AIG Casino and Financial Services Company

My wife and I often argue about whether investing in equities is the same as going to a casino and pumping dimes into a slot machine. Now when it comes to slot machines and dimes, my wife has first hand experience. On our first trip to Las Vegas together we stopped at the first casino we came to, she put a dime into a slot machine and on the first pull collected $100. “That’s a better return than on any equity investment we’ve made,” she’ll point out thirty years later. I’ve given her the business school pitch on markets countless times and have explained that we’re value investors and occasional traders, but that we’re not gambling with our retirement.

Are you stupid or have you known this all along?

That’s a question my former boss and mentor used to ask when you really screwed up. It was asked half in jest but the staff knew it often signaled the beginning of the end for someone’s career at the company. This is the first of what I hope won’t be too many semi-irregular posts rhetorically asking this beautifully simple question.  First up are Liddy, Geithner, Bernanke, Frank, and Dodd.

Best quote today

As longer time readers may remember, I like to read the Wall Street Journal at night. Hey, the news was old since it hit my doorstep, so reading it at night is fine by me. In fact, I consider the WSJ the official paper of record here at the TLRB.

Well, the page one headline today is “Market Pans Bank Rescue Plan”, which we discussed yesterday in “Oh Tim“. This is where I found the quote of the day. One Ethan Harris, chief U.S. economist at Barclays Capital said

“This is the shock and ugh plan.”

I thought that was just about perfect. I suppose it was intended for dry finance types like myself, so don’t feel bad if you didn’t find it funny. It made my day though.

Oh Tim

I’ll be honest here: I spent a good part of today trying to figure out what is going through Tim Geithner’s head and I have no idea. To great fanfare he announced the Treasury’s new plan of attack against this crisis but the only change I detected was that is should be larger and more transparent. Well thank you Captain Obvious. Really, this is your great plan Mr. Geithner?

According to the speech’s text, it is a three-pronged strategy very short on detail. Has Tim learned nothing from watching the crisis unfold: empty speeches make the matter worse. Just ask Hank.

Suicide Myths

There have been quite a few unfortunate, high profile suicides lately. Several were directly a result of the Madoff scandal- investors who lost everything or were disgraced by participation. Another just this week, German billionaire Adolf Merckle ,threw himself in front of a train.

Obama’s Stimulus Plan

Since late November, ideas have been steadily leaked regarding the form of the stimulus package. So far, I have refrained from commenting since the final package will look very different from today’s talk. What did prompt this post, however, is just how masterful a politician Obama is from the start. As one would expect from seasoned Washington leaders, Obama’s aids have been steadily leaking ideas, no doubt to test the water and see what Wall St and Washington think.

The Role of Credit Agencies in the Financial Crisis

We had a good question regarding the role credit agencies have played in creating this financial mess. By “credit agency” we don’t mean Experian, Equifax or Transunion which I wrote about earlier this week. While those focus on consumer credit profiles and scores, there are a few more “agencies” that had a direct impact in fueling this crisis and they are household names: Moody’s and Standard & Poor’s.

Oh, Hank

I wish Hank [Paulson] would just shut up. It seems every time he does a press conference, the market sells off. It could be a coincidence, but maybe not. Regardless, his press appearances are not helping things. I bring this up because many, many people are being hard on Hank right now. Few commentators seem to approve of anything he does, says or proposes.

An Observation: WSJ

It is shortly after 11:30pm local time and I just finished reading today’s Wall Street Journal.  The WSJ is my paper of record having been a daily reader for well over a decade.  Why am I reading a newspaper at 11pm?  Isn’t the news old?  Why am I reading a paper at all?  Good questions for this internet age, I suppose.

Ugly Numbers: Where the Market Stands

I am out of antacid and almost out of hair after today’s plunge in the stock markets.  In my September 15th, 2008 post, “The Most Difficult Decision An Investor Must Make” I wrote:

“I can at least promise the coming weeks will be exciting- at least as exciting as market watching gets.”

I continue to stand by the things I shared in that post and recommend a re-read.  For now, let me provide a little market history and perspective from the proprietary research at SFP.