SEARCH
GET QUOTES
Welcome, Guest
    News & Events
Scott Rothbort will appear on Bloomberg TV...
 More >>

  
Online Users

No Online Users

    RSS Feed
The Finance ProfessorExpress Your Knowledge
10 Things I Will Not Miss About 2012

 

Every year since 2002 I have closed out the year with my satirical look at the world through the eyes of a professional investor poking fun at what has transpired in our global society during the year we are about to turn the page on. You can access a complete list of all prior years’ articles at the LakeView Asset Management, LLC website. 2012 has brought forth its own unique series of unexpected news, celebration, joy, disappointment, tragedy and of course several major elections. I hope that 2013 will be a year of health, happiness and prosperity to all of the members of my family, clientele, students, co-workers and readers. So without further ado, here is my List of 10 Things I Will Not Miss About 2012 (and never want to hear about ever again), in no particular order:

1. THE KARDASHIANS AND OTHER REALITY PSEUDO CELEBRITIES – In August, on a business trip to the West Coast my wife and I dined at a well know posh Beverly Hills dining establishment. My wife, upon returning from the ladies’ room reported that Kris Kardashian Jenner and husband, Olympian Bruce Jenner was dining at the same restaurant. During our meal, the paparazzi and TV celebrity show camera people were assembling outside on the sidewalk. I wondered; why would they care about where the Kardashian-Jenners were out for dinner or what they ate? If Warren Buffetf of Berkshire Hathaway (BRK/a; BRK/b) or Ford’s (F) Alan Mulally were dining there then it would be worth asking them upon their exit from the restaurant about investments or the economy. That was too “East Coast” in terms of thinking and I forgot that we were in TMZ territory. Who really cares about the Kardashians anyway? Have we really turned into a society of shallow celebrity or pseudo-celebrity (think Nicole "Snooki" Polizzi) “reality” show watching people? What have they contributed to society? What are their talents? The world needs more talented groups of sister entertainers like the Andrews Sisters and the Redgraves. From an investment perspective, I prefer to be long entertainment companies like Walt Disney (DIS) and CBS (CBS) and but have avoided the TMZ owner Time Warner (TWX).

2. GANGNAM STYLE – We had to endure the Electric Slide, the Hustle and, the Macarena. 2012 brought us, direct from South Korea, Gangnam Style.  I don’t get it. Still it received over one billion views on Google’s You Tube. Frankly it is stupid. However, it would be wise to invest in South Korea, a place I will be allocating more assets to in 2013. My investment of choice is the iShares South Korea (EWY). 

3. SANDY – In October, Super Storm Sandy devastated the New York metropolitan area throughout New York City, Westchester, Long Island, New Jersey and Connecticut. That included Sandy Hook New Jersey. As it turns out, Sandy is the first name of my hometown mayor who in my opinion did a poor job in handling the post-super storm crisis. Then on December 14 the tragic massacre of students and employees of the Sandy Hook Elementary School in Newtown, Connecticut by a mentally deranged gunman took place. Hospitals should dissuade parents from naming their kids, girl or boy, Sandy or any other derivative thereof like Sanford. The name Sandy should be banned from being used in any way shape or form.

4. GREEK YOGHURT – What happened in Greece all of a sudden that now Greek Yoghurt is all the rage? Has an entire nation pinned its fiscal turnaround and future on the dietary and digestion needs and desires of the rest of the world?  Has Danone (DANOY) missed the Greek Yogurt craze? Should Danone get a Greek Celebrity Goddess to push their Greek Yoghurt as did Jamie Lee for the company’s Activia product? What do you think? Jennifer Aniston? Tina Fey? Rita Wilson? Angie Harmon? They are all of Greek descent. I vote Angie Harmon. Let me know who you vote for. 

