"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

In nature's casino
http://www.nytimes.com/2007/08/26/magazine/26neworleans-t.html?pagewanted=all
"From Miami to San Francisco, the nation's priciest real estate now faced
beaches and straddled fault lines; its most vibrant cities occupied its
most hazardous land. If, after World War II, you had set out to redistribute
wealth to maximize the sums that might be lost to nature, you couldn't
have done much better than Americans had done. And virtually no one - not
even the weather bookies - fully understood the true odds."

A psychology lesson from the markets
http://www.nytimes.com/2007/08/26/business/yourmoney/26view.htm
"Many people feel that they have discovered their true inner genius as
investors and have relished the new self-expression and excitement. Investors
across the world have been thinking that they are winners - not
recognizing that much of their success is only a result of a boom. Declines in asset
prices endanger this very self-esteem. That is why it is so hard to turn
around investor attitudes once a downward psychology sets in. The Fed and
other central banks do not have lithium or Prozac in their bag of
remedies, and so cannot control it."

How rich friends make you feel poor
http://articles.moneycentral.msn.com/SavingandDebt/SaveMoney/HowEnvyWrecksYourFinances.aspx
"Trying to live as if you have more money than you do may be one of the
biggest causes of financial distress in America today, and nobody wants to
talk about it."

Fed bends rules to help two big banks
http://money.cnn.com/2007/08/24/magazines/fortune/eavis_citigroup.fortune/index.htm?postversion=2007082417
"The regulations in question effectively limit a bank's funding exposure to
an affiliate to 10% of the bank's capital. But the Fed has allowed
Citibank and Bank of America to blow through that level. Citigroup and Bank of
America are able to lend up to $25 billion apiece under this exemption,
according to the Fed. If Citibank used the full amount, "that represents
about 30% of Citibank's total regulatory capital, which is no small
exemption," says Charlie Peabody, banks analyst at Portales Partners. The Fed says
that it made the exemption in the public interest, because it allows
Citibank to get liquidity to the brokerage in "the most rapid and cost-effective
manner possible." So, how serious is this rule-bending? Very. One of the
central tenets of banking regulation is that banks with federally insured
deposits should never be over-exposed to brokerage subsidiaries; indeed,
for decades financial institutions were legally required to keep the two
units completely separate. This move by the Fed eats away at the principle."

Wells Fargo gorges on mark-to-make-believe gains
http://www.bloomberg.com/apps/news?pid=20601039&sid=aY8m0nta94GA&refer=home
"The board last September approved a new, three-level hierarchy for
measuring 'fair values' of assets and liabilities, under a pronouncement called
FASB Statement No. 157, which Wells Fargo adopted in January. Level 1 means
the values come from quoted prices in active markets. The balance-sheet
changes then pass through the income statement each quarter as gains or
losses. Call this mark-to- market. Level 2 values are measured using
'observable inputs,' such as recent transaction prices for similar items, where
market quotes aren't available. Call this mark-to-model. Then there's Level
3. Under Statement 157, this means fair value is measured using
'unobservable inputs.' While companies can't actually see the changes in the fair
values of their assets and liabilities, they're allowed to book them through
earnings anyway, based on their own subjective assumptions. Call this
mark-to-make-believe."

The evolution of the idea of 'value investing'
http://static.scribd.com/docs/1n1dfayqyiq5b.pdf
"Benjamin Graham and David L. Dodd's Security Analysis, first published in
1934, brought structure and logic to the field, creating an intellectual
framework for sound investment. In an area where much looks foolish shortly
after publication, Graham's principles have proved reliable for over
sixty-five years."

Housing woes hit high end
http://money.cnn.com/2007/08/19/real_estate/mortgage_luxury.fortune/index.htm?postversion=2007082008
"The jumbos are probably a bigger impediment than fear. The term refers to
home loans in excess of $417,000. By rule, they cannot be guaranteed by
the government-sponsored mortgage finance companies Fannie Mae and Freddie
Mac. Of late, if Fannie or Freddie aren't vouching for your loan, there's
trouble. As with most mortgages, jumbos are typically bundled together by
lenders and then resold to investors (often mutual or pension funds) as
mortgage-backed securities. The problem: The rising number of defaults on
subprime mortgages -- particularly among borrowers who took out interest-only
or other exotic loans -- has laid bare the, um, less than diligent
practices of many lenders. That has spooked investors and dried up the secondary
market for mortgages -- even those of sterling quality -- that aren't
guaranteed by Fannie or Freddie. Unable to resell their jumbo mortgages on
Wall Street, lenders are now making far fewer mega-loans, and those they are
making charge much more onerous interest."

