"I've seen more people fail because of liquor and leverage -
leverage being borrowed money. You really don't need leverage in this
world much. If you're smart, you're going to make a lot of
money without borrowing."  - Warren Buffett


Stingy Links
http://www.stingyinvestor.com/SI/articles/articlearchive.shtml

Subprime in sheep's clothing
http://www.forbes.com/home/2008/05/08/alt-a-mortgage-markets-bonds-cx_md_0506markets32.html
"Unlike subprime folk with expired teasers who have been putting
capital into their homes for months and perhaps years, many
Alt-A borrowers with years left on their payment-lite teaser periods
are going to wake up one day to homes that have hugely
deteriorated in price and have little if any equity in them. That is the
exact recipe for foreclosure that bank insiders and credit
analysts are warning about. Mark Zandi of Moody's Economy.com
estimates that, by the end of June, 21.0% of all first-mortgage
holders in the United States, or 10.6 million homeowners, will have
zero or negative equity in their homes. For now, Alt-A loans are
performing better than subprime mortgages. The risk, however, is
that generally well-heeled Alt-A borrowers will adopt the same
flippant attitude to paying their debts as lenders did in
evaluating them. An additional pressure: 23.7% of Alt-A loans were not
taken out for primary residences are often considered
investments and have a higher rate of foreclosure. Only 8.7% of subprime
mortgages were for absentee landlords, according to the New York
Federal Reserve Bank."

Doubts raised on big backers of mortgages
http://www.nytimes.com/2008/05/06/business/06fannie.html?_r=1&oref=slogin
"As home prices continue their free fall and banks shy away from
lending, Washington officials have increasingly relied on two
giant mortgage companies - Fannie Mae and Freddie Mac - to keep
the housing market afloat. But with mortgage defaults and
foreclosures rising, Bush administration officials, regulators and
lawmakers are nervously asking whether these two companies, would-be
saviors of the housing market, will soon need saving
themselves."

Subprime outcomes
http://www.bos.frb.org/economic/wp/wp2007/wp0715.pdf
"Our second point is that house price depreciation - negative
house price appreciation(HPA) - is the main driver of foreclosures.
The easiest way to see this is to look at aggregate data.
Figure 1 shows that periods of exceptionally high HPA in
Massachusetts, as in 2002-2004, are associated with exceptionally low
numbers of foreclosures, while periods of negative HPA, such as
1989-1991 and 2005-2007, are associated with high foreclosure rates.
Cash flow problems at the household level, driven by job loss,
for example, play a role, but only when HPA is low. For example,
in 2001, a recession generated a record high number of
delinquencies, a sign that many households had problems making monthly
mortgage payments. During this time, however, there was a record
low number of foreclosures in Massachusetts. Thus, the phenomenal
levels of HPA in the early 2000s enabled many borrowers to
either refinance or sell to avoid foreclosure."

Foreclosure woes require action
http://money.cnn.com/2008/05/05/real_estate/Bernanke_home_prices_and_foreclosures/index.htm?postversion=2008050606
"Unemployment statistics, according to Bernanke, do not explain
the increased delinquencies of many areas, including California,
Florida and parts of Colorado, where foreclosure filings have
increased even when unemployment generally have fallen. More
revealing was the close correlation between declining home prices and
high delinquency rates. On the home price decline map, states
like California and Florida were drenched in red, indicating the
worst losses. On the map revealing the highest foreclosure
rates, the same states were also covered in red."

Rewarding failure
http://money.cnn.com/2008/04/14/magazines/fortune/colvin_rewarding_failure.fortune/index.htm?postversion=2008041505
"You might suppose that the stars are in near-perfect alignment
for major reform of CEO pay. The mammoth pay and disastrous
performance of Countrywide Financial's Angelo Mozilo, Citigroup's
Chuck Prince, and Merrill Lynch's Stan O'Neal should be enough to
make the public furious. Each CEO departed with $100-million-plus
compensation after misadventures with subprime mortgages. Now
add the economic slowdown to the mix; ordinary Americans are
worried about making ends meet while failed pooh-bahs rake it in.
Then throw in one more element - a presidential election. Put it
all together, and how could change not be imminent?"

The siege of State Farm
http://money.cnn.com/2008/04/09/news/newsmakers/parloff_scruggs.fortune/index.htm?postversion=2008041007
"For State Farm Insurance - the nation's leading auto and home
insurer - coping with once-in-a-lifetime disasters is everyday
business. Risk analysis is what it does, and its actuarial staffs
are prepared for every eventuality. Almost. When Hurricane
Katrina struck the Gulf Coast in 2005, it infamously brought a storm
surge the likes of which the nation had never seen, causing more
flood damage in one event than all the storms combined for as
far back as there was data (37 years). Even that risk State Farm
had anticipated. What it hadn't foreseen was that the storm surge
would gut the home of a plaintiffs lawyer named Richard F.
"Dickie" Scruggs, as well as those of his family, friends, and
neighbors in Pascagoula, Miss. Scruggs was someone who could render
all of State Farm's actuarial calculations irrelevant, because he
had the power and know-how to force it to rewrite its contracts
retroactively. He had been the scourge of Fortune 500 companies
for two decades, precisely because he tended to change the
rules of any game he chose to play."

