Wall Street Ends Higher on Economic Data, Despite Halt – NYTimes.com

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Should “glitches” like these concern investors?  Should you be concerned if your retirement funds are in a market that has flash crashes, trading halts, and computers executing trades and trading strategies by the millisecond?

All good questions.  I don’t have a definitive answer.  Let me quote Robert Reich’s “Aftershock”: “Wall Street is a casino in which high stakes wagers are placed within a limited number of betting houses that keep a percentage of the wins for themselves and fob off losses on others, including taxpayers.”

If you have money in the market I suggest you buy low and sell high.  For example,  Netflix has  price to earnings ratio of 335 now.  The historical average for the market in general is roughly 15.  This seems like a sell high opportunity.  Yes, it could go higher.  But isn’t a P/E of 335 high enough?

http://mobile.nytimes.com/2013/08/23/business/daily-stock-market-activity.html

LA Times – Facebook is a bummer, study says

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I don’t have a Facebook account.   Call me old school, but according to this article I am happier!  May you all be happy as well, Facebook or no Facebook.

http://touch.latimes.com/#section/-1/article/p2p-77032533/

By the way, anyone entering into a short position on Facebook stock?

An old news article worth sharing: “Dividend tax hike ‘could have been worse'”

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While organizing some of my files today I stumbled across a CNN Money article on the dividend tax hike “compromise” reached earlier this year: 20130102_dividend_tax_hike

Most of you probably already know where I am going with this.  🙂  It is yet another reminder of how the wealthy (in this case those earning more than $400,000 AGI) avoided a restoration of taxes to pre-great recession / pre-Bush rates.  However, as I mentioned in my Cadence of Finance presentation, taxes are not the main driver behind the widening wealth gap.  See the presentation for more details.

Another government lawsuit against Bank of America related to $850M in bad mortgages

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Sure Bank of America (BofA) has been sued a time or two by the government.  Just take a look at my Cadence of Finance presentation slides 9 and 11. But they were also bailed out by the government.  Are we being forced to watch and participate (via our tax dollars) in some sick (and expensive) good-cop bad-cop show?  Nevertheless, if you like reading about BofA’s latest lawsuit, checkout this Forbes article.

As mentioned in the Cadence of Finance presentation, BofA was already sued for misleading investors about $16.5B (that’s B as in Billion). They eventually settled for a $315M judgement.  What about the other $16.2B dollars?  Where did that go?  Nevertheless, it appears the only differences this time are the “lower” amount of bad mortgages ($850M) and their source (from “wholesale channels” rather than originated by BofA).

I hope everyone has made, or at least begun, the transition to banking with credit unions. See page 26 of “The Cadence of Finance” for a few reasons to make the switch.  Those are in addition to the fact BofA laid off 30,000 workers after being bailed out, paying bonuses, and settling for pennies on the dollar (page 11).

Revamped home page, financial crisis presentations

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First, I would like to thank all of those who follow my blog.  I hope you find the material interesting and thought provoking.  To make material more accessible to students, businesses, and curious readers alike I have revamped the homepage.

After a discussion regarding the debt ceiling this weekend I asked myself: “didn’t I write something about this before?”  It turns out I did!  You will notice a “2011 Debt Ceiling Crisis” presentation under the “Seminars” column on the home page.  That presentation was created two years ago.  It turns out the debt ceiling is in the news again.

If you like the debt ceiling presentation also take a look at “The Cadence of Finance” and the “2008 Financial Crisis” presentations.  It appears that observations and concerns in those presentations keep coming up again and again.

Enjoy the reading!

Netflix Approaching Its Apple Moment (AAPL, NFLX)

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Netflix is cool technology but how does it increase productivity in a Schumpeterian context?  In that context productivity enhancing technological progress leads to economic growth.  How is getting the [relatively few] remaining Americans who are not Netflix subscribers going to lead to productivity enhancement and subsequently economic growth?  The same argument applies to Facebook.

Perhaps streaming video saves time and money related to driving to Blockbuster and picking up a movie.  But do we do anything with the time and money savings?  Do we just spend that saved time and money consuming more Netflix content?

http://www.fool.com/investing/general/2013/07/22/netflix-approaching-its-apple-moment.aspx

USA TODAY – Has facebook figured it out?

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A 30% jump in value in one day because of one earnings report?  Something is fishy here.  Buyer beware, and I am referring to stock investors and advertisers on Facebook.  I still don’t have a Facebook account.  For others, when was the last time you clicked on an advertisement and spent money?

http://m.usatoday.com/article/news/2587117