The escape of the enablers
http://money.cnn.com/2007/08/22/magazines/fortune/sloan_enablers.fortune/
"Wall Street loves to talk about letting financial markets weed out the
weak. But when the Street itself gets in trouble, it sticks out its little
tin cup, asking for help. And gets it. The subprime-mortgage-market meltdown
is a classic example of the way small fry get devoured, but the whales of
Wall Street get rescued. Here's the deal: People with crummy credit who
took out mortgages are being allowed to fail in record numbers. The
mortgage companies that made those loans are being allowed to fail. The Street
itself? It's bailout city. Even before the Fed made a symbolic half-point
cut in the discount rate, it and other central banks from Switzerland to
Singapore were trying to rescue the Street by injecting hundreds of billions
of dollars into the financial markets and announcing they will put up
more, if needed."

Tough love on Wall Street
http://money.cnn.com/2007/08/17/magazines/fortune/gross_column.fortune/index.htm?postversion=2007082006
"The past few weeks have exposed a giant crack in modern financial
architecture, created by youthful wizards and endorsed for its diversity by
central bankers present and past. While the newborn derivatives may hedge
individual institutional and sector risk, they cannot eliminate the Waldos. In
fact, the inherent leverage that accompanies derivative creation may foster
systemic risk when information is unavailable or delayed in its release.
Nothing within the current marketplace allows for the hedging of liquidity
risk, and that is the problem at the moment. Only the central banks can
solve this puzzle, with their own liquidity infusions and perhaps a series
of rate cuts. The markets stand by with apprehension."


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)                                   4   4   2   5   5    5
National Bank of Canada (NA)                    5   5   4   3   5    5
Bank of Montreal (BMO)                          4   4   3   3   5    5
TransCanada (TRP)                               3   4   2   4   5    5
BCE (BCE)                                       3   3   3   4   5    5
Bank of Nova Scotia (BNS)                       4   3   2   2   5    5
Enbridge (ENB)                                  2   3   5   3   5    5
Transalta (TA)                                  0   4   3   4   5    5
Royal Bank (RY)                                 4   2   3   2   5    5
CIBC (CM)                                       5   2   4   2   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)                                   4   4   2   5   5   1.7
National Bank of Canada (NA)                    5   5   4   3   5   2.3
CIBC (CM)                                       5   2   4   2   4   3.3
Bank of Montreal (BMO)                          4   4   3   3   5   3.4
Bank of Nova Scotia (BNS)                       4   3   2   2   5   3.7
Teck Cominco Limited (TCK.B)                    5   3   4   5   4   4.0
Royal Bank (RY)                                 4   2   3   2   5   4.0
BCE (BCE)                                       3   3   3   4   5   4.1
TransCanada (TRP)                               3   4   2   4   5   4.5
Husky Energy (HSE)                              4   2   4   5   4   4.6
More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml 

Graham Stocks                                  P/E P/B P/D   G$   dG$(%)
============================================== === === === ====== ======
MDS Inc. (MDS)                                  5   5   0   40.26  99.80
Lundin Mining Corporation (LUN)                 5   5   0   16.76  46.34
National Bank of Canada (NA)                    5   5   5   58.14   3.73
Magna Cl.A (MG.A)                               4   5   3   95.83   2.59
More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml 

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


Books for Stingy Investors

Value Investing: A Balanced Approach
by Martin J. Whitman

Value Investing encourages investors to cast off the tyranny of
earnings and to focus instead on balance sheets and book values.
Well-capitalised firms can withstand an occasional headwind and
can be excellent values provided that they are bought for
reasonable prices. Safe and cheap are the driving factors for value
investors. Although Whitman's prose is occasionally a bit dry, his
useful ideas makes Value Investing well worth reading.
Amazon Link: http://www.amazon.ca/exec/obidos/ASIN/0471398101/


Stock Research From Dan Hallett & Associates

The Rothery Report
http://www.rotheryreport.com/ 

The Rothery Report provides research on select deep-value stocks in
North America. Discover overlooked and undervalued stocks in quarterly
investment reports which provide detailed analysis of Canadian and
U.S. stocks.  Weekly email news and additional updates keep
subscribers informed about new opportunities and developments.

Rothery Report Performance (03/31/2001 to 06/30/2007)
  Average Capital Gain    Average Holding Period
    Sold Stocks: 74.1%      Sold Stocks: 2.1 Years
    All Stocks: 53.6%       All Stocks: 2.4 Years

Special Bonus Reports: Top Smaller Stocks 2007
http://www.rotheryreport.com/store/TopSmallStocks.shtml

Learn More
http://www.rotheryreport.com/store/store.shtml

Subscribe Today
http://www.rotheryreport.com/store/order.shtml 



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ISSN 1499-2795 Copyright Dan Hallett and Associates Inc., 2007.
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
securities or financial advisors is solicited or accepted.  The
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)
publication.  DH&A is registered as Investment Counsel in the province
of Ontario. DH&A, or related-parties may have an interest in the
securities mentioned.