Wednesday, 31 December 2008
Tuesday, 30 December 2008
| According to Rolling Stone, its a growing phenomenon... Real people putting on costumes and helping people and fighting crime... |
In one year, it has been read 2,170 times.
Saturday, 27 December 2008
| This family found an envelope with $10,000 in crisp, $100 bills in a box of Annie's Sour Cream and Onion Cheddar Bunny crackers. They reported it to the police, who at first thought it was probably a drug drop. Then, they found out that it belonged to an old lady who didn't trust banks anymore. She hid the money in the cracker box - and then returned the box to the store by mistake! She also did not give the family a reward. I picture her as some miserly she-Scrooge who likes to say Bah! Humbug! |
Friday, 26 December 2008
| The Wall Street Journal had an interesting article about people living in the Fuggerei - a Roman Catholic housing settlement for the poor in Augsberg, Germany. People who live here still pay the same rent that was set when the Fuggerei was first opened - in 1520! Then, the rent was 1 Rhein Guilder a year and 3 daily prayers for the well being of the Fugger banking family (make up your own jokes about "Fugg"ing bankers ;-) ). Today, the equivalent to 1 Rhein Guilder/year is 0.88 euros ($1.23) per year. The founder of the Fuggerei was Jakob Fugger "The Rich": Jakob the Rich was Wall Street long before it existed. He minted coins for the Vatican, bankrolled the Holy Roman Empire and helped steer Europe's spice trade in the early 16th century to become one of the wealthiest and most powerful financiers in history. He left more than seven tons of gold to his successors -- and a good deed. Much of the Fugger business empire crumbled over the next 150 years, battered by wars and soured credits. But the walled Fuggerei, with its picturesque lanes and seven gates in the heart of this onetime European banking capital, still stands. The Fuggerei is a good testament to the power of long term investing - even at conservative rates of return. In the late 17th century, after losing money in riskier investments, the bulk of the trust was invested conservatively - in old forest holdings. Since then, over the last 200 years, the trust has never lost money. The returns have ranged from 0.5% - 2%. |
| The CIA is winning cooperation from older warlords with multiple wives by handing out free Viagra... In the case of the 60-year-old warlord - the head of a clan in southern Afghanistan who had not co-operated - operatives saw he had four younger wives. The pills were explained and offered. Four days later the agents returned. "He came up to us beaming," the Post quoted an agent as saying. "He said, 'You are a great man.' "And after that we could do whatever we wanted in his area." |
Tuesday, 23 December 2008
However, unlike the days when I aggressively day traded, I am still calm and tranquil. I believe in my trading system, and know that bear markets such as these are what feed the rebalancing mechanism of my system that allows me to "win through defense" - like Bears football.
Now, it is the end of another year and I plan to rebalance my positions next week. The only thing I might have done differently was to have saved more in the cash part of my account.
Normally, when you buy a new position under my system, you have to add a certain percentage of the amount to the cash portion. But, I also have the rule that you can waive this when you are making regular contributions because you can use future contributions to rebalance.
This year, all my positions are down enough that, when I applied the system's formula to my stocks, I found that I had to add a lot. I had to transfer more cash from my bank, but I did not have enough to rebalance every position.
So, according to another rule, I picked the 2-3 worst performing stocks in my portfolio and sold those off. That freed up a little more cash but, more importantly, meant that I have three less stocks to rebalance.
In all my testing, it is better to sell off a couple of stocks at a loss, and rebalance stronger stocks, rather than leave all the positions unbalanced.
The complete rules behind my successful stock trading system (along with chapters on topics such as variations, minimizing commissions and taxes, etc.) are described in my book, Stock Trading Riches, which is available on Amazon.com.
While the author doesn't mean to let crooks and failed regulation (especially, in his opinion, an ineffective SEC) off the hook, he thinks that a lot of this ultimately happened because of the acceptance of "black box" systems - where the automated algorithms are kept hidden (either for proprietary reasons or due to complexity) and the investors just accept it.
Even more interesting, the author of this article feels that the bailouts themselves form a black box system, because the Treasury department is not doing enough to keep the process transparent and track where the money goes.
