Brokerage Firm

Mark to the Market: what is it?

October 2, 2008

Quick history lesson: Mark-to-the-Market was a practice originally begun by futures and commodity traders in the 19th century.  Essentially, mark-to-the-market means your holdings must be “priced” every night…at the price they can be sold at. For years, many bank and investment companies carried investments at cost, or even sometimes at the face value.  This never [...]

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Who’ll Save Lehman?

September 13, 2008

That was the headline I found over at CBS Marketwatch.  As usual, the news media is whipping (anyone who will read) into a frenzy about Lehman Brothers.  More news may be forthcoming about Lehman — between the time I finish writing this and the time you read this. I have no idea what’s going to [...]

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Auction Rate Preferred: the bail-out

August 9, 2008

In one of my most recent posts I discussed the “ready to explode” product issued by brokerage firms called “auction rate preferred securities.” Well, that didn’t take long. In this past week UBS (the parent company of PaineWebber), announced they are spending $19 billion (yes, billion with a B) to buy back auction rate preferred [...]

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Is This a Recession?

July 31, 2008

Sometimes, trying to get your arms around a gigantic number (for example, the area of earth covered by land) just takes time. So it’s no surprise (to me) this week the Commerce Department announced “oh by the way, remember three quarters ago… the fourth quarter of last year? Well, we didn’t know it at the [...]

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Federal Reserve closing the spigot

July 31, 2008

“Mr. Valentine has set the price!” Or, in this case Mr. Bernanke sets the price. This week the Federal Reserve announced that the “open spigot” of money available to investment banks will be closing January 30, 2009. This is six months away. What this means is that the access to cash will be closing. What [...]

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Lehman: Going Private?

July 17, 2008

In the coming months and years, you will hear more publicly traded companies than ever before discussing the idea of GOING PRIVATE.  Even with the mortgage mess, there is STILL access to capital. Management often gets fed up trying to build long term businesses and gain market share on a long term basis, while struggling [...]

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How Smart is The Crowd?

May 20, 2008

Do you remember the television program, “Who wants to be a Millionaire“?The show was actually featured in a terrific book “The Wisdom of Crowds” by James Suriowiecki. If you remember, the contestants were given three “lifelines” to help them. The first lifeline was the “50/50,” where two of the four possible answers were eliminated. So, [...]

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Bear Stearns, part II

March 16, 2008

UPDATE: Sunday evening, 03/16/2008: Bear Stearns to be acquired by JPMorgan Chase for $2.00 in stock swap deal. That is NOT a typo! The stock closed at $30 on Friday. On Thursday, it was $57.00. And yes, it was $150 last summer. This, essentially became a giant margin call on Bear Stearns. Apparently, cash — [...]

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Cutting Losses Short

February 15, 2008

Most Wall Street recommendations to buy are based on projected future revenues and/or projected future earnings. Projected. Or you could say, “predicted”. Ever notice that a stock will begin to drop (many times without any news), and people will begin to ask “why is XYZ dropping?” Then rumors begin to swirl that something might be [...]

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