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Tuesday, December 30, 2008

CNBC Bonus Bucks Trivia Answers - Million Dollar Portfolio Challenge

CNBC's Million Dollar Portfolio Challenge is back. Trading started November 17th, 2008. Hours: Monday 6:00 a.m. to Friday 4:00 p.m. During the week, you can post your answers even after the market closes.


Daily Answers for
12/30/08:

Squawk Box question: In Jon Najarian's Monday Stock Blog, which independent oil & gas company did he cite?
  • Answer: Linn Energy

Squawk On The Street Question: In her introduction to "On the Money Thrival Guide for 2009", Carmen Wong Ulrich uses what euphemism for
  • Answer: thrown a big monkey wrench

The Call Question: On Dec. 29, Marc "Dr. Doom" Faber recommended which trio of "hard assets" to investors?
  • Answer: gold, silver, platinum

Power Lunch Question:
According to our guide to international market holidays, whose markets were closed on Dec. 25?

  • Power Lunch Answer: all of the above

Street Signs Question: In Bob Pisani's blog post from yesterday afternoon, what did he call the "real X-factor for stocks"?
  • Street Signs Answer: the coming stimulus package

Closing Bell Question:
According to the article "Best and Worst Ads: A Year the News Eclipsed..." whose ads reeked of "cultural imperialism"?

Closing Bell Answer : Burger King



Monday, December 29, 2008

CNBC Weekly Trivia: NYSE tick indicator represents number of stocks with.. Week #7 Answer

Weekly Question for week 7:
  • NYSE tick indicator represents number of stocks with:

Weekly Answer for week #7:

  • last trade executed on uptick vs downtick
==> Daily CNBC Bonus Bucks Trivia Answers

Thanks for your support!

Wednesday, December 24, 2008

Merry Christmas - Happy Holidays to Everyone!

Christmas Message:

It has been a difficult year for the stock markets.


Lets hope the stock picking monkey that throws darts at the Wall Street Journal has a choice of stocks to hit that all go up next year!


Now is a good time to reflect on the good things in our lives we are thankful for as we look to a better 2009.

Merry Christmas, Happy Hanukkah to all!!

Have a safe and happy holiday season!

.

Tuesday, December 23, 2008

Gartner Dataquest Semiconductor Capital Equipment Spending Historical Forecasts

Experts like Gartner are often no more reliable than throwing darts. Gartner was wildly bullish at the very peak in February 2000 and now is wildly bearish at the end of 2008 expecting semiconductor capital equipment sales to fall nearly 34% next year after they fell 30.6% this year.

According to their web site, www.gartner.com, Gartner Dataquest
"Gartner Dataquest tracks over 35 major IT and telecom markets, providing highly specific global and regional coverage of the key trends, issues, and most revealing statistics. With a detailed cross referencing of more than 30 Gartner research programs, Gartner Dataquest offers the single best way to understand risks and opportunities before investing or launching a product."
I think it will be interesting to track summaries of their forecasts for semiconductor capital equipment here in an easy to compare to past forecasts format. Below is my attempt that I will update when new forecasts come out.

Thanks to Jacob Snyder for thinking of this and gathering some of the data in this post.

14 February 2000 Wafer Fab Equipment and Capital Spending Forecast: How Exciting Will 2000 Be? The semiconductor recovery accelerated, and unit demand was better than expected. Spending for capacity additions began in earnest, initially in the logic-centered foundry industry, but is expected to broadly expand into memory in mid-2000.

2 October 2000 The semiconductor recovery is in full swing, driven by strong unit demand. Spending for capacity additions strongly accelerated in 2000, and positive growth is expected to continue into 2002.

19 February 2001 Led by foundry companies, Asia/Pacific companies' capital spending increased by 82 percent to US$18.3 billion from 1999 to 2000. Asia/Pacific companies' capital spending is expected to decrease by 1 percent to US$18.2 billion in 2001 because of global economics and the market situation.