5. NEW YORK YANKEES SPENDING TOO MUCH MONEY – How many times do we have to hear the same old refrain that the Yankees are buying a World Series? Spending by the Yankees is like capital investment for a major industrial corporation. You have to spend money to make money. The team has not won a World Series since 2009. However, the team is immensely profitable, has a large and loyal fan base and is part owner of the most successful regional sports network, YES. For the record, Yankee Global Enterprises, the holding company for the 27 time World Series champion baseball team holds 25% of YES after a recent sale of 49% to Rupert Murdoch’s News Corp (NWS) in a deal which values the network at $3 to $4 billion. It is one of the top three most valuable sports franchises in the world along with Manchester United and the Dallas Cowboys.  Winning a World Series is an end game but you can hardly call the Yankees a failure. What have the Angels and Dodgers got for their highfalutin spending? One World Series each since 1988 and far less post season appearances. Yet they keep on spending in what amounts to a sports themed “keeping up with the Joneses.” The New York Metropolitans have a spending problem as well. I think they must be run by members of Congress. Let me put it this way, The Yankees are the Apple (AAPL) of baseball and the less profitable Major League Baseball equivalents of Research in Motion (RIMM) along with their fans just lament and complain. My suggestion is to put on the pinstripes and also take a position in Apple.

6. FISCAL CLIFF – Due to my chosen profession as an investment manager, I am required to read, watch and listen to the financial media. Also, as a frequent guest on financial media shows, I believe I have a responsibility to provide accurate information and valuable insight. Unfortunately the fiscal cliff dirge is dominating the press and air waves. It is a serious issue, I kid you not. However, there is a major disconnect between how politics operates in Washington, how Wall Street reacts to news or rumors and how the rest of the nation live their lives. In the end, the nation will win out and Wall Street will figure out how to profit from it. Until then, strap on a construction hat and put in your ear plugs.  From an investment perspective, there will be many opportunities, so remain patient and do not fall victim to any fiscal cliff related panic while our elected leaders fritter away valuable time.

7. MAYAN CALENDAR – December 21, 2012 came and left. Wonder of wonders, miracle of miracles, the world did not end. The tailor, Motel Kamzoil was right after all, there is a higher power.

8. SOCIAL NETWORKING IPOS – The excitement was palpable. Would Hoodie Man Mark Zuckerberg wear a suit or his hoodie to the road show for Facebook (FB)? Was Facebook undervalued? Should I hock the house, sell the family jewels and trade down to a used Yugo to put everything on the line for the Facebook IPO? Clients were calling me to get into Facebook. They wanted to pay anything to be in for something that they had no clue about from a valuation and business model perspective. These were some of the same clients who complained when I trimmed back some Apple at $655 (after all, I started to accumulate the stock in the 40s; yet it does remain my largest position).  I managed to get a few hundred shares of Facebook IPO stock for one client and sold it as soon as possible for a few points gain. I then proceeded to short Facebook and covered for a gain. It is for these reasons that I get paid by my clients to make investment decisions.  In the fullness of time, Facebook will survive. The stock might eventually go higher than its IPO price. I am not risking any capital on the stock until it gets to a reasonable valuation and proves that it has a sustainable revenue model. Don’t fret though if you bought Hoodiebook on the IPO as it could be worse. You might have fallen for 2012 IPO hypes for Groupon (GRPN), Pandora (P) or Zynga (ZNGA) and would have gotten burnt even worse than the “Rippedoffyourfacebook” deal. However, and this is important to note, I began to buy Zynga shares when the stock got close to its cash value, trading at around $2.25, as was featured on Bloomberg by my good friend and Bloomberg television and radio host of Taking Stock, Pimm Fox.  

9. THE 1 PERCENTERS – I don’t know about you, but I am sick and tired of hearing about the “1 percenters.” Why does our society insist on the one hand deifying the rich and famous actors (see item #1 above) and athletes who are overpaid far more than bankers yet at the same time demonize successful entrepreneurs?   Why can’t we think about the 100 percenters, that is everybody as a society in its entirety? Remember that more one percenters live in the “Sandy” states of New York, New Jersey and Connecticut than anywhere else. They are people too. Instead, politicians have to pit segments of society against each other.  It is so counterproductive. We made it through World War II by being a nation of 100 percenters. We fought epidemics like AIDs as a nation of 100 percenters. Why change our strategy now? 

10. THE HOPPER COMMERCIAL – Forget the fact that I prefer my Verizon (VZ) FIOS services over that of Dish Networks (DISH). The Dish Networks series of advertisements for its Hopper service was the worst and most annoying commercials in 2012. Maybe I am just talking like a true New Yorker (Noo Yawka?) but I would not be putting the Bunker Family – Archie, Edith, Gloria and Meathead in a commercial for Time Warner Cable (TWC). What about Da Super Fans shooting some commercials for Cablevision’s (CVC) Optimum? As one of my worst run companies, Cablevision can use all the help it can get, so it may be worth a try. 

Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, CBS, DIS, EWY, GOOG, VZ, ZNGA stock and AAPL and GOOG calls — although positions can change at any time.

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. You can subscribe at www.restaurantstox.com 

You can access more daily commentary from Scott Rothbort and live chat with him all during the trading day, on Wall Street All-Stars

Scott is also a Senior Advisor to AAPLTrader

© 2012 LakeView Asset Management, LLC

 



Posted By Scott Rothbort at December 26, 2012

The Worst-Run Company List of 2012

 

Ever since October 2006, I have published my list of Worst Run Companies. The list is reevaluated every year, burying those that have disappeared, excusing those that have improved and selecting new members for inclusion. Due to the unfortunate effects of Super Storm Sandy, I have delayed publishing this year’s list up until today. Here is an update of the existing list and my additions for 2012. In the past, companies on this list have made excellent short sale candidates. Some have gone on to bankruptcy while others have redeemed themselves.

The following characteristics, one or more which are apparent for each of the worst managed companies, are as follows:

1. Poor Financial Condition: Heavy debt loads, large amounts of goodwill, as well as, poor cash flow are common among poorly run companies. As a result, their balance sheets are in lousy shape. The inability to shore up balance sheets could spell further danger in the future.

2. Second Banana Syndrome: Some of the companies on my list are not what you would refer to as "best of breed." Most of them are in an industry or sector that has at least one or more dominant competitors. Why be a bridesmaid when you can be the bride?

3. Ineffective Management: Successful companies will have management teams that not only innovate, but are also capable to perform during times of stress. Innovation does not mean simply introducing a single "cool" product. By extension, a great product does not make a great company. Just remember Sharper Image and its Ionic Breeze air purifier? For a more recent example, take a look at Pandora (P), the internet radio service. Why do I need Pandora if I have an pm3 player? Effective innovation and management are about being able to transform a company into a provider of a well-balanced and diversified line of products.

4. Disastrous Strategic Acquisitions: Many companies try to grow by developing a successful acquisition strategy; however, most cause more harm than good by doing so. Do you remember the ill fated acquisition of the old America Online by Time Warner (TWX)? How about Hewlett-Packard (HPQ) purchase of Palm, Autonomy, etc? 

5. Failure to Deliver Value to Shareholders: The bottom line remains the same, good management teams deliver dividends and share price appreciation to shareholders. Bad management delivers coals in stockings. 

First, let's review the roster of my list of worst-run companies from years past and see how they've fared so far in 2012 through the end of November:

 

Class of 2006:

Alcoa (AA) – Alcoa’s only claim to fame now is that the company is first to report earnings in the earnings cycle. The stock's price has lost a modest 2.8% for the year through the end of November. I say modest because investors have been accustomed to larger declines. Still the story remains the same for Alcoa which is stuck in an operational Wonderland full of ever present risk, whether that is: commodity prices; energy prices; industrial demand; or, the ever mischievous maneuvering from the Cheshire Cat of China.  

Alcatel-Lucent (ALU) – 2011 was a year in which Alcatel-Lucent returned to profitability. That was short-lived as the networking and telecommunications company is expected to lose money in 2012. Since the end of 2011, shares of Alcatel-Lucent have declined by 29.5%. Management should take shareholders out of their misery and sell the company for its scrap value. 

Cablevision (CVC) – In the cable and entertainment business, content is king. Cablevision has managed to spin-off its content companies AMC Networks (AMCX) and The Madison Square Garden Company (MSG). This has left Cablevision shareholders to operate as a second banana cable company. Actually, according to JD Powers and Business week, in the East, where Cablevision operates, the company received an average overall satisfaction rating ranking well below its competition. Despite a projected 36% decline in earnings per share for 2012, the stock price of Cablevision has only declined 2.7% this year through the end of November. It is a classic value trap with a 4.3% dividend. Despite that above market dividend, the company does not have enough operational promise and the level of debt is too high for this company to be removed from the worst-run list. 

Janus Capital (JNS): Despite a rise in the S&P 500 (SPX) for the first eleven months of 2012 by 12.61%, earnings for this investment management company are expected to decline approximately 38% for 2012. Luckily, the stock price has risen by nearly 30% over the same period of time. The rush to fixed income investments likely helped to soften the blow in 2012 and provided support towards the company’s stock price. I am not sure that fixed income inflows will last so long. Janus’ luck may be running out.   

