Sunday, October 26, 2008

Hedge Fund Manager

Andrew Lahde, manager of a small California hedge fund, Lahde Capital, burst into the spotlight last year after his one-year-old fund returned 866 percent betting against the subprime collapse.

Last month, he did the unthinkable -- he shut things down, claiming dealing with his bank counter parties had become too risky. Today, Lahde passed along his "goodbye" letter, a rollicking missive on everything from greed to economic philosophy.

Click on the CNBC link to read more.

Friday, October 24, 2008

Why we buy?

Marketing Delight

In a world of too many options and too little time, our obvious choice is to just ignore the ordinary stuff. Marketing guru Seth Godin spells out why, when it comes to getting our attention, bad or bizarre ideas are more successful than boring ones.

(Seth Godin is an entrepreneur and prolific business-book author who specializes in marketing in the digital age.)

Wednesday, October 22, 2008

Oil Prices

Just had a look at the current oil prices. Wow! It is $67 per barrel! Yes, $67 per barrel, according to the Nasdaq Stock Market and New York Mercantile Exchange.

The crude oil prices were trading at highs of $147 earlier this year.

The lower consumer demand, the sell-off of commodities by cash-strapped investment houses and banks, and recession concerns are prompting the drop.

Friday, October 17, 2008

Words of Wisdom

My Dad often says: "Fear and greed are the two most important factors in the stock market."

Warren Buffett reiterated his long-standing philosophy: "Be fearful when others are greedy, and be greedy when others are fearful."

I firmly believe these are the tenets of successful investing in the stock market (most applicable in the current economy). Buffett became the richest man in the world by investing while others were fearful, which in turn has allowed him to be one the greatest philanthropists of his time. He said, "You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy."

Read the advice/opinion in NYT Editorial by Warren Buffett.

Today, confidence among U.S. consumers fell by the most on record and single-family housing starts hit a 26- year low, posing an increasing threat to household spending that accounts for more than two-thirds of the economy. Even the stock market is super-volatile right now, consider just this week for starters. The Dow Jones gained 976 points on Monday; fell 76 points on Tuesday; dropped 733 points on Wednesday; gained 401 points Thursday and then again dropped 127 points today. Yet, the net gain for the week is about 400 points!! Is this a good time to invest?

Ohh, yeah! Yet, it's imminent that there in no quick recovery for the economy and it should ideally be back on track by the end of next year. I'm not sure if we're at a bottom in equities, but valuations sure do look good from a historical perspective.
I would advise everyone to be a more pro-active investor than the buy-hold-forget and then expect profits strategy! You should be more involved and actively aware of economic trends and make necessary adjustments to your portfolio/assets.

Take it for what it's worth...

Thursday, October 9, 2008

Market Update - Financial Crisis

An update on the last couple of deadly weeks.

I think the Freddie and Fannie mac news provided the much needed jolt to everyone unaware of the financial turmoil. The Government did step in with a bailout.

The signboard "Lehman for Sale" was already put up on Wall St. but unfortunately there were no buyers which started the stocks free fall. Unfortunately, Lehman could not raise capital and did not make it as even Bernanke and Paulson kept there hands off. In the meanwhile, Merrill Lynch was sold to Bank of America, Wachovia to Wells Fargo and WaMu to JP Morgan Chase. With the big investment giants + banks going down under the panic kept on escalating.

The crisis grew bigger as AIG was kicked out of the Dow. It got an infusion of cash from the Fed for a 80% stake to stay afloat and avoid the catastrophic collapse. However, this raised substantial fears of the financial sector leading to massive sell off.

In the midst of all this the foreclosures continue to climb while new home construction falls. The $700 billion big bailout plan failed to clear the House initially but cleared the hurdle during a second chance. Berkshire Hathaway and Warren Buffet showed confidence in Goldman Sachs and GE and poured in $5 billion and $3 billion respectively which I think helped tremendously. The endorsement helped both companies to raise more capital.

The coordinated rate cuts yesterday didn't help much as the credit markets still remained tight. Fed chief Bernanke has offered a dismal outlook on the economy. The Dow and Nasdaq continue to sink and companies forecast a tough next quarter and issue warnings.

Imagine this. The DOW was at its all time high exactly one year back in October 2007. It has dropped 4000 points just in the last 4 months. It was hovering around 11,000 about 2 weeks back to close at 8,579.19 today.

Hopefully the economic downturn gets reversed soon.

Debt Increase

Well, seems like the debt clock can't keep up with the recent times.

The National Debt Clock in Times Square in New York has run out of digits to record the growing figure. As a temporary fix, the dollar sign has been switched to a figure--the "1" in $10 trillion. The clock is marking the current national debt at about $10.2 trillion.
Think of that.

The clock’s owners say a new model — with space for two extra digits — will be in place early next year. Now the debt clock will be able to reach the quadrillions. Hopefully, that’s not a level that will be breached any time soon.