Warren Buffett's Advice: How to Get 'Fair Shake' on Wall Street: "So, you always want to look at costs. When somebody comes around to you and says, 'I'm going to sell you this wonderful security but there's this big chunk in it for me," you get suspicious.
(Read More: Buffett Still Buying Stocks, Sees 'Good Value')
As they say, when a person with experience meets a person with money, the person with the money gets the experience and the person with the experience gets the money."
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Friday, January 31, 2014
U.S. stocks see worst monthly decline in over a year - Market Snapshot - MarketWatch
U.S. stocks see worst monthly decline in over a year - Market Snapshot - MarketWatch:
Stocks endured heavy selling in most of the sessions this week, as sharp drops in emerging-markets currencies prompted nervous investors to flee riskier assets including stocks and lock in profits from a spectacular year.
“We can blame the recent pullback on the emerging markets or capital flows, but at the end of the day, it was going to happen anyway because markets rallied a bit too much at the end of last year,” says Jim Russell, senior equity strategist for U.S. Bank Wealth Management.
“We would consider this as a buying opportunity. The jury is out on whether stocks will have a bigger correction, but for longer-term our outlook is positive,” he added.
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Stocks endured heavy selling in most of the sessions this week, as sharp drops in emerging-markets currencies prompted nervous investors to flee riskier assets including stocks and lock in profits from a spectacular year.
“We can blame the recent pullback on the emerging markets or capital flows, but at the end of the day, it was going to happen anyway because markets rallied a bit too much at the end of last year,” says Jim Russell, senior equity strategist for U.S. Bank Wealth Management.
“We would consider this as a buying opportunity. The jury is out on whether stocks will have a bigger correction, but for longer-term our outlook is positive,” he added.
'via Blog this'
Do yourself a favor: Care less about the stock market - David Weidner's Writing on the Wall - MarketWatch
Do yourself a favor: Care less about the stock market - David Weidner's Writing on the Wall - MarketWatch: "The market is really just a yardstick of our confidence, right?
Actually, no.
That’s because most of us who own stocks don’t hold much and most people don’t own any stocks at all.
How is the market a reflection of this silent majority?
The reality is that stocks are not only owned by a minority of Americans, but by a minority of that minority – and a very wealthy minority at that."
'via Blog this'
Actually, no.
That’s because most of us who own stocks don’t hold much and most people don’t own any stocks at all.
How is the market a reflection of this silent majority?
The reality is that stocks are not only owned by a minority of Americans, but by a minority of that minority – and a very wealthy minority at that."
'via Blog this'
44 per cent drop in SMRT's Q3 earnings, with rail operations in the red | AsiaOne Business
44 per cent drop in SMRT's Q3 earnings, with rail operations in the red | AsiaOne Business: ""Our fare business continues to face cost pressures arising from ongoing efforts to meet heightened demands on service, reliability and capacity," said SMRT chief executive Desmond Kuek. He said rising costs will be mitigated partially next year by the recently approved fare adjustments, and the company's continuing efforts to drive higher productivity and cost efficiency.
"We are engaging the authorities on a timely transition to a viable and sustainable model for the trains and bus businesses," said Mr Kuek. The firm also continues to explore rail business opportunities overseas, he said."
'via Blog this'
"We are engaging the authorities on a timely transition to a viable and sustainable model for the trains and bus businesses," said Mr Kuek. The firm also continues to explore rail business opportunities overseas, he said."
'via Blog this'
Thursday, January 30, 2014
Blackstone Has Record Fourth-Quarter Profit on Fund Exits - Bloomberg
Blackstone Has Record Fourth-Quarter Profit on Fund Exits - Bloomberg: "er of alternative assets such as private equity and real estate, posted a record fourth-quarter profit as the carrying value of its holdings gained and it sold assets. The shares rose the most in a year.