Sharper Image went bankrupt

Pier One (PIR) was removed from the list in 2010 as management has turned the company around. 

 

Class of 2007:

Palm: is now part of Hewlett-Packard (HPQ). Hewlett-Packard was later named a worst-run company (read on below)

Circuit City: bankrupt

Charter Communications: Filed for Bankruptcy in March 2009. The company emerged from Bankruptcy in November 2009 and is now operating as a public company. Since it is not the old Charter Communications it is longer on this list

Six Flags (SIX): Filed for Bankruptcy in June 2009. Emerged from Bankruptcy in April 2010. Now back in operation as a public company and since it is not the old Six Flags is longer on this list

Washington Mutual: Declared insolvent and seized by the FDIC. Washington Mutual is now a part of JPMorgan (JPM), which is one of the world’s premier financial institutions under the stewardship of Jamie Dimon, despite what happened with the London Whale this year.

 

Class of 2008:

Macy’s (M): was removed from the list in 2010. I have been so impressed with management’s turnaround that I even own the stock now. 

General Motors (GM): Filed for Bankruptcy in June 2009 and a new entity was formed with the backing of the US Treasury. Now back in operation as a public company as a result of its IPO in November of 2010. Since it is not the old General Motors, it is longer on this list.

Time Warner (TWX): Last year I upgraded Time Warner’s status from a Worst Managed company to a work-in-progress and removed the company from this list. The company is continuing its turnaround. 

 

Class of 2009:

Advanced Micro Devices (AMD): Advanced Micro Devices continues to fail to deliver the goods to shareholders. I don’t think that management has figured out what to do in the age of mobile technology. AMD is clearly a second banana to Intel (INTC) and remains lost in the wilderness of the semiconductor sector. More headcount and guidance reductions are in the cards. The stock has declined a miserable 59.3% through the end of November of this year. Earnings are expected to decline from 50 cents per share in 2011 to a loss of 20 cents this year. Did management get the email or memo that the personal computer business is shrinking? Have they heard about the mobile telecommunications boom? I think they are still partying like it is 1999. I am not saying that AMD will go bankrupt; however, the company is on a treadmill to nowhere. 

Sirius XM Radio (SIRI): I removed Sirius XM from my worst managed list in 2011.  

Jamba Juice (JMBA): Jamba Juice’s management team is trying very hard to turn the corner. Last year’s loss of 16 cents per share is expected to improve to a more modest loss of 2 cents per share of 2 cents in 2012, while sales are only expected to increase 2% for the year. Long suffering shareholders have seen the stock rise 60% through the end of November to $2.10. Let’s put that in perspective. The stock is off 28.6% from its 52-week high. Since early 2008 the stock has poked its head above $3 for a very brief period of time in the second quarter of 2010. Otherwise it has traded pretty much between $1 and $2. The company has more progress to make before I remove Jamba Juice from my list. 

 

Class of 2010:

Yahoo (YHOO): Carol Bartz was supposed to be the savior of Yahoo (YHOO). She was ousted in favor of Scott Thompson who ran into a mess over his bio. Thompson was replaced by Ross Levinsohn on an interim basis until the hiring of Marissa Mayer this past July. The company has had 5 CEOs in as many years. Will Mayer deliver the goods? Shareholders and management hope so. The stock has moved higher by about 17% so far this year, mostly on the feel good hiring of Mayer. I don’t see hope as a business strategy for Yahoo’s future. Mayer and the board have their work cut out for them. Fool me once share on me. Fool us four times – who knows? Is the fifth time a charm? A longer duration for Yahoo is prescribed on my list, but I am willing to put in on watch for an upgrade. We shall see what happens. 

Boeing (BA): The company’s 787-8 entered service last year. The 787-9 will not be delivered until 2014; however, we are seeing orders being cut back or cancelled. The American Airlines bankruptcy does not help Boeing’s cause. Neither does the merger between United and Continental into a single United Continental Holdings (UAL). The budgetary constraints / fiscal cliff in Washington will also put pressure on the company’s operations in the future. Earnings are expected to slip by 6% in 2012. I do not believe that 2013 earnings estimates can be trusted at this juncture. The stock has declined about 1.3% for 2012 year-to-date. For now, Boeing remains grounded on my list.

