once in 10,000 years happened every day for three days."

"Wednesday is the type of day people will remember in quant-land for a very long time," Rothman told the Wall Street Journal "Events that models only predicted would happen once in 10,000 years happened every day for three days."  http://www.dealbreaker.com/2007/08/quant_bloodbath_revisited_a_pr.php

 

"The pressure to generate returns in what was a low-return environment has without doubt caused investors to go into less liquid spaces. In the past those less liquid parts of the credit markets had mostly long-term investors in them. Now they are mostly short-term investors, who are facing a liquidity crisis."

 

Some of the earliest quantitative investment methods included the successful identification by Benoit Mandelbrot, the Yale mathematics professor, of patterns in cotton prices in the 1960s, writes Anuj Gangahar. FT repeated in  http://www.msnbc.msn.com/id/20267284/

 

Nassim Taleb:

emphatically rejected the [central limit theorem], and the entire "Gaussian" approach as applicable to social and economic reality. . . . He pointed out ... that the fractal approach, which does not give precise probabilities, is much more applicable to social reality because it does not arbitrarily dismiss inconvenient events as "outliers." For example, according to Taleb, the Crash of 1987, the proverbial Black Swan to Gaussians, "is not an outlier if you use a fractal with an exponent of 3." (In the Gaussian world the Crash of 1987 was 20 standard deviations from the mean, an episode that would occur "every several billion lifetimes of the universe.") Taleb went on to argue that Mandelbrot's fractals allow us to account for a few Black Swans, although by no means all, and transform them into Gray Swans or "known unknowns." Taleb also produced a startling graph showing that in the last 50 years the ten most extreme days in the financial markets represent half the returns. And yet these Black Swans are dismissed by Gaussians. Taleb concluded that those using sigmas (standard deviations) as a measure of risk and randomness in the world of finance were practicing "phony mathematics" and were "charlatans." http://organizationsandmarkets.com/2006/11/15/randomness-and-the-black-swan/

Countrywide -- Too Big to Fail ?

http://www.businessweek.com/print/investor/content/aug2007/pi20070819_751874.htm

 

News Analysis August 20, 2007, 12:01AM EST

Did Countrywide Get a Hand from the Fed?

The central bank's discount-rate cut probably wasn't aimed directly at the lender, but the move may have helped save it from bankruptcy

by Ben Steverman

The question was all over Wall Street last week: Was the credit crunch threatening the survival of Countrywide Financial ( CFC) (see BusinessWeek.com, 8/15/07, "Mortgage Lenders: Close to the Edge?")? A bankruptcy filing by the largest U.S. mortgage lender would have jolted the economy, squeezing Countrywide's many creditors and tormenting the already wounded mortgage and housing markets.

Undervalued Stocks based on Graham's Number (Net Current Asset Value).

http://www.grahaminvestor.com/screens/grahams_result 

This is the basic Graham Number Stock Screen: the original "Bargain Stock" scan that seeks stocks trading at two-thirds or less of their Net Current Asset Value per share. Look for issues with low debt to equity and high cash flow in order to avoid issues with debt problems that are likely to go bankrupt. The method of calculating the Graham Number is taken from the book "Safe Strategies for Financial Freedom" by Tharp et al. See Finding Undervalued Stocks for details of how the screen is calculated. Unless there has been a prolonged bear market, few suitable candidates will appear. For a larger selection of suitable stocks including tech stocks and small caps, see the Advanced Screen.

 

 

Ticker	Avg Vol	Last	NCAV	66%NCAV	Price%NCAV	OCF/Shr	D/E
IFTH.OB	1974	0.18	0.33	0.22	54.37	0.07	0.5
MHO	240989	21.61	37.06	24.46	58.31	6.81	0.72
TAIT	3104	1.80	2.98	1.97	60.42	0.10	0.03
TWMC	80920	4.71	6.73	4.44	70.03	0.86	0.19
UTSI	4035790	3.33	4.64	3.07	71.69	3.62	0.44
AAC	266373	0.18	0.25	0.16	73.39	0.01	0.13
SPOR	4011	3.72	4.88	3.22	76.25	0.06	N/A
LKI	4065	7.00	8.90	5.87	78.66	1.76	1.19
CRC	5302	6.25	7.81	5.15	80.06	0.93	N/A
BSHI.OB	823	7.70	9.54	6.30	80.72	2.62	0.08
HDL	160836	3.38	3.99	2.63	84.81	1.12	0.45

Will subprime meltdowns send markets into free fall? Expert opinions.