Sunday, 21 December 2008
Being a contrarian, he thinks that the economy is not as bad as the media make it out to be. In fact, he thinks that there might currently be a reverse bubble, where only bad news is being noticed.
For example, he notes that the media does not mention that the S&P 500's dividend yield (3.74% on October 13) has exceeded the yield on a 10-year treasury for the first time since 1958.
Also, he says that business inventories were at record lows during the start of the recession. This should help make the recession milder.
Finally, because stocks are so cheap, a large bull market should develop.
He doesn't know when it will happen so, depending on your risk tolerance, you can own big, safer stocks or smaller, risky ones.
His 5 stocks picks:
1. Logitech (LOGI) - this Swiss firm (with American ADRs) is small, but is the leader for PC peripherals (mice, keyboards, trackballs, etc). The stock is down 65% this year, but profits are up 5%. So, Fisher thinks it is cheap at eight times 2008 earnings and one times revenue.
2. Cisco Systems(CSCO) - A bigger and safer choice than Logitech. Here, you are getting the world's leading supplier of data-networking hardware / software for noly ten times 2009 earnings. He thinks it will fully participate in the next rally.
3. GlaxoSmithKline (GSK) - this is the world's second largest drug and vaccine maker. Fisher thinks that it is way too cheap at its current price (less than two times revenue, a dividend yield of 6%, less than 10 times 2008 earnings).
4. France Telecom (FTE) - France is doing better than the rest of Europe, and this stock is trading very cheaply - "at a price only a pessimist can justify".
5. John Wiley and Sons (JW.A) - This is a small, but well managed and low risk, book publisher. Fisher says its revenues are growing - and are derived from an established portfolio of expert books in the fields of science, technical, medical and Financial. The stock is currently selling cheaply for 10 times its estimated 2009 earnings.
Tuesday, 16 December 2008
The exhibit is free, and located at the FDIC (550 17th St. NW) in Washington D.C.
The exhibit begins with a look at the financial panics of the late 19th and early 20th centuries. Then, it tells how the FDIC was created after 9,000 banks failed in the Great Depression.
Interestingly, there are a couple of Illinois connections:
1. The first FDIC payment was in 1934 to Lydia Lobsiger, a customer of Fon du Lac State Bank of East Peoria, IL.
2. During World War II, the FDIC re-located to Chicago to free up office space for the war effort until the Pentagon was built.
Also, the FDIC has temporarily owned some interesting properties - due to acquiring bad loans from failed banks:
During the 1988 and 1989 football seasons, the FDIC owned 12% of the Dallas Cowboys, due to the failure of FirstRepublic Corp.
They once owned the 1983 horror movie "Grizzly 2: The Predator", starring Charlie Sheen and George Clooney.
1. Campbell Soup Company - In trying times, people turn to comfort foods like soup. Campbell's was the only S&P stock to escape the Sept. 29 market selloff of 778 points.
Its stock is up 26% since January. A few days before the selloff, the company announced a 14% dividend increase - its fifth increase in 5 years.
In the fiscal year that ended on August 3, Campbell had an 8% increase in sales. They forecast 4% sales and earning growth for fiscal 2009.
2. Walgreens - This drug store chain's gross margins have been stable at 28%, even during the last recession.
3. Pediatrix Medical Group - Even in recessions, 1 in 8 babies end up in the neo-natal intensive care unit. This company employees 12,000 physicians who help small hospitals setup and staff these units. They benefit from the trend of older parenting, because women who have kids at an older age have more chances of complicated pregnancies and premature babies.
4. AAR Corp - They are an aerospace outsourcing firm that services jets for airlines and defense. Government contracts accout for 40% of their business, and sales should be up 30%. They are helped by airlines putting off purchases of new planes.
5. Microsoft - They have so much cash ($23.7 billion) that they can buy their way into other markets.
6. Brown-Foreman - Their liquor sales hold up in recessions. They are currently shifting their marketing for Jack Daniels from restaurants/bars to retail ads and in-store promotions, because people are eating at home instead of restaurants. They have lots of cash and untapped credit lines.
