Investment Analysis Class Blog

The Miracle of Compound Interest

2004-12-09T16:34:00.000-05:00

I was reading an article today at Fool.com on how to become the millionaire next door. The article was basically a promotion of a newsletter called "Hidden Gems," but towards the end they offered several techniques for becoming a millionaire. One of their scenarios was geared at people just like us...Soon to graduate with little money to invest. Starting with $350 and making $350 monthly contributions invested in their "gems" earning 15.5% per year, in 25 years you will end up with approximately 1.25 million bucks.

Although this sounds good, I am a little skeptical of the 15.5% return lasting for 25 years. I decided to figure out how much it would be using 8% and 12% annual returns instead. With 8% you only end up with $335,000...Not a bad chunk of change but not nearly as impressive as a million. At 12% you would end up with almost $665,000, that more like it, but still maybe not high enough.

I decided maybe a 12% average return was realistic but I wanted more than $665k. I decided to raise the initial investment to $1,500 and the monthly payment to $400 and ended up with about $780,000. Not a bad nest egg to have before the age of 50.

I think the initial investment and monthly payments are reasonable assumptions...I could cough up $1,500, it might hurt a little now but its possible and assuming we get a job offering $30k a year ($2,500 a month) only 16% of our gross paycheck is being diverted toward that goal.

I don't know about you but I am ready to get started investing right now.

Airlines?

2004-12-09T16:21:00.000-05:00

Is this a good time to get back into airlines' investment? Most of them have cut down on labor cost, and the air traffic becomes more and more intense. It has been over 3 years since 9/11 and majority of people are not afraid to flight again.
If airlines can curb down the cost of the enhanced security that they are reequired to provide now and also minimize fuel expenses, they can become a lucritive invetment once more. Because they were such when thew Twin Toweres still stood. Is the situation with the international terrorism favourable? Holiday season is coming up and more people will choose airlines to travel, but till we still hear about airlines going bankrupt, few people will invest in them.

2004-12-09T16:04:00.000-05:00

Genius at work? Or just future additions to the "Why did they make a sequel to that?" list? The statement made by CEO-hopeful Robert Iger, current Disney President describing the plans to make numerous sequels based on recent and current Disney-Pixar blockbuster hits is a brazen move. Especially because no contract exists with Pixar to create the animations, although Disney does own the rights to the film library and all characters associated with the films. Still, looking back on sequels which either weren't made by the same group or didn't involve the same character actors, they did not fare too well. Disney may want to tread carefully into these waters, unless they're willing to sacrifice another blockbuster hit to make a quick buck, i.e. Aladdin 3. I rest my case.

IPO's Bounce Back

2004-12-09T15:50:00.000-05:00

2004 has proven to be a great year for IPO's. Google immediately comes to mind, having doubled its shares only a couple months after it's introduction. As impressive as this increase is, Google was only ranked 19th among 2004 top IPO's. In 2004 there were 192 offerings raising about $39 billion. While this is great compared to the 221 that have been introduced in the past 3 years combined, it is far from being close to the 400 that were introduced in 1999. Particularly in the tech industry were the performances impressive. Tech IPO's averaged about 31% up from their introductory price. Eight of the top ten performing IPO's were tech stocks. Overall this is indicates that things are picking up. Kathy Smith from Renaissance Capitol stipulated that there could be as many as 250 IPO's next year, raising in total roughly $50 billion. She also said that another positive sign about this years increase in IPO's was that the stocks were well established, in contrast to the 1990 boom where the offerings were more speculative. Thus it appears that things are beginning to firm up in this area and will lead to a strong year in 2005.

Martha Stewart to return to TV next Fall

2004-12-09T15:32:00.000-05:00

I thought it was weird to see that Martha Stewart is already set to host a new show in only 9 or 10 months, considering she's in jail. Her company had hired the TV producer of Surviver to help revive her show, although Martha herself couldn't even be involved as she is prohibited. It will be interesting to see what happens after she finishes serving her sentence...whether American will reject or embrace her. It might be hard to follow advice from someone who spent a year in prison.

Gourmet Christmas Trees

2004-12-09T13:25:00.000-05:00

Times have changed since the 1970s and '80s when most people who celebrated Christmas set up some species of pine tree in their homes come December. Artificial trees have since improved in quality and selection, with some coming complete with LED lights and themed decorations. Sales of artificial trees have risen 31 percent since 2001 and in the past few years, about 70 percent of American homes with trees had fake Christmas trees on display.
Production has dropped in many areas and the Carolinas are producing most of the country's supply. In order to survive, small tree farms are developing unusual breeds to attract new customers. They are commonly called "gourmet" or "exotic" trees. Because the cost to produce these "gourmet" trees is more, the price for these trees is around $110. Even though the cost is double the cost of more traditional trees, they are always the first to go.
I think that it's irrational to pay that much for a tree that will die in a few weeks, but these trees could be considered a luxury item, as far a Christmas trees are concerned, and people who can afford to pay that amount will pay. This can also be explained by the "snob value effect", where satisfaction comes from knowing the price of a good.

Ground Control to Major Tom

2004-12-09T11:45:00.000-05:00

Soon everyone will be able to phone Major Tom if the FCC decides to lift the ban on inflight cell phone usage. Major airlines are lobbying for a lift to the ban as a way to increase sales. They feel that the extra utility of inflight internet and cell phone will attract a larger market of customers. I think this is a great idea, although I am hesitant to think about what it would be like sitting inbetween two people chattering away on their cellphones. That is what they make headphones for. In the future you may be able to experience the friendly skies from the comfort of your home.

Hedge Funds manage their data better than they manage money

2004-12-09T02:53:00.000-05:00

The New York Times online reported that most Hedge Funds, all though most show huge gains and little risk, are mostly lying in their actual data. They are consistently only waiting to report on huge gains, and then they "backfill" the old data where they lost money. Burton G. Malkiel, a professor of Economics and author of our wonderful textbook, commented on hedge funds saying that most only wait to report any data until they acutally have any sort of income.

Hedge funds are large funds that appeal mostly to clients. They began in the mid-1980s and have duobled in size since 1990, going from a 50 billion dollar fund to over a trillion dollars in investment. They pursue both short- and long-term funds and generally have substantially higher fees that average investment strategies.

Most hedge funds have a tendency to cease, with roughly 10% a year ending without further notice.

Born To Be Wild

2004-12-08T14:59:00.000-05:00

As the Japanese sport bike makers begin to constrict the motorcycle market, Harley-Davidson has been forced to alter its practices and develop new ways to keep sales rising. In an almost catch 22 situation, Harley must change enough to capture the buying power of Generation Y, but must also not change enough to lose the loyalty and support of the very strong baby-boomers. Having produced a 37% annual return since its IPO in 1986, Harley has turned the free-spirited cruising pastime into a lifestyle once again. Thirty years ago, most bikers were thought of as beard bearing, rough and ready types but now, that average income of a Harley owner is $76,000. In any case, Honda has been increasingly constricting the global market while Harley makes effort not to lose its throne. Through Buell Motorcycles, Harleys sport bike subsidiary, the introduction of technologically advanced "sportfighter" bikes may prove to be a substantial answer to Harley's prayers. Many investors have planned on selling short, saying Harlye will soon lose its footing. In any case, Harley must acquire the loyalty and buying power of Generation Y to boost sales and keep the wheels rollin.

AOL cuts jobs as subscriptions fall

2004-12-08T01:26:00.000-05:00

American On Line cut 7 percent of its northern Virginia work force yesterday. The cut comes as a result of falling subscriptions to the service. The 750 employees were all gathered in an auditorium and given the bad news at the same time. Can you image being the guy to fire 750 people at the same time? I would definatly take the bus on this day. It appears that AOL is going to need to find new ways to maintain the companies growth. Could we soon be paying to use our precious Instant Messenger? God, I hope not.

IBM Digs and Finds China

2004-12-07T23:45:00.000-05:00

As IBM has been specializing in computer and technology services rather than sales of computers, it comes without surprise that they are selling their PC division. Lenovo, a Chinese corporation sealed the deal, valued around $1.75 dollars. This is certainly good news on the shareholders because the PC division has not been able to keep up with the rest of the company.

This way, IBM will be able to specialize in an area where it is doing well and not bother with making computers. It seems to be a smart move on both parts, as Lenovo will be able to expand in China an possibly into other countries in the future. Around 10,000 IBM workers will become Lenovo employees which will help IBM with international contacts. Overall, a good move and it will be interesting to see how things pan out.

American Eagle Profits from Sticking to What it Knows Best

2004-12-07T14:20:00.000-05:00

As of the end of last year American Eagle Outfitters Inc. was in bad shape. The company had released an entire new line of clothing. This line was supposed to look more "sophisticated" and attract the stores older clientele. Unfortunately, all this line of clothes did was discourage customers and drastically lower sales. This year American Eagle has gone back to its normal line of casual clothes. As a result of this sales are booming and stock prices are up. What should other companies learn from American Eagle? I think that companies should realize that they cannot change the feel of their entire product line in on fell swoop. Sure, its important to try to expand your customer base and move into new markets; but, American Eagle made the mistake of doing it all at once. Other companies should learn from American Eagle's mistake and take things slowly when it comes to changing their product line.

A media transformation

2004-12-03T17:46:00.000-05:00

With the retirement of Tom Brokaw, it seems to be the end of a era. It’s not just the ending of a distinguished career, but the death of an American tradition. For years people would come home from work and watch the nightly news to stay informed, but now there are so many more media options to choose from. There are now a plethora of cable news stations and the internet allows people to be plugged into the world news beat from practically any location. Americans no longer rely on just a handful of anchor men to deliver the news and it will be interesting to see how big of a roll Brokaw’s replacement plays in the American media machine.

