Can we blame the accountings?

In relation to the current subprime/Wall st mess:

According to Anthony Randazzo at Reason (amongst many others)

Third, the SEC should suspend the "mark-to-market" accounting rules for long-term assets that are driving firms into bankruptcy. Essentially, these regulatory rules are forcing firms to value their assets at much lower prices than what they would be worth long-term. The intent of mark-to-market regulation was to keep firms from overvaluing themselves and deceiving investors. Instead the law has artificially devalued financial institutions as a whole, which hurts their investors. As Steve Forbes noted recently, "The mark-to-market mania of regulators and accountants is utterly destructive. It is like fighting a fire with gasoline."

Not so, say the ISAB (surprisingly :) [Note: pdf link]

Technical analysis

We're talking this week about technical and quantitative analysis. Barclays Global Investors has been doing it pretty well this decade. Here's a Businessweek article explaining why.

Big US companies buying back

A number of large US companies are starting to engage in buybacks again. Microsoft, HP and Nike are all undertaking new buybacks. Some are to signal undervalued share prices, some to manage dilution created by employee stock plans.

Here's the Wall Street Journal report.

Seven's corporate strategy

Questions have been raised about the Seven Network's corporate strategy, as well as the communication of that strategy to investors. Nick Tabakoff has the details.

Key grafs:

KEY institutional shareholders, corporate governance specialists and analysts have questioned the Seven Network's investment strategy in the wake of its revelation on Monday it had incurred losses from its strategy to "park" hundreds of millions of dollars in listed securities.

The company revealed it was down a total of $57 million on paper on a portfolio of listed stocks it has refused to disclose to the market. The company has also crystallised a total of $14 million in "realised losses" on the portfolio, after selling out of about $200 million worth of stock in recent weeks.

Hmmm, seems a bit odd. I'd sooner make my investment decisions than have Seven management do it for me.

More on the Meltdown

There's a whole heap of information out there on the latest Wall St saga. Why not go to the Wall Street Journal as a start?!

Here's a 'local' story on how these thing happen. [H/T: Andrew Bolt's blog]

Wall st hits the wall

Guess you want at least some info on what on earth is happening over the ditch?! Here's a useful summary with plenty of links: at mediabistro
H/T: Instapundit

Oh, have a look at the ASX webpage to see the announcements by the Australian banks outlining their exposure to Lehman.

Value or momentum!

Turns out both.

Found this paper by Clifford S. Asness, Tobias J. Moskowitz, and Lasse H. Pedersen1 (note: pdf link) via an article in the New York Times.

Here's the abstract:

We study jointly the returns to value and momentum strategies for individual stocks within countries, stock indices across countries, government bonds across countries, currencies, and commodities. Value and momentum generate abnormal returns everywhere we look. Exploring their common factor structure across asset classes, we find that value (momentum) in one asset class is positively correlated with value (momentum) in other asset classes, and value and momentum are negatively correlated within and across asset classes. Long-run consumption risk is positively linked to both value and momentum, as is global recession risk to a lesser extent, while global liquidity risk is related positively to value and negatively to momentum. These patterns emerge from the power of examining value and momentum everywhere at once and are not easily detectable when examining each asset class in isolation.

LTCM

A reminder about what can go wrong, even when smart people are involved. A New York Times essay on Long Term Capital Management.

Righst issues

An article in The Age (that I can't find onlnine, but an abstract is here. According to some Monash & Birmingham University academics, the way in which a company chooses to raise capital impacts on reputation and even company value. Balachandran, Faff and Theobald have an article in the Journal of Financial Economics. Abstract of the journal article on SSRN here.

Postgraduate courses

The Oz had a nice special last weekend (Sept 6-7) aobut postgraduate study; both by coursework and research. Here's one nice article from the special. Sensible advice.