 

Class of 2011:

MF Global Holdings (MF): Little did we know that on the day I published my list last year (I prepare it well in advance of publication) that behind the scenes MF Global was improperly transferring client funds into company accounts to cover trading losses. Within a month the company was gone. The only question is whether indictments will be forthcoming. As always, with a bankruptcy this company is excused from the list as a matter of extinction. 

Hewlett Packard (HPQ): I used the word dysfunctional to describe Hewlett-Packard last year. It remains so. There is no comprehensive answer from Meg Whitman or the company’s management as to how to combat the decline in desktop printing or personal computer usage. The company bungled the smart phone and tablet revolution. Selling ink is not going to bring this company back. Now to top it all off now this serial acquirer, with a lousy track record of acquisitions, is writing off nearly $9 billion of its $11.3 billion purchase price of Autonomy.  Earnings per share are expected to decline 18% in fiscal 2013 after declining 17% in fiscal 2012. The company’s shares have plunged 50% in this year through the end of November. Hewlett Packard’s stock is a value trap poster child.

Sprint Nextel (S): Corporate actions both rumored and real have driven shares of Sprint-Nextel higher this year. Apparently, SoftBank thinks enough about Sprint Nextel that the Japanese telecom company invested $20.1 billion to acquire 70% of Sprint Nextel. In the deal, the company will also acquire a majority share in Clearwire (CLWR). Based on this series of corporate actions, I am removing Sprint Nextel from my list. 

 

Class of 2012:

I hereby confer upon the following companies the distinction of being the newest inductees to my Worst-Run Companies list:

Research in Motion (RIMM): I gave this company some rope when considering it for inclusion in 2011. It took that rope and hung itself. There was a time not so long ago that the maker of Blackberry devices was at the very top of the Smartphone revolution; however, Research in Motion lost its way. It was too focused on the enterprise user at a time when companies were cutting expenses and consumers were being offered more cutting edge Smartphones with larger screens, more functionality, greater appeal and superior operating systems from companies such as Apple (AAPL) and Google (GOOG). The stock nearly halved from $14.50 at the end of 2011 to $7.50 at the end of September 2012, but has recently jumped to $11.60 by the end of November on the hype those new product introductions could jump start the company. I doubt it. Earnings have disappeared for the company and losses are likely for this year, next and conceivably further out. Perhaps, what can save Research in Motion is a sale of the company. Until then, management remains deer caught in the headlights of its competition. 

Radio Shack (RSH): I remember long ago and far away when this was Tandy. Tandy was the first stock I ever bought with some of my Bar Mitzvah money. It was a great consumer electronics company that spun off many other companies. That was then and this is now. Radio Shack is now known as a place to buy replacement parts and batteries. The consumer electronics sector graveyard is littered with the carcasses of failed companies. Best Buy’s (BBY) problems are well known. To exist on selling commoditized products as in cell phones, batteries and audio/visual wiring is not a business model worthy of future growth. To top it off, many times when I go to a Radio Shack they don’t have what I am looking. Instead, the friendly salesperson offers to get it from the warehouse in a few days. Thanks, but no thanks. If I want to wait, I can get it over the internet. I do have a suggestion to Radio Shack company management. Sell yourself to EBay (EBAY), close the bricks and motor locations and go web only giving Amazon (AMZN) some serious competition. 

YRC Worldwide (YRCW): This was another company I gave consideration to in the past. I think that the time is now to put it on my list. YRC Worldwide currently has a market capitalization of just around $100 million, give or take a few million, using diluted share count as of the end of September. At that point in time the company held $189 million in cash and equivalents versus $1.37 billion of debt. One could argue that the company has valuable equipment supporting that amount of debt. Of course the same argument might have been put forth for Hostess. The company lost $619 million in 2009; $326 million in 2010; and, $409 million in 2011. In the three quarters of 2012 the company generated losses of $95 million. It will take seemingly forever for YRC Worldwide to dig itself out of debt, even if it may show some improvement. I am not sure that the company can survive the next recession, whenever that might occur. 

 

 

DisclosureAt the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, EBAY, GOOG, M stock and long AAPL and GOOG calls — although positions can change at any time.

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. You can subscribe at www.restaurantstox.com 

You can access more daily commentary from Scott Rothbort, on  Wall Street All-Stars

Scott is also a Senior Advisor to AAPLTrader

Benjamin Hansell assisted in the preparation of this article.

