Clippings

[parvus]

Yer cud always go to Shiller.

[WishingWealth]

Inflation expands '$100,000 club'42,527 in public sector hit six-figure bracket in Ontario last year
In The Star.

The Liberal government insists inflation is to blame for Ontario's "$100,000 club" growing larger every year.

In all, 42,527 provincial civil servants and others in the broader public sector earned $100,000 or more last year, according to salary disclosure figures released yesterday.

Paul Haggis, president and CEO of OMERS Administrative Corporation, which oversees municipal employees' pensions, tops the list at $2.24 million, followed by Ontario Power Generation president and CEO Jim Hankinson, who got $1.79 million.

Deputy Premier George Smitherman defended the ballooning roll of well-paid mandarins, which jumped from about 34,000 last year.

As the two-volume, 855-page list landed with a thud at Queen's Park, Smitherman emphasized things have changed since former Progressive Conservative premier Mike Harris launched the "sunshine list" in 1996.

Lots of buts buts buts from the poor victims of inflation creep will be heard in the coming days.

WW

BTW: Gentlemen and ladies, swear words are frowned upon on FWF. Please keep the f... s to a strict minimum.

[parvus]

Or click here to find out what your fav financial profs are making (or, mutatis mutandis, your most disliked ivory tower media pundits).

[83_gemini]

It's always interesting to see the large gaps between my various professors' salaries. Some of their taxable benefits look fairly generous too.

On the other hand the people who I know on the list deserve the money, if only because almost of all them could have done far better in the private sector.

Personally, I think they should index the disclosure.

[ghariton]

On the other hand the people who I know on the list deserve the money, if only because almost of all them could have done far better in the private sector.

Yes. And some of them make far more than the amounts shown, as they do work for private sector clients on the side.

Personally, I think they should index the disclosure.

Yes. That would make 2007 disclosures start at $125,000. Most of your teachers would still make it.

Georges

[WishingWealth]

In The Star, a follow-up by Rosie DiManno.

Notice to the money makers pressed with time.
Little chance of monetizing the read; just take a pass and go on in search of more lucrative offerings.

The life of a mandarin sure pays well

...I understand professional athletes making $20 million a year because they are gifted, exceptional, and the market will allow it. But there's nothing genuinely exceptional about a corporate administrator who's fashioned squat from scratch, with a vast staff to do the heavy lifting, moving about in this rarefied air of non-competitive white-collar privilege and gross sinecure.

Burlington's city manager makes $307,651? Have you been to Burlington recently? I can scarcely believe it's a full-time occupation.

And the president/CEO of St. Michael's Hospital rakes in $723,265 annually, but an ordinary ailing mook still has to wait five-six hours in the emergency room.

Maybe I should have become a secretary after all – and married the geek with a rich mandarin future.

WW

[Taggart]

Is 'Free Cash Flow' More Important Than Net Income?

June 24, 2008

------------------------------------------------

Probably the best book I've come across on free cash flow is Cash Flow and Security Analysis by Kenneth S. Hackel and Joshua Livnat. Their interpretation of free cash flow is nothing like the examples given in the article above. In 2000, the authors also put out a research paper on the subject.

A Free Cash Flow Investment Anomaly

Unfortunately, you need a subscription to access it.

[WishingWealth]

Look look, there's one of them kids jumping over the turnstiles to defraud this great country of the $2.00 fee.
I tell you, not enough jails in this country. They're bankrupting us.

A One-Time Tax Break Saved 843 U.S. Corporations $265 Billion

In the NYTimes.

...American companies can typically defer paying taxes on foreign profits as long as they keep that money outside the United States. When companies bring the money back, they usually pay the top corporate tax rate of 35 percent.

In recent years, the biggest and wealthiest companies in the United States have increasingly set up foreign subsidiaries and used them either as foreign operations or offshore repositories.

The subsidiaries, many in offshore tax havens like the Netherlands, Ireland and the Cayman Islands, collectively held about $804 billion in foreign profits on which their American corporate parents had yet to pay any United States taxes, according to the I.R.S.

A one-time tax holiday enacted by Congress in 2004 offered companies the chance to bring that money back at a reduced tax rate of 5.25 percent.