Protecting Your Retirement

2004-12-03T15:50:00.000-05:00

As discussed in class, Individual Retirement Accounts (IRA’s) are a great way to prepare for retirement. Most people begin small investments at a young age and by 50 or 60 years of age they finally realize they have a substantial amount of retirement income. This has been the traditional method of IRA savings but the Supreme Court is now considering how much retirement savings people can shield when they file bankruptcy. As always, abusing certain benefits can create changes that effect everyone working toward retirement. Currently bankruptcy laws protect pensions, 401(k)s, Social Security and other benefits tied to age, illness or disability. The issue today is how frequently people go into debt and figure they can just file bankruptcy and all is well. This individual lack of financial responsibility may generate changes in the allowable amount and which retirement accounts may be protected from creditor. I know many people will say that some times bad things happen and the person cannot help it. This is partly true with natural disasters and unexpected illnesses, but most of the bankruptcies are due to living outside of ones means.

I do not mean by any standard that you must nickel and dime everything you do. What I do stress is to understand that if you make 35 to 45 thousand annually you should not spend 40 to 50 thousand annually although credit card and retail companies want you to. I know this may sound very simple but emotions (and credit cards) usually get the best of us when we desire a particular item now. We discussed options about getting accustom to certain financial practices. With the increased population and more individual financial defaults many companies will have to charge everyone else a higher interest rate or give no credit at all to make up for the loses. This is why it is imperative to live well within your means and to set aside at least 3 months of emergency money in order to get through the rough spots. Also, by establishing an acceptable living standard within your available income, it will make it easier to maintain this level when you receive raises and promotions so that you will be following your plan for retirement and not someone else’s. By having this mentality and reserve you will not have to depend on a 22% interest credit card to get you over the hill and continue to pay that bill for the next 20 years.

The different IRA’s discussed in class is a great way to benefit from compounding interest and also tax free until you need the money at retirement. The two types are Traditional and Roth IRA’s. The Roth IRA is taxed today and withdrawn after 59.1/2 tax-free while the traditional is not taxed today but when you begin to withdraw money after 59.1/2. The traditional IRA can also reduce your yearly tax liability if you fall into certain categories. Roth IRA withdraw after 59.1/2 is tax-free and is highly recommended because you can get many years of compounding increases and pay no taxes on the growth. Both IRA’s can be withdrawn at anytime but there is a hefty penalty, which can consist of a 10% penalty plus taxes on the withdrawn amount. The IRA’s can be established just about anywhere, but first check to see what is offered before you start your IRA. Most mutual fund families have IRA availability but require different start up amounts. Some require the account to be started with either $1,000, $3,000 or some will start it as low as $50 as long as you establish an account for direct monthly investment. You can either go through your broker or call the mutual fund directly and they will send you the documents to start the account. The main issue here is to get it started as early as possible to benefit from the compounding effect.

The Supreme Courts review of certain bankruptcy cases will probably generate governmental changes in the long-term security of retirement accounts. Many individuals will have to change their haphazard attitude toward bankruptcies when their intended retirement is at stake. This is why it is very important to get accustom early to a certain acceptable living standard and maintain this throughout your career to ensure your plan is in play and not the governments plan.

"Peering" into the Lives of the Wealthy

2004-12-02T18:24:00.000-05:00

Now there is a new way to get great investment advice only you have to already be wealthy to get it. A new way of trading advice is cropping up among the country's wealthy population called "peering". Groups are now being organized among the wealthy that allow them to talk to each other about anything from who has the best private jet service to how to introduce your kid to their inheritance. They also can go in on investments and get group discounts and suggest investments such as hedge funds. The new groups, like Tiger 31 or Met group charge a fee to join and then introduce the families to each other. The families like this because there is no "hard sell". They know that they are with like minds and thus do not have to worry about being taken advantage of. The members go through what is called a "portfolio defense" where they get up in front of the other members and show all of their private statements and balance sheet. The members then critique the presenter's decisions and offer up advice. The groups meet about 2 times a month. Sometimes they have a speaker and sometimes it is only the family members. Overall it is designed to insulate the wealthy from money grubbing fund managers and is catching on very quickly as the nation's wealthy population continues to grow.

$10,000 Martini?

2004-12-02T17:43:00.000-05:00

I must say this is some advertising stunt, and an expensive one at that. One wonders what person would decide to actually order one, besides who says that diamond would be worth 10,000$. Perhaps their argument is the olive juice is. Either way it seems like one extreme gimmick, much like the Victoria's Secret millennium wonderbra that was studded with diamonds all over it and cost a whopping 10 million dollars.

The new hot Job

2004-12-02T17:31:00.000-05:00

Auditing is usually thought of as one of the most cut and dry professions you can go into. However, with all the scandals over the past few years it seems to be becoming quite a hot topic. Many people misinterpret an auditor’s job of approving that the numbers on the financial statements are reasonable NOT necessarily correct. With Sarbanes-Oxley in effect there are much tighter controls on the books and on management to sign off on them. But what makes the profession so interesting are all the problems it has found itself in. We hear a lot about all of these frauds but to dig a little deeper, what is the common mistake that every company has made that has found themselves in this situation? CORRUPTION... yeah ok fine, that’s a little obvious. More importantly are the simple internal controls that have allowed these frauds to happen. I have always been told life is all about contacts, but being an auditor, the less contacts you have the less pressures you have of trying to cover things up for people. Too often auditors are the same ones creating the financial statements, or better yet the people who want to fraud committed are the ones writing the paycheck to the auditor, so it’s either the paycheck or the fraud. Whatever the reasons are the accounting profession is one of the fasting growing job markets and students seem to be taking a great interest in these positions.

A Little Advice on Fundamental Analysis

2004-12-02T16:43:00.000-05:00

Despite the recent positive news about Kmart, its not so glamorous past is still in the news. Today three former executives and several representatives of major vendors, including Coca-Cola and Pepsi, were charged with accounting fraud for falsely inflating profits by $24 million in recent years.

Viewing this situation in light of our recently covered chapters, I think it is safe to say that regardless of how many ratios we use, how carefully we analyze a company's reported financial information, or what estimations we make about a company, we still must make guarded investment decisions.

As investors, if we choose to perform fundamental analysis, most of the judgments we make will come from information directly reported by the company itself. Despite the checks and balances outlined by the SEC, this information may not be as accurate as we assumed. For example, in the previously mentioned Kmart scandal, the company's own accountants were misled as to the assumptions they should make in reporting data. These accountants are most likely the ones who worked with the external auditor,allowing the false financial statements to slip through the cracks even more smoothly. Basically it was the blind leading the blind.

When our hard earned money is on the line, our research may need to dig a little deeper than what we would normally do for a passing grade on a project. Although the difference between an A and a B isn't very great, sometimes we know we could have had that A if only we had spent an hour or two more in the library. When it comes to our money, it could turn out to be more of a Pass/Fail situation. In the end, that extra hour or two of additional research may be what makes or breaks our investment piggy bank.

Day of the "Anchor Icon" is over

2004-12-02T15:36:00.000-05:00

Tom Brokaw, an icon of the nightly news, has retired leaving a space to fill in American society. People use to come home, turn on the news and a trusty TV anchor man would be there to relay the day’s events. Today things have changed scientifically due to the ever growing number of news sources. People now have a variety of cable news channels, as well as the internet to use as their link to the world and no long have to rely on just the 4 major network news shows. It will be interesting to see if the replacements for Brokaw, Jennings and Rather, become American icons like their predecessors, or simply get absorbed by the ever growing American media machine.

No More Worries

2004-12-02T14:19:00.000-05:00

With all the talk about the economy looking brighter but there being little job creation, college students everywhere are worried about their future. Some of this worrying can end with the recent release by the Collegiate Employment Research Institute. According to their survey, college grad hiring is going to increase by 20% this coming spring. An economics major was included in the most demanded majors according to the survey (I knew I majored in econ. for some reason). This report is reassuring but I will continue to be somewhat skeptical until I am able to find a job. The November employment report is due out this Friday so maybe we'll be able to see a hint of this forecast starting to come true.

S&P and Moody's = Extortion?

2004-12-02T13:23:00.001-05:00

This article talks about how some companies have allegedly been strong-armed into paying the 3 major credit raters (S&P, Moody's, and Fitch Ratings) in return for favorable credit ratings. The most alarming part of the article was when Moody's began rating an insurance company's debt free of charge but then systematically lowered the rating over a year as the company resisted pressure to pay for ratings. Eventually, their bonds were rated as junk despite having very favorable ratings with S&P and Fitch Ratings.
The lack of governmental oversight over these raters and the absence of accountability is worrying some in the investment world. When it comes to economics, I am typically of the laissez-faire mentality. But this article makes me wonder now about the quality of the quality ratings. Another inconsistency in the defense of these raters is that they were unable to downgrade companies such as Enron and Worldcom before the scandals broke. In fact, the raters had plenty of inside data but still were unable to detect irregularities. Their defense is that it is not their job to detect fraud. Sorry, but that's pretty weak. What's the point of having credit ratings if they can't even figure out that a firm's finances are completely false?
In my opinion, this is a pretty good article. Give it a quick read.

Regifting: Poor Manners or Economic Sense?

2004-12-02T11:04:00.000-05:00

According to many Ethics Experts, it is OK to regift any unwanted gifts you receive this holiday season. They also note that you should not feel guilty, and that actually you should feel good about yourself. The art of regifting makes economic sense, if done correctly. The correct way to regift is to take a gift that you deem unvaluable, or unusable and give it to someone who places more utility in that item. This is not saying that when Frank the Tank regifted a breadmaker to a small child in "Old School" made economic sense, because the child also had no use for a breadmaker. But if you find yourself with an unwanted gift this season, have no reservations about "regifting" it to someone with more want of the item.

$33 billion, not too shabby

2004-12-02T01:46:00.000-05:00

Tomorrow Microsoft will dole a whopping one-time $32.6 billion dividend, or roughly $3 a share. This is some of the best news to come out of the Microsoft camp in recent history as its stock price has been sluggish, not closing above $30 on a stock split or one-time dividend adjusted scale for nearly three years. Many analysts have predicted a cyclical flow of the dividends back into the microsoft stock, which improves the cash flow by getting it out of equity and back into cash, further strengthening its asset base. While there are many proponents who believe this action will help Microsoft to continue to raise its stock price, others remain wary until Microsoft unveils its newest operating system, Longhorn. Still the upside for Microsoft looks good for the next few years as it aims to regain the dominance in the software industry it enjoyed in the days prior to its antitrust lawsuits. So is Microsoft a buy? I think so, but give the returns awhile to amass.

