Check out the new site!
Posted on November 8, 2008 - Filed Under Uncategorized
From now on, I will continue to update this site as needed, but am focusing the majority of my time developing a new personal brand at the Mike Fanelli website. This site uses the new wp-vybe template produced by Solostream, which is very intuitive and user-friendly. This site will focus its content on providing financial literacy to people from Wall Street to Main Street. I hope to bridge the gap between Wall Street and Main Street, in order to educate people to make better personal financial decisions. In the future I hope to write a book, become a renowned speaker, among other goals for the new site. Check it out!!
Earnings Update From CNBC
Posted on October 24, 2008 - Filed Under Investing
The blended earnings growth rate for the S&P 500 for Q3 2008, combining actual numbers for companies that have reported, and estimates for companies yet to report, fell to -11.0% from -10.9%.
On April 1st, the estimated growth rate for Q3 was 17.3%, and by July 1st, the estimated growth rate had fallen to 12.6%. (Data provided by Thomson Reuters)
Limit Down
Posted on October 24, 2008 - Filed Under Investing
U.S. stock futures halted after hours following Asia plunge - which means the futures cannot go any lower, and stocks will begin trading once the market opens at 9:30 am EDT. According to the article, traders in Europe were simply staring at their screens earlier today, in disbelief. However, they shouldn’t be too surprised since the market volatility lately has been at all-time highs. The CBOE Volatility Index (^VIX) tracks market volatility, and has been all over the board lately.
The circuit breakers provide for cross-market trading halts during a severe market decline as measured by a single day decrease in the Dow Jones Industrial Average (DJIA). There are three circuit breaker thresholds—10%, 20%, and 30%—set by the markets at point levels that are calculated at the beginning of each quarter. The formulas for these thresholds are set forth in the New York Stock Exchange (NYSE) Rule 80B. See SEC article here.
This is one of the craziest times in market history. I could sit here and analyze investment research all day long. Hmmm….maybe I will someday?
MF
Workout vs. Bailout: Should Government Take Advantage of the Buffett Effect?
Posted on October 20, 2008 - Filed Under Investing, Investment Managers
On occasion, I enjoy reading the Harvard Business School (HBS) Working Knowledge Newsletter. A recent article (most of which are white papers) discussed whether the government should take advantage of the Buffett effect. Readers can also comment on the article, which makes it very blog-like.
What the article discusses is the recent moves by Warren Buffett by injecting capital into US public companies such as Goldman Sachs and GE. Instead of Buffett purchasing common stock, he purchased perpetual preferred stock (with common warrants I believe) which included 10% dividend rights. This is a tremendous investment, which helps the firms as well, since they received billions in capital from Buffett in return. The government’s recent action, however, included the option to purchase preferred stock in the nations largest banks, but I think for a lesser dividend rate (5%).
Check out the article, and more from HBS. HBS has always been one of the best business schools in the world, so there is much to learn on the Working Knowledge website. Harvard also has the largest university endowment in the country (maybe the world), which speaks volumes to the loyalty of graduates and the vast amounts of money they earn in their careers.
MF
A short history of modern finance (economist.com)
Posted on October 16, 2008 - Filed Under Economics
Great article by Economist.com, which details “The crash has been blamed on cheap money, Asian savings and greedy bankers. For many people, deregulation is the prime suspect.”
“…investmen bankers may have nothing to gain but their chains.”
“Once currencies could float, the world changed.”
“Companies with costs in one currency and revenues in another needed to hedge exchange-rate risk.”
“As banks’ business became broader, they also became more complex. With the help of academics, financiers started to unpick the various components of risk and trade them separately.”
“A credit default swap (CDS) allows investors to separate the risk of interest-rate movements from the risk that a borrower will not repay. For a premium, one party to a CDS can insure against default.”
“Futres, options and swaps all have the same characteristic: a small initial position can lead to a much larger exposure.”
“Alan Greenspan, the chairman of the Fed from 1987 to 2006, was in the vanguard of this view. In his book, “The Age of Turbulence” (2007), he welcomed the growth of CDSs, arguing: “Being able to profit from the loan transaction but transfer credit risk is a boon to banks and other financial intermediaries which, in order to make an adequate rate of return on equity, have to heavily leverage their balance sheets by accepting deposit obligations and/or incurring debt. A market vehicle for transferring risk away from these highly leveraged loan originators can be critical for economic stability, especially in a global environment.” - (I wonder what he thinks now?)
“It would be a mistake to argue that, had politicians rather than bankers been in charge, policy would have been more prudent.”
Conclusion:
“Amid the crisis of 2008, it is easy to forget that liberalisation had good consequences as well: by making it easier for households and businesses to get credit, deregulation contributed to economic growth. Deregulation may not have been the main cause of the rise in living standards over the last 30 yrs, but it helped more than it harmed. Will the new, regulated world be as benign?”
MF
keep looking »