January 7, 2002: Gartner Dataquest analysts believe 2002 will be the transition year to recovery, with the most likely scenario of a sustainable recovery for the semiconductor device and capital equipment industries occurring in the second half of this year. Demand is extremely weak in the equipment market, but Gartner Dataquest forecasts an acceleration in capital equipment spending driven by a tightening of leading-edge capacity in the second half of this year. Still, it will not be enough to contain the decline in equipment spending, as the market is forecast to decline 19 percent in 2002. (press Release)

Worldwide Capital and Equipment Spending Forecasts Estimates (Millions of Dollars)

2002 2003 2004
Semiconductor Capital Spending 27,884 29,896 41,525
Growth (%) -37.4 7.2 38.9
Source: Gartner Dataquest (April 2003)


December 19, 2002: Worldwide semiconductor capital spending is projected to grow 15 percent in 2003 to $32 billion, up from $27.8 billion in 2002. Worldwide wafer fab equipment spending is expected to total $18.5 billion, a 16 percent increase from 2002 revenue of $15.9 billion. (press Release)

December 19, 2003: Worldwide semiconductor capital spending is projected to grow 28 percent in 2004 to $37 billion, up from $28.9 billion in 2003 (see Table 1). Worldwide capital equipment spending is expected to total $29.5 billion, a 36 percent increase from 2003 revenue of $21.7 billion. (press Release)

18 December 2006 Semiconductor capital equipment realized solid growth in 2006, expanding 24.9% driven by double-digit expansion in semiconductor demand and a heating competitive investment race in memory. However, higher-than-expected inventories and a slowing macroeconomic environment will create a pause in 2007.

5 February 2007 Strong growth of 26.3% for wafer fab equipment in 2006, combined with strong inventories and soft demand, will lead to flat growth in 2007 as the industry pauses before another ramp-up in 2008.

18 May 2007 Semiconductor capital equipment spending will face a shallow correction in 2007, with sales revenue shrinking 3% from 2006. After this pause, growth will revive and reach 14.9% in 2008. Aggressive spending in memory still drives the market as manufacturers add capacity in response to growing demand.

30 July 2007 Semiconductor capital equipment spending is in a shallow correction, although sales will still rise 2.7% in 2007, and growth will revive to reach 6.2% in 2008.

15 August 2007 2007 is proving to be a flat year for capital spending in the semiconductor industry. GARTNER expects 2007 to register growth of 0.6%, bringing spending to $56.3 billion. This will be followed by 4.8% growth in 2008, when spending will reach $59.3 billion.

6 October 2007 The back-end equipment market will realize a modest decline in 2007. A slight rebound is in place for 2008, with growth in the mid single digits.

12 November 2007: Semiconductor capital equipment growth is slowing; the trough will push out into the first quarter of 2008, leading to a flat 2008 for semiconductor capital equipment markets. Scenarios note some upside in 2008, but issues in the global semiconductor environment mean a downside risk is greater.

11 January 2008 Semiconductor capital spending will register growth of about 5% in 2007 to $59.1 billion. Current expectations are that 2008 spending will be down about 13%, as memory spending contracts to compensate for excess capacity, specifically in dynamic random-access memory.

6 May 2008: Facing strong head winds from a weakening U.S. economy and a collapsing DRAM market, semiconductor capital equipment markets will contract in 2008 before staging a mild recovery in 2009.

18 August 2008: 2008 semiconductor capital spending will contract to $49.2 billion, which is more than 22% lower than 2007 spending of $63.4 billion. The 2008 capital spending contraction is being triggered by excess capacity, specifically in memory segments, as well as weak economic conditions worldwide.

20 August 2008: In 2008, semiconductor back-end-equipment markets are expected to decline more than 17% compared with 2007. Modest BEE growth is expected for 2009.

29 August 2008: Capital spending will decrease in 2008 as the excessive spending in the memory segments in 2006 and 2007 hits home. Declines of 22.4% in capital spending and 21.5% in wafer fab equipment spending are expected for 2008.

16 October 2008: Worldwide semiconductor capital spending will decline nearly 26% in 2008. Instability in the memory sector, combined with a weak U.S. and world economy, will lead to a further drop of 13% in 2009.

10 November 2008: ...lowering our capital equipment forecast... Our new most likely scenario has revenue declining nearly 18% in 2009.

18 December 2008: Capital spending on semiconductor equipment is already projected to drop 30.6%, to $31.1 billion in 2008, and will fall 31.7% in 2009
(search: semiconductor capital spending, by date)
=================================
New

19 December 2008: Forecast: Semiconductor Capital Spending, Worldwide, 1Q09 Update
Barbara Van | Bob Johnson | Kay-Yang Tan | Klaus Rinnen
Worldwide semiconductor capital spending is expected to decline sharply in 2009 because of instability in the world electronics markets. Current expectations are that capex will decline by 34% compared with 2008.