E-Bay: The Worlds Marketplace Just got Bigger

2004-12-02T01:13:00.000-05:00

Today E-Bay, the world's marketplace, announced that it plans on launching E-Bay: Malayasia. "The localized website will allow Malayasian buyers and sellers to come together, build a local community, and bring even more e-commerce to an already growing industry. E-Bay reports that many Malayasian's already use the main site, and this will allow a much easier local community to form. The arrival of E-Bay in Malayasia will provide a boost for the e-commerce market in the country, which is already projected to increase from 1.1 Billion dollars a year to 3 Billion in just 3 years.

I find the success of such e-businesses, such as Amazon.com and E-Bay, great examples due to the failed attempts at most e-commerce in the 2000's. These company's, and others similar have obviously successful economic models which should be used in the future for e-companies.

Where is the Freedom?

2004-12-02T01:01:00.000-05:00

The city of Philadelphia and Verizon Communcations have come to an agreement in which Verizion waives its right to stop the city from providing wireless internet for a fee. While Philadelphia is able to provide free or cheap wireless internet as a municipal service, it seems that other cities will be unable to do so starting in 2006. Any political subdivision from this date on will have to get permission from the local telephone company to provide telecommunications services for a fee.

I am surprised that Verizon waived its right to stop the city from offering this service. While they will be able to control other municipalities from acting similarly in the future, this is a very interesting loophole in the system. The reasoning for Philadelphia being so adamant about getting this done is the inability to spread internet access across the city. It is rare for the government to hinder business in the area, but I really wonder if this is justified. Granted, Verizon will not be hurt by losing some customers in one city; however, is wireless internet something that is something that all people should be entitled to? It will certainly help the city of Philadelphia and will attract more business to the area. The structure of the city will certainly change, and maybe it will create a better environment. I just don’t know how good it is for business overall.

Sexual Solution?

2004-12-01T22:34:00.000-05:00

Up to 1.7 to 3 million surgically menopausal women in the US suffer from hypoactive sexual desire disorder, which is a lowered or absent sex drive characterized by a significant (50%) lack of serum testosterone due to estrogen treatments. This condition has no safe treatment; so, if one is created and approved, it could prove to be exciting in the world of investment. Procter and Gamble Pharmaceuticals Inc. are trying to make this a reality. They are currently undergoing approval by the FDA for a treatment they’ve created called Intrinsa. Intrinsa is a patch worn on the abdomen that allows for a treatment of testosterone to be absorbed through the skin.

It is unclear to the reviewers whether Intrinsa is beneficial or if it is safe in the long run, despite the drug’s completion of Phase II and III testing. Thus, the advisory panel of the FDA will determine whether more safety studies will be needed for the approval of Intrinsa to be released into the market. Interestingly enough, Procter and Gamble’s stock inched up $.61 today despite the ‘unclear’ review.

Patents Wearing Thin for Pfizer

2004-12-01T15:30:00.000-05:00

Many of the patents which Pfizer holds on a number of their medications are expiring within the next three years. Though the CEO natuarally says that this will not hurt the company, I feel that Pfizer's stock is doomed to fall lower than it already has in the last few months. Perhaps I'm just bitter because Pfizer was my biggest loser in the stock competition. Despite this, I do believe that I'm right about the future of Pfizer. As their patents run out, generic companies will begin to produce similar drugs at lower costs. Pfizer plans to release a slew of new drugs to help counteract this. Though, the CEO declined to comment on the progress of the frontrunners of these drugs: torcetrapib, a cholesterol drug, and varenicline, a drug to fight tobacco addiction. On top of the pressures of expiring patents, Pfizer faces the risk that its painkilling drugs, Celebrex and Bextra, could have similar consequences, namely negative cardiovascular side effects, as Vioxx. Again, the CEO affirms that there are no problems with these drugs, but I'm not quite convinced.

I feel that Pfizer will not be able to step up to the challenges of these pressures. Pfizer's stock has been steadily falling since about May and will continue to fall as Pfizer battles with these new difficulties. I would recommend watching closely, or even selling any Pfizer stock that you own until these problems are sorted out.

Is 300 Horsepower Enough to Boost Ford's Sales?

2004-12-01T15:23:00.000-05:00

I don’t know about you but I really anticipated the introduction of Ford Mustang this year. The 2005 model brought back the retro design of the most famous American muscle cars. It was interesting to see if Ford would be able to boost its sagging sales. Steep competition with mostly Japanese imports prevented American companies from claiming superiority on the domestic market.
In addition to Mustang, Ford introduced redesigned F-series earlier this year and Five Hundred sedan just recently. Despite all this, its sales dropped for the 9th consecutive month. November’s data indicate 4% decrease in comparison to last year. Car sales led the decline – 12.5% followed by trucks and SUV’s – 0.5%. New models sales where rather high: Mustangs – up 12% and Ford Five Hundred and Freestyle and the Mercury Montego were up 62 percent compared with October. The main reason for the decline in sales overall is poor performance of carry-over vehicles such as Ford Focus (I think it is time for that little car to go or be completely redesigned; very popular in Europe, it proved to be a poor competitor in the U.S.)
So, what car do Americans buy if not Fords? In pick-ups and SUV market Nissan dominates, it had with huge 68% increase in sales. Great looking Armada and Titan led the increase. Market for passenger car is all Toyota’s; it had 20% increase in sales from last year.
Is 12% increase in sales of new Mustangs high enough? I hardly think so, it is not bad, but I would expect it to be much higher, because the demand for that model is no doubt high. It is definitely high among young people, but they apparently cannot afford to buy it fresh from the lot. Demand can do only that much if the price is too high for the potential buyers. It does not mean that the price should be reduced, but rather that not all potential buyers cannot pay it. But this Mustang will definitely make a great resale vehicle.

Check out the pics:
http://www.edmunds.com/new/2005/ford/mustang/100464180/photogallery.html?pg_type=Coupe%2FHatchback&imgsrc=%2Fpictures%2FVEHICLE%2F2005%2FFord%2F100464180%2F20022128-T.jpg

Who says there is No Money In Blogging

2004-12-01T13:56:00.000-05:00

Merriam-Webster reports that "blog"was the number one searched word on their website in 2004. It will make the 2005 version of the Merriam-Webster Collegiate Dictionary as a new entry.

Thinking about starting a blog, but want a little help? Consider hiring a blogger.

Dominion goes on a shopping spree

2004-11-30T22:10:00.000-05:00

Dominion, which is one of the country's largest energy companies, announced yesterday that they intended to buy three power stations in the Northeast from USGen New England Inc. USGen, which is a subsidiary of National Energy and Gas Transmission, filed for Chapter 11 bankruptcy last year, at which time they decided to divest their power plants through an auction. Dominion's bid for the plants was the highest offer. Therefore, the company is scheduled to settle on the properties in 2005, which will include Brayton Point Station and Salem Harbor Station, both in Massachusetts and Manchester Street Station, which is in Rhode Island. Dominion already owns another nuclear power plant in Connecticut. These purchases will give the Richmond-based company a strong foothold in the Northeast and will allow them to further expand, however a monopoly over the Northeast energy source could occur, causing energy to become state regulated, much like in the case of Baltimore Gas and Electric in Maryland.

iPod

2004-11-30T20:20:00.000-05:00

A recent article in the WSJ described the affects of Apple's iPod to the electronics market. While Apple has led the way to compact digital audio entertainment, other companies have started setting their sights on the king of the hill. Apple's stock has always grown at a decent rate, but recently their return has been growing at a rapid rate. With the stock price increasing and other companies pumping out products similar to the iPod, maybe selling short wouldn't be too bad of an idea. In any case, Apple continues to run the market but it is, of course not certain for how long. As the competition introduces similar products, the pricing battles will begin. Until then, Apple seems like a good investment.

Kmart-Sears: A rough road ahead!

2004-11-25T17:38:00.000-05:00

Some analysts believe the Kmart-Sears merger will have a tough road ahead. I don’t think we will see any quick changes due to the discount store competition surrounding Kmart and Sears. One of the CEO’s intended steps is to get rid of an estimated 300 mall locations and not gain very significant value from this venture. I would think keeping the mall stores would be more profitable due to the convenience of the large quantities of mall shoppers. Most Kmart’s are outside of malls and competing with other discount stores like Target and Wal-Mart. Another issue that can hamper the company’s success is the enormous executive pay and stock options that are provided which minimize plowback funds into the company. With bonuses of 150% to top executives and stock options to buy 200,000 shares, this can easily chew up the advances the company may have made. Also the shareholders will have to wait a bit longer to see any profit because for the first few years the money is going into someone’s pocket and not into company growth. I see this merger as a way to milk all you can from the resources available. With Kmart’s double digit decline in sales since the chapter 11, I wonder if the intent is to make the merger work or just run it for a few years to get the high bonuses and options and then drop it so the shareholders come up dry.

Rudeness and call centers

2004-11-24T20:56:00.000-05:00

We all know how fustrating it can be to have to call in to a call center for information. You're lucky if you get a real person, in fact it's so common not to that Citibank has made an ad slogan out of it. As some one that has had to call and receive calls I understand the pain from both ends of the phoneline. I have worked at the computer help desk (now the Technical Assistant Center) for as long as I've been attending Mary Washington and I've dealt with rudeness and fustration that defies imagination. I found this article interesting because it (to me) shows how rational and pragmatic people are. You are calling for information, if you are going to be rude you better be able to help me. I also found it interesting that the ones that are at the call center longer tend to be the ones that are more hostile due to burn out and I can relate to that. Being the oldest employee at TAC I know how hard it is to keep that patience when it's the sixth person that day that calls because their computer doesn't work and it's because the power is out.

