Articles

In one corner you have the fact that more adjustable rate mortgages are due to reset, the economy is slowing, and home prices continue to decline. In the other corner you have banks who say that the worst for them is over and next quarter should see a rebound. What do you think? Who do you believe? Have the banks fully marked down their assets to reflect reality or are there more skeletons in the closet - excuse the Halloween pun?

Meredith Whitney of CIBC world markets wrote yesterday that Citicorp may be forced to cut its dividend or sell assets to prevent a liquidity crisis. But Citibank sure isn't acting like it's having problems. Today it announced the acquisition of hedge fund Carlton Hill.

Debate over the rapid rise in oil prices ranges from blaming geopolitical events, Arab producing nations, big oil companies, hedge funds and the like. All have something to do with the rise, but hedge funds are surely pulling more of the strings than the others. Nothing else explains the extraordinary jump in prices in the last days. In fact, hedge funds are far and away the principal actors behind the oil bubble we have seen of late -- and they are about to profit even more handsomely when the Fed drops the interest rates tomorrow.

The New York Times stock has gotten pummeled over the last three years as heavy competition from online has eaten into profits. But the company has bottomed-out. It is a web-savvy company that will profit as more revenue moves online. It will survive and thrive.

Oil has reached a new record - $93 per barrel - despite plenty of supply. The news will tell you that it's because of geopolitical tension between the Kurds and Turkey but neither of these areas supply much oil. Traders are using that as an excuse to drive up the price of oil and make a killing.

It is odd that Apple, RIMM, Nokia, Microsoft etc. are all performing so well this earnings season while the chip-makers that drive these stocks perform so poorly.

A big headline in the Wall Street Journal today declares "Slower China Growth Suggests Peak is Past." That is as silly a headline as The World is Coming to an End. I don't know what the journalist (Andrew Batson) was drinking, but China's growth in the second quarter was 11.9% and 11.1% in the first quarter. We should all be so lucky as to have quarters like that -- including this last one. Give us a break, Andrew Batson, and start reporting responsibly.

Microsoft's current success is due to the fact that they are a multi-faceted company that isn't afraid that take chances.

According to a recent investment made my Microsoft, Facebook, the popular online site has a valuation of $15b on revenue of several hundred million dollars. News Corp. which owns the larger social networking site MySpace, and which has $30 billion in annual revenue has a market value of $70 billion. Either Facebook is way overvalued or New Corp. is way undervalued.

It never ceases to amaze me how volatility plays out in the markets – how easily people forget one day only to rediscover the next. One has to believe that the market movers are all senile – that they can hold an idea in their heads at most for a day, forget it entirely the next, and then embrace it as new two days later. I am convinced that everyone buying and selling stocks these days suffers from some form of Alzheimer’s disease. The symptoms are clinically the same in the market and in the nursing home.

Not surprisingly, China’s wireless telecom carriers are growing by leaps and bounds, far more rapidly than fixed-line operators. Any country developing as rapidly as China cannot wait for the old technology. In fact, wireless telecoms are leading the way for huge economic development throughout Asia, the Middle East, and South America. But, in China’s case, the growth is nothing short of spectacular. Investment in China Mobile, the major wireless carrier in China, is one of the surest bets in the midst of China’s unprecedented growth. And, safer still, is to buy shares of FXI which bundles the best of China and where China Mobile is the ETF’s largest holding.

Amazon reported earnings today that showed the company is finally starting to live up to its potential. But somewhere along the way, Amazon stopped being the poster child for the Internet. The problem is that while Internet companies have PEs of 30+, retailers have PEs of 10-15. What will it be for Amazon?

Jordan's Furniture, a store owned by Warren Buffett, made a bet with its customers last spring that if the Red Sox won the world series, any furniture (sofas, tables, mattresses) purchased between March 7 and April 16 would be free. The company is now looking at the very real prospect of paying back millions of dollars.