Items Tagged With David Neubert

Dollar Decline Is A Slower Process than Soros and Esterhuizen Think
Written By: David Neubert
2008-02-10 12:02:52
Eben Esterhuizen quotes George Soros saying that the current financial crisis is the culmination of a 60-year super boom of dollar credit expansion . The current financial crises based on over-leverage and excess government spending is part of the long term trend in the decline of the dollar that started in the 1970's. The Pound Sterling did not lose its status as the currency of international payments overnight; the process took nearly 80 years and ended last century. The US dollar is in a similar situation. If anything, the recent dollar drop and all the "sky is falling" pessimism is ahead of itself and the dollar actually has a greater chance of rallying from here against the Euro (1.47 USD/EURO).

I do agree with Mr. Soros that the U.S. will have to have higher interest rates at some point and that's why I'm currently short US long term treasuries.

Eben nicely outlines the risk reward of my higher interest rates bet; a bet that is currently causing me to cough up cash to meet margin calls on my treasury futures. But if I'm right, the reward is much larger than what I lose if I'm wrong.

E*TRADE Commercial Captures the Essence of Trading
Written By: David Neubert
2008-03-21 15:35:55
I do not endorse any one broker, but this eTrade commercial really got to the essense of what trading for one's own account is all about. This E*TRADE advertisement caused the following emotional and intellectual reactions in me:

1. I felt guilty about investing in Pharma companies who rely more on marketing than curing diseases.
2. I felt good about the power all self directed investors have at our fingertips.
3. I Laughed my butt off.
4. I thought about adding E*TRADE FINANCIAL (ETFC - $3.72) to the list I created today of investment banks to buy on the next pullback. I just thought about it and I wouldn't include E*TRADE in that same list, though I do think they are nice speculation on a buyout or return to grace after all the dust settles in the sub-prime mortgage debacle. After all, First Call analyst estimates have them earning $0.37 a share by 2010 that would imply a cheap 13 times earnings - not a bad deal if there are no more surprises in their mortgage portfolio.

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Eric Jackson Represents the Little Guy for Change at Yahoo, The Panelist Quoted
Written By: David Neubert
2007-06-30 20:37:51
In this story from The Naples Daily News, local resident Eric Jackson manages to shake up Silicon Valley giant Yahoo (YHOO - $27.13). Because I was the first blogger to notice Mr. Jackson's Plan B campaign to increase shareholder value at Yahoo, reporter Laura Laydon called up for a couple quotes.

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Exxon and Conoco Leave Venezuela
Written By: David Neubert
2007-06-27 10:13:18
Photo:bear69designs, Creative Commons, Flickr

Historically, Venezuela has a love/hate, mutual abuse relationship with foreign companies. Venezuela seems to nationalize its foreign partners every 30 years or so and, as the last time it happened was in the seventies, it would seem that we are due.

Now, I don't know all the details behind the negotiations that made Chevron (CVX $83.03), BP (BP - $70.35) and Statoil (STO - $29.29) stay and Exxon (XOM $82.25) and Conoco (COP $76.67) walk away, but I'm going to hold my Conoco, BP, Statoil and Chevron and I'm still not going to buy Exxon.

As for this forced negotiation/nationalization changing oil prices, I don't think it will. The oil will still come out of the ground, and unless Chavez completely loses his mind and starts to really squeeze his foreign oil partners to the point where they all back out, I don't see production really falling.

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Fed Makes a Gift to JPMorgan
Written By: David Neubert
2008-03-17 14:13:09
I bought Bear Stearns (BSC - $4.68 - down 85%) on Friday for $33.00. I thought there would be some kind of rescue package. I was wrong. Here, Portfolio.com blogger, Felix Salmon summarizes some of my comments and those by others. Instead, what I got was The Fed exacting their revenge on Bear at my expense. I also benefited by the gift that the Fed gave to JPMorgan (JPM - $40.01 up 10%). Basically, what has happened is that the market (and I) didn't expect the government to play favorites and give such a valuable asset away at the shareholders' expense.

Did Bear Stearns deserve to go away? I don't doubt it. It would seem they didn't understand their own risks and didn't treat others nicely. As someone who competed against and interviewed a couple times at Bear Stearns over my career, I think I have a fairly common opinion of the firm. They were not very good citizens in Wall Street. For example, as a free rider they did not pitch in on the 1998 rescue of LTCM, though they did benefit. They culture at Bear Stearns was one of extreme self interest, which promoted chaos.

I know several employees at Bear who are wiped out. Stock vesting at Bear Stearns was cliff vesting over three years. This means that had to stay with the firm for three years to get your stock. Compensation at Bear (and most of Wall Street) is between 25%-65% in stock. So we are looking at a least a year's worth of earnings for many Bear Stearns employees being transferred to JP Morgan shareholders. I feel bad for these guys. They weren't expecting this. I know many others may not feel bad for this unlucky group. They are very employable and it's hard to get anyone to feel bad (except for the Bush administration) for millionaires getting pay cuts.

Photo:Photobunny, Creative Commons, Flickr

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