Click chart courtesy of Gottfried to see a full sized image

Gartner CapX Forecast October 2007

Gartner CapX Forecast December 2008



Comment on this Article here





Monday, December 22, 2008

Ed Hyman Bullish on Bonds

Ed Hyman, head of the ISI Group, believes Treasury rate can go lower which is bullish for US Treasury Bonds according to the December 20, 2008 Barron's article "Rates May Climb, but Not by Much."
Virtually all economists sampled in our semiannual survey -- which is designed to take in the spectrum of opinions, not to be a comprehensive poll -- expect the Fed to maintain its current 0-0.25% range for fed funds (represented in the table here as the midpoint). Only a few look for the Fed to nudge the funds rate up, later in 2009.

Likewise, few seers think Treasury yields can stay at current low levels or even decline further. Yet Ed Hyman, head of the ISI Group, sees a severe global recession taking yields down from here. And Merrill's Rosenberg expects a recession more like the ones seen before World War II, which were longer and more severe than those of the post-War era.
Below is the table of rate predictions from the panel of economists Barron's surveyed for their article.

Table courtesy of Barron's

Currently, as of December 22, 2008, the 10-Year US Treasury Note is paying 2.116%

13-WEEK TREASURY BILL
(Historical Quotes for: ^IRX)
10-YEAR TREASURY NOTE
(
Historical Quotes for: ^TNX)
Click for 1-Day Graph Click for 1-Day Graph
Click for 5-day graph Click for 5-day graph
Click for Yahoo! 1-Yr Quotes Click for Yahoo! 1-Yr Quotes
Charts courtesy of Yahoo! Finance

More Rate Charts at:
For sure, a long period of low Fed Funds rate and low US Treasury rates will be good for homeowners. For homeowners with equity in their homes and verifiable income who wish to refinance at low rates, they should have plenty of opportunity in 2009 to do so. Refinancing at lower rates will give them more money to spend which will eventually stimulate the economy.

Homeowners who wish to refinance also need to watch the key London Interbank Offered Rate, also known as LIBOR. It is a daily reference rate based on the interest rates banks in the London wholesale money market (or interbank market) offer to lend unsecured funds to each other.

Graph of 6-Month LIBOR in US Dollars


Graph of 1-Year LIBOR in US Dollars

Graphs courtesy of Bloomberg.com.

More LIBOR charts at:
Current Libor Rates at a Glance
What do you think?
  • Will rates go lower as the recession deepens?
  • Will rates stay about the same for a year?
or
  • Will rates rise faster than anticipated as the fiscal and monetary stimulus pushes the economy to recover quicker than many predict?
Irrational exuberance or irrational pessimism?

Tuesday, December 16, 2008

Valence to Supply PVI with Lithium Phosphate Energy Storage Solutions (Lithium Ion Batteries)

Yesterday Valence Technology, Inc. (Charts) announced a leading European manufacturer of industrial vehicles will incorporate Valence as the enabling battery technology for its electric vehicle platforms.

Intraday Chart for Valence Technology Inc.


AUSTIN, Texas, Dec 16, 2008 (BUSINESS WIRE) --

Valence Technology, Inc. (NASDAQ: VLNC Charts), an international developer of safe lithium phosphate energy storage solutions, announced today that it has entered into a multi-year non-exclusive supply agreement with PVI for Valence's U-Charge(R) XP Energy Storage Systems. PVI develops and manufactures commercial electric vehicles including electric buses under the GEPEBUS brand and trucks in partnership with Renault Trucks.

Under the terms of the supply agreement, Valence will provide lithium phosphate battery systems and engineering support to power four commercial EV platforms. Valence will begin shipments to PVI in the fourth quarter of fiscal 2009. Based on PVI projections, revenue for Valence from this supply agreement could represent approximately $3 million in fiscal 2010.

"This is a major milestone in our company's history," said Alastair Johnson, vice president, worldwide sales and marketing for Valence. "Since this represents our first supply agreement with a major automotive OEM supplier, we are delighted to be associated with PVI, especially given their work with leading companies such as Renault Trucks. PVI has a long and successful track record of developing innovative commercial vehicles. This agreement speaks to the value that a vehicle developer such as PVI places on Valence's safe battery chemistry, proven production capacity and technical vehicle integration support."