Bear Stearns second brush with bankruptcy
http://money.cnn.com/2008/05/02/news/companies/bear_stearns.fortune/index.htm?postversion=2008050216
"Bear believed that if it failed to get a new agreement that
reaffirmed JPMorgan's guarantee of Bear Stearns' obligations, Bear
could have been cut off from JPMorgan's Fed-backed funding and
forced into bankruptcy - an outcome that many investors assumed
had been forestalled by the March 16 merger agreement. The dispute
that nearly brought Bear down a second time turned on whether
JPMorgan would stand behind Bear Stearns' massive credit default
swap book and other liabilities. The firm's lack of access to
other funding had Bear lawyers preparing for a possible bankruptcy
the weekend before the revised merger agreement was unveiled."


S&P/TSX60 Value Screens
http://www.stingyinvestor.com/SI/strategy.shtml 

High Dividend Yield Stocks                 P/E P/B P/S P/C P/D Yield*
========================================== === === === === === ======
Biovail (BVF)                               5   5   3   5   5    5
Bank of Montreal (BMO)                      4   4   5   1   5    5
National Bank of Canada (NA)                3   4   5   5   5    5
CIBC (CM)                                   2   4   5   5   5    5
Royal Bank (RY)                             4   3   4   5   5    5
BCE (BCE)                                   5   3   4   5   5    5
Bank of Nova Scotia (BNS)                   4   3   4   1   5    5
Telus (T)                                   4   4   4   5   5    5
TransCanada (TRP)                           3   4   3   4   5    5
Toronto Dominion Bank (TD)                  4   3   3   3   4    4
More Info: http://www.stingyinvestor.com/SI/strategy/dogs.shtml 

Value Ratio Stocks                         P/E P/B P/S P/C P/D  VR
========================================== === === === === === =====
Biovail (BVF)                               5   5   3   5   5   0.7
Thomson (TOC)                               5   4   2   2   4   1.9
BCE (BCE)                                   5   3   4   5   5   2.0
Bank of Montreal (BMO)                      4   4   5   1   5   2.1
Royal Bank (RY)                             4   3   4   5   5   2.9
Telus (T)                                   4   4   4   5   5   3.1
Bank of Nova Scotia (BNS)                   4   3   4   1   5   3.1
National Bank of Canada (NA)                3   4   5   5   5   3.2
Toronto Dominion Bank (TD)                  4   3   3   3   4   3.4
Sun Life (SLF)                              4   5   4   1   4   3.8
More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml 

Graham Stocks                              P/E P/B P/D   G$   dG$(%)
========================================== === === === ====== ======
ACE Aviation (ACE.B)                        5   5   0   92.90 335.74
MDS Inc. (MDS)                              5   5   0   47.26 138.10
Thomson (TOC)                               5   4   4   55.77  48.79
Nova (NCX)                                  5   4   3   35.95  28.67
Biovail (BVF)                               5   5   5   16.15  27.99
Magna Cl.A (MG.A)                           3   5   3  100.07  27.33
BCE (BCE)                                   5   3   5   40.03   7.32
Petro Canada (PCA)                          5   4   2   60.42   7.22
Weston George (WN)                          4   5   4   52.85   6.60
Sun Life (SLF)                              4   5   4   49.74   5.91
Canadian Tire (CTC.A)                       4   5   2   66.06   5.02
Bank of Montreal (BMO)                      4   4   5   50.37   2.79
More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml 

*Notes: http://www.stingyinvestor.com/SI/strategy/notes.shtml 

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Books for Stingy Investors

A Random Walk Down Wall Street
by Burton G. Malkiel

Take a random walk down Wall Street and you'll learn a great deal
about market history and current market theory. This book
provides an excellent introduction to the markets and gives readers a
good grounding in the efficient market hypothesis. Along the
way Malkiel makes a very strong case for indexing but even active
investors will find a great deal of useful information in his
book.
Amazon Link: http://www.amazon.ca/exec/obidos/ASIN/0393325350/


Stock Research From Dan Hallett & Associates

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http://www.rotheryreport.com/ 

The Rothery Report provides research on select deep-value stocks in
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  Average Capital Gain    Average Holding Period
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Learn More
http://www.rotheryreport.com/store/store.shtml

Subscribe Today
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ISSN 1499-2795 Copyright Dan Hallett and Associates Inc., 2008.
All rights reserved. The securities mentioned in this report are not
appropriate for all investors. Consult your professional investment
advisor before making any investment decision.  While all reasonable
effort is made to ensure the accuracy of information and data
contained herein, accuracy can not be guaranteed. Past performance is
not a good predictor of future performance.  Results are not
guaranteed and we assume no liability whatsoever for any material
losses that may occur.  No compensation for suggesting particular
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information in this newsletter, and in its related website, is not
intended to be, nor does it constitute, financial advice or
recommendations.  Investing in stocks can be risky and may result in
substantial losses.  A Dan Hallett and Associates Inc.(DH&A)
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securities mentioned.