Well, 2008 is finally coming to a close, and there were definitely some fireworks this year, although not the kind that most businesses were happy to see.One year ago, we noted several financial commentators who were predicting a recession in 2008, and why we felt their assumptions were incorrect. We agreed with the obvious assessment of the state...
Monday, December 29, 2008
Lessons from the Madoff Scandal, part two
The discussion of the Ponzi scheme perpetrated by Bernard Madoff is likely to continue for a long time, and it raises several issues that are worth discussing, including many important issues concerning regulation and the SEC.However, there are at least two issues that the Madoff scandal exposes that are absolutely vital for all investors to understand,...
Tuesday, December 23, 2008
Seasons Greetings -- including to Mr. Grinch
Here for your holiday listening pleasure is the delightful 1966 song "Mr. Grinch," sung by Thurl Ravenscroft (also the original voice of Tony the Tiger until his death in 2005). Due to its creative metaphors, the song never seems to get old (who can resist "You're a three-decker sauerkraut-and-toadstool sandwich, with arsenic sauce"?).Lest anyone...
Thursday, December 18, 2008
The best perspective comes from a business focus
Many pundits are arguing over how far in to the economic crisis we are and what is the correct direction for investors to take. Many are predicting far worse catastrophes yet to come, while others believe a bottom has been put in and things are beginning to turn.If there is a central point to all the posts we make on the Taylor Frigon Advisor, it...
Tuesday, December 16, 2008
Lessons from Madoff and his Ponzi scheme
With last week's announcement of the largest Ponzi scheme of all time it is important for investors to understand that for a Ponzi scheme to work, the operator has to take the money from one investor and give it out to another.In order to do that, the first investor must lose visibility of his money. In other words, he must be unable to see what...
Monday, December 15, 2008
Beware of the witch doctors of modern finance
In 1974, towards the end of the biggest and most sustained bear market since the Great Depression up to that point (see this chart for historical perspective), something very significant happened in the world of portfolio management.Theories that had been developing for two decades in academia were widely adopted by many investment management professionals...
Wednesday, December 10, 2008
Understanding the uptick rule can help you see the big picture on the current economy
Yesterday, Charles Schwab, the founder and CEO of financial services firm and broker/dealer Charles Schwab & Company*, published an opinion in the Wall Street Journal entitled "Restore the uptick rule, restore confidence."In it, he argues that it is time to restore the uptick rule, which prevents selling stock short until after the price of a...
Monday, December 08, 2008
Thoughts on the NBER's identification of a current recession
The National Bureau of Economic Research declared last week that the US has been in a recession since December 2007.Real GDP is the broadest measure of economic activity, but the GDP is not measured on a monthly basis, and the NBER has clearly based their dating of a recession on employment numbers. The graph above from the Bureau of Labor Statistics...
Monday, December 01, 2008
"Stock Market Guessing"
Today, the American Institute for Economic Research published a Research Report entitled "A Persistent Delusion," which contained selected quotations from an earlier bulletin that the AIER had published in 1962.The AIER was founded during the depths of the Great Depression in 1933 by Colonel E. C. Harwood (1900 - 1980), a graduate of the West Point...