Friday, 12 December 2008
| What a small world - now the restaurant / banquet hall where Rasika and I got married (India House in suburban Schaumburg) is mentioned as a key to the Blagojevich scandal over selling Obama's senate seat. It looks like a prominent group of Indian-Americans, who support both Blagojevich and Jesse Jackson Jr., tried to arrange fund-raising for Blagojevich in return for Jackson being appointed to the Senate seat. There was a closed-room power lunch at India House on October 31, with Blagojevich present. |
Wednesday, 10 December 2008
| Police around the country say the restaurant that gives them the most trouble is Chuck E. Cheese! "The biggest problem is you have a bunch of adults acting like juveniles," says Town of Brookfield Police Capt. Timothy Imler. "There's a biker bar down the street, and we rarely get calls there." |
Tuesday, 9 December 2008
All newspapers are under pressure these days, because of the rise of the internet and the decline of advertising in today's economy. In fact, I think the stock price of the Chicago Sun Times is less than the cost of its daily newspaper.
The Tribune, however, is also burdened by $13 billion in debt - mostly because of its leveraged buyout from last year - which was done by billionaire Sam Zell.
Back in April 2007, I wrote about how Zell won a bidding war for the Tribune and bought it using borrowed money, and using an Employee-owned (ESOP) S-Corp structure to avoid taxes.
In that article, I noted that "...as long as the Tribune's cash flow at least stays flat, they should be able to pay off the debt in 10 years...". As we now know, that did not happen. Newspapers declined faster than expected, and the current "perfect storm" economic crisis made things much worse.
In another post, back in August, I mentioned how Zell was anxious to sell the Chicago Cubs to raise money to pay debts. But, in order to use the ESOP tax advantages to avoid capital gains, Zell was requiring the new owner to finance the purchase with debt, and not repay it for 5 years. There were questions about if Major League baseball would allow this.
As it turns out, the credit crunch made a sale difficult. So, the Tribune still has the Cubs. They still want to sell, but it is doubtful if they will get the $1 billion price they were hoping for.
In the first article, I also mentioned how Zell protected his downside by limiting his personal investment to $300 million, while getting 40% of the multi-billion Tribune. It turns out, he protected himself even better than that.
Zell, as Tribune CEO, was able to convert his investment to a subordinated debt note. Now, in bankruptcy, his claims will be at the head of the unsecured creditors. His "co-owners", the employees, still have their interest in an equity form - in the ESOP - which could get wiped out in the bankruptcy.
So, basically, first dibs will go to the secured creditors (i.e. the banks, such as Bank of America, which leant the money for the leveraged buyout). Second dibs will got to Zell's unsecured debt. Finally, the employees will get anything that is left.
Ex-employees (those who retired or were recently laid off) have it worse. Yesterday, the Tribune stopped paying them their severance payments and told them that, if they want their money, they have to get in back of the line in bankruptcy.
Famous film critic Roger Ebert works for the rival Sun Times, but he stated his opinion in his column today. He blames Zell.
Monday, 8 December 2008
| A three-year old boy wondered away from home and got lost for 21 hours in the woods - in 17 degree weather. The family's two puppies went with him and saved him by keeping him warm. |
Tuesday, 18 November 2008
| Besides terrorism, piracy is making a come-back. This time, they went 180 miles offshore and captured a Saudi super oil tanker! Somalia is a failed state and now there are "pirate ports". Like "Ye Pirates of Olde", they use grappling hooks. Otherwise, they use AK-47's and rocket launchers, instead of swords and muskets. |
Monday, 17 November 2008
CEO --Chief Embezzlement Officer. CFO-- Corporate Fraud Officer. BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius. BEAR MARKET -- A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex. VALUE INVESTING -- The art of buying low and selling lower. P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing. BROKER -- What my broker has made me. STANDARD & POOR -- Your life in a nutshell. STOCK ANALYST -- Idiot who just downgraded your stock. STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves. FINANCIAL PLANNER -- A guy whose phone has been disconnected. MARKET CORRECTION -- The day after you buy stocks. CASH FLOW-- The movement your money makes as it disappears down the toilet. YAHOO -- What you yell after selling it to some poor sucker for $240 per share. WINDOWS -- What you jump out of when you're the sucker who bought Yahoo @ $240 per share. INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse. PROFIT -- An archaic word no longer in use. |
Thursday, 6 November 2008
| It looks like McCain aides are complaining about her even more - now that the election is over. They say she didn't even know Africa was a continent, and she might have spent more than $150,000 in donor money on designer clothes. It looks like she also pressured underlings to put clothes on their credit cards, and she might get audited now by the Republican Committee's lawyers. |
| ...it was used to restrain an unruly (and probably drunk) woman on a United flight. The flight was supposed to be from Puerto Rico to Chicago, but got diverted to North Carolina so she could be removed from the flight. |
Friday, 31 October 2008
It's Germany, of all places, that seems to be a wheeling-dealing casino these days, because of Porsche.