Cousins Properties Declares a Special Dividend

2004-11-24T16:39:00.000-05:00

This past week Cousins Properties Inc. declared a special dividend of $7.15 per share of common stock. The funds for this dividend were obtained by selling a large number of high-quality office projects. This dividend was also the result of Cousins shrinking its capital base in order to produce better returns to its shareholders over time. What does this say about the company? Were its assests becoming too many for it to efficiently manage? Was there some debt that Cousins needed to generate a large amount of funds in order to pay off? Or, is Cousins just practicing smart management by holding and selling assets at the most oppurtune times? When I searched for the cause of this dividend online, I found that Cousins issued it in order to avoid certain corporate taxes. Investors immediately de-valued this stock the day after the dividend was issued. On the night of the 18th(the issuing day) the stock closed at about 39$ it reopened the next morning about 7$ lower. I believe that this is because the intrinsic value of the stock dropped due to Cousins selling off assets. The only thing that puzzles me is that the dividend was announced the 28th of Oct. I would think that the shares would have dropped in value following the announcement and not the actual payment of the special dividend. If anyone has any thoughts on this feel free to fill me in.

a solution to the wage gap?

2004-11-18T17:47:00.000-05:00

i think this is pretty great for those hispanic women. not the fact that they earn so much less than their male counterparts, but taking their futures into their own hands and starting their own businesses. the wage gap has been a persistent problem since women entered the work force, and there doesn't seem to be a solution on the horizon. kind of depressing for those of us who are women and are going to join the work force soon. but the point is, these hispanic women are saying that the wage gap is not ok, and coming up with a solution for it themselves. although, obviously, this option won't work for all the owmen out there, at least some people are better off now.

Good news for art lovers...

2004-11-18T17:21:00.000-05:00

it's an interesting idea to get the art market to catch on. I wonder how easily it can be abused however. Still, and interesting way to promote art and investment. Though I think it could cause a lot of bad investments and 2,000 pounds isn't a lot to buy something with guarenteed repurchase value, so perhaps it's more of being able to buy are for personal enjoyment and supporting the arts then as an investment tool, art is after all, extremely subjective.

Gas Prices and Tax

2004-11-18T17:14:00.000-05:00

Well just in time for Thanksgiving travel, gas prices are declining due to the drop in crude oil prices.
Also Warner stated that he will not propose an increase in the state's gas tax next year. The current tax amount is 17.5 cents per gallon. The money is still needed to fund future projects to improve/build roads in Virginia. It looks like "user fees" will be used to fund improvements.

Taxi's strike to prevent "dictatorship"?

2004-11-18T16:41:00.000-05:00

Any person who has taken a taxi in DC knows the unbelievable frustration that occurs when it comes time to pay up. "No way did that 5-minute cab ride just cost $9.40, we only went seven blocks". But little did you know that there is a charge for extra people and an extra dollar for that bag your carrying and you crossed over a zone. I have had many an argument with these cab drivers and their only defense is that there is not enough demand for cabs in DC to enable them to switch to the meter system and still pay their bills. This argument is obviously flawed, if they lowered their prices the demand for cabs would rise. The zone system dates back to the depression era, please tell me we have progressed somewhat since those times and have allowed our policies to change as well. Not in DC apparently. Well anyways, yesterday the taxi's went on strike in order to protest the proposal that the 9 member Taxi Cab Commission and creating a Taxi and Limousine Commission, run by only one person and merging into the Department of Transportation. There is also talk of switching to a metered system and drivers feel that they will not be able to voice their opinions if there is only one person in charge and thus creating a "dictatorship". Yesterday for 12 hours the cabs would not stop to pick up anyone. Some drivers even parked in front of hotels turning down customers so as to emphasize their point. But what was the point? I do not understand what exactly was accomplished by this effort except that many people who needed cabs yesterday were forced to walk. I don't really see how that helps the drivers, or what they were intending to prove. The TLC would allow regulations to be passed more easily and would allow for an improvement of customer service, I guess that just rubs the drivers the wrong way.

Bling Bling

2004-11-18T16:23:00.000-05:00

In reviewing the recent activities in the securities markets, gold seems to be sprinting to the front of the pack. Since the dawn of time this shiny metal has made people to unthinkable things...and it doesn't seem like much has changed today. The value of gold has recently begun to spike. Many investors have found refuge by investing in the safety of gold and now their returns are skyrocketing. Of course, once everyone starts tossing their money into gold based securities, the price will inevitably drop. The uncertainty lies in how long the gold standard will produce quality returns.

S-mart?

2004-11-18T15:14:00.000-05:00

Firm-foundation or castle in the air? The same question was posed to us all as we read Malkiel's A Random Walk Down Wall Street but now we must decide whether this is the case with the proposed Kmart-Sears marriage. When the announcement first came out both stock prices, Kmart (up $14.33 to $115.55) and Sears (up $9.55 to $54.75) soared in afternoon trading. But getting back to the main point, will the marriage of two companies, one regaining strength after emerging from Chapter 11 bankruptcy protection 2 years ago, and the other suffering stagnant growth at best, yield a synergistic result? In terms of investor compensation, the holders of Sears stock appear to be getting the better offer, either $50 or 1/2 share of Kmart stock, over the Kmart holders offer of a one-for-one trade to shares of Sears stock. Many questions still exist as to what the final name of the consolidated conglomerate, as well as the direction the business will take. Only time will tell whether there is a true firm-foundation for the emerging company, or whether underlying problems will relegate this merger to a castle in the air.

"DirecTV has hinted that its future may not include TiVo"

2004-11-18T13:52:00.000-05:00

TiVo was created and become such an instant hit because of its ability to fast-forward through commercials, amongst other perks of course. However, now during the fast-forwarding, there will be tiny “billboard” advertisements while you fast forward. I think it’s understandable since what’s the point in creating commercials anymore if you can’t get anyone to see your advertising, even though I’m the biggest power hog, and tend to switch channels during commercials. But then again, I don’t know how I’d feel while flipping through the channels to avoid commercials and then seeing a tiny billboard in the right hand corner, similar to PiP.
On a similar note, TiVo’s no longer the only option for digital television video recorders(dtvr). Last week, I received a call from Cox offering me 2 months with their free version of the dtvr before I would have to begin paying the $10/month (which is less than 13.95). With deals such as this, I expect the competition to be increased against TiVo. And paired with fast-forward commercials, DirecTV (the TiVo owner) may take a hit.

Dollar Falling Again

2004-11-18T13:32:00.000-05:00

About 2 weks ago I blogged on falling exchange rates of the dollar in regards to Euro. Well, it is happenning again and a lot faster than anybody could imagine. Today dollar fell to $1.3074 per Euro, its new all time low. The European Central Bank is seriuously considring to buy up some currency to force dollar up. It already had to interven in 2000, when Euro hit it all time low of $0.82 (somebody probably made a fortune on the discrepancy in the rates!)So, what is the reason for falling dollar? Americans claim that its European's fault for their economic growth is too low. But a simple fact that dollar is falling against other major currencies proves that the problem is in the States. Most analysts claim that very large budget and huge deficit are the main contributors to it. Thus, if anything the budget should be fixed first

Real Estate vs Stocks

2004-11-18T11:35:00.000-05:00

The biggest deciding factors between investing in real estate and stocks are time, and tax breaks. Real Estate is a far more time consuming investment, but also provides many more tax incentives. This article explains that it is very possible to turn 30,000 into 200,000 within a decade with real estate investing. While it would be rather difficult to produce the same earnings with stock investment. At the same time, when you invest in stocks you simply write a check and wait for your dividends. Real Estate is far more involved. You have to pay for upkeep of your land, deal with annoying tenants, and look for new real estate deals. It is more of a full time job than investing. So I believe the article discounted the fact that most stock investors are also earning an income from their primary occupation, while a lot of real estate investors primary occupation is real estate investing. A great alternative to the time investment in real estate are REIT's. This article recommends two REITs worth investing in, and with 5% dividend it sounds good to me.

Investors rejoice at the thought of Bush tax reform

2004-11-18T11:00:00.000-05:00

The Bush administration is planning on giving the US tax system an overhaul which could be very beneficial to investors. Preliminary talks have pointed towards the elimination on dividend and capital gains taxation, as well as shielding interest and expanding tax breaks for business investment. This policy shift could have a tremendous impact on economic growth, where the death of double taxation could cause a major investment boom. The president is in the process of changing his top economic advisors which is defiantly a sign of change on the horizon. After hearing adults complain about double taxation through most of my childhood, I’m very excited to see this investor friendly tax reform, especially as I prepare to enter the work force.

Joining forces

2004-11-18T09:28:00.000-05:00

Kmart and agreed today to buy out Sears for 11 billion dollars. The merger between these two companies was agreed upon to allow both retailers to come together and have a better chance at competing with Walmart that each could have done on their own. Both stock prices shot up today as well as Walmarts taking almost a dollar decrease. Martha Stewarts stock went up along with Sears and Kmart because both companies endorse her products. Both companies hope that with their increased locations and increasing product range, that it will attract more customers and keep up a steady growth with Walmart trying to push people out of the industry. They also feel that since Sears are often found in malls the union of these stores is very much a location issue. Not many Walmarts are located in malls and doing this Kmart and Sears hopes to maintain their consumer base.

Downfall of Wal-Mart?! Not Quite.

2004-11-17T21:52:00.000-05:00

What will be the largest merger in the world this year? That would be Sears and Kmart! Yes, these two retail stores will be combining forces to attempt to compete with retail giants, Wal-Mart and Target. The key word here is attempt. While they will be considered the third largest store of the kind, it will be a distant third. Both companies have been struggling with sales, Kmart has even been bankrupt for awhile. Wal-Mart has annual sales approximately of $203 billion, whereas the combined sales of Sears and Kmart will only be about $55 billion. Still, with their new larger size and more stores nationwide, they will be able to push suppliers prices down and could have Wal-Mart executives very worried.

