"You are neither right nor wrong because people agree with you."  - Benjamin Graham


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

How high-risk mortgages crept north
http://www.theglobeandmail.com/servlet/story/RTGAM.20081212.wmortgage13/BNStory/Front/home
"The untold story of how elements of the first Conservative
budget in 2006 encouraged big U.S. players such as AIG to make a push
into Canada, creating our version of subprime mortgages"

Suddenly vulnerable
http://www.economist.com/opinion/displayStory.cfm?story_id=12773135
"In two respects, however, India has a big advantage over China
in coping with an economic slowdown. It has all-too extensive
experience in it; and it has a political system that can cope with
disgruntlement without suffering existential doubts. India pays
an economic price for its democracy. Decision-making is
cumbersome. And as in China, unrest and even insurgency are widespread.
But the political system has a resilience and flexibility that
China's own leaders, it seems, believe they lack. They are
worrying about how to cope with protests. India's have their eyes on a
looming election."

How can you spot a wall street crook?
http://www.thebigmoney.com/articles/judgments/2008/12/12/madoff-dilemma
"The key concept here, developed by MIT professor and noted
hedge-fund theorist Andrew Lo, is "serial correlation." Simply put,
serial correlation is the degree to which each month's returns in
a fund mirror the results of the month before. A fund that
returns the exact same amount every month is perfectly serially
correlated. Madoff's returns were strikingly consistent month after
month, year in and year out. That kind of performance - a nice,
smooth line going up no matter what the market does - is a
really good sign that you should look more closely."

'Already bankrupt' GM won't be rescued by loan
http://www.bloomberg.com/apps/news?pid=20601110&sid=abLGhi7QEIt8
"For General Motors Corp., the question is no longer whether it
will get a government loan or if Chief Executive Officer Rick
Wagoner will be replaced. It's whether anything can prevent the
largest U.S. automaker from sliding into bankruptcy. "

The American Dream?
http://real.wharton.upenn.edu/~wongg/research/Wong%20-%20The%20American%20Dream.pdf
"Using a unique data set that links up well-being and housing
consumption, this paper sets out to measure systematic differences
between homeowners and renters, in term of moment-to-moment
emotions, life satisfaction, joy and pain derived from domains of
life including home and neighbourhood, family life and time use. A
remarkable similarity between homeowners and renters is found.
Controlling for demographics and income, homeowners do not
report higher levels of well-being by any measure in this data set.
In fact, they report to be less healthy, derive less joy from
love and relationships, spend less time with friends and on active
leisure, and also experience less positive affect during time
spent with friends. Their time use patterns reveal little evidence
of them being "better citizens". Due to self-selection in the
housing tenure choice, these results are likely to represent
upper bounds of the causal benefits of homeownership. Homeowners who
live in ZIP code areas with higher rates of homeownership
report more positive attitudes only if other owners are similar to
them in socio-economic terms, lending some support to the idea of
beneficial social interaction among owners."

Muni-bond funds face record losses
http://www.marketwatch.com/News/Story/Story.aspx?guid=72b8f338452a4de0891cf683b8df213b
"With the stock market down more than 40% and Treasury bond
yields at 50-year lows, municipal bonds can seem an attractive
option. And while some managers see once-in-a-lifetime bargains in the
muni market, several funds have cratered."

The case for bonds
http://money.cnn.com/2008/12/11/magazines/fortune/kimes_bonds.fortune/index.htm
"Boring is beautiful - or so it feels in this time of wild and
crazy stock market swings. In this case we're talking about
investment-grade corporate bonds, which are dirt-cheap right now for
the same reason that stocks are: The market turmoil has pounded
down their prices. The result is historic opportunities in bonds
issued by blue-chip companies."

Self-employed? Make sure business is for real
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20081211/RCESTNICK11
"Take a business-like approach to pursuing revenues in your
business. Have a marketing plan, and be prepared to explain how you
plan to increase revenues over time. Next, make sure you
understand, and can explain, what it will take to be profitable (how
many widgets you need to sell, how many performances you need to
make, etc.). Finally, try to avoid reporting losses for more than
a couple of years. This could raise a flag on your tax return."