As I mentioned in an article a couple of days ago, Volkswagen briefly became the world's largest company because Porsche, while trying to buy out VW, acquired control of 75% of its stock and caused a panic among short-sellers.
After I wrote that article, a friend from Switzerland forwarded me this Times of London article that goes into some interesting details.
Interestingly, the 71 year old founder of Volkswagen is the grandson of Ferdinand Porsche. The grandson, Ferdinand Piech, wants to succeed through being a leader in automotive design and engineering.
Porsche, on the other hand, is being called "an investment bank with a car show room attached". Since 2006, Porsche has made 4 times as much money through finance than selling cars.
While the VW takeover has made the heads of Volkswagen and Porsche instant billionaires, the hedge funds who did the shorting have been clobbered with 30 billion euros in losses.
To add insult to injury, the sudden rise in the price of VW have caused the German exchanges to reduce its weighting in the stock indices. This, in turn, causes the German market index funds to have to trim their positions. They were the ones who lent the stock to the hedge funds to short. Now, they want their stock back so they can sell.
Wednesday, 29 October 2008
| Yesterday, after its stock climbed 250% on Monday and 93% on Tuesday, Volkswagen passed Exxon to become the largest company in the world (by market capitalization). Volkswagen is now more valuable than Toyota, Honda, Nissan, Daimler, Renault, Peugeot, General Motors, and Ford combined! Why did this happen? It's a massive short squeeze. It turns out that a lot of people shorted Volkswagen stock. When someone shorts a stock, they sell shares that are borrowed from others. The key is that, eventually, the party doing the shorting has to return the stock by buying it back. Porsche is trying to acquire Volkswagen, and they owned 35% of the stock. The government of the Lower State of Saxony owns 20% of the stock, and are trying to block Porsche's takeover. Porsche figured out that there were a lot more short positions on VW then expected, and they decided to capitalize on it. If they can't get Volkswagen, they can at least get rich. Taking advantage of lax German disclosure laws (that are to be strengthened next year), Porsche secretly bought more stock. In addition, they bought call options on WV from Goldman Sachs and German banks (such as Commerzbank). The banks thus have short call option positions in WV - and would need to buy the stock to cover rising prices. Over the weekend, Porsche dropped a bombshell by announcing that, not only had they increased their stake in VW from 35% to 42.6%, but they had options to buy another 31.5%. This means that Porsche controls (directly or indirectly) just over 74% of VW stock. Since the Lower State of Saxony owns 20%, this leaves less than 5% of VW stock that short sellers and the option sellers (Goldman, etc) can buy to cover their positions. The shorts and banks are basically screwed, and have to bid up prices higher, while Porsche exercises the options and locks in prices. |
Monday, 27 October 2008
These are from the results of a recent Careerbuilder Survey:
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Thursday, 23 October 2008
| Science Fiction is Becoming More of A Reality ;-) In Japan, a woman was playing a virtual life game, and her character was "married" to another character. That character's owner "divorced" her character, making her angry. She logged on to the game using his password (which she somehow got), and she killed off his character. Now, she has been charged with illegally accessing a computer and manipulating electronic data. |
Thursday, 16 October 2008
This percentage is based on the Consumer Price Index. This is the biggest one year COLA increase since the 7.4% increase in 1982, and it's more than double last year's increase of 2.3%.
This could be a sign that inflation is increasing. Since the country is also slowing down into a recession, could this mean that we will suffer stagflation like the 1970's?