Home Depot reports 15% profit rise

2004-11-17T21:51:00.000-05:00

Today, Home Depot, which is the world's largest home improvement retailer, announced a 15 percent increase in their third-quarter profits. This increase spurred excitement within the company, resulting in an increase in forecasted full year earnings as well. While this announcement was positive, it was outweighed by the reported 15.5 percent growth in third-quarter profits experienced by rival Lowe's. Despite this rivalry, the recent success that has occurred within these two companies demonstrates the vitality of the U.S. home improvement market in the growing economy.
Home Depot's recent performance can be attributed to their attempts to attract new customers and retain current customers by modernizing all of their stores, as well as offering a wider range of high quality products, such as designer paints and interior lighting and brand name home appliances. This has proven to be a successful approach for the company, due to the increase in average spending by each customer to $55.53 during the quarter. Net income has also increased from $1.15 billion last year to $1.31 billion, while sales totaled $18.8 billion, which is a 13.1 percent increase from last year. All in all, Home Depot and the home improvement industry continue to outperform the market.

Housing Bubble When

2004-11-16T16:34:00.000-05:00

This article talks about how rising interest rates are increasing and that it will finally puncture the housing bubble, but it does not say when. That seems to be the question. While I understand how a bubble works, it seems like with all their fancy formulas they should be able to actually find out when it will burst, or at least in certain areas. Although I guess if you could pinpoint when it would happen you would be able to beat the market.

The article goes back into the past and looks at housing prices compared to family income. Housing prices are around four times the median family income while it was only 2 times thirty years ago. Kellner explains that as rates are lower, there is more of a demand for housing. However, maybe it is just that there is just naturally a higher demand for housing. There are more people, and i'm guessing more jobs than there were in the past, so maybe more people are demanding ownership of property.

Gonzales to Fill Ashcroft's Shoes

2004-11-11T18:24:00.000-05:00

Alberto Gonzales was named the Attorney General nominee yesterday. This decision has received mixed responses. Gonzales was reportedly being considered for the Supreme Court Justice nomination. His nomination as Attorney General knocks him out of consideration as a Justice and this makes many conservative, pro-life republicans happy. Gonzales, who has worked with Bush for some time, is considered to be fairly moderate. In his term as a state Supreme Court Justice in Texas he voted against a bill which would have required doctors to report to the parents of a minor who was seeking to have an abortion. Some conservatives were less than excited about Bush's loyalty to Gonzales, but say they are relieved that he will no longer be considered a candidate for Supreme Court Justice. Thus paving the way for a more conservative, "ideological" appointee. In other words, he will no longer be considered a hendrence on their path to overturn Roe v. Wade, and therefore making abortion illegal.

america's favorite pastimes: resisting change and video games

2004-11-11T18:02:00.000-05:00

today in the new york times there was an article about video game sequels that are even more popular than the originals. with the market for video games today, you'd think that there would be more new ideas coming out, and with the short attention spans of people, especially children, you'd think that the new games would be popular. but with the recent releases of halo 2 and grand theft auto vice city, america proved that what we like is actually the same thing slightly redone. just like the changing of paper money (like the recent changes to $20 and $50 bills), people don't want new and better games, they want something they recognize as the same product under those changes. does this mean that the market for new games, technology and other things is closing? probably not for the most part, but i'd expect to see halo 3 and a new grand theft auto in the future.

Thanksgiving on the run? And through a straw??

2004-11-11T17:47:00.000-05:00

Don't have time for that Thanksgiving meal? Too busy for those green beans and mashed potatoes, turkey and gravy. Well you are in luck, you can now have the joys of a thanksgiving meal in the form of a soda. Oh yes, that's right, there is now thanksgiving meal flavored soda available. I think this must be one of the grossest ideas I've ever heard of. Like some sort of twisted Willy Wonka concoction but take it as you will. Apparently the soda sold out last year but I have my suspicions that it was just because people wanted to claim they owned a turkey and gravy flavored soda and not that they actually enjoy it, still anything is possible.

EBay buys Dutch classified site

2004-11-11T17:11:00.000-05:00

EBay announced today that it is buying Markplaats.nl, the leading classifieds site in the Netherlands, for $290 million cash.
Marktplaats.nl is owned by Het Goed Beheer BV, which owns second-hand retail shops in the Netherlands. It currently has one million listings on a number of items ranging from clothing and collectibles to cars.
This is the third time EBay has announced investments in a classified listing Web site. In a press release Thursday, Ebay said it doesn't expect the deal to materially impact 2004 or 2005 earnings per share and revenue.

Efficient Market in Action

2004-11-11T17:05:00.000-05:00

Blockbuster has made an offer to pay $11.50 per share in order to take control of its biggest video rental store competitor, Hollywood Video. When the offer was made, Hollywood was trading for $9.80 a share and by close today it was up $1.13 to $10.93. Not quite the immediate jump we would expect under the efficient market hypothesis? Not so fast. The price change is due to expectations of what will happen in the future...as far as that goes, the fate of Hollywood Video is still undecided. They are currently in a deal to let their chairman and CEO and a buyout firm take the company private. That being said, they are still allowing offers to be made.

Although Blockbuster currently has the highest offer, back in 1999 the merger between the two was blocked by the FTC. Perhaps it is more likely to happen now though. Competition is picking up, not only from traditional video rental chains but also online rental operators (mainly Netflix) and discount retailers (Walmart). I don't know about you, but when I don't have a specific movie I want to see, I would much rather go to Walmart and buy a movie for $5 from their gigantic bin and have a tangible product that I can keep if I so choose, than to go to Blockbuster and spend $5.50 for a video for 2 days.

Blood and Gore

2004-11-11T15:39:00.000-05:00

Al Gore is back. But he's not coming back to the political spotlight. Instead, he's opted to team up with former Goldman Sachs CEO David Blood. Together (with the backing of many million dollars) they have launched Generation Investment Management. This new investment analysis firm will incorporate "sustainability research" into it's evaluations of investments. From what I gather, this slightly different technique of valuing stocks includes more moralistic factors such as: Does the firm pollute a lot? Does the firm make products harmful to consumers (e.g. tobacco, firearms)? How much charity work does the firm participate in? Is the firm thinking about the long-term?
In class we learned that such valuation techniques reduce investment opportunities which results in less efficient diversification. Obviously, part of my interest in this story stems from Al Gore's involvement. But I am also intrigued by the economic implications of this type of investing. I remember learning in principles that many normative goals such as reducing pollution are in fact a luxury. I'm not saying that it's bad, but for many investors, their number one concern is the return on their investments. So it should be interesting to see how well this firm performs and whether or not more investors will take a more social view of investing.

Thursday - Stocks on the Rise

2004-11-11T15:28:00.000-05:00

Today in late afternoon trading, the market seems to be on the up and up. Due to a sharp decrease in oil prices and also the Fed released its views for the economy, which were upbeat. The S&P 500 posted prices similar to those of mid-2001. Due to veterans day, bonds were not traded but overall investors were happy to post high numbers. There is hope to hold out for the rest of the weekend. This shows how everything in the market is intertwined. Oil prices fall and stocks rise. Some companies are showing lowered expectations for the upcoming year, such as Coke and Starbucks which was a disappointment to investors, although Starbucks did raise its quarterly earnings by 49%.

Coca-cola decline fueled by lower expectations

2004-11-11T15:17:00.000-05:00

Coca-cola stock has been on a decline since its high of $88.94 in June 1998. After re-evaluation it has lowered its long-term earnings and sales targets on Thursday, which has dropped the stock price even further. The article goes on to explain why they believe Coca-cola has lost its luster, for instance the trend in juice and bottled water, and interestingly enough it cites the weather as one cause. To try to salvage the drop, the firm is intending to increase its annual marketing and innovation spending form 350 million to 400 million. So, look forward to new Coke commercials that will hopefully be more innovative than Brittany Spears as a talking head (granted it did work for Pepsi, but you can’t say much for creativity).

Fed Funds & the Futures Market

2004-11-11T15:07:00.001-05:00

Earlier this week the Fed decided to again raise the Federal Funds Rate 25 basis points to 2 percent. This was the much anticipated and much predicted result of the most recent FOMC meetings held at the NY Fed. Prior to the announcement analysts everywhere were trying to predict exactly what the Feds decision would be, but one of the most accurate predictors of expected future interest rates are those being chosen for futures contracts. By examing the yield curves of the Futures markets even the unsavviest of investors can catch a glimpse as to the direction of future monetary policy.

Self Regulating "What a Joke"

2004-11-11T15:07:00.000-05:00

It seems like no one has learned a lesson when it comes to mutual fund trading or compensation packages that stretch the limit. J.P. Morgan may be disciplined for late trading mutual funds. The so-called supervisory system and written procedures were not in place to prevent this. I guess now anyone who wants to get out of trouble will just say the procedures are not in place therefore its not my fault. Let me see, if you late trade that means you got your cake and ate it too. Hell, I think everyone would love to late trade so they can profit without fear. I guess the ethical question of (is it right or wrong) is irrelevant, as long as no procedure have been written down. Also, the SEC proposal plans to alter the (Self-Regulation) procedures currently utilized by the exchanges. I think the self-regulation policy is ridicules in light of all the scandals in the market as a whole. Independent management needs to be part of the exchange boards to bring some fairness and some comfort to investors. With compensation pay packages being outrageous, such as the $188 million deal for the former chairman, Richard A. Grasso one has to wonder about this so called self regulating. A self-regulating policy is worthless because the investors are the ones who get the short end of the stick due to personal greed. There should never be any self-regulating polices when you are investing other peoples money and future.

