On this the 20^th anniversary of the 1987 stock market crash (Monday, October 19, 1987), I thought I’d share with you an interesting personal story. I had been working in the securities industry for about four years at that time. The two weeks prior to the crash the market had been very volatile and virtually all to the downside. Here are the changes to the S&P for that period:

I never thought I would say it, but here we go: hip-hip, hooray! hip-hip, hooray! hip-hip, hooray! Why I am cheering the accounting industry you should rightfully ask? Because they are showing they have a spine and are taking a harder line with financial clients about properly accounting for two items: valuing illiquid securities and recognizing losses in off-balance sheet investments. Over the years accountants and rating agencies, two entities that are supposed to be independent and tell it ...

Yesterday a consortium of banks (including Citigroup, JP Morgan Chase and Bank of America), with the encouragement and support of the US Treasury Secretary Paulson, set up the Master-Liquidity Enhancement Conduit (MLEC). The purpose of MLEC is to purchase up to $100 billion of highly-rated paper in an effort to provide liquidity to the asset-backed commercial paper market. I heard the term “Superfund” used this morning on CNBC to describe the MLEC, and I think it is a very ...

Today the S&P 500 closed at 1,517.82, up 41.17 (2.8%) after the Fed announced a 0.5% cut in the fed funds rate and a 0.5% cut in the discount rate. That puts the S&P 500 within 35 points of it record close of 1,553.08 reached on July 19^th and 111.12 points ahead of the recent low of 1,406.70 on August 15^th. The market obviously is looking to the Fed to continue easing over coming quarters.

The third quarter of 2007 may go down as one of the more amazing quarters in ...

I started to think things were out of kilter with the economy and stock market at year end 2006. At that time I put in an order to sell my position in a hedge fund (it took three months to liquidate, see blog below). As the market moved up in early to mid-2007, I took the opportunity to sell large equity positions on April 27^th and July 19^th. Since then I have been about 55% in equities and 45% in cash. Obviously, I have been thinking that the market has had an increased probability of moving ...

Given all the talk lately about hedge funds, I thought I’d give you some feedback on my personal experience. For the past several years I have used a large, well respected investment banking/brokerage (LWRIBB) firm for money management. In December 2004, I decided to allocate a small portion of my portfolio to a hedge fund of funds (i.e. a fund that invests in a portfolio of hedge funds) managed by LWRIBB.  What intrigued me about this investment was the possibility of a ...

A couple of weeks ago I came across a regulated northeastern utility called Energy East (EAS). I was looking for an undervalued utility with strong electricity distribution capacity and a good dividend yield, and it had these qualities. The stock had been downgraded in January of this year by Jefferies (on January 3^rd) and Goldman Sachs (January 29^th) to underperform and sell, respectively. According to Yahoo Finance (http://finance.yahoo.com/q/ao?s=EAS), three months ago Energy East had 3 ...

There have been some interesting tidbits lately about the investment research business that I wanted to share. (They are interesting because they are part of the basis for my involvement in co- founding InvestingMinds with Jay and Gary). Having spent over 15 years of my prior professional career in the investment research field, my perspective is based on experience. The first bit of news was the announcement two weeks ago that Prudential Financial (formerly known as Prudential Bache) was ...

I just got back from a family vacation in England where we stayed four days in London and four days in a small town 20 minutes from Salisbury called Compton Chamberlayne (population: 75 residents and 10,000 sheep). We ate, drank and made merry, and took in a lot of the wonderful things that England has to offer – Big Ben, Buckingham Palace, Camden Market, Stonehenge, the Salisbury Catherdal (and to my pleasant surprise, one of the 4 surviving copies of the Magna Carta housed there), a ...