Some of the biggest names in corporate America decided to take advantage, in particular those in the pharmaceutical and technology industries. Pfizer brought back $37 billion, while Hewlett-Packard repatriated $14.5 billion. ...

WW

[Taggart]

News from globeandmail.com

Friday, June 27, 2008

This is what value looks like

They're not the sexiest companies you'll ever meet: no glamour, little coverage. But when it comes to profits and prices, these 10 quiet achievers have charms aplenty, John Daly discovers

[Taggart]

Wall Street Journal

Investment Page-Turners for the Summer

By DAVE KANSAS
June 29, 2008

It's time to gather books for warm-weather reading. While some prefer the diversion of a thriller, others see the summer reading season as an opportunity to sharpen the mind.

[WishingWealth]

How much does corporate fraud cost you?

Corporate fraud didn't start with Enron, Tyco, and WorldCom and it didn't end with them, either. Fraud is rampant in the technology industry. What most employees, investors, and consumers don't realize is how much it costs them.

Excuse me for stating the obvious, but you'd be surprised how many people think there's some magic pile of dough somewhere that pays for companies to comply with investigations, contest charges, and remedy issues. In fact, the costs are born primarily by the corporation. That means it comes right out of shareholders' and employees' pockets. Consumers also pay, albeit indirectly.

...

At CNET.News.
http://news.cnet.com/8301-13555_3-99802 ... g=nefd.riv

The article is mostly about tech but nevertheless, it skimps over what is to me the biggest cost of recent corporate fraud.
IMO, the costs associated with the banking system frauds.


Fraudulent lending =>
Fraudulent credit ratings =>
Write-offs by the banks =>
US$ meltdown =>
Higher price of oil =>
Destruction of hundreds of billions (probably trillions) of accumulated wealth.

etc...

(By no means an exhaustive list)

Of course, the price of oil could be higher just due to demand alone but we would certainly not see the kind of panic we presently see.

WW

BTW: This is what I had been thinking for quite some time but D. Yergin during a recent interview said it in a much more eloquent way.

[Taggart]

Bear market freak out

Pulling out of the market during hard times creates a pattern of buying high and selling low. A savvy investor would do much better to stay the course.

----------------------------------------------

The study the above article refers to:

Mutual Fund Flows and Investor Returns: An Empirical Examination of Fund Investor Timing Ability

Abstract:
We examine the timing ability of mutual fund investors using cash flow data at the individual fund level. Over 1991-2004 equity fund investor timing decisions reduce fund investor average returns by 1.56% annually. Underperformance due to poor timing is greater in load funds and funds with relatively large risk-adjusted returns. In particular, the magnitude of investor underperformance due to poor timing largely offsets the risk-adjusted alpha gains offered by good-performing funds. Investors in both actively managed funds and index funds exhibit poor investment timing. We demonstrate that our empirical results are consistent with investor return-chasing behavior.

[Nemo2]

A savvy investor would do much better to stay the course.

Well, it's what we're doing, even though I mainly feel like Shakes' interpretation of Kipling.

[Taggart]

Financial Times (UK)

Man in the News: Bernard Arnault

By Paul Betts

Published: July 4 2008

These days, some of his senior executives refer to him as “God”. Like God, Bernard Arnault is omnipresent, respected and feared both inside and outside the LVMH luxury empire he has built over the past 25 years.

Yet he does not look like an empire builder. He is an enigmatic figure. On the one hand he is a politely distant, impeccably dressed, soft-spoken individual who likes to play classical works on the grand piano next to his office; on the other, he is considered one of the world’s most ruthless and competitive business tycoons and by far the most successful in his sector.

[Taggart]

A simple plan for riding out a bear market

DON MACDONALD, The Gazette
Published: Monday, July 07

Grrrr! That's the sound of a bear taking a bite out of your retirement savings.

U.S. and international stock markets are already in or near bear-market territory, traditionally defined as a drop of at least 20 per cent. The Canadian market has been held aloft so far by a few dominant energy and natural resource stocks along with frothy Research in Motion. But elsewhere it's been nothing but pain, especially in the financial sector, the foundation of many small investors conservative portfolios.

But it's not just falling stocks that are grating on investors' nerves. It's the whole unsettling economic backdrop of soaring energy prices, a weakening economy and a frightening crash in the U.S. housing and credit markets.