Also, this means that if you do not get a 5.8% raise this year, you will effectively be suffering a pay cut.
Wednesday, 15 October 2008
Tuesday, 14 October 2008
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Friday, 10 October 2008
This is an interesting article about the financial crisis and how AIG might have been at the center of it. |
| My portfolio is down like everyone else's. Instead of adding any new regular stock positions, I bought DOG. DOG is an ETF that is the inverse of the Dow index. So it goes up when the Dow goes down, and vice versa. Needless to say, I wish I had bought it at the beginning of the year. It is up about 50% for the year. Anyway, I bought some on Wednesday for $79.22/share and bought some more today at $87.66 per share. Who knows - maybe we are at the bottom and the stock market will only go up from here. If so, this position will lose money while my others gain. On the other hand, if the market keeps going down, at least the gains will offset the bleeding. You can find more interesting ProShare Funds here. They have funds for most major indexes that return two times, negative one times, and negative two times all major indices. For example, DOG returns the reverse of the Dow, DDM returns two times the Dow, and DXD returns two times the reverse of the Dow. So, for example, while DOG is up about 50% for the year, DXD is up around 118%. DDM is down 61%. DIA, which returns the Dow, is down 34%. I would be careful about using the double ETFs, because of the leverage. |
Thursday, 9 October 2008
| Fred Gratzon, author of "The Lazy Way to Success" - which I really enjoyed - has created a 5 minute video on his website. This movie is really great and creative - with very good production values. Fred's philosophy is like Tao - avoiding hard work and, instead, succeeding through creativity and leverage through intelligent "play". |
Tuesday, 7 October 2008
Monday, 6 October 2008
| A Chicago woman won an auction for an abandoned home in Saginaw, MI with a bid of $1.75. |
| Neel Kashkari, a 35-year old former Goldman Sachs exec and TRW engineer who worked on NASA projects, will lead the $700 billion bailout fund. He got his engineering degrees from University of Illinois at Urbana-Champaign, and got his MBA from Wharton. http://news.yahoo.com/s/ap/20081006/ap_on_bi_ge/meltdown_kashkari |
Thursday, 2 October 2008
| Miss Beatrice, The church organist, Was in her eighties And had never been married. She was admired for her sweetness And kindness to all. One afternoon the pastor Came to call on her and she showed him into her quaint sitting room. She invited him to have a seat while she prepared tea. As he sat facing her old Hammond organ, The young minister Noticed a cute glass bowl Sitting on top of it. The bowl was filled With water, And in the water Floated, of all things, a condom! When she returned With tea and scones, They began to chat. The pastor tried to stifle his curiosity About the bowl of water and its strange floater, but soon it got the better of him and he could no longer resist. 'Miss Beatrice', he said, 'I wonder if you would tell me about this?' Pointing to the bowl. 'Oh, yes,' she replied, 'Isn't it wonderful? I was walking through The Park a few months ago And I found this little package On the ground. The directions said To place it on the organ, Keep it wet and that it would prevent the spread of disease. Do you know I haven't had the flu All winter.' |
Tuesday, 30 September 2008
Congressman Barney Frank has been involved with all the bailout talk. I happened to read up a little on him. Before, all I knew about him was that he was a gay democrat from Mass. who had that scandal with a male prostitute back in 1990. Turns out he's an interesting guy. Congressional staff voted that he was one of the most intelligent and funniest people in congress, and it turns out he has a libertarian streak: From the Cato Institute: http://www.cato-at-liberty.org/2007/04/30/barney-frank-the-occasional-libertarian/ "...seven years ago I did a libertarian rating of Congress. Frank did better than most Democrats, and indeed better than most Republicans (including 7 of the 11 members of the Republican Liberty Caucus Advisory Board)." From Wikipedia: Political positionsIn Congress, Frank is an ardent supporter of medical marijuana. He was the author of the States' Rights to Medical Marijuana Act (H.R. 2592), an attempt to stop federal government from intervening with states' medical marijuana laws.[16] Frank consistently voted for the Hinchey-Rohrabacher amendment, annually proposed by Dana Rohrabacher (R-CA) and Maurice Hinchey (D-NY), that would prohibit Department of Justice from prosecuting medical marijuana patients.