Dividend ETFs: One way to ride out the storm
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20081213/STMAIN13
"A jump back into the stock market right now will pay dividends
right away. This is not a market-timing call, but rather a
statement of fact. If you buy into an exchange-traded fund that tracks
the broad stock market, you'll put yourself in a position to
start receiving a surprisingly good flow of dividends."

'Financial psychopaths' wreak havoc
http://money.cnn.com/2008/12/12/magazines/fortune/madoff_dreier.fortune/index.htm?postversion=2008121215
"Two of the most remarkable frauds in the history of finance were
exposed this week. They are just beginning to unravel and as
such we don't fully understand the magnitude of the crimes. But
already I can tell you they are of epic, even cinematic,
proportions. This is really from the "can't make this stuff up" school of
news. These two miscreants aren't just every day
corner-cutters, they are world-class whack."

'Dilbert' on how to save your career
http://money.cnn.com/2008/12/10/news/economy/dilbert.fortune/index.htm?postversion=2008121209
"I'm drawing a series right now where he gets laid off and he has
to go through a really tough bunch of interviews to try and get
another job. At one point he is asked whether he would take a
bullet for a prospective employer and they make him go to a
firing range to prove it."

'Illegal' glacier investment juiced returns
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20081211/RHEDGE11
"His funds were the envy of the imploding hedge fund sector,
managing to deliver a 159-per-cent return so far in a year marred by
the worst bear market in decades. Now Otto Spork, a former
dentist, is facing allegations that the fund's returns were juiced
by unsubstantiated valuations in several underlying investments
in Icelandic glaciers."

The IBM fortune and the funeral home director
http://www.portfolio.com/views/blogs/the-tech-observer/2008/12/10/the-ibm-fortune-and-the-funeral-home-director
"A couple of months ago, Robert McDevitt died at 90 in
Binghamton, N.Y., my hometown. He ran a nice-enough but unremarkable
funeral home near the center of town, about two blocks from where my
parents now live. Over the past week, his will has become
public, revealing that while McDevitt spent his time embalming local
bodies and soothing mourners -- he was worth $250 million."

Top broker accused of $50 billion fraud
http://online.wsj.com/article/SB122903010173099377.html
"Bernard L. Madoff, a former chairman of the Nasdaq Stock Market
and a force in Wall Street trading for nearly 50 years, was
arrested by federal agents Thursday, a day after his sons turned him
in for running what they said their father called "a giant
Ponzi scheme." The Securities and Exchange Commission, in a civil
complaint, said it was an ongoing $50 billion swindle, and asked a
judge to seize the firm and its assets. "Our complaint alleges
a stunning fraud that appears to be of epic proportions," said
Andrew M. Calamari, associate director of enforcement in the
SEC's New York office."

$73 an hour: adding it up
http://www.nytimes.com/2008/12/10/business/economy/10leonhardt.html?_r=1&adxnnl=1&ref=business&adxnnlx=1229022031-MS649/WshzeJLW+H15Zw8g
"That figure - repeated on television and in newspapers as the
average pay of a Big Three autoworker - has become a big symbol in
the fight over what should happen to Detroit. To critics, it is
a neat encapsulation of everything that's wrong with bloated
car companies and their entitled workers. To the Big Three's
defenders, meanwhile, the number has become proof positive that
autoworkers are being unfairly blamed for Detroit's decline."

Market bottom by year-end
http://www.marketwatch.com/news/story/Valuation-model-shows-stocks-most/story.aspx?guid={8B075A43-A23A-4B6F-B22B-6A138ACE25CB}
"It is one of the ironies of stock-market timing that it is
easier to forecast where the market will be in several years than
where it will be in several days. And, according to a valuation
model from a research firm with an excellent long-term record, the
stock market is likely to be significantly higher in several
years' time -- regardless of whether the final low of the last
year's bear market has been seen."

