Keywords: Returns, Investment Performance, Bonds, Stocks, Dividend Yields
a positive development as they, by definition, should focus on prosperous long-term development of the firms they invested in.
Activist investors like Carl C. Icahn, Daniel S. Loeb and William A. Ackman are getting deep-pocketed imitators.
Some of the biggest public pension funds, which have sought to influence companies for years, are now starting to emulate these investors by engaging with, and sometimes seeking to oust, directors of companies whose stock they own.
Anne Simpson, director of corporate governance at the California Public Employees’ Pension Fund, the largest United States pension plan with $279 billion in assets, says “board coups” this year that led to the departure of directors at Hewlett-Packard, JPMorgan Chase and Occidental Petroleum show “how shareholder activism is evolving from barbarians at the gate to acting like owners.” read more in The New York Times
Keywords: Pension Funds, Shareholder Activism, Pension Fund Performance
Keywords: Investment Strategy, ETF, Passive Index Funds, Actively Managed Fund, Mutual Funds
Former Morgan Stanley managing director and manager of the Federal Reserve's $1.25 trillion agency mortgage-backed security purchase program, Andrew Huszar, about the backdoor bailout of Wall Street banks:
I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time. read more in the Wall Street Journal
Keywords: Fed, Quantitative Easing, Bank Bail Outs, Bank Recapitalizations, Main Street, Wall Street
Interesting article and charts by Wesley R. Gray, PhD, on the ratio of GDP growth/Corporate Profits, which seems to be of quite importance to investors such as Warren Buffett:
Keywords: Market Timing, Investor Strategy, GDP Growth to Corporate Profits
Admati, Anat R. and DeMarzo, Peter M. and Hellwig, Martin F. and Pfleiderer, Paul C., Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity is Not Socially Expensive (October 22, 2013). Rock Center for Corporate Governance at Stanford University Working Paper No. 161. Available at SSRN: http://ssrn.com/abstract=2349739
"We examine the pervasive view that "equity is expensive," which leads to claims that high capital requirements are costly for society and would affect credit markets adversely. We find that arguments made to support this view are fallacious, irrelevant to the policy debate by confusing private and social costs, or very weak. For example, the return on equity contains a risk premium that must go down if banks have more equity. It is thus incorrect to assume that the required return on equity remains fixed as capital requirements increase. It is also incorrect to translate higher taxes paid by banks to a social cost. Policies that subsidize debt and indirectly penalize equity through taxes and implicit guarantees are distortive. And while debt’s informational insensitivity may provide valuable liquidity, increased capital (and reduced leverage) can enhance this benefit. Finally, suggestions that high leverage serves a necessary disciplining role are based on inadequate theory lacking empirical support.
We conclude that bank equity is not socially expensive, and that high leverage at the levels allowed, for example, by the Basel III agreement is not necessary for banks to perform all their socially valuable functions and likely makes banking inefficient. Better capitalized banks suffer fewer distortions in lending decisions and would perform better. The fact that banks choose high leverage does not imply that this is socially optimal. Except for government subsidies and viewed from an ex ante perspective, high leverage may not even be privately optimal for banks.
Setting equity requirements significantly higher than the levels currently proposed would entail large social benefits and minimal, if any, social costs. Approaches based on equity dominate alternatives, including contingent capital. To achieve better capitalization quickly and efficiently and prevent disruption to lending, regulators must actively control equity payouts and issuance. If remaining challenges are addressed, capital regulation can be a powerful tool for enhancing the role of banks in the economy."