Here are a few basic things you can do in the second half of the year to help yourself calmly ride out the storm.

[George$]

The current issue of Business Week features retirement and market issues --

Retirement Strategies for Tough Times -- Nest egg looking a little fragile? Chances are you need to rethink your old investment tactics—and consider a few new approaches. Our Annual Retirement Guide can help

[Taggart]

Leaky condo crisis far from over

Report says officials still don't know "the full extent of building envelope failure."

William Boei, Vancouver Sun

Published: Wednesday, July 09, 2008

Coastal British Columbia's leaky condo crisis is far from over, a recent report prepared for the provincial government shows.

The report acknowledges for the first time that thousands more strata-owned apartment units suffered water damage than the government has been estimating.

[WishingWealth]

I was watching an interview of JPM's Dimon on Charlie Rose and some of his remarks reminded me of some readings on CEO compensation vs company 'profits' and vs shareholders return. And the trend.

I ended up with a few hits on Google but not quite what I'd like.
Over the years Bogle had some comments but none that came up in my search.

Does anyone have anything handy?
(Don't waste any time, I'm just looking for something to reinforce my biases )

WW (Not on a crusade)

[Taggart]

Telegraph (UK)

Anthony Bolton is expecting many more rights issues and company failures

He stepped down running money full time at the end of last year (he turned £1,000 into a staggering £147,000 over 28 years) but Fidelity wisely kept him on the payroll as a mentor. We spoke to him to seek his advice for investors worried about the economic uncertainty and the stock market falls.

[Taggart]

Strong stomach needed to chase takeover plays

Monday, July 14, 2008

BENJ GALLANDER AND BEN STADELMANN

[Taggart]

In the following article, I don't know if the retiree is being just stubborn or what. Legally taking on a law firm, let alone a large bank/brokerage. Sometimes you can think you're completely in the right, but still come out losing everything financially, just to prove a point. Even if she wins the court case, she may still lose if it's taken further to the appeals process. I can only wish her the best of luck.

---------------------------------------------

The lone investor fights back

Retiree got hit from all sides but won't give up

Jonathan Chevreau, Financial Post
Published: Saturday, July 19, 2008

[Taggart]

WallStreet Journal

How to Control Your Fears In a Fearsome Market

Saturday July 19, 1:05 am ET
By Jason Zweig

What goes on inside your head when your portfolio implodes?

[Taggart]

I missed this one.

Good or bad, he'll certainly be most remembered as playing a major role during the 60's go-go era, in U.S. stock market history.

Sunday, July 13, 2008

Obituaries

Gerald Tsai, 79; Celebrated '60s Fund Manager

[Taggart]

Interview with Larry Sarbit: Time to Revisit Business-Focused Value Investing?

July 27, 2008

[WishingWealth]

I wonder what the happy buyers will be getting?
Potato peelings, corncobs, apple cores, poultry internals?

With all the truflles and Kobe filet mignon to remain in Mr. Kravitz hands.

KKR, a big private-equity firm, prepares to go public, once again

HENRY KRAVIS, in May 2007, heralded a “golden era” of private equity. Today things look very different. With debt markets still closed, big-buy-outs are off the agenda. Meanwhile falling stockmarkets and profits have left many of the mega-deals struck during that golden age looking pretty idiotic. Yet Mr Kravis still plans to list Kolberg Kravis Roberts (KKR), the firm he co-founded in 1976 and which he runs with his cousin, George Roberts.

KKR was originally set to float just after Blackstone, another big private-equity firm, did the same thing last summer—it had even filed an initial prospectus with American regulators. That plan was put on ice after the credit crunch took hold. It has now been revived, but with a twist. Instead of a straight listing, KKR said on Sunday July 27th that it will first merge with KKR Private Equity Investors (KPE), a Dutch-listed vehicle which invests in the firm’s leveraged buy-outs. The combined firm will then float in New York. At today’s prices its market capitalisation would be about $10 billion (compared to $18 billion for Blackstone).

...

In The Economist.
http://www.economist.com/finance/displa ... s_box_main

WW

(May be we'll get some manuscript certificates by Marie-Josée)