Housing goals we can't afford
http://www.nytimes.com/2008/12/11/opinion/11husock.html?_r=2&ref=opinion
"The Community Reinvestment Act was passed in 1977 when bank
competition was sharply limited by law and lenders had little
incentive to seek out business in lower-income neighborhoods. But in
1995 the Clinton administration added tough new regulations. The
federal government required banks that wanted .outstanding.
ratings under the act to demonstrate, numerically, that they were
lending both in poor neighborhoods and to lower-income
households."

Tobin's Q indicates 'horrific' market bottom
http://www.bloomberg.com/apps/news?pid=20601087&sid=a6iiap2DL_gQ&refer=home
"The 2008 slump in global equities has further to go if Tobin's Q
ratio is any guide, according to CLSA Ltd. strategist Russell
Napier. The ratio, a method of valuing U.S. companies developed
by Nobel Prize laureate economist James Tobin, indicates that the
Standard & Poor's 500 Index, set for its worst year since 1931,
may sink by another 55 percent to 400 when the market bottoms
around 2014, London-based Napier said. The ratio divides total
market capitalization by the cost of replacing assets."

Want to lend money to Uncle Sam?
http://bespokeinvest.typepad.com/bespoke/2008/12/want-to-lend-money-to-uncle-sam-its-going-to-cost-you.html
"What would your reaction be if you had a friend who had reached
the limit on 20 different credit cards and then came to you to
borrow $100? Then imagine that you actually said yes, and when
you went to give your friend the $100, he or she actually asked
for $101 just for the privilege of loaning the money. Well, that
is exactly what is happening (to a lesser degree) in the US
T-bill market. As just another example of the crazy times we are
living in, the yield on 3-Month Treasuries went negative today."

Contango pays most in decade
http://www.bloomberg.com/apps/news?pid=20601109&sid=axA8bIBUfvLI&refer=home
"In the worst year ever for oil, investors can lock in the
biggest profits in a decade by storing crude."

Most likely to succeed
http://www.newyorker.com/reporting/2008/12/15/081215fa_fact_gladwell
"This is the quarterback problem. There are certain jobs where
almost nothing you can learn about candidates before they start
predicts how they'll do once they're hired. So how do we know whom
to choose in cases like that? In recent years, a number of
fields have begun to wrestle with this problem, but none with such
profound social consequences as the profession of teaching."

Market woes hit newer ETFs
http://online.wsj.com/article/SB122862338042085769.html
"The market mayhem hasn't stopped fund companies from rolling out
scores of new exchange-traded funds this year. But it has made
it tough for many of these young funds to gain traction, and
that could mean trouble for investors."

After crappy decade, stocks always do great?
http://clusterstock.alleyinsider.com/2008/12/after-crappy-decade-stocks-always-do-great-right-wrong
"There's a new refrain that a lot of folks keep repeating these
days: When stocks do as badly as they have over the past decade,
they usually do great over the following decade. Sadly, like a
lot of stock market refrains, it's not really true."

Private matters
http://www.bis.org/publ/work266.pdf?noframes=1
"Why do private firms stay private? Empirical evidence on this
issue is sparse, as most private firms in the US do not report
their financial results. We investigate why private status matters
by taking advantage of a unique dataset of large, leveraged
private firms with SEC filings. Unlike a number of other studies, we
find that neither the existence of growth opportunities, nor
the desire of firm founders to diversify, is a principal
determinant of the decision whether or not to retain private status.
Rather, the existence of private benefits of control appears to
serve as the most significant incentive to stay private.
Family-controlled firms have significantly lower probabilities of filing
for an IPO, while a board structure that grants management
relatively more autonomy lowers the probability of an IPO filing as
well. Crosssectional analysis of profitability and ex post
performance suggests that while private benefits of control may
encourage firms to stay private, they do not have detrimental effects on
firm efficiency. In contrast, firms controlled by private
equity specialists appear to place a low value on control benefits
and are likely to go public as a means of cashing out."

Macroeconomics is complete bunkum
http://www.realclearmarkets.com/articles/2008/12/macroeconomics_is_complete_bun.html
"I confess that the only Hayek book I made it through without my
eyes glazing over was 'The Fatal Conceit.' It's a slim volume
written later in life, apparently after Hayek discovered
humbleness, an unusual discovery for an economist. His thesis is simple -
'I don't care how smart you are, you can't keep track of all
this s**t.' Economists who believe they can centrally plan a
national economy and optimize - what, some flaky set of poorly
defined aggregates? - are deluded. Politicians who promote these
delusions to arrogate power to themselves are knaves. And voters who
buy this fantasy are dupes. Yet Hayek be damned, here we go
again."




Tip Sheet
http://www.stingyinvestor.com/SI/strategy/tipsheet.shtml

Asset allocation for the ages
http://www.ndir.com/SI/strategy/tipsheet/12-06-2008-Asset-allocation-for-the-ages.shtml
A quote on asset allocation from the distant past.

Synthetic Debt Ratings
http://www.ndir.com/SI/strategy/tipsheet/12-05-2008-Synthetic-Debt-Ratings.shtml
Aswath Damodaran worked out a simple way to find a firm's debt
rating.  He determined that debt ratings primarily, and
overwhelmingly, depend on interest coverage ratios.  Calculate the
ratio and you can determine debt ratings with reasonable precision.




DOW 30 Value Screens
http://www.stingyinvestor.com/SI/strategy.shtml 

High Dividend Yield Stocks                   P/E P/B P/S P/D Yield
============================================ === === === === =====
Bank of America  (BAC)                        2   5   2   5    5
Pfizer  (PFE)                                 3   4   1   5    5
General Electric  (GE)                        4   4   3   5    5
Alcoa  (AA)                                   5   5   5   5    5
EI DuPont  (DD)                               5   3   4   5    5
AT&T  (T)                                     2   4   3   4    4
Verizon  (VZ)                                 1   4   3   4    4
Merck  (MRK)                                  2   2   1   4    4
JP Morgan Chase  (JPM)                        1   5   2   4    4
Kraft  (KFT)                                  2   4   4   4    4
More Info: http://www.stingyinvestor.com/SI/strategy/dogs.shtml 

Value Ratio Stocks                           P/E P/B P/S P/D  VR
============================================ === === === === =====
Alcoa  (AA)                                   5   5   5   5   0.7
General Electric  (GE)                        4   4   3   5   1.1
EI DuPont  (DD)                               5   3   4   5   1.2
Pfizer  (PFE)                                 3   4   1   5   1.4
Bank of America  (BAC)                        2   5   2   5   1.5
Caterpillar  (CAT)                            5   2   5   3   1.7
Boeing  (BA)                                  4   1   5   4   1.8
American Express  (AXP)                       5   3   3   3   2.0
Chevron  (CVX)                                5   4   4   2   2.0
AT&T  (T)                                     2   4   3   4   2.1
More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml 

Graham Stocks                            P/E P/B P/D   G$   dG$(%)
======================================== === === === ====== ======
Alcoa  (AA)                               5   5   5   30.07 198.33
Bank of America  (BAC)                    2   5   5   27.80  86.17
JP Morgan Chase  (JPM)                    1   5   4   43.19  39.58
General Electric  (GE)                    4   4   5   22.79  33.19
Chevron  (CVX)                            5   4   2  104.98  32.89
Walt Disney  (DIS)                        4   5   1   29.75  31.58
American Express  (AXP)                   5   3   3   26.28  29.18
EI DuPont  (DD)                           5   3   5   33.35  25.32
Pfizer  (PFE)                             3   4   5   18.93  11.86
AT&T  (T)                                 2   4   4   31.38  11.34
Caterpillar  (CAT)                        5   2   3   46.67  10.90
Kraft  (KFT)                              2   4   4   29.75  10.35
United Technologies  (UTX)                3   3   2   49.63   1.66
More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml 



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)                            1   3   2   2   5    5
Bank of Montreal (BMO)                   3   4   4   2   5    5
National Bank of Canada (NA)             4   4   4   0   5    5
CIBC (CM)                                0   3   2   0   5    5
Nova (NCX)                               5   5   5   5   5    5
Bank of Nova Scotia (BNS)                3   3   3   5   5    5
Husky Energy (HSE)                       4   2   3   4   5    5
Toronto Dominion Bank (TD)               3   4   3   5   5    5
Sun Life (SLF)                           2   4   4   3   5    5
Royal Bank (RY)                          3   2   2   4   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
======================================== === === === === === =====
Nova (NCX)                                5   5   5   5   5   0.2
First Quantum Minerals Ltd. (FM)          5   5   4   5   3   0.5
National Bank of Canada (NA)              4   4   4   0   5   0.8
Husky Energy (HSE)                        4   2   3   4   5   0.9
Bank of Montreal (BMO)                    3   4   4   2   5   1.0
Petro Canada (PCA)                        5   5   5   4   3   1.1
Toronto Dominion Bank (TD)                3   4   3   5   5   1.4
Bank of Nova Scotia (BNS)                 3   3   3   5   5   1.5
Telus (T)                                 3   3   3   4   4   1.7
Royal Bank (RY)                           3   2   2   4   4   1.7
More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml 

Graham Stocks                            P/E P/B P/D   G$   dG$(%)
======================================== === === === ====== ======
Teck Cominco Limited (TCK.B)              5   5   0   39.83 630.88
Nova (NCX)                                5   5   5   34.26 451.71
First Quantum Minerals Ltd. (FM)          5   5   3   78.45 362.03
Inmet Mining (IMN)                        5   5   1   72.12 296.94
Petro Canada (PCA)                        5   5   3   81.89 186.83
Talisman Energy (TLM)                     5   4   2   25.55 121.60
Agrium (AGU)                              5   4   1   75.44 100.70
BCE (BCE)                                 5   4   0   41.01  93.16
National Bank of Canada (NA)              4   4   5   55.90  83.32
Canadian Tire (CTC.A)                     4   4   2   67.62  72.76
Magna Cl.A (MG.A)                         2   5   3   59.81  68.44
Nexen Inc. (NXY)                          5   3   1   35.28  66.03
Canadian Pacific Rail (CP)                3   4   3   64.86  59.01
Bank of Montreal (BMO)                    3   4   5   52.22  55.52
Toronto Dominion Bank (TD)                3   4   5   64.67  55.31
Canadian Natural Resources (CNQ)          4   3   1   71.31  55.15
Sun Life (SLF)                            2   4   5   35.87  45.83
Encana (ECA)                              4   3   4   78.21  42.36
Husky Energy (HSE)                        4   2   5   45.19  41.79
Suncor Energy (SU)                        4   3   1   35.26  40.66
Manulife (MFC)                            3   4   4   29.45  38.60
Gildan Activewear Inc. (GIL)              4   3   0   14.46  32.69
Yamana Gold Inc. (YRI)                    1   5   2    9.69  27.69
Telus (T)                                 3   3   4   43.89  22.58
MDS Inc. (MDS)                            1   5   0    9.43  21.65
Bank of Nova Scotia (BNS)                 3   3   5   36.18  17.08
Royal Bank (RY)                           3   2   4   40.10  15.22
CN Railway (CNR)                          3   2   2   47.01  13.14
TransCanada (TRP)                         2   3   4   35.76   8.69
Brookfield A.M. (BAM.A)                   2   2   4   17.81   1.83
More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml 

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


Switch to the HTML version if the tables aren't formatted properly.
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Books for Stingy Investors

Mean Markets and Lizard Brains
by Terry Burnham

Learn how markets and ancient wiring in the brain conspire to
reduce investor returns by reading Mean Markets and Lizard Brains.
You'll also discover how to profit from other investor's
mistakes. Burnham's book provides a fun romp through the new world of
behavioural economics and it is very easy to digest - even for
new investors.
Amazon Link: http://www.amazon.ca/exec/obidos/ASIN/0471602450/


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
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subscribers informed about new opportunities and developments.

Rothery Report Performance (03/31/2001 to 09/30/2008)
  Average Capital Gain    Average Holding Period
          36.2%                   2.4 Years

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., 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
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.