The Stingy News Weekly (03/21/2010)
Stingy News Flash
Our Graham stocks had a phenomenally good year. Leading the hit parade was the Canadian Simple Way which gained 151%, not including dividends. In the U.S., the Simple Way also fared well with an advance of 93%. The more conservative Dividend Way saw its Canadian stocks grow 78% on average and the U.S. crop gained 75%. Last but not least, the U.S. Defensive list scored a 115% return over the last year. Needless to say, we're extraordinarily pleased with these capital gains. The March edition of our Graham Value Stocks letter is now available exclusively to Rothery Report subscribers. Get your copy today! http://www.stingyinvestor.com/RR/store/order.shtml
Volatility, the last anomaly
"Despite the mysterious case of the missing anomalies there's one that resolutely refuses to go away, squatting in the middle of the markets like a recalcitrant and extremely ugly toad. Rather ungraciously stocks continue to bounce around like a jitterbugger on speed. Regardless of everything else it's volatility, the last anomaly, that keeps on giving. And then taking away. And then giving back again."
Spending on clothing falls below 3%
"With significantly falling prices in real terms, clothing has become more and more affordable almost every year, requiring smaller shares of our income, which has freed up disposable income that can now be spent on other consumer goods (think electronics, travel, entertainment, etc.)."
Fix the mistake on the lake
"Like all too many American cities, Cleveland seems locked into a death spiral, shedding people, jobs, and dreams like nobody's business. When it comes to education, business climate, redevelopment, and more, Clevelanders have come to expect the worse. Is a renaissance possible?"
Reward for punishment
"Short-term redemption fees may prevent investors from frequently trading in and out of mutual funds, which results in an implicit wealth transfer from long- to short-term fund investors. This paper studies the impact of short-term redemption fees of various structures on long-term fund performance. We observe that fund performance is increasing in the magnitude of the fee and the time period during which an investor would be subject to it. Redemption fees are associated with up to a 327 annualized basis point increase in average abnormal returns."
Odds are, it's wrong
"For better or for worse, science has long been married to mathematics. Generally it has been for the better. Especially since the days of Galileo and Newton, math has nurtured science. Rigorous mathematical methods have secured science.s fidelity to fact and conferred a timeless reliability to its findings. During the past century, though, a mutant form of math has deflected science.s heart from the modes of calculation that had long served so faithfully. Science was seduced by statistics, the math rooted in the same principles that guarantee profits for Las Vegas casinos. Supposedly, the proper use of statistics makes relying on scientific results a safe bet. But in practice, widespread misuse of statistical methods makes science more like a crapshoot."
A Capital Idea
The Canadian Capitalist blog moves in with Money Sense magazine.
Lizard Ballad: Where's Warren?
Buffett channeling Axl Rose
Repo 105's antecedents
"For those that don.t know Repo 105 was a sale and repurchase agreement by which Lehman parked about 50 billion in assets (presumably assets they did not want to discuss) overnight via a repo transaction so they would not appear on the balance sheet. By now anyone who does not realize that sort of accounting legerdemain is unacceptable is (a) entirely out of touch with reality and (b) self aggrandizing on a magnificent scale. Both are signs of mental illness."
An unconventional glut
"Now North America has an unforeseen surfeit of natural gas. The United States' purchases of LNG have dwindled. It has enough gas under its soil to inspire dreams of self-sufficiency. Other parts of the world may also be sitting on lots of gas. Those in the vanguard of this global gas revolution say it will transform the battle against carbon, threaten coal's domination of electricity generation and, by dramatically reducing the power of exporters of oil and conventional gas, turn the geopolitics of energy on its head."
Michael Lewis on Charlie Rose
"An hour with Michael Lewis, author of 'The Big Short'"
"It's the time of year when a young man's fancy lightly turns to thoughts of deductions and write-offs. One select group of Americans, though, has a more pressing tax-season task on its mind: preserving a lucrative loophole in the I.R.S. code. The provision allows money managers at privately held partnerships - like hedge and private-equity funds - to treat most of the money they make as capital gains rather than as ordinary income. That means that their income is often taxed at fifteen per cent, a much lower rate than it otherwise would be."
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