The Stingy News Weekly (07/21/2013)
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Negative EV stocks
"Enterprise value has one peculiarity that market capitalization does not. It's possible for a company to have a negative enterprise value. That might sound odd at first but remember the calculation subtracts a firm's cash from the market value of its equity and debt."
Hedge fund math
"The lesson here is to try to minimize your costs and employ sensible tax planning methods. While a 2-per-cent annual fee might not seem like much, it can really add up over time. Throw in a performance fee on top, as most hedge funds do, and the costs skyrocket." [Btw, the calculations included a high-water mark]
Bullish on cash
"Charles de Vaulx has an investment idea: cash. That may seem an odd choice, since cash earns less than inflation, making it a money-losing proposition. But Mr. de Vaulx, who oversees $17.8 billion as chief investment officer at International Value Advisers in New York, has been boosting his cash position. He is having trouble finding stocks he considers cheap and won't buy overvalued stocks. He considers bonds even more overvalued than stocks, leaving him perched on a lumpy cash pillow."
The problem of small accounts
"Good advice costs money. Really good advice costs a lot of money, and is worth it, if you have enough money to spread the cost over. But when you have a small account, you have a problem in getting advice."
Stock pickers' markets a myth
"Whenever the notion of a volatile sideways market bubbles up among portfolio managers, they claim indexing will fail in comparison to active stock selection. In other words, portfolio managers argue that trendless volatility is ripe for active management skill to shine. They call it a stock pickers. market. I call it a myth for retail investors."
Feds vs. raisins
"The government allows them to sell one out of every two raisins.The farmers were always supposed to get a percentage of the money raised from the reserve pool raisins, but as profit margins dwindled over the years, so did the return to farmers. The tipping point came in 2003, when farmers received zero dollars in return for the 47 percent of the crop they had surrendered."
"China Bilateral Investment with Victor K. Fung, Charles Munger, and Jim Sinegal"
Detroit gap and pension math
"Until mid-June, there was one ray of hope in Detroit's gathering storm: For all the city's problems, its pension fund was in pretty good shape. If the city went under, its thousands of retired clerks, police officers, bus drivers and other workers would still be safe. Then came bad news. Seemingly out of nowhere, a $3.5 billion hole appeared in Detroit's pension system, courtesy of calculations by a firm hired by the city's emergency manager."
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