[17] As of March 2008, he is trying to pass the Personal Use of Marijuana by Responsible Adults Act of 2008 (HR 5843), which would decriminalize small amounts of marijuana.[18] Frank has also been a critic of aspects of the Federal Reserve system, partnering with some Republicans in this opposition.[19] Frank says that he and Republican Congressman Ron Paul "first bonded because we were both conspicuous nonworshipers at the Temple of the Fed and of the High Priest [Alan] Greenspan."[19] Frank has also partnered with Paul in support of online gambling rights. In 2006, both strongly opposed H.R. 4777, the Internet Gambling Prohibition and Enforcement Act,[20] and H.R. 4411, the Goodlatte-Leach Internet Gambling Prohibition Act.[21] To restore online gambling rights, in 2007 Frank sponsored H.R. 2046, the Internet Gambling Regulation and Enforcement Act.[22] This bill would have established licensing and regulation of online gaming sites. It provided for age verification and protections for compulsive gamblers. In 2008, he and Paul introduced H.R. 5767, the Payment Systems Protection Act, a bill that sought to place a moratorium on enforcement of the Unlawful Internet Gambling Enforcement Act while the U.S. Treasury Department and the Federal Reserve defined "unlawful Internet gambling". As a result of these efforts, Frank (who does not gamble) has become a hero to poker players and online gamblers, including many Republicans.[23] In 2006, Frank was one of only three Representatives to oppose the Respect for America's Fallen Heroes Act, which restricted protests (notably those of Fred Phelps' Westboro Baptist Church) at soldiers' funerals. He opposed the bill, which passed unanimously in the Senate, on civil liberties and constitutional grounds. Frank said of the vote, "I think it's very likely to be found unconstitutional. It's true that when you defend civil liberties you are typically defending people who do obnoxious things... You play into their hand when you let them provoke you into overdoing it. I don't want these thugs to [make the] claim [that] America is hypocritical. |
Friday, 26 September 2008
Today, I experienced the opposite - one of those rare cases of a down-sell!
It made me feel good!
We have domestic service with Dish Network, and my wife wanted to add an international channel.
I called up to add it, and the guy told me I had to get a second satellite dish for $56.
Somehow we got disconnected (turned out to be lucky for me) and I called back and spoke to a woman.
She told me that, instead of paying $56 for a second dish, they now have a “super dish” that can take the place of both the international and domestic dishes. I could get my domestic dish swapped for this one for free.
So, now, instead of having to pay $56 and having 2 dishes wired up together on the side of my house, I’ll pay nothing, and have only one dish to worry about!
See how powerful the down sell (suggesting ways to save your customer money) can be! Here, I now had a good experience with Dish Network and I'm telling everybody about it.
Thursday, 25 September 2008
Maybe the government did strong-arm lenders into making loans to unqualified members of groups that traditionally rented (such as minorities), but I don't think it was the main factor.
I think the main cause was the Federal Reserve trying to cushion the post dot com market crash and slowdown by lowering interest rates and increasing the money supply.
I think they overdid it, and the resultant lower rates and excess money in lenders' hands led to speculation and greed.
Remember all the house flippers and speculators in places like California, Nevada, and Florida?
In fact, Florida was the location of an infamous real estate boom and bust from 1924-1926. The difference is that, back then, Wall Street wasn’t linked up through the repackaging of mortgages as securities, so the real estate bust didn't spread throughout the financial system.
Their CDs, bonds, and dividends aren't giving enough income and they are reluctant to raise money by selling stocks because they would have to sell at a loss.
Meanwhile gas and food prices are up.
A lot of their houses are paid for, but they have trouble paying higher property tax bills, and can't sell their homes.
Back in 1995, Kevin Garnett went straight from high school into the NBA. Before that, it was understood that star basketball players out of high school would go to college, and then get drafted into the NBA.
For the top players, however, the colleges benefited more from their talent then they did. Sure, the players received scholarships - which is good if they want an education. But, they can't work campus jobs for extra money, they can't sign with an agent, or get sponsorships. Meanwhile, the colleges can get money from ticket sales, merchandise sales, sponsors like Nike, etc.