Economic net income, a measure of earnings excluding some costs, more than doubled to $1.54 billion, or $1.35 a share, from $670 million, or 59 cents, a year earlier, New York-"
'via Blog this'
Economic net income, a measure of earnings excluding some costs, more than doubled to $1.54 billion, or $1.35 a share, from $670 million, or 59 cents, a year earlier, New York-"
'via Blog this'
Ghost of 1929 haunts, as 1997-style crisis hits - Outside the Box - MarketWatch
Ghost of 1929 haunts, as 1997-style crisis hits - Outside the Box - MarketWatch:
"For now, I continue to recommend investor protect themselves from a worsening crisis by focusing on defensive assets like Treasury bonds and making opportunistic short-side plays. Examples include a position in the leveraged Direxion 3x Treasury Bond Bull TMF +2.22% and a short against Brazilian steelmaker Companhia Siderurgica Nacional SID -0.06% . Both positions are carrying gains of more than 7% since I added them to my Edge Letter Sample Portfolio.
Disclosure: Anthony has recommended TMF and SID short to his clients.
Anthony Mirhaydari is founder of the Edge, an investment advisory newsletter, as well as Mirhaydari Capital Management, a registered investment advisory firm. "
'via Blog this'
"For now, I continue to recommend investor protect themselves from a worsening crisis by focusing on defensive assets like Treasury bonds and making opportunistic short-side plays. Examples include a position in the leveraged Direxion 3x Treasury Bond Bull TMF +2.22% and a short against Brazilian steelmaker Companhia Siderurgica Nacional SID -0.06% . Both positions are carrying gains of more than 7% since I added them to my Edge Letter Sample Portfolio.
Disclosure: Anthony has recommended TMF and SID short to his clients.
Anthony Mirhaydari is founder of the Edge, an investment advisory newsletter, as well as Mirhaydari Capital Management, a registered investment advisory firm. "
'via Blog this'
Calm Broken in Markets Amid Concern of Emerging Contagion - Bloomberg
Calm Broken in Markets Amid Concern of Emerging Contagion - Bloomberg: "“My phone hasn’t stopped ringing in the past few days, and I met with about half of my clients, as some of them have direct exposure to emerging-market currencies,” Lorne Baring, who manages about $500 million as managing director of B Capital in Geneva, said in a telephone interview, adding the firm reduced emerging-market exposure prior to the selloff. “They want to know my views on whether the situation is going to get worse, and I tell them yes, it will.”"
'via Blog this'
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Wednesday, January 29, 2014
Asian cities most at risk of extreme weather
Asian cities most at risk of extreme weather: "Japan's Tokyo, Manila in the Philippines and China's Pearl River Delta region — one of the most densely urbanized areas in the world — top Swiss Re's list of cities most at-risk in terms of population. Only one non-Asian city, Los Angeles, made the top 10."
'via Blog this'
'via Blog this'
Chinese can’t say neigh to feng shui in year of the horse
Chinese can’t say neigh to feng shui in year of the horse: ""In theory, wood produces fire. Fire produces illumination. Everything looks good for the stock market," Chua said. "But I did a little divination and a very simple and answer came to me and it says: disasters," he added.
"Too much fire will cause an imbalance," Chua said, citing concerns more "freaky weather" could be ahead. But he expects the entertainment and energy sectors will perform well, while the property will likely be volatile."
'via Blog this'
"Too much fire will cause an imbalance," Chua said, citing concerns more "freaky weather" could be ahead. But he expects the entertainment and energy sectors will perform well, while the property will likely be volatile."
'via Blog this'
‘Huge amount of downside’ in S&P: Fleckenstein
‘Huge amount of downside’ in S&P: Fleckenstein: ""If they taper, they're going to get a lot of weakness. People are being very macho right now, they think that if the Fed tapers it's going to be OK—and it might be for a little while. But the market's going to end up lower if they keep tapering, and they're going to have to come back the other way. Then at some point, people will see that the Fed is trapped, because what they do doesn't work, and they can't stop," Fleckenstein said."
'via Blog this'
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Why is SMRT Raising Fares? | Balding's World
Why is SMRT Raising Fares? | Balding's World:
Why is SMRT Raising Fares?
Posted on January 29, 2014
Share
Lost amid the Anton Casey mess was the announcement that SMRT would raise fares by more than 3% in 2014 and additional 3% in 2015. With yesterdays announcement that SMRT profit had fallen by more than 40%, SMRT appears destined to take increasingly stronger steps to maintain profitability. While people have understandably been upset by the fare increase, there appears to be a poor understanding of how this fits into the larger picture of Singaporean public finances and the Temasek portfolio.