Super nice sequence of opinions from Buffett, Miller, Paulson, etc… on this topic.

http://money.cnn.com/galleries/2007/fortune/0708/gallery.crisiscounsel.fortune/5.html

 

पीपुल run at Countrywide Bank
http://www।ajc.com/business/content/business/stories/2007/08/17/countrywidebank0817.html
At Countrywide Bank offices, in a scene rare since the U.S. savings-and-loan crisis ended in the early '90s, so many people showed up to take out some or all of their money that in some cases they had to leave their names.
In west Los Angeles, a Countrywide supervisor brought in from another office served coffee to more than 25 people waiting calmly for their turn with the one clerk who could help them.
Bill Ashmore drove his Porsche Cayenne to Countrywide's Laguna Niguel office and waited half an hour to cash out $500,000, which he then wired to an account at Bank of America.
"It's because of the fear of the bankruptcy," said Ashmore, president of Irvine's Impac Mortgage Holdings, which escaped bankruptcy itself recently by shutting down virtually all its lending and laying off hundreds of employees.
"It's got my wife totally freaked out," he said. "I just don't want to deal with it. I don't care about losing 90 days' interest, I don't care if it's FDIC-insured — I just want it out."

Central Banks to the rescue ...

After injecting $130.7 billion into the market yesterday, the European Central Bank added an additional $83.8 billion today. The added capital comes on the back of Japan's central bank injecting $8.4 billion and the U.S. Federal Reserve doling out $24 billion.

One hundred billion dollars here, $80 billion there, and soon you're talking about real money. Make sure you own some gold and silver, folks...

The SEC will begin tearing through the books of the five largest banks on Wall Street, checking for subprime exposure. In particular, the SEC is checking to see if the banks calculate the value of their subprime assets and customer assets in a consistent way. What's your guess?

Financial stocks are now at their cheapest point in a decade. The subprime scare has erased $600 billion, 8%, of value from the financial sector – the worst of any industry. Financials are now trading at 11 times earnings, the lowest since 1995.

Permabear Marc Faber, publisher of the Gloom Boom & Doom report, is calling for benchmark indexes to fall by 30%. He believes the Dow Jones Industrial Average will fall below 12,000. Faber also predicts that the bailout by central banks will cause severe inflation... see above.

Another stock Owens Corning Sales, Inc. (OC)

well the most  interesting thing about this company is http://finance.yahoo.com/q/it?s=OC

NET SHARE PURCHASE ACTIVITY

Insider Purchases - Last 6 Months   Shares Trans Purchases 1,351,440 21 Sales N/A 0 Net Shares Purchased (Sold) 1,351,440 21 Total Insider Shares Held N/A N/A % Net Shares Purchased (Sold) (100.0%) N/A

Net Institutional Purchases - Prior Qtr to Latest Qtr   Shares Net Shares Purchased (Sold) 3,268,950 % Change in Institutional Shares Held

 

All the insiders are buying this share. financials dont look bad. but insiders buy the stock for only one reason!

How to invest like Bear Stearns

http://www.thestreet.com/s/the-dirt-cheap-stocks-to-buy-right-now/newsanalysis/stockpickr/10373327.html?puc=_tsccom

 

Let me explain what is happening to these hedge funds. The "holy grail" for hedge funds is to return 1% a month with no volatility. The saying is, "If you can return 1% a month, you can raise $1 billion," and that's true. But it's impossible to get 1% a month without enormous risk.

Here's the trade that hedge funds started making about two to three years ago to get that 1% a month. They would borrow money at the short end of the curve and they would then buy (lend) subprime paper. So they would borrow at 5.5% and lend as low as 6.5%. The difference was only 100 basis points because that trade got very crowded.

And that was the problem.