Fed continues Fed Fund Hike

2004-11-11T14:42:00.000-05:00

Little by little the fed funds rate is moving away from the accomodative policy that has been in tact for a while now. At the FOMC meeting on the 10th they revised the statement to imply a general increase in the fed funds rate in the near future. The Fed Funds rate was raised by 25 basis points, now it is 2%, still very low and the real federal funds rate is JUST becoming a non negative number. We can see from the lowering of unemeployment and infationary pressures that raising the fed funds rate was a good move by the Fed. With the economy looking like it is going to be back on the expansionary track, the fed will have to keep a close watch on many economic indicators to ensure growth, high employment and stable prices. The discount rate was also raised by 25 basis points, now resting at 3%

When the Dollar Drops

2004-11-11T14:24:00.000-05:00

The US dollar is currently being hammered by the euro and pound. The pound is nearly 2 times the dollar, and the euro nearly 1.5 times. And analysts predict little recovery in the near future. The dollar has dropped because of the trade deficit, and budget deficit. Two issues that the US government has shown little concern in fixing. So little that it was not even an issue in the current election. But in reality it should be at the forefront of political debate, because as this article expressed the lower value of the dollar effects everything we do from buying foreign made clothing, to traveling on vacation. Hopefully Bush will find a way to both cut govt spending, and narrow the trade deficit.

Microsoft vs. Google

2004-11-11T14:23:00.000-05:00

This article reveals that Microsoft is gearing up to compete with Google. It unveiled a test version of its new web searching tool on Wednesday, apparently in an effort to try to capture some of the market share in this multi-billion dollar industry. It makes you wonder why Microsoft wasn't in the web-search business earlier, considering it is present in almost every other software-related market from operating systems to video games to the internet service provider MSN. I guess they just didn't think that a search engine could be as profitable as Google has become.

Internet Gambling--Why Not?

2004-11-10T22:40:00.000-05:00

The World Trade Organization decided this week that it was against free trade policy for the U.S. to ban cross-border gambling on the internet. People involved with this in the U.S. are confident that they made the right decision on banning it and are ready to appeal the WTO. If we are to support free trade in general, then why should internet gambling be any different? The U.S. should not be able to pick and choose what they want to trade freely, when some countries rely heavily on this, such as Antiqua and Barbuda who have about 5% of its population working in this industry.

Vioxx Adds to the Crisis at Merck

2004-11-09T22:36:00.000-05:00

Yesterday, Merck announced that they are undergoing federal criminal investigation concerning their anti-inflammatory drug Vioxx. They also stated that they are being investigated by U.S. securities regulators and that the Department of Justice has issued the company a subpoena asking them to release information concerning the research and development as well as the marketing strategies they used to advertise the drug. Merck also mentioned that the Securities and Exchange Commission has launched an informal investigation into Vioxx. Ever since the company took Vioxx, a pain reliever which grossed $2.5 billion a year, off the market on September 30th, they have been flooded with lawsuits. Due to the fact that the drug was found to double the risk of heart attack and stroke in users, 27,785 heart attacks and deaths since 1999 in fact, Merck has faced a numerous lawsuits from injured patients and shareholders, totaling 375 as of October 31st. As a result of all this negative attention, Merck's stock has dropped, with share prices plummeting 41% since the drug was revoked. Merck's stock closed at $26.57 yesterday.

Best Buy: Not so "Best" anymore

2004-11-08T21:26:00.000-05:00

I returned from Best Buy Today a bit disappointed and without the video game which I had been searching for. I proceeded to sit down and read today's WSJ and, to my surprise, found an article on the company which had just crushed my video game dreams. Best Buy has begun implementing a new sales strategy which distinctly contradicts the name of the company. This strategy is to effectively dump the bottom 20% of customers, who prove to be the most unprofitable to the company. These customers include those who habitually return items and habitually call Best Buy out on their price-matching policy. Best Buy is trying to rid itself of these customers by cutting back on promotions and sales tactics which tend to draw them. Instead, stores will concentrate less on these promotions and sales tactics and more on stocking merchandise which its most profitable customers are known to purchase. This is an extremely risky strategy since this merchandise can vary from location to location; the company is, in fact, already experience greater operating costs at the locations piloting this initiative. I'm not sure what this new strategy means for the future of the company; though, I do know that Best Buy should considering changing its name since this new strategy of dumping bargain-hunting customers doesn't seem to mesh with the connotation of the name. As a side note, I ended up going to Circuit City after my failure at Best Buy. I found Circuit City to be much cleaner, more organized, and to have a generally more friendly atmosphere. A good investment perhaps? I'm not sure but I'm going to keep my eye on it.

Investment Analysis Class Blog

2004-11-08T13:56:00.000-05:00

Euro Backs Off Brutal Rally Against Dollar
Euro reached its all time high against dollar: $1.2987 for a Euro (when will they put a Euro sing on the keyboard as they did with the dollar?). European Central Bank president Jean-Claude Triche exressed his concern about raising Euro. He pointed out that falling dollar is slowing down the mild growth that Europe is experiencing today. The cut off limit is $1.40 for a Euro, in which case most of EU will be thrown into recession. With the way it is going, this is likely to happen by the end of the year.
One of the interesting facts: oil prices are quoted in dollars, so Europeans are actually better off with falling dollar, that is why raising oil prices did not hurt Europe as much as they did the U.S.
The solution to the problem is for the United States to reduce its enormous deficit that has already reached $6 bill. With countious war effort and tax cuts it is unlikely to happen soon. Let's wait and see what impact it will have on European economy.

Shop to the Beat. Holiday songs remixed.

2004-11-06T17:38:00.000-05:00

Have you ever heard a song that just instantly put you in a good mood? Well, chances are if you go holiday shopping you’ll be bombarded with them. Retailers are gearing up for the holidays and plan to use music to get shoppers pumped up and feeling good. Old Christmas favorites are being remixed with hopes that consumers will be more in a store with a holiday dance party atmosphere. It’s hard to imagine that a small detail like background music could really effect my purchasing decision, but I suppose they wouldn’t do it if it didn’t work.

Enron who?

2004-11-04T18:06:00.000-05:00

I had forgotten all about Enron. Martha has dominated the newspapers lately and the folks at Enron have been forced to take a backseat. Maybe those days are over. A jury convicted 4 former Merrill Lynch exec's in what is the first of many criminal trials related to the Enron scandal. The exec's were involved with the accounting fraud that eventually led to the downfall of Enron. The guilty verdicts are a positive sign that the government's prosecution of Enron will be successful. Ken Lay and Jeffrey Skilling"s trial will hopefully start soon. Jury selection begins on March 1.

Show me the stock options

2004-11-04T17:56:00.000-05:00

Not directly related to investments made by common investors, I would like to touch upon the topic of CEO benefits and bonuses. I have recently researched the means by which corporations used to reward execs with bonuses, and the ways they are doing so recently. Instead of the highly sought after stock options, companies are rewarding CEOs and other high performing individuals with restricted stocks. These stocks are public offerings made to the individual by the company. The only catch is that the stocks cannot be cashed in until a set date. The corporations are doing this in hopes to keep top performers performing for as long as possible. Long term dividends are where it's at.

Blogging an article on Blogging

2004-11-04T16:08:00.000-05:00

There is nothing more fun than to blog an article written on blogging. According to this article, 2004 was the year of the blogging election, but unfortunately those rumors fizzled out. The author pokes fun at blogging, and the people who blog. He claims blogging is just an overrated outlet for misinformation and for fanatics to find safe haven in each others fanaticism. On the other hand there have been reports of legitimate questions arising against noteworthy news sources. So it probably goes either way depending on what blogging circle you are in. The numbers however certainly dont lie when you compare the 3 million visitors to cnn.com compared the 300 thousand visitors to blogspot.com. Perhaps this fad has not caught on, or perhaps it never will. Are opinionated editorials more efficient than proffesional journalism? Only time will tell!

Blogging an article on Blogging

2004-11-04T16:07:00.000-05:00

Two convicted in nation's first felony spam conviction

2004-11-04T13:44:00.000-05:00

A brother and sister who sent junk e-mail to millions of AOL customers were convicted Wednesday in the nation's first felony prosecution of Internet spam distributors. Jurors recommended that Jeremy Jaynes, 30, be sentenced to nine years in prison and fined Jessica DeGroot, 28, $7,500 after convicting them of three counts each of sending e-mails with fraudulent and untraceable routing information.

The e-mails that were being sent were offers for various items such as penny stock pickers and "FedEx refund processor" that would allow people to earn $75 an hour for working from home. Jaynes amassed a net wealth of $24 million selling worthless products.

In one month alone, Jaynes received 10,000 credit card orders for the processors at $39.95 each. Prosecutors have asked the jury to impose the maximum sentence of 15 years for fraud.

I think that Jaynes deserves to be punished, but what about all of the people who think they can work from home for $75 an hour--DUH!

Invest in an Ipod, but not in the company that makes it

2004-11-04T13:24:00.000-05:00

Bush wins, will we Business & Econ students win too?

2004-11-04T09:09:00.000-05:00

With Bush being re-elected to a second term, and subsequently laying out his agenda for his next term, one of the topics that has been very controversial, yet seemingly flying under the radar with today's younger generations is what will be done with the rapidly decreasing social security. Bush has hinted at wanting to privitize social security, which means there is going to be an influx in the need for stockbrokers, fund managers, and the likely creation of many new financial instruments. But what does this all mean to us as business and econ students? Well, I for one think privitization of social security is a good idea. The most likely remedy is the creation of individual retirement accounts (IRAs) for each individual to contribute to as they continue to work. This equates to many opportunities for us soon-to-be grads who stand to profitably if we get in on the ground floor and stick around for the process to begin and grow. So, in the famous words of Gordon Gecko from the movie Wall Street, Greed is indeed good.

Wall Street reacts to Bush's Re-Election

2004-11-04T01:15:00.000-05:00

Today Wall-Street investors were jubilant over the news of President Bush's re-election due to the possibility of his privatizing of Social Security and also drug makers were happy to be able to head-off government control over pricing. Private businesses such as Banks, Insurance firms, and private investors would help the millions of people who would privatize thier retirement plans, which could lead to a billion dollar industry. Also under Bush the current Dividend tax rate of 15% would stay stable, and possibly become permanent. Drug companies were excited because under Kerry, government regulation of drug prices would come into effect. This may be bad news for the consumer, but there may be the possibility of importation from canada which wont affect the industry very drastically but may help out some consumers.