Transportation companies and especially public transport companies are notoriously unprofitable. There is a reason there are virtually no listed public transportation companies and that is because they are unprofitable. Throughout the world, whether it is North America, Europe, or even Asia (Singapore and Hong Kong excluded) public transportation companies like bus and rail companies do not make money. Public transport train, subway, and bus companies from Japan to Germany are rarely profitable enterprises.
SMRT is an immensely profitable firm. Despite being in a difficult industry, SMRT has posted net profit margins of nearly 20% as recently as 2010 and even in its most difficult recent year still managed to post a net profit margin of 7.3% equaling $83 million SGD. In other words, despite declaring a healthy net profit, SMRT has also declared its business model “unsustainable”. This begs the question: what is driving the unreliability and financial problems at SMRT?
SMRT is receiving subsidized profits via government funds. Though most people are aware of the subsidized fares available to seniors and students, there are two much larger and less obvious ways the government subsidizes SMRT. First, the Singapore government has been gifting buses to the SMRT most recently to the tune of $1.1 billion SGD resulting in an annual implied subsidy. If we take a simple scenario assuming this money was loaned to SMRT over 10 years at 5% annual interest, this would necessitate annual payments of $142 million SGD. Consider, that SMRT only recorded net income of $161 million in 2011 declining to $83 million for the year ending March 31, 2013. It becomes obvious how important this implicit subsidy become to SMRT reporting yearly net profits around 10%.
Second, though there is no public statement about the agreement between SMRT and the government on the rail, subway, and light rail assets, given the generosity of the government to SMRT with regards to buses, it stands to reason that they are displaying a similar level of generosity with regards to rail assets. The government of Singapore paid for out of public funds and built rail and subway lines and then reach an agreement for SMRT to pay the government for the use of these assets. If the government is not charging SMRT a cost plus rate for the use of those rail assets, as is the most likely scenario, this represents an additional significant subsidy. Given the large amount of money invested by the Singaporean government over time but the longer expected of life span of rail assets when coupled with the bus subsidy, it would be conservative to estimate an implied subsidy of greater than $200 million SGD annually to SMRT. Given their recent net profit of $83 million and their $163 million in 2010, this implied subsidy represents between 125-250% of net profits.
This matters because SMRT is a publicly traded firm and a portfolio company of Temasek. SMRT is publicly traded and counts Temasek as its dominant shareholder. Temasek repeatedly boasts its superior asset management in producing 16% annualized returns since 1974 and SMRT has produced consistently high rates of return producing an 18% net profit in 2010. Given the close links between the government and Temasek, each has an incentive to ensure continued profitability even if that means the government gives money to Temasek managed firms so they can declare a profit. SMRT is only making a profit because of government subsidies not due to superior management. If the government wants to give money to SMRT for the purpose of maintaining service, this would be a reasonable use of public funds. However, the government giving money to SMRT so it can declare a profit and increase the rate of return for government linked shareholders is nothing less than cronyism.
Let me strongly emphasize that given the difficult nature of the public transportation industry, I am not philosophically opposed to public private partnerships in this area. However, it seems to be a clear conflict of interest and inappropriate for the government to be subsidizing the profits of a publicly listed firm that is owned by a government owned investment firm. SMRT clearly has no profits without government subsidies and the subsidies should not be used to allow Temasek or other executives to meet profit or return targets for bonuses.
'via Blog this'
Why is SMRT Raising Fares?
Posted on January 29, 2014
Share
Lost amid the Anton Casey mess was the announcement that SMRT would raise fares by more than 3% in 2014 and additional 3% in 2015. With yesterdays announcement that SMRT profit had fallen by more than 40%, SMRT appears destined to take increasingly stronger steps to maintain profitability. While people have understandably been upset by the fare increase, there appears to be a poor understanding of how this fits into the larger picture of Singaporean public finances and the Temasek portfolio.
Transportation companies and especially public transport companies are notoriously unprofitable. There is a reason there are virtually no listed public transportation companies and that is because they are unprofitable. Throughout the world, whether it is North America, Europe, or even Asia (Singapore and Hong Kong excluded) public transportation companies like bus and rail companies do not make money. Public transport train, subway, and bus companies from Japan to Germany are rarely profitable enterprises.
