The Almighty Bill Gross of Pimco has flip flopped on the direction of interest rates for the second time this month. I can feel Mr. Gross’ pain. At this point predicting the direction of interest rates is like flipping a coin. The global economy is roaring on all engines – a case for higher interest [...]
If I’ve learned anything over the years, it’s that people don’t learn. Recently, I talked to my cousin who is an executive with a Russian airline company. In our discussion he mentioned that his company just received semi-unsecured loans (all planes are leased so they are not used as a collateral) from western banks at 10% [...]
Fortune’s June 25 issue has come out with the top picks for Growth & Income, Bargain Growth, Small Wonders and Deep Value. The shocking part is that almost every stock in this group (yes, including Deep Value) is trading at, or very close to, an all time high. If this is not a sign of a market top, [...]
There was an interesting article in the WSJ on Moody’s downgrading 131 bonds backed by a pool of subprime mortgages. As dramatic as it sounds this downgrade only impacted $3 billion worth of bonds, less than 1% of the $400 billion in subprime mortgage issue in 2006.
The Financial Times reports China’s largest bank, ICBC, announced its intentions to get into the banking business in the US. That move actually makes sense. Politicians already started making waves about China owning a good chunk of the US through its government debt (an idiotic rhetoric, but it is a topic for a different discussion).
The Joseph A. Banks (JOSB) selling machine is kicking on all cylinders – yesterday’s quarterly numbers were proof of that (see article I wrote for Market Watch).
By Vitaliy Katsenelson, CFA
Financial Times – May 25, 2007
Wall Street is inherently short-termist. This is not because it is dumb. Quite the contrary, some of the brightest minds in the country labour in the investment industry. But as the mutual fund industry has grown, the desire for short-term gratification has altered the focus, turning an investment business into a marketing one.
There is nothing wrong with marketing; some of my good friends are marketeers. But a good marketeer’s job is to discover what customers want and try to meet that need. Unfortunately, the investing public wants instant gratification. They want to keep up with the (Dow) Joneses, and for their fund to "beat" the other funds and comparable indices on a short-term basis – quarterly and annually. That is not what investing is about; it is about reaching long-term financial goals without taking unnecessary risks.
In this article I made an argument that despite high uncertainty surrounding First Marblehead’s (FMD) business at nine times earnings, it is a very attractive opportunity. Here are some additional points that I omitted in the article: