Most Penetrating Comment I've Seen on Jerome Kerviel and Societe Generale Yet

David Weidner of Marketwatch: "Kerviel, the bad apple who was smart enough to fool a banking empire but not enough to beat the markets...."

Brilliant. No sarcasm at all intended. Smart enough to utterly defeat whatever passes for internal risk controls at an ostensibly world-class institution, but not smart enough to beat the market. Who's next for a similar story? Goldman? Some other firm? Just a matter of time. It seems these guys are given ambitious goals to meet; they are, when you get down to it, told to win or else at what is rather like a very big ongoing coin-flipping contest. So what do you think is going to happen?


A rogue ruined the financial system? Which one? - MarketWatch

Cramer's picks haven't beaten the market--Barron's

No kidding!

I credit Jim Cramer with working very hard at what he loves. And with being a fine communicator, and an under-appreciated writer. And he is likable, when he is not being completely nutty. But the market is just too efficient for him. No argument exists on this, the numbers are in. Only trading "true believers" are willing to commit money to trading approaches for which there is no rational basis to expect bigger gains after taxes as a result.

Because he is on after the markets close, and because the more naive of his viewers are immediately buying his picks, in after-hours trading, a number of day traders will be right there in after hours action, catching those market orders, shorting his picks as those folks buy in. I know that he says not to do that. They do it anyway. Guess how that works out.


Cramer's picks haven't beaten the market--Barron's: Financial News - Yahoo! Finance

A few thoughts on Ben Stein's latest column.

Ben is someone I would describe as a grand old man of personal finance, who usually retains his perspective when looking at things. You have to like the guy. So what's he saying?

"First, I'm not at all worried about the stock market despite the recurrent panic about subprime mortgage problems and resistance to some loans by lenders in private equity deals (which used to be called, appropriately, leveraged buyouts, or LBOs)." Neither am I. The economy is still just too good, and not looking like 2000 (for example).

Ben rather politely throws verbal ice-water on the hysterical financial media types for all the cat-fits they have had over the sub-prime lending industry's return to sanity: "Subprime is a small sector of the mortgage market...If all [distressed sub-prime loans go] into foreclosure (which is unlikely) ... the real loss might be about .9 percent, or less than 1 percent [of mortgage loans]." He provides enough detail to back this up. The financial media gets awfully lathered up over almost everything. It gets viewer attention but lessens their credibility.

He talks about how traders work, and how he sees their antics as not affecting the market in the longer run. Nicely done, Ben.

There's
more.

China at 45 Times Earnings = Bubble

Yes China's economy is growing. Its' financial markets may go on up higher for some time. But no, it cannot grow fast enough to justify such valuations. Period. Simple enough? For you and for me, um-hum. For all the speculators out there praying for greater fools to keep coming in, and for investing newbies, 'fraid not. We are living in interesting times.


Bloomberg.com: Exclusive

Markets Made 'Unchanged' Into 20 Percent Gain: Chet Currier of Bloomberg

"If this steady-as-you-go spell has been tough on traders, it has gone down just fine with buy-and-hold investors in the stock market and stock mutual funds." -- Mr. Currier. Pithy and true. If you have been trying to game the Fed, building some sort of trading approach around what will, you hope, go up when an interest rate cut comes, then you haven't made much, or maybe you've even lost ground. If you were just well-invested, well allocated, and so on, you've reason to be smiling as you read this.

Is there a lesson in this? You bet. What has worked in investing continues to work.



Bloomberg.com: Opinion

Now this is a problem! False refinery fire story sends nutty traders into frenzy

How do you comment on this? The professional traders cannot not trade on news. Even incorrect news. Apparently it is not about real news, or even about rationality. It's about out-trading the other guys. So what's to stop some jerk of a stringer for a TV station from calling in stories to help his friend the speculator?



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