Bush Wins, Stocks Go Up

2004-11-03T22:03:00.000-05:00

In an interesting example of political events affecting the stock market, an article from MSNBC mentioned major stock gains the day after the election. Investors seemed a little worried about a Kerry victory (seen not to be as business friendly as Bush). But after Bush's defining win, stocks reacted positively in many sectors. Following what we've learned in class, it appears that these increases can be seen as a "pricing in" of investors' optimism in future cash flows as a result of Bush's re-election. There's something very intriguing about investor reaction to events outside of the stock market. It seems that one day the market is selling, the next day its buying. I'm really buying into this random walk school of thought.
Another part of the article that caught my attention is the differing forecasts of two market analysts. One said that he anticipates investors to "soon return to the reality of the economic outlook." This analyst also mentioned looking at other economic indicators such as the monthly job creation statistics to get a better idea of where the market is really heading. But another strategist predicted that the really would continue on into early next year. Just an example of how different forecasts for the market can be, even for just the short term.

Markets Brace for Volatility if Poll is Indecisive

2004-11-02T17:25:00.000-05:00

Both investors and business owners alike fear that the market will become volatile if the presidential election fails to produce a concise outcome. The volatility of bond prices and currency have already risen in anticipation of the results of the election and are expected to intensify. Some individuals fear that if legal battles ensue over the outcome of the election, businesses will be hurt due to hesitancy in consumer spending. Lawsuits and challenges could only prove fatal for the economy, causing investors to lose confidence in U.S. markets and be forced to flee to foreign markets. Uncertainty about the election has also begun to weigh on the value of the dollar, which is expected to drop 1.5 cents on average if the outcome of the election is unclear. Overall, if the country doesn't know which candidate won it make it much harder to plan for the future.

The hottest new....cell phone rings?

2004-11-02T13:54:00.000-05:00

Ok so I'm sure we all have our favorite artists and I know when my friend got new cellphones they went nuts with the ringtone downloads. But a billboards hottest ringtones list? It seems to me that everything is going mobile. Indeed cellphone ringtones are a 3.2 billion dollar industry. It seems that every accessory imaginable is coming about. It will be interesting to see which ones succeed.

Fair trade?

2004-11-02T13:48:00.000-05:00

Nextel’s stock increased 5% after settling the new spectrum dispute, in which Nextel proposed a swap of less interference in public safety networks for a new spectrum. The FCC approved this proposal, and furthermore, Verizon wireless agreed it would not oppose the swap, although it will clearly give Nextel an advantage in the communications industry. In return, Nextel gave up the ownership rights to the phrase “push to talk.” I think Nextel may have gotten the better end of that deal.

IEM Update

2004-11-01T22:13:00.000-05:00

As of the closing bell on Halloween, President Bush leads Senator Kerry in the Presidential Election Winner-Takes-All of the IEM 55 cents to 45. Have the traders accurately predicted that President Bush will take the popular vote (and presumably the electoral as well)? In just a day or two (or even longer if history repeats itself) we will soon find out if people putting their own money on the line offer a better predictor of the outcome of the election than the omnipresent opinion polls that flood the media. If Bush is reelected, will his positions on the economy remain the same? If Kerry is elected, what changes are in store?

FYI: Tonight (Monday) at midnight, today's prices will be recorded so my numbers may be a little off from the ones that actually lead in to election day. That said, is it possible to assume that the IEM, like the stock market, is efficient?

Oil. Enough Said.

2004-10-31T23:04:00.000-05:00

There are power outages in Kuwait which of course is going to change the popular news commodity, oil. Oh no, we're going to have to pay another 10 cents per gallon. Yeah, it sucks, but what are you going to do, take public transportation? That would just unclog traffic and create more jobs.

But seriously, I noticed something at the bottom of the article crude oil futures trading at over 51 a barrel on the NY Mercantile Exchange. Perhaps oil could be a good investment/ could have been a good investment. If supply is slowly diminishing then prices have to go up and then so should the futures market for oil. Unless the futures market takes into account that many countries are trying to shy away from oil. I'm not really sure how the futures market works. Even then though the prices should still be high for the countries that do use it. Just a thought.

Boo

2004-10-28T18:38:00.000-04:00

Scary, I know. Naturally with Halloween in mind, a Halloween blog is neccessary. Candy companies do quite well throughout the regular span of a year however, when Halloween is right around the corner their value increases. Is it wise to invest in Snickers or Baby Ruth before Halloween I wonder? If it was extremely profitable, everyone and their ghouls would buy, therefore driving the price right back down. Seasonal changes in stock prices due to annual events and situations are very common and predictable. This topic of course deserves further investigation, but is interesting nonetheless. Trick or treat.

Holding Strong

2004-10-28T18:35:00.000-04:00

For the thirteenth year in a row the U.S. has refused to lift its embargo over Cuba. This is understandable since eliminating it would greatly aid our enemy while providing little benefit for us. This is not helping, however the currency problems that are more prevalent than ever in Cuba. They are currently using three different currencies: U.S. dollars, a convertible peso that has equal value to the dollar, and a non-convertible peso. As of Nov. 8, Castro is forbidding the use of U.S. dollars anywhere on the island. Is this in backlash to the decision to retract the embargo? Many countries feel that this is just another example of the U.S. alienating themselves from the rest of the world since the U.N. voted 179-4 in favor of lifting the embargo.

Sinking the Float

2004-10-28T17:32:00.000-04:00

So much for playing the "float" as a money management technique. On October 28, 2004 the Check Clearing Act for the 21st Century goes into effect, which aims to greatly reduce the "float" period on checks. For those who don't know, float is the time period between the time you write a check and the time the money is withdrawn from your account. This time used to range from 1 to 5 days, but with the new system in place, it is hoped to be reduced to an average of 24-hours. This change seems to have many underlying problems for those who were used to playing the float, namely the increased risk of bouncing checks, as well as an increase in people defaulting on scheduled payments. While over the years the float period on checks decreased, mainly due to more efficient processes implemented by the Fed, Check 21 as the act is nicknamed seeks to rid the float time altogether. This will be good for businesses, especially banks who offer "bounce protection," otherwise known as a brief loan with an exorbitant fee (usually $25-35 per check), as they will receive payments faster, thus decreasing their operating cycles.

Check 21 seems to be a case of the greatest good for the greatest number, but it comes with one ironic and important caveot, banks will not be required to speed up the time when they make funds available from the checks you deposit. Does that make sense?

IPO`

2004-10-28T13:44:00.000-04:00

This article talks about the IPO for Dreamworks and how the price for the stock opened about 30 percent higher than the IPO price.

I just think this is interesting how it seems that you can "beat the market" by buying IPO's. Obviously this is not always true, but with well-known companies it seems to be true. I don't think it should be able to work this way. It's just the more priveleged who are able to cash out on this, just like hedge funds used to work.

IPO`

2004-10-28T13:38:00.000-04:00

Running from Bankruptcy

2004-10-28T11:50:00.000-04:00

Delta is avoiding claiming Bankruptcy at all costs. They have recently cut thousands of jobs and those that they did keep will be recieving pay cuts. To keep the company afloat these cuts must happen and happen smoothly. The workers unions have agreed to many of these contract breakers understanding that this is the last chance for a bounceback. These emp;oyment cuts amount to almost 1.7 billion dollars. They are also making internal cost cuts amounting to 2.3 billion dollars. These changes will hopefully keep Delta up and running and allow the company to get its bearings. In general the airline industry is still stuggling but gaining more and more confidence monthly.

DualDisc

2004-10-27T23:17:00.000-04:00

I thought this article was interesting because it just shows how technology is advancing and to save more space you can now have a CD on one side and a DVD on the other. I'm sure this will also bring down costs of dvd and cd combos that many artists put out, not to mention there is less to keep track of. I'm sure they will soon release burnable versions, though one wonders where you are supposed to title everything if both sides are going to be burned on. Still seems like a promising product that could very well catch on.

Dow Hits New Low for 2004

2004-10-26T23:06:00.000-04:00

Volatile crude oil prices are to blame for slight losses experienced by indexes such as the Dow Jones Industrial Average. Yesterday, the Dow fell 7.82 points to 9749.99, setting a new low for the year. Consequently, oil prices reached a high of $55 a barrel in the last week and even though prices fell somewhat on Monday, oil is still too expensive and will begin to weigh on the economy unless the price drops below $50. This strain is felt by businesses such as BellSouth, who watched profits fall 14% in recent months and saw their stop price drop 13 cents, to $26.42. Kimberly Clark's stock prices also fell a considerable amount, $4.03 in fact, despite a 5% increase in profits. However, other companies are doing well in spite of the market. Both Kellogg and International Steel Group experienced increases in stock prices and shares as well as profits.
What does this all mean? Unless the price of crude oil decreases a considerable amount soon, companies like Kellogg will not be as lucky as they have been recently. High oil prices will continue to hurt the U.S. economy by weakening the U.S. dollar and contributing to investor uncertainty, which will in turn put a strain on businesses.

Ballot Initiative on Stem Cells Gives Biotech Stocks Lift

2004-10-26T22:31:00.000-04:00

I read in the WSJ today that the stocks of some biotechnology companies working on stem-cell research are getting a boost in advance of the Nov 2 election, which could unleash new state and federal funding for the controversial scientific work. If John Kerry is elected he plans to lift restrictions of federal funding of the work imposed by Bush three years ago.
Stem-cell company stocks have long been volatile and the research is still in its infancy, so the shares are predominantly owned by individual investors who are a little more risky when investing. The stocks have spiked and fallen numerous times in the past eight years.
The companies involved are Geron Corp, StemCells Inc., and Aastrom Biosciences. The increases range from 16% to 51%.