 

The problem is not that there are defaults; the defaults are exactly what one would expect from subprime lenders who had never borrowed before. The problem is that the paper was yielding only 6.5%.

What makes a spread of just 1% a good trade? Well, leverage it up 12-to-1, and you make your 1% a month. And that's the problem: An 8% decline in subprime paper, and your fund is wiped out. Wiped out.

Countrywide questions and answers

Question: Financial turmoil at Countrywide Financial Corp., the biggest U.S. mortgage lender, might have many people wondering if their home loans are in trouble. And what about funds deposited in Countrywide's affiliated savings and loan operation, Countrywide Bank?
 

http://www.latimes.com/business/la-fi-answers17aug17,0,7175677.story?coll=la-home-center

Salesforce.com results

Revenue for the 2nd quarter was $176.6 million, up 9% sequentially

"subscription and support revenue" = $160 million and "professional services" = $16.6 million

3,000 net new customers during the quarter; total customer count "roughly 35,300"

subscribers passed the 800,000 ("customer" = a company and a "subscriber" = one of the employees of the customer

ASPs = 'high 60's to low 70's" [i.e, ARPU]

capital spending down from Q1 to finish the second quarter at roughly $10 million -- capital expenditures more than tripling year over year,

gross margin = 77%

operating expenses = 75% of revenue [what is wrong with this picture? - SAC/CPGA and support costs 75 cents on the sales dollar]

GAAP operating margin = 2%, up from breakeven in Q1 and up from a loss of 1% last year.

Net income = $3.74 million- all the huff from Marc Benioff and they bring in a bit over million in earnings a month. This supporting a $4.75 billion market cap? Loads of inside sellers: http://finance.yahoo.com/q/it?s=CRM

Churn "under 1% a month"

As a percent of revenue, G&A has fallen 170 basis points and marketing 160 basis points from a year-ago quarter.

deferred revenue on the balance sheet to $321 million

Marc Benioff: "One thing that no competitor can match these days is the Salesforce Platform, which gained dramatic momentum in the second quarter. We logged our first 100-million transaction day in the quarter and for the period. Our transactions totaled approximately 6.8 billion, a new record. While we delivered 119% more transactions this quarter, we delivered them at an average time of less than 0.25 seconds each, a 22% year-over-year improvement in speed. More remarkably, we delivered all this performance at greater than 99.9% availability. Of course, it's all available for you to see every day at trust.salesforce.com. None of our competitors; not Microsoft, not Oracle, not SAP provides this level of transparency or even the kind of website that we've made popular at trust.salesforce.com....calls to our API accounted for more than half of our transactions, indicating deeper and deeper integration with our service. That integration capability took a big leap forward this quarter, with our introduction of Salesforce SOA. This is a powerful set of technologies for enterprises as they continue to move to on-demand. We had our first-ever developer conference back in May, and now our developer community numbers more than 48,000. On the AppExchange, 348 ISVs have contributed to the 642 applications now available. Customers have now completed more than 251,000 test drives and 32,000 installs of on-demand applications from the AppExchange. Our platform is where partners go to build their own businesses into the next Salesforce.com. "

http://money.cnn.com/news/newsfeeds/articles/prnewswire/AQW07715082007-1.htm

Ensco International Inc

I bought (Ensco International Inc) yesterday. the order was placed long time back when i did some analysis on the stock. the stock seems cheap I am not sure why its falling.
Here are some numbers about it from finance.yahoo.com
P/E (ttm):8.77
Forward P/E (fye 31-Dec-08) ¹:6.44
Growth
Past 5 Years (per annum) 69.237%
Next 5 Years (per annum) 22.59%

Return on Assets (ttm):	17.31%
Return on Equity (ttm):	28.63%

Still think you are in bull market?

