

There's a lot of excitement about just-launched startup Betterment, but I'm very wary. At best, it's an example of "bad" financial innovation. At worst, it's a straight up scam. It goes to show that it doesn't take complexity and structured products to pull the wool over investors' eyes; all you need is a website and […]

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Stock is more efficient than options are more efficient than stock

November 18, 2009

Investment decisions can hinge on how risk and exposure are defined. Here, the choice determines whether an insider should trade in stock or options.

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Dilution in action

July 17, 2009

A lot of sites are reporting Bank of America's year-over-year income comparison without batting an eye: Bank of America posted income of $3.22 billion, or 33 cents a share, down from $3.41 billion, or 72 cents a share, a year earlier. The number wasn't particularly surprising (EPS slightly beat, revenue slightly missed) but couldn't anyone […]

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JPM, AXP ask taxpayers for money to pay back taxpayers

June 1, 2009

Almost like a Ponzi scheme, but not quite: JP Morgan and American Express plan to issue common stock in order to pay back their TARP funds. Essentially, the two firms are going to sell parts of themselves to taxpayers in order to increase their cash, which will then be used to buy back, yes, parts […]

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June 1, 2009

Stock price of GM the day it files for bankruptcy (unchanged): Stock price of Lear the day it skips an interest payment (up 14.5%): Needless to say, both charts are from today. I'm reminded of the quote from the otherwise-terrible Episode I: So this is how liberty dies. With thunderous applause.

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Quick thoughts: stress tests and such

May 6, 2009

Front page of the NYT tonight: "As Stress Tests are Revealed, Markets Sense a Turning Point." I know I'm a cynic, but my first thought was "...which way?" Is it even possible to turn upward after a 40% rally? Sure enough, the article is quickly laced with the caveat "All of this assumes that the economy […]

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The Short Squeeze

April 30, 2009

It is a favorite chorus of the anti-CDS crowd that CDS can make it more difficult for a company to survive, since bidding up CDS prices can affect the firm's cost of borrowing. This is about a hair's width away from the oft-cited argument that "short selling is bad because it drives down stock prices," […]

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The math (and myths) of leveraged ETFs

April 20, 2009

Leveraged ETFs are vehicles which provide non-recourse leverage on various sectors or strategies. For example, every day the double-inverse financials SKF returns roughly -2 times the daily return of the DJ Financials index. These products are a favorite of mine not simply in a speculative framework, but in a quantitative one. Many people make the […]

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Bear Stearns is worth slightly less than A-Rod

March 16, 2008

Obviously the news of the hour is that J.P. Morgan is buying Bear Stearns for $236mm, or just $2 a share, meaning the firm is worth only a fifth of the value of its own midtown headquarters.  The Yankees paid more for their third baseman. More gravely, despite the WSJ headline, there is no "rescue" […]

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