Personally I’m optimistic. Cautiously optimistic. Which means I like industrial stocks, some tech stocks and stocks with a decent dividend yield. I’m waiting a a slightly bigger pullback in Verizon and AT&T. I also dislike most financials and hyped situations (see below).
I despair of real (or any) reform on Wall Street. The New York Times ran on long piece Angelo Mozilo called “How Countrywide Covered The Cracks. Aneglo Mozilo’s Public Bravado and Private Doubts.“
The story detailed how he personally sold millions of dollars of Countrywide shares while publicly positive and internally negative. He knew the mess his company was in, but continuously pumped out an ultra-positive story about housing and his company’s prospects. Well, the SEC finally got him. But the penalty was — to my mind — totally insufficient. No jail time and a fine that was only a small part of what he made selling his stock and much of his fine and his legal expenses were paid by Countrywide and Bank of America (which now owns Countrywide). To me the deal signals loud and clear — Do what you want, tell lies, pump your company’s stock. If you get caught, the consequences are minimal.
What’s the moral here? Nothing we haven’t known before. Buyer beware. Wall Street remains a rats nest to avoid and to thoroughly distrust.
Oh yes, I forgot. Mozilo is not allowed to serve as an officer or a director of a public company. Oh my. The man is 71, and has at least (by my calculations) $100 million stashed away from his Countrywide stock sales. Figure Mozilo living to 101. And not earning a nickel of interest, that’s still $3.3 million a year to spend. Not too shabby.
Avoiding Wall Street scams. Gold is hot. Therefore gold mines are hot. And potential goldmines even hotter. Gold Resource Corporation is a gold explorer with no mines and no earnings. But lots of hype. (Like Countrywide.)
The chart shows a big hype, a big runup and then lots of selling. The company’s own web site is a masterpiece of hype. It includes:
Gold Resource Corporation’s objective is to create shareholder value by establishing production and generating superior financial performance through the development of gold and silver projects that feature low operating costs and produce high returns on capital. Management’s commitment to shareholder value is reflected in the disciplined approach it has taken to the Company’s capital structure, its focus on rapid project execution and its goal of meaningful dividend distributions.
Gold Resource Corporation (GRC) targets to emerge in the elite peer group of low-cost producers at the earliest possible date. …
All three deposits discovered to date are within an important regional structural corridor over 16 kilometers long, all within GRC’s land concessions. 8 kilometers of this corridor has returned high-grade rock chip surface samples, with the highest 115 samples, running over 0.43 ounce per tonne gold equivalent. Multiple targets exist along and around this regional corridor and GRC plans to explore many of these targets with cash flow from operations.
An independent scoping study indicated cash production costs of approximately $100 per ounce of gold from the El Aguila open pit and an annual return-on-capital of greater than 100%, indicating a capital payback of less than one year. These criteria fit well with the Company’s financial focus and approach to the business of mining.
GRC has 100% interest in three additional properties located strategically within trucking distance to El Aguila: the El Rey high-grade gold property, the Las Margaritas high-grade silver property, and the Solaga high-grade silver property. Collectively, they provide the Company with a pipeline of potential projects that would expand and diversify the Company’s precious metal production profile. The Company plans to have four high-grade properties feeding one mill.
GRC’s project opportunities are enhanced by the very favorable price environment for gold and silver. The Company’s high-grade projects also offer the opportunity to maintain profitability when the metal-price cycle turns downward.
Tennis or golf elbow? Try this. Click here.
Latest favorite New Yorker cartoons:
Harry Newton who counsels Beware of distant states seeking tax revenues and threatening asset grabbing and salary garnishment. Beware especially of years past, where their claims give vagueness a whole new meaning. California, naturally, is leading the charge. Desperation is the mother of all invention.
Good info on tennis elbow. Here is a better link than that good NY times article. I am a doc and also suffer from lateral epicondylitis. These guys like the theraband.
http://www.nismat.org/ptcor/tennis_elbow/
CEO's are in a real quandary. If their company has problems (and most do), they must be very careful what they say internally (morale) and externally (stock price). Hence the popularity of selling company granted stock on a schedule decoupling from inside information. First rule of investing? Diversify. If you're a CEO and have a significant part of your wealth tied up in company stock, you should be selling some of it regardless of which way the stock price is moving. Also note that it's frowned on (if not prohibited) when executives hedge their positions. At best you can short the industry you're in and make the argument that you are expecting your company to outperform.
You're meant to tell the truth internally and externally. It's not that difficult.
Mozillo who? Now back to important things … Game 1 is tomorrow, or Bristol Palin on Dancing WIth The Stars if you aren't into baseball.
Harry — Mozillo put the money in double tax free California bonds and makes over $4-5 million per year and will never deplete the principal
Smart man.