 



Posted By Scott Rothbort at December 5, 2012

What's All the Hubbub About Over the iPad Mini Pricing?

 

What was all the hubbub about over the Apple (AAPL) iPad Mini’s pricing of $329? I am talking about its base 16 gigabyte model I guess that traders and analysts expected the pricing to come in at $299 in order to be somewhat more competitive with Amazon (AMZN) Kindle’s price tags. Which Kindle is the Mini supposed to compete with?  The 7 inch Fire HD model for $199 or the Fire HD 8.9 inch which sells for $299? I am sticking with wi-fi only models for comparison. The Mini has a 7.9 inch screen and the iPad4 has a 9.7 inch screen. I would guess that we have to compare the 7 inch fire with the 7.9 inch Mini, So let me get this straight…. the expected price of $299 was to be highly competitive with $199 in the minds of analysts and traders? When you analyze it this way, it sounds ridiculous. So, what is the big deal between $329 and $299? I will tell you what –the 7 inch 16 gigabyte Samsung Galaxy sells for $349. That’s the real competition if you ask me. In the end, $329 means better margins for Apple while being cheaper than Samsung. 

Apple it appears is going the route of Macy’s (M). Macy’s sells moderately priced brands and luxury brands. They will leave the lower margin off-priced brands to the discounting competition. Apple is trying to capture the mid-market for tablets. It already has the high-end market which was enhanced with the upgraded iPad4 model. Apple has now created a middle tier alternative. If you ask me, the decision is now much easier – you can get an Apple product at $329 or $499 or go for the competition at $349, $299 or less. 

Amazon sells it Kindle products at cost. They are now backed into a corner. If they raise their prices in an attempt to make money, then the iPad Mini looks more attractive. Otherwise Amazon can keep on selling what many consumers believe is an inferior product and fail to make money. Perhaps Amazon believes in the razor and razor blades concept for the mobile computing market. Apple knows better. It can make money on both the razor and the razor blades. 

 

DisclosureAt the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL and M stock — although positions can change at any time.

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. You can subscribe at www.restaurantstox.com 

You can access more daily commentary from Scott Rothbort, on  Wall Street All-Stars

Scott is also a Senior Advisor to AAPLTrader

 

 



Posted By Scott Rothbort at October 23, 2012

Digging Deeper Into The JP Morgan Chase Loss

By know you should have heard that after the market closed yesterday, JP Morgan Chase (JPM) announced that the company lost about $2 billion on synthetic credit security investment trades taken on by its chief investment office in its London branch. Supposedly the loss was taken on poorly designed hedges in its credit risk portfolio. Let us accept that fact at face value. However, we need to dig a bit deeper. That digging needs to be done outside of JP Morgan Chase. Here is why.

Over-the-counter derivatives are a zero sum game. I should know, I ran the Global Equity Swap business at Merrill Lynch for most of the 1990s and have taught courses in derivatives at Seton Hall University’s Stillman School of Business on and off since 2002. In the unregulated over-the-counter derivative market, for every winner there is an equal and offsetting loser. The problem driving the 2007-2009 Credit Crisis was that the losers were insolvent and could not pay the winners. Thus, the US Treasury had to step in with TARP and other government programs to balance the books, so to speak.  This time around, JP Morgan Chase is the loser. While $2 billion is not a drop in the bucket, it certainly won’t move the needle for JP Morgan, a company that earned $17.6 billion after tax in 2011. 

So what we need to ask now is: Who is on the other side? I can think of many potential winners on the other side of JP Morgan Chase’s “mistake” as Jamie Dimon called it. Here is a non-exhaustive list: Citigroup (C), Bank of America (BAC), Goldman Sachs (GS), Barclays (BCS), Deutsche Bank (DB), Credit Suisse (CS), UBS (UBS), HSBC (HSB), Credit Agricole, Societe General, BNP Paribas, Royal Bank of Canada (RY) or Royal Bank of Scotland (RBS), to name a few in banking. Then there are hedge funds, pension funds and sovereign wealth funds that could also be on the right side of the trade. Of course, none of these winners will release a press statement pounding their chests as to their victory. Some of these gains might trickle in during the reporting of second quarter results. 