Well you first have to ask what is your time frame. However if we are looking at the major market, closing below the 200 day moving average is generally considered a bear market. If we get below the 500 day moving average that would be a depressive market. All markets have waves within waves. A few days ago we had the "kiss goodbye" which was a intermediate term swing upward in the larger down market. Day traders only want volatility since they go flat at the end of every day. Intraday movements are generally not significant so focus on the close. Intraday movements generate a candle pattern that will give you hints about the current market. Today the S&P gapped down on open….. again….. which is generally a very bearish sign. Today also closed right on a Fibonacci retracement point.*IF* the market is going to turn it generally does so on one of these points. But only time will tell. What does this all mean? First, we are definitely not in a bull market. I might have been willing to say we were consolidating because there have been some doji''s and reversals. This indicates market indecision. However today we closed lower than we have been since March and below the consolidation area. There have been some other bearish candle patterns in the mix

THE FEEL GOOD FACTORY: "Our foreign exchange reserves are now so huge that Jaswant Singh commands Indian companies to 'Go out and conquer the world. (George W. here we come). We will be there at every step for you. There is over 100 billion dollars of forex reserves. That is to be put to use, not to be kept under a lock and key.'
Leading economists are telling us we've never had it so good.
In the media, The Golden Age is Upon Us. Leave alone the mainstream for a moment. You know it's a new world when the Economic & Political Weekly finds space for a piece that trashes the Millennium Goals as irrelevant. In India, we achieved those a long time ago.
What's more, thousands of young Indians are successfully faking American accents. (If you can't beat `em, cheat `em.)
And while we may have got thumped in the VB series, we did retain the Border-Gavaskar trophy. That too, against Australia in Australia. Pakistan, here we come.
What more could anyone possibly ask for? When have we ever had it so good?
WELCOME to India Shining. To where the government spends - and various media receive - 4,000 million rupees of your money to tell you how good you're feeling. "

QuoteGallery.com: " You cannot prevent and prepare for war at the same time.
Albert Einstein"

A not-so-warm welcome for Bush: "A recent poll in the popular (left-of-center) Daily Mirror — traditional supporters of Blair — declared that half the country feels Bush is a threat to world peace rather than a help. "

BBC NEWS: "Did we have to go to war for this cause? And you only go to war in a desperate last case scenario. It hadn't reached that point. Iraq was being disarmed day by day. Missiles were being destroyed.
I think historians are going to come to judge this as the greatest mistake by a British prime minister in 50 years. "

BBC NEWS: "This wasn't a victory and there was nothing triumphalistic about it. They were lucky to get out alive. The reporter said it makes your teeth rattle. Well that's what war does; it makes your teeth rattle.
I think the attacks on Al-Jazeera - both verbally and in the end with missiles - were absolutely indefensible. It's entirely right that the Arab world should have its own sources of information. "

BBC NEWS: "No, when I saw the war and I saw the beginning and I saw how the first thing that the United States protected - was what? The Ministry of Oil - the oil fields. Did they protect the people of Iraq? Did they protect the museums which have one of the greatest legacies of our own history? Did they make everything possible so that there wouldn't be a humanitarian catastrophe? Did they do everything in their power so that there was going to be no lawlessness? No - the only thing they were concerned about was the oil ministry and the oil fields. "

Bush's Resume: "George W. Bush
The White House
1600 Pennsylvania Avenue
Washington, DC USA


PAST WORK EXPERIENCE

I ran for Congress and lost.

I bought an oil company, but couldn't find any oil in Texas; the
company went bankrupt shortly after I sold all my stock.

I bought the Texas Rangers baseball team, in a sweetheart deal and built a stadium using taxpayer money.

With my father's help and name, I was elected Governor of Texas.


ACCOMPLISHMENTS AS GOVERNOR

I changed pollution laws in favor of the power and oil companies and made TX the most polluted state in the US. And replaced Houston over L.A. as the most smog-ridden city in America.

Cut taxes and bankrupted TX government to the tune of billions of
dollars in borrowed money.

I set the record for most executions by a Governor in US history.

I became US President after losing the popular vote by over 500,000 votes with the help of major Enron money and my father's appointments to the Supreme Court.


PRESIDENTIAL ACCOMPLISHMENTS"

Bush Lies to the American People!: "There never was any weapons of mass destruction found in Iraq although Bush said he knew exactly where they were. Thousands of lives were lost because of him. In my opinion he is responsible for loss of thousands of lives and HE HIMSELF is a weapon of mass destruction. I am an American and I love my country dearly. I do not support a President who lies to us and I do not support cold blooded murder and he has done both"