Boston "Curse" Merchandise in Danger of Becoming Obsolete

2004-10-26T01:06:00.000-04:00

While reading the Wall Street Journal today I became aware of a whole line of merchandise which I didn't even know existed. Apparently for the last few years people have been creating a line of Boston Red Sox "Curse" merchandise. I wouldn't think that there would be a large enough market for this stuff but apparently there is. Merchandisers have come out with Boston Curse T-shirts, posters, hats, and even an ice cream flavor. But if the Red Sox break the curse at the World Series then all this merchandise is going to become obsolete. Producers are going to need to work a new angle on their market, perhaps a line of "Boston Breaks the Curse" items are due out soon. Bostonians may even see a new ice cream flavor in their local ice cream shops soon. Producers shouldn't have much of a problem thinking of a new angle because people seem to buy anything that is put on a T-shirt, they just need to come up with a witty slogan and slap it on a shirt. Come to think of it, the T-shirt business is probably pretty lucrative, just ask Morgan Applegate, the man behind the "I was here before U" MWC T-shirt. He had a creative and timely slogan and has probably made a decent amount of money off of it. So, to the fans of witty Red Sox merchandise, don't worry if Boston wins the series I'm sure that a new line of products will come out to replace the old "curse" ones.

Traffic and Investments

2004-10-26T01:01:00.000-04:00

The other day I was sitting in traffic on I-95 south when I began thinking about some of the similarities between stocks and traffic. Granted, both are not entirely the same, but there some interesting similarities.

In traffic, you ever notice how one lane will start moving but then once you switch, your lane stops and the lane you left picks up momentum and the car that was behind you passes you by? It's happened to me enough times that I don't even bother switching lanes in traffic anymore. This is similar to the whole market efficiency idea in that once a profitable opportunity has been identified, enough investors will swoop in until the discrepancy has been eliminated. In traffic, it makes sense to stay in the same lane since you're bound to pick up the different momentum shifts.

Sitting in one lane is like being a passive investor. Stay put and only switch if the other lane has been passing me by for several minutes or so. Often times I am tempted to switch, thinking that I can get ahead by a couple of cars and gain some ground. But 9 out of 10 times, I end up getting stuck and actually falling farther behind than if I had stayed put.

The constant lane-changers are somewhat analogous to aggressive investors. Always switching, taking chances, cutting people off, and many times (at least in traffic) not much better off than the rest of the pack. These risks are akin to transaction costs and the possibility of missing big gains by being in the wrong investments. I find that when it comes to traffic, being a passive driver is much less stressful since I'm not worried about getting in and out of lanes, I run less risk of an accident, and I can focus on other things like the radio or enjoy some down time. This passive investing sounds more appealing already.

If anyone has anymore similarities between stocks and traffic, I'd be happy to hear them.

AdSense

2004-10-25T14:29:00.000-04:00

Logging on to Blogger.com today took a tremendous amount of time and patience. I didn't yet have a topic to write about, I just wanted to get some ideas from what others had done last week.

As I sat looking at the screen I noticed a section on the login page called "AdSense Invite" (or something like that). AdSense, from what I understand, is a program where Google matches sponsored links to the content of your website and posts them on your page. Then Google pays you per click that the links receive. In the quick online tutorial, no cost is mentioned, but I imagine there is probably some sort of fee. One page of the tutorial also mentions that you can add a Google Search Box to your site (at no cost) and earn revenue on searches made using it as well.

All-in-all it seems if you have a website, AdSense may offer a great investment opportunity, especially if you only have to give up a small amount of space on your webpage.

"No Housing Bubble" Says Greenspan

2004-10-21T18:53:00.000-04:00

Amid speculation that a housing bubble is being created, Fed chairman Alan Greenspan said that he is not worried about problems with U.S. housing prices. Another article I read on the same topic said that transaction costs and the need for a seller to have shelter are some of the reasons that Greenspan thinks that will limit speculative practices on the housing market. The other article also said that only about 11% of the price increases were due to speculative buyers. He also mentions that despite some instances of increasing debt among U.S. households, he is not worried that rising interest rates will severely affect the overall debt problems of U.S. households. So despite what may have been said on this blog before, maybe things are not as a bad overall. Should be interesting to see how things develop over the next few years.

Phrase "Empty your pockets" is given a whole new meaning

2004-10-21T18:18:00.000-04:00

This article gives a new meaning to that little phrase you hear at security checkpoints in airports (and other places). In the past year, passengers have left over $320,000 in spare change in those little containers. This includes about $14,000 each at O'Hare and Dallas, $12,000 at Los Angeles, and $5500 at Miami.

The money is collected by the airport authorities and deposited into the general fund at the U.S. Treasury. While not a huge amount of money, I found this article be interesting. I wonder what the economic ramifications of this are? Now the airport security is run by the government, rather than private companies, we could use this money to help fund it. Maybe that's a little far-fetched, but it's just my thought for the day.

Planning for retirement when you think its too late...

2004-10-21T18:01:00.000-04:00

I can always remember that one of the things everybody has always told me growing up was to start saving for your retirement when you are in your early twenties. I always heard the stories about if you start putting money away now you'll be a millionaire by the time you retire. Well what do those people who decided not to put the money away what can they do for their retirement? This article addresses that problem. They described people who are in their forties and fifties and have now decided to start a nest egg. Many people began putting money in riskier stocks in hopes of getting rich quick, but unfortunately, that is not the way to go. Especially with big investors such as Warren Buffet stating that over the next few years the market would only give a 6-7% return. The author discussed certain things that a person can do to help with their retirement, such as cutting back spending. By paying off your mortgages or car loans earlier, people save a lot more money in interest each month and by the time they retire that is one less worry off of their minds. Also another way to start saving money is to stop recieving a tax refund. Refunds are from money that you over pay the gov't. The gov't collects interest on that money while it is held in their account, if a person were to correctly to their taxes then the money that would be from a refund, could be invested on your own and that individual would recieve the interest on it. Also when most people recieve the refund it is usually spent on vacations and big ticket one time purchase items when it could be re-invested for more money.

credit card permits?

2004-10-21T17:44:00.000-04:00

today in the washington post, there was an article about college students and credit cards, as there often is. and once again, the statement was made that college students shouldn't have credit cards because they abuse them (despite the statistics that were about an inch down saying that college students are capable of being responsible adults). but basically the article's author was asserting that college students don't know how to use credit cards responsibly, and thus shouldn't have them. but if we don't have credit cards, how do we learn how to use them responsibly? as the director of the credit research center said that he would rather see college students messing up when they have a lower credit limit, and that sounds pretty smart to me. isn't that what we do for driving, more or less? students are issued a permit, and only when they have been taught the basics and pass a test can they drive on their own with their shiny new license. i'm not saying that college students should get a credit card permit, but shouldn't there be an option kind of like that? now that sounds responsible to me.

E*Trade Pulling Ahead

2004-10-21T17:42:00.000-04:00

Third quarter profit at E*Trade went up 29% this year. Although the general brokerage market has recently suffered, E*Trade has risen above quite significantly. The net income per share was recently announced at 21 cents per share. By the end of the year, net income per share is expected to rise to somewhere between 92-97 cents per share. As apposed to its first and second quarter losses, E*Trade has been experiencing an upward turn not characteristic of the current online brokerage and banking businesses. How long E*Trade will be able to keep this trend on the table is however, a completely different story.

Baseball & Politics

2004-10-21T14:35:00.000-04:00

As I am sure everyone is now aware, the Boston Red Sox are World Series bound. What many may not realize is that if the Houston Astros are victorious tonight, the World Series matchup with replicate the current presidential matchup. Massachusetts, home of John Kerry and the BoSox vs. Texas, George Bush and the Stros. The subplots this possible matchup would develop are numerous, with Roger Clemens returning home, the Sox being able to exercise the curse of the Bambino. If history is any indication, the fact that it will be a Yankee-less series could bode well for Bush, as the Yankees last world series came when a Democrat was in the Oval Office. Regardless, the possible baseball and political matchup will be one for the ages, so with that said, GO ORIOLES (next season of course)!

EU Busts up Coke Racket

2004-10-21T11:21:00.000-04:00

I’m not talking about drugs, but the soda giant Coca-Cola. The European Union recently forced Coke to change its sales practices. The beverage company can no longer make exclusive arrangements with stores or restaurants, and rivals can now sell their product from Coca-Cola refrigerators. The change will allow consumers to buy based on price and personal preference, as opposed to availability. This is a major victory for consumers in the EU and hopefully the US will soon follow suit.

Creative Accounting

2004-10-21T11:18:00.000-04:00

Just getting back from the "Executive-in-residence" presentation I feel the need to write on Business ethics. The speaker, Richard Barry, is the Vice Chairman of Landmark communications (a media company in charge of many newspapers magazines and news programs such as the Weather Channel). As he spoke about ethics and how his private company strives to uphold high ethical standards, he went into detail on accounting records and blaming most of the past and present business frauds on the accountants. Creative accounting as he called it was the prime reason for businesses getting caught, but I don’t think this is WHY the frauds happened. Yes, they were covered up with this creative accounting, but then shouldn’t the accountants have whistle blown or refused to cover up such fake expenses. It all comes down to survival of the fittest, better referred to as greed. I uncovered an article about the SEC trying to crack down on the accountant firms, but what we really need is better morals throughout the human race. Yes, it’s a long shot because as we can see an efficient market can’t be efficient without someone finding ways to get ahead or make a quick buck. With the recent Enron scandal many laws have been instated to ensure better accounting procedures but it is near to impossible for the government to enforce all of these laws. Mr. Barry spoke of how ethics were upheld in his company but then he turned around and said if anyone has a problem with what was said on the weather channel he defers blame onto the national weather company that he gathers his data, claiming that they just restate the same data. I had a good laugh at that answer because during big weather storms the news seems to just blow everything out of proportion and then people become glued to the weather channel for updates, which increases their revenue. I found a conflict of interest... why WOULDNT they hype a storm to create more viewers. Some people flee the area, buy many supplies and panic, but really, the storm is no big deal and was blown out of proportion. Is that ethical? He claimed that it was all a question of taste... In other words, he didn’t have an answer. Where do business ethics start? Is it just in the books? Or does it start way down on the little stuff?