Also looking beyond JP Morgan Chase, we have to ask about the “Volker Rule.” There will be politicians and critics of banks who will point to the Volker Rule as not being strong enough with the JP Morgan Chase loss being prima facie evidence to support their opinion. However, the JP Morgan loss was recorded in London, where the new financial regulations and the Volker Rule are beyond the reach of US regulators. I would argue that the Volker Rule might have been a contributory cause to the JP Morgan loss, albeit indirectly and inadvertently. By driving these proprietary trading activities offshore, the Volker Rule in essence has lost any potency that it was intended to have. Thus, just like Nathan Detroit’s Oldest Established Permanent Floating Crap Game, the risk taking activities in banking have just been moved beyond the reaches of the local authorities to London. Along with that go all the gains that collectively the banks make in proprietary trading and the resultant taxes that will be paid. Thus, I would argue that the Volker Rule went too far and not far enough.

Over on Wall Street All-Stars  we are conducting a poll through 9AM Monday May 14. The question being asked is: Is the JP Morgan Trading Loss Bombshell an Isolated One Day Event? Please cast your vote and check back for the results. 

Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BAC stock — although positions can change at any time.

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. You can subscribe at www.restaurantstox.com 

You can access more daily commentary from Scott Rothbort, on  Wall Street All-Stars.



Posted By Scott Rothbort at May 11, 2012

Lower Your Bills After the Holidays by Refinancing Your Car

The holidays can be stressful. Money gets stretched between wants and needs, gifts and bills. Afterward, it can be especially rough if you’re paying too much for your auto loan. That’s why now may be a good time to refinance. If you have questions about how to take advantage of low interest rates and refinance offers, you’ll find a few answers below to help you get started.

  1. What is an auto refinance loan?
    An auto refinance loan pays off your existing auto loan, much like mortgage refinancing. But refinancing your vehicle is a much faster, simpler process.
     
  2. How do these loans work?
    Your new lender pays off your old loan and the title to your vehicle is transferred to your new lender. 
     
  3. Why refinance my existing auto loan? 
    Refinancing your auto loan can lower your interest payments or decrease your payments by changing the terms. People typically refinance when interest rates are low to reduce their interest costs. You can also lower your monthly payments by extending the term and breaking the payments up over an extended period of time. 
     
  4. Are there any fees associated with an auto refinance loan?
    Yes, but they’re not excessive. You’ll typically pay a fee of $10 or less to transfer the lien. There’s also a state re-registration fee, which can range from $5 to $75 depending on the state. As always, every situation is unique; fees may vary by lender or state of residence. Ask your lender if they have any pre-payment fees before you refinance your auto loan.
     
  5. How much will I save by refinancing my existing auto loan?
    Your savings will depend on three factors: the remaining balance of your existing loan; the difference between your old interest rate and the new interest rate; and the terms of your new loan if you choose to extend it. 
     
  6. Are auto refinance loans popular? 
    Absolutely. Check around to learn how much money you can save!

 



Posted By Scott Rothbort at April 18, 2012

Scott Rothbort

About Me :

SCOTT ROTHBORT

THE FINANCE PROFESSOR

 

Scott Rothbort has over 20 years of experience in the financial services industry. In 2002, Rothbort founded LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed separate accounts, including proprietary long/short strategies to its high net worth clientele. He also is the founder and manager of the social networking educational website TheFinanceProfessor.com and a frequent contributor the TheStreet.com where he also writes a weekly article as The Finance Professor

Immediately prior to that, Rothbort worked at Merrill Lynch for 10 years, where he was instrumental in building the global equity derivative business and managed the global equity swap business from its inception. Rothbort previously held international assignments in Tokyo, Hong Kong and London while working for Morgan Stanley and County NatWest Securities.

Rothbort holds an MBA in finance and international business from the Stern School of Business of New York University and a BS in economics and accounting from the Wharton School of Business of the University of Pennsylvania. He is a Term Professor of Finance and the Chief Market Strategist for the Stillman School of Business of Seton Hall University.

For more information about Scott Rothbort and LakeView Asset Management, LLC, visit the company's Web site at www.lakeviewasset.com.

 


Contact :
Phone : 973-564-8139
 Blog Archive
Home | About Us | Products | Advertise on The Finance Professor | FAQ | Contact Us

© Copyright 2014 thefinanceprofessor.com. All rights reserved. Terms of use apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law.
Privacy Policy | Copyright and Trademark Notice | Terms of Use
Powered By Aarthika Technologies