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Big unemployment figures
So yesterday’s posting looks particularly timely after today’s big announcement of the number of jobs lost by the U.S. economy in the month of November. In case you have not heard, the estimated number of jobs lost was 533,000. Furthermore, the unemployment rate ticked up 0.2% last month. In case you did not read yesterday’s posting, these figures are pertinent and telling. It will be important to watch the response of the financial markets to this news. Late last month I had said that I thought the bottom of the financial...
read moreLay off the layoffs
Good morning friends and readers! One of the tough things about tough times is seeing the endless parade of job layoff numbers. They create lots and lots of anxiety amongst people. I know because when I was growing up my mom experienced layoffs on multiple occasions. I also know people who have been personally laid off during our current recession. Layoffs are never pleasant. What I wanted to point out though is that even given the large layoff announcements that have been occurring, unemployment in the United States remains at a fairly low...
read moreThe recession is officially on
As you probably all know by now the U.S. “officially” entered a recession exactly one year ago in December 2007. The fun bunch of officials who have officially stated this are the National Bureau of Economic Research. More specifically it was the organization’s super funky bunch, funily named the Business Cycle Dating Community. Another way of stating this is that the U.S. economy finished expanding one year ago and has been contracting ever since. According the the NBER we had 73 months of expansion, or 6 years and 1...
read moreUp, up and away?
…the Holiday is fast approaching and I hope that all of you have wonderful plans to enjoy a breather. Today marked the third day in a row that the financial markets closed up. More importantly, they closed up despite the fact that there was bad news from important companies. Bad news is no longer triggering panics and this is a good thing. Recall from last month’s initial blog postings that I said we needed to see 3 big changes before you could gain confidence in the financial markets again? Well 2 of those 3 criteria have been...
read moreHighwater marking
I wanted to talk to you about an executive pay concept that was introduced into my thinking by a former colleague, who is still a good friend, named Chandler Spears. Chan is the Portfolio Manager of the Davis Real Estate Fund and he has served in that capacity for many years now. Chandler introduced me to the concept of “high-water marking” executive pay packages. So what exactly is “high-water marking?” It means that executive pay packages are tied to the incremental performance of the businesses that they...
read morean irony that just occured to me
Isn’t it ironic that the government’s solution to the financial crisis is the exact same thing that got us into this mess in the first place? Namely, give mostly free money to folks and hope that they behave responsibly with all of that cash. Hmmmmm
read morethe people are changing
Happy Saturday to each of you! You may have heard about yesterday’s financial market rally. The Dow Jones Industrial Average was up 6.5%, the S&P 500 was up 6.3% and the NASDOG was up 5.2%. All of this rise was attributed to President-elect Obama’s expected nomination for Secretary of the Treasury, Timothy Geithner. As regular readers of this little blog know, I have been saying that for markets to stabilize, the people who got us into this mess have to leave and new people put into place. Financial market participants...
read moreprice earnings ratio primer
In today’s post I wanted to share with you the results from one of my favorite tools that I developed during my career as a professional money manager. It was a spreadsheet that took me several days to create that analyzed the financial implications of P/E ratios. Folks bandy about P/E ratios without necessarily understanding what they mean for long-term returns. In case some of you out there do not understand what they are, let me give you a brief overview. The “P” in P/E stands for price. In this instance it is the...
read morea little financial humor
This comes courtesy of my father in-law and will hopefully lighten things up a bit… Try this Financial humor from Japan: Following problems in the subprime lending market in the States and its devastating effect on Northern Rock and Bear Stearns, uncertainty has now hit Japan. In the last 7 days the famous Origami Bank has folded. Sumo Bank has gone belly up and the Bonsai Bank announced plans to cut some of its branches. Yesterday it was announced that Karaoke Bank is up for sale and will likely go for a song. Today shares in...
read moresorry for the absence
Hello everyone! Sorry for the lack of posts in the last several days. I have been traveling and had but my BlackBerry at my disposal. Needless to say, for my posting a BB is not the ideal instrument to use to post. However, I have several blog postings at the ready and will be publishing them in the next several days. With smiles! Jason
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