Keywords: Financial Institutions, Capital Structure, "Too Big To Fail"
..."Study the roots of our new tech economy, and you’ll find that it differs in important ways from the Internet bubble of the ’90s. That blip was fed by the promise of future billions that we were certain to realize from the web economy. Today’s tech industry, on the other hand, feeds off of three megatrends that are already minting billions by revolutionizing every sector of the global economy, including healthcare, manufacturing, energy, media, and advertising. The first of these trends is the transition from hulking desktop PCs to ubiquitous mobile devices that allow tech firms—most notably Bay Area behemoths Apple, Google, and Facebook—to address their customers’ desires at a proximity never before achievable. The second is the rising urge to incorporate software into every corner of our lives: from booking restaurants (OpenTable), to hailing cabs (Uber), to searching for jobs (LinkedIn), to adjusting our home heating and cooling systems (Nest), to paying for everything (Square, PayPal), to finding a room anywhere in the world (Airbnb). Third is our full-throated embrace of personalized services—from algorithmically determined TV programming (YouTube, Netflix) to geographically targeted advertising (Google, Facebook, Twitter)—that are fueled by ever-larger storehouses of data collected through our mobile gadgets. And all of these forces amplify one another. More mobile devices make for more personal data, which allow for better personalized software that we use more often, which in turn makes mobile devices more attractive—and on and on in a gilded upward spiral." Source: San Francisco Magazine
Keywords: Technology, Innovation, Tech Boom
“‘Your No. 1 client is the government,’ John J. Mack, Morgan Stanley MS +0.75%‘s chairman and chief executive from 2005 to 2009, told current CEO James Gorman in a recent phone call. Mr. Gorman, who was visiting Washington that day, agreed.” – Wall Street Journal, September 10, 2013.
The five year anniversary of the ‘financial crisis’ has predictably generated all manner of commentary about its presumed causes. What’s most unfortunate five years later is that ‘financial’ and ‘crisis’ are still used together. It’s unfortunate simply because despite what you read, the crisis was decidedly not financial, nor was it caused by a crackup in the housing market, nor was it caused by the failure of Lehman Brothers. read more in Forbes
Keywords: Financial Crisis, Great Depression, Government, Banking Sector, Government and Market Distortions
as an Apple user I hoped them to come up with a smartwatch first. Advantages of such watches are obvious. They are the future.
Keywords: Smartwatch, Galaxy Gear
"Rule No. 1: Never lose money; rule No. 2: Don't forget rule No. 1."
"Someone's sitting in the shade today because someone planted a tree a long time ago."
"No matter how great the talent or efforts, some things just take time. You can't produce a baby in one month by getting nine women pregnant."
Keywords: Wisdom, Value Investment
Running With The Crowd
Focusing On Recent History
Missing The Forest For The Trees
Extrapolating From Popular Success Stories
Keywords: Asset Allocation, Behavioral Finance, Bias
Keywords: Tesla, Elon Musk, Electric Car
Keywords: Microsoft, Windows, Bill Gates, Steve Ballmer
Focusing only on nominal returns ignores the degrading effects of inflation, taxes, and investment expenses. And using a single asset allocation plan disregards the potential benefits of different available vehicles. Thornburg Investment Management has a study of real returns. Good stuff!
Keywords: Investment, Asset Classes, Stocks, Bonds, Real Returns
"The benchmark 10-year Treasury Note yield is near a one-year high. The upward bias of late is a reminder, albeit a mild one at the moment, that the long-anticipated run of higher interest rates has arrived. All the usual caveats apply, but we’ve probably seen the bottom in rates. This isn’t the end of the world, but it's the start of a new era.
What are the implications of higher interest rates? By some accounts, the change tempts predictions of a world that’s patently unfriendly to risky assets. No doubt there’ll be times in the years ahead when that scenario applies. Then again, it's worth remembering that risky assets weren't always immune to trouble when interest rates were generally falling in years past. In any case, we’ve lived in a world where rates have been trending lower for more than three decades, and so the prospect of reversing this move conjures all sorts of dire possibilities. It would be naïve to dismiss the dark forecasts entirely, but much depends of how quickly rates rise and under what economic conditions." read more on The Capital Spectator
Keywords: Interest Rate, Treasury Yield
Keywords: Google, Google Glass
Keywords: Jeff Bezos, Media, Online, Print, Washington Post
"Average time spent with digital media per day will surpass TV viewing time for the first time this year, according to eMarketer’s latest estimate of media consumption among US adults.
The average adult will spend over 5 hours per day online, on nonvoice mobile activities or with other digital media this year, eMarketer estimates, compared to 4 hours and 31 minutes watching television. Daily TV time will actually be down slightly this year, while digital media consumption will be up 15.8%.
The most significant growth area is on mobile. Adults will spend an average of 2 hours and 21 minutes per day on nonvoice mobile activities, including mobile internet usage on phones and tablets—longer than they will spend online on desktop and laptop computers, and nearly an hour more than they spent on mobile last year."
Keywords: Media, Online, Internet, Print, Digital, TV
Keywords: Tesla, Electric Car
Keywords: Media, Newspaper, Print Media, Online Media, Advertising
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