After Garnett, a lot of the top players skipped high school and went into the NBA. The college game suffered from lack of top talent.
Then, 2 years ago, during contract negotiations, the NBA commissioner made the Player's Union accept a provision that requires draft choices to be at least 19 and one year away from high school.
This forced the players to work for free in college - for at least a year.
Now, Brandon Jennings (this year's top high school point guard) had poor SAT scores and no desire to go to college. Instead, he and his family hired an attorney and agent, and he signed with an Italian team in the European Basketball league.
Now, instead of playing for free at a college - and going through the motions of being a "scholar/athlete" - he is doing an apprenticeship with an actual pro team, and getting paid $1 million in salary, plus a shoe endorsement from UnderArmour for a lot more.
His contract with the Italian team is three years - but he has a clause that he can leave after year 1 or 2 to sign with the NBA.
The other interesting thing about Jennings is that he signed up to endorse the fledgling shoe division of Under Armour - instead of Nike or Addidas.
He is being advised by Sonny Vaccaro, the same agent who negotiated Michael Jordan's relationship with Nike. At that time, Addidas was the big shoe company but Vacarro convinced Jordan that he would ultimately get rewarded well as Nike built its shoe division around him.
Now, Vaccaro is trying to do the same with Jennings and Under Armour.
Wednesday, 24 September 2008
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Monday, 22 September 2008
| On my business and trading blog, I've recently written 5 articles about the the current financial crisis: Lehman, Merril Lynch, and AIG Lead to The "Unbubble" Lehman, Money Market Funds, and the Government Guarantee Controversy Kraft Foods (KFT) Replaces AIG in Dow OfficeMax Stock Hurt by Lehman Fallout Short Sellers Aren't Evil |
Currently, the SEC has temporarily banned short selling on a list of 799 financial stocks.
As reported on CNBC, this list seems to have been quickly thrown together - some CEO's have questioned why they were not included on the list, and some were surprised when reporters told them that their stocks were on the list.
Chicago Tribune reporter Joshua Boak reported on Saturday that many exchanges, traders, and economists have been outraged by the ban, and warned that this could disrupt the flow of the markets.
In fact, the SEC has since modified the ban to allow market makers to short stocks - to help maintain liquidity and an orderly market.
Proponents of short selling argue that "investors are best served when they can hear both the reasons to buy and reasons to sell any given security."
Boak went on, in a separate article, to explain his personal experience with short sellers. Back in 2005, when he wrote for the Toledo (Ohio) Blade, Boak investigated the State of Ohio's $50 million investment in rare coins.
It turned out that pension money was invested in shares of Greg Manning auctions - which bought and sold rare coins, stamps, etc.
Shares in Manning Auctions took off after a majority stake was bought by a Spanish company called Afinsa Bienes Tangibles. This company bought postage stamps from money invested by Spanish and Portuguese pension funds. They kept the stamps in a vault and paid the pension funds 8-10% a year.
Short sellers suspected that Manning Auctions was being supported by Afinsa, and that Afinsa was a Ponzi scam - using new investor money to pay old investors.
The short sellers contacted Boak and the Blade - who ended up exposing the scam.
So, he credits short sellers with saving 143,000 pensions.
This was OfficeMax's biggest one-day decline since October 1987.
It turns out that, in 2004, OfficeMax sold its timber assets to Boise Land & Timber and, in return, received $1.6 billion in installment bonds from Boise.
Half the value of these bonds were guaranteed by collateral bonds issued by Lehman.
Now, those collateral bonds are in default.
Right now, the Boise installment bonds have not defaulted, and OfficeMax is ok. But, if something happens to the installment bonds, OfficeMax would not be able to collect from Lehman.
| I am planning to buy Kraft Foods (KFT). It should get a boost because it has just been added to the Dow - to replace AIG. Being added to the S&P 500 would produce more of a boost, but there are still a lot of funds and investment strategies that use Dow components. Longer term, Kraft has a history of solid performance. I like the fundamentals of holding a prepared foods company - they, along with grocery stores are starting to see their sales increase as people stop eating out as the economy continues to slow down. |