SMRT is an immensely profitable firm. Despite being in a difficult industry, SMRT has posted net profit margins of nearly 20% as recently as 2010 and even in its most difficult recent year still managed to post a net profit margin of 7.3% equaling $83 million SGD. In other words, despite declaring a healthy net profit, SMRT has also declared its business model “unsustainable”. This begs the question: what is driving the unreliability and financial problems at SMRT?
SMRT is receiving subsidized profits via government funds. Though most people are aware of the subsidized fares available to seniors and students, there are two much larger and less obvious ways the government subsidizes SMRT. First, the Singapore government has been gifting buses to the SMRT most recently to the tune of $1.1 billion SGD resulting in an annual implied subsidy. If we take a simple scenario assuming this money was loaned to SMRT over 10 years at 5% annual interest, this would necessitate annual payments of $142 million SGD. Consider, that SMRT only recorded net income of $161 million in 2011 declining to $83 million for the year ending March 31, 2013. It becomes obvious how important this implicit subsidy become to SMRT reporting yearly net profits around 10%.
Second, though there is no public statement about the agreement between SMRT and the government on the rail, subway, and light rail assets, given the generosity of the government to SMRT with regards to buses, it stands to reason that they are displaying a similar level of generosity with regards to rail assets. The government of Singapore paid for out of public funds and built rail and subway lines and then reach an agreement for SMRT to pay the government for the use of these assets. If the government is not charging SMRT a cost plus rate for the use of those rail assets, as is the most likely scenario, this represents an additional significant subsidy. Given the large amount of money invested by the Singaporean government over time but the longer expected of life span of rail assets when coupled with the bus subsidy, it would be conservative to estimate an implied subsidy of greater than $200 million SGD annually to SMRT. Given their recent net profit of $83 million and their $163 million in 2010, this implied subsidy represents between 125-250% of net profits.
This matters because SMRT is a publicly traded firm and a portfolio company of Temasek. SMRT is publicly traded and counts Temasek as its dominant shareholder. Temasek repeatedly boasts its superior asset management in producing 16% annualized returns since 1974 and SMRT has produced consistently high rates of return producing an 18% net profit in 2010. Given the close links between the government and Temasek, each has an incentive to ensure continued profitability even if that means the government gives money to Temasek managed firms so they can declare a profit. SMRT is only making a profit because of government subsidies not due to superior management. If the government wants to give money to SMRT for the purpose of maintaining service, this would be a reasonable use of public funds. However, the government giving money to SMRT so it can declare a profit and increase the rate of return for government linked shareholders is nothing less than cronyism.
Let me strongly emphasize that given the difficult nature of the public transportation industry, I am not philosophically opposed to public private partnerships in this area. However, it seems to be a clear conflict of interest and inappropriate for the government to be subsidizing the profits of a publicly listed firm that is owned by a government owned investment firm. SMRT clearly has no profits without government subsidies and the subsidies should not be used to allow Temasek or other executives to meet profit or return targets for bonuses.
'via Blog this'
SMRT's profits crashed 44.1% to $14.2m | Singapore Business Review
SMRT's profits crashed 44.1% to $14.2m | Singapore Business Review:
SMRT's profits crashed 44.1% to $14.2m
But here's why no one is surprised.
According to OCBC Investment Research, as expected, SMRT reported another set of lacklustre results for 3QFY14. Although revenue climbed 4.1% YoY to S$293.3m due to positive contribution from all segments except its Taxi and LRT operations, PATMI dipped 44.1% to S$14.2m as operating expenses increased at a faster pace of 10.6%.
Here's more:
The main culprit was a 21.4% hike in SMRT’s staff costs to S$119.6m, which formed 40.8% of its topline, versus 35.0% in 3QFY13.
For 9MFY14, revenue rose 4.3% to S$874.4m but PATMI slumped 52.8% to S$45.0m. SMRT’s Rail operations (Train and LRT combined) recorded its first ever quarterly loss of S$0.2m in 3QFY14, while its overall fare business (Train, Bus and LRT) suffered a S$9.0m operating loss, in contrast to 3QFY13’s S$7.4m operating profit.
In terms of balance sheet strength, SMRT’s net gearing increased from 8.3% as at 31 Dec 2012 to 63.7% as at 31 Dec 2013, largely due to the payment of S$392.7m for 17 trains and operating assets taken over from the LTA.
'via Blog this'
SMRT's profits crashed 44.1% to $14.2m
But here's why no one is surprised.
