Wall Street Breakfast: Must-Know News [View article]
The market is pricing Greek debt at what it's actually worth, ditto for Portugese, Irish, and other bankrupt nations' debts. If the Fed had not been monetising US debt in various hidden ways, the markets would have priced US debt at what it's truly worth. Indeed, when the Fed buys GSE debt from the Chinese at face value in return for the Chinese buying treasuries at face value, this is tantamount to the Chinese buying treasuries at 50-75 cents on the dollar, the value of the junk the Fed buys from them to get them to buy treasuries.
The governments in the Western countries are eager to buy, on behalf of their taxpayers, assets (such as Greek bonds) at prices that greatly exceed their market value. This is a breach of their fiduciary rsponsibility to their taxpayers. I sincerely hope that their constituents, perhaps in Germany, will put an end to this irresponsible charade.
Capitally Challenged Stocks That Could Be Diluted or Extinguished [View article]
This is an excellent article and a prudent view of current valuation metrics: (a) Balance Sheets Rule the Day. (b) Cash is King (c) Debt is Death.
Unfortunately, many of our largest companies are managed by overpaid incompetents supervised by ignorant and irresponsible boards, who have failed to think through the sobering reality your article brings to light. Thus, they continue to embark on debt-fueled, cash-wasting mergers, ignoring the obvious lessons of a de-leveraging world. Dow Chemical was first, and has thus managed to morph, miraculously, from a US corporate powerhouse into a zombie on life support. Pfizer, then Merck followed close on Dow's heels, in an astonishing display of foolishness.
The lesson I learnt in the past few months, is that one has to apply a "mismanagement discount" to stocks, since the probability of arrogant managers demolishing the value of perfectly excellent companies has to be added to the other uncertainties of this complex market climate.
(disclosure: unhappy owner of shares in Dow, Pfizer, and Merck)
Wall Street Breakfast: Must-Know News [View article]
The governments in the Western countries are eager to buy, on behalf of their taxpayers, assets (such as Greek bonds) at prices that greatly exceed their market value. This is a breach of their fiduciary rsponsibility to their taxpayers. I sincerely hope that their constituents, perhaps in Germany, will put an end to this irresponsible charade.
Capitally Challenged Stocks That Could Be Diluted or Extinguished [View article]
(a) Balance Sheets Rule the Day.
(b) Cash is King
(c) Debt is Death.
Unfortunately, many of our largest companies are managed by overpaid incompetents supervised by ignorant and irresponsible boards, who have failed to think through the sobering reality your article brings to light. Thus, they continue to embark on debt-fueled, cash-wasting mergers, ignoring the obvious lessons of a de-leveraging world. Dow Chemical was first, and has thus managed to morph, miraculously, from a US corporate powerhouse into a zombie on life support. Pfizer, then Merck followed close on Dow's heels, in an astonishing display of foolishness.
The lesson I learnt in the past few months, is that one has to apply a "mismanagement discount" to stocks, since the probability of arrogant managers demolishing the value of perfectly excellent companies has to be added to the other uncertainties of this complex market climate.
(disclosure: unhappy owner of shares in Dow, Pfizer, and Merck)