According to OCBC Investment Research, as expected, SMRT reported another set of lacklustre results for 3QFY14. Although revenue climbed 4.1% YoY to S$293.3m due to positive contribution from all segments except its Taxi and LRT operations, PATMI dipped 44.1% to S$14.2m as operating expenses increased at a faster pace of 10.6%.
Here's more:
The main culprit was a 21.4% hike in SMRT’s staff costs to S$119.6m, which formed 40.8% of its topline, versus 35.0% in 3QFY13.
For 9MFY14, revenue rose 4.3% to S$874.4m but PATMI slumped 52.8% to S$45.0m. SMRT’s Rail operations (Train and LRT combined) recorded its first ever quarterly loss of S$0.2m in 3QFY14, while its overall fare business (Train, Bus and LRT) suffered a S$9.0m operating loss, in contrast to 3QFY13’s S$7.4m operating profit.
In terms of balance sheet strength, SMRT’s net gearing increased from 8.3% as at 31 Dec 2012 to 63.7% as at 31 Dec 2013, largely due to the payment of S$392.7m for 17 trains and operating assets taken over from the LTA.
'via Blog this'
China Manufacturing Index Shows Contraction - Bloomberg
China Manufacturing Index Shows Contraction - Bloomberg: "“China’s growth momentum will continue to weaken in coming quarters,” Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong, said in a note. “The market continues to underestimate the degree of the ongoing slowdown and further negative surprises are in stock as the year progresses.”"
China Credit Trust Co. has repaid the principal to some investors of its 3-billion-yuan ($495 million) high-yield product, according to investors who accepted the bailout offer. Averting the nation’s biggest trust default in at least a decade may reinforce investors’ belief in implicit guarantees and the government’s willingness to back risky products, stoking their appetite for products in the $1.7 trillion trust market.
China will struggle to maintain 7.5 percent economic growth this year and next year, Li Daokui, a former People’s Bank of China academic adviser, said last week at the World Economic Forum in Davos, Switzerland. He said that excessively fast declines in property prices could be a risk, while shadow banking isn’t a major threat.
HSBC’s survey is based on responses from more than 420 manufacturers and is weighted more toward smaller companies. The official PMI is based on questionnaires sent to about 3,000 companies.
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Tuesday, January 28, 2014
Monday, January 27, 2014
When a Giant Gain Causes Pain - MoneyBeat - WSJ
When a Giant Gain Causes Pain - MoneyBeat - WSJ:
If you have a small stake in a company, you own the stock. But if that stake suddenly grows enormous, the stock owns you. Thinking rationally about it then can become all but impossible—even if you have a doctorate in economics.
No matter how closely you analyzed a stock when you bought it, if it has since gone way up, then it is time to start analyzing yourself, says Meir Statman, a professor of behavioral finance at Santa Clara University.
“What many people are afraid of when they have a stock with a big gain,” he says, “is regret.” So you need to figure out which will bother you more: selling the stock and then watching it go up even more, or not selling and then watching it go down.
To manage both kinds of regret on a highflying stock, consider selling, say, 20% in five equal installments at regular intervals. That reduces the risk of selling too soon and of holding too long. As Terrance Odean, a behavioral-finance professor at the University of California, Berkeley, puts it: “Investors should diversify emotionally as well as financially.”
— Write to Jason Zweig at intelligentinvestor@wsj.com, and follow him on
'via Blog this'
If you have a small stake in a company, you own the stock. But if that stake suddenly grows enormous, the stock owns you. Thinking rationally about it then can become all but impossible—even if you have a doctorate in economics.
No matter how closely you analyzed a stock when you bought it, if it has since gone way up, then it is time to start analyzing yourself, says Meir Statman, a professor of behavioral finance at Santa Clara University.
“What many people are afraid of when they have a stock with a big gain,” he says, “is regret.” So you need to figure out which will bother you more: selling the stock and then watching it go up even more, or not selling and then watching it go down.
To manage both kinds of regret on a highflying stock, consider selling, say, 20% in five equal installments at regular intervals. That reduces the risk of selling too soon and of holding too long. As Terrance Odean, a behavioral-finance professor at the University of California, Berkeley, puts it: “Investors should diversify emotionally as well as financially.”
— Write to Jason Zweig at intelligentinvestor@wsj.com, and follow him on
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