PVI and Renault Trucks recently announced an agreement to develop concept trucks and demonstrators of light commercial EV vehicles including an all-electric version of the Maxity. The first demonstrator will be powered by Valence lithium phosphate batteries. The all-electric Maxity represents a significant advancement of how goods can be transported in urban environments with zero emissions.

"This is an exciting time for PVI with a number of significant projects in our pipeline," said Pierre Midrouillet, managing director of PVI. "The supply agreement with Valence is critical because the battery is the enabling technology for our electric platforms. Valence's chemistry provides both safety and long life not found in other lithium-ion batteries. After extensive testing and qualification we have been impressed by Valence's lithium phosphate technology and system integration support. We will be incorporating Valence solutions not only into the all-electric Maxity concept truck, but also into a number of our other EV projects."

PVI joins a diverse group of nearly 100 companies that are actively testing or have already implemented Valence's patented energy storage solutions. Valence's technology powers a variety of hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs) and electric vehicles (EVs) including cars, buses, trucks, scooters and motorbikes. With over 400 international patents, Valence holds an extensive domestic and worldwide IP portfolio for phosphate cathode materials, the critical technology pathway for next generation energy storage. This extensive portfolio includes the important categories of Lithium Iron Magnesium Phosphate along with next generation materials Lithium Vanadium-based Phosphate (LVP) and Lithium Vanadium-based Fluorophosphates (LVPF). The patents also extend to Valence's innovative single-step preparative method, known as the Carbothermal Reduction (CTR) process, a key step for large scale, low cost manufacturing.

About Valence Technology, Inc.

Valence Technology is an international leader in the development of lithium phosphate energy storage solutions. The company has redefined lithium battery technology and performance by marketing the industry's first safe, reliable and rechargeable lithium phosphate battery. Founded in 1989, Valence today offers a proven technology and manufacturing infrastructure that delivers ISO-certified products and processes that are protected by an extensive global patent portfolio. Headquartered in Austin, Texas, Valence has facilities in Nevada, China and Northern Ireland. Valence is traded on the NASDAQ Capital Market under the ticker symbol VLNC. For more information, visit www.valence.com.

About PVI

PVI designs and manufactures trucks for specialized applications in small and medium sized series. The company produces 400 to 500 vehicles a year and employs a staff of 200 at its plant in Gretz, France (Seine-et-Marne). PVI is a Renault Trucks partner for alternative fuel technologies in trucks, such as CNG or full electric drivelines. PVI also develops electric buses, sold under its division brand "GEPEBUS". For more information, visit www.pvi.biz.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results, including realization of any revenues from the PVI supply agreement, may vary substantially from these forward-looking statements as a result of a variety of factors. The risk factors that could affect actual results are discussed in our periodic reports filed with the Securities and Exchange Commission, including our Report on Form 10-K for the year ended March 31, 2008, and the reader is directed to these statements for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements.

SOURCE: Valence Technology, Inc.

IR Contact:
Pierpont Investor Relations
A. Pierre Dubois, 512-527-2921
Director of Investor Relations
or
PR Contact:
Rasky Baerlein Strategic Communications
Travis Small, 617-443-9933 x356
Vice President

Read Comments and Discuss VLNC here

For commentary on Valence including my recommended buy and sell levels, read "Kirk's Investment Newsletter"

Disclaimer: I have been accumulating Valence in my newsletter (testimonials) and personal portfolios and have good profits already with a "break-even" price as of today of $0.08 per share. In an attempt to increase my overall return, I plan to continue to trade around this core position to get my original investment out and then generate cash from the volatility with the remaining "profit shares." I expect Valence to be a very volatile stock so risk control is essential.

More Articles:




High Yield Fixed Income Investmets - Beware the Hype and Allure

When the Federal Reserve Fed Funds Rate was last at 1.0% several years ago, people everywhere were searching for yield, often with little regard for risk. [After today's rate cut, I suspect this will happen again.] I used to write for Suite101 at that time. I can't tell you how many times people asked me about high yield investments to get better return than "safe" treasuries and CDs. I often get emails today from my newsletter subscribers who think some new product might have better risk/reward than the safe investments I recommend for their core portfolios. For the lowest risk, I like US Treasuries when they are paying higher than current rates and CDs with FDIC. See My typical reply to questions is the higher the yield is above a US Treasury bond with the same term, the higher the risk (not counting CDs with FDIC which are also risk free.) Also, the increase in risk is not linear. If you get double the rate, you might be taking ten times the risk! I also wrote an article warning people about banks offering annuities with higher "teaser rates" so tellers had something to offer customers who complained about CDs renewing at very low rates. For the revised article, see:
Beware of Annuities
I also wrote an article telling people how to get better than advertised CD rates at their local bank. I've improved on this article over the years and you can read it here:
How to Get the Best CD Rates
Other people asked about investment products that paid eight to 12 percent a year returns that were related to real estate loans. As we have learned now, these products depended on people with low teaser rate mortgages paying the higher rates when the teaser period ended and their loans adjusted to very high rates, often nine percent or more. Very few would actually pay these high rates. They refinance or default in most cases. Anyone who bought these is probably very unhappy now as the return OF their investment is in doubt. They only wish they could have settled for low "returns ON investment" offered by treasuries five years ago.

The other investment to be wary of is high yield bond funds. These are often called "junk bond funds." I have NEVER liked these because your upside is limited by the interest rate compared to stocks which have unlimited upside. BOTH stocks and junk bond funds have the same downside which is bankruptcy for the company which makes the bonds and stocks nearly worthless. The bond holders usually get paid before shareholders with any assets available, but that is not much of a cushion for the average investor who was looking for 8% yield when treasuries were paying a few percent less.

Vanguard Fixed Income Funds:
  • GNMA Ginnie Mae Fund (VFIIX)
    • Seeks to provide a moderate level of current income.
    • Invests primarily in Government National Mortgage Association (”Ginnie Mae”) securities. These securities are backed by the U.S. government to provide timely payment of principal and interest.
    • Follows no specific maturity guidelines but typically maintains a dollar-weighted average maturity of 3 to 10 years.

  • TIPS or Treasury Inflation Protected Securities (VIPSX)
    • Seeks to provide investors inflation protection and income consistent with investment in inflation-indexed securities.
    • Invests in high-quality inflation-indexed bonds issued by the U.S. Treasury and government agencies as well as domestic corporations.
    • Maintains a dollar-weighted average maturity of 7 to 20 years.
    • Principal and interest payments are adjusted quarterly in response to changes in inflation.

  • Total Bond Fund (VBMFX)
    • Invests in more than 3,000 bonds representative of the broad, U.S. investment-grade market.
    • Goal is to keep pace with U.S. bond market returns.
    • Offers relatively high potential for investment income; share value tends to rise and fall modestly.
    • More appropriate for medium- or long-term goals where you’re looking for a reliable income stream.
    • Appropriate for diversifying the risks of stocks in a portfolio.

  • High-Yield/Junk Bond (VWEAX)
    • Seeks high current income.
    • Invests in lower- and medium-quality corporate bonds (“junk bonds”).
    • Fund’s bond holdings are considered speculative because of their issuers’ lower credit ratings, and they can fluctuate substantially in price.
    • Assesses a 1% redemption fee on shares held less than one year to discourage short-term trading

Vanguard Funds
NameSymbol
YTD Returns
as of
12/16/2008
Yield
500 Index Fund
VFINX 2.87%
–36.42%
GNMA Fund Investor Shares
VFIIX 4.71%
6.81%
High-Yield Corp Fund
VWEHX 13.90%
–28.00%
Inflation-Protect Sec
VIPSX 3.45%
–2.96%
Total Bond Mkt Index
VBMFX 4.56%
4.14%


Personally, I own the first three bond funds but not the last, Vanguard's High-Yield/Junk Bond (VWEAX). I much prefer to take my market risk with equities in both my core and my explore portfolios.





The Mortgage Crisis Is Not Over but There are Bargains in Stocks

60 Minutes' Scott Pelley reports on the mortgage crisis that's far from over with a second wave of expected defaults on the way that could deepen the bottom of the U.S. recession.

On the next wave of defaults: "...just like the sub primes, the Alt-As and option ARMs were bundled and sold to investors." Watch the video:


On the next wave of defaults: "...just like the sub primes, the Alt-As and option ARMs were bundled and sold to investors." Watch more CBS Videos Online

It is too bad people got loans they could not pay back. I have a 5 year, 4.875% ARM that reset at yesterday's 1-year LIBOR rate plus 2.25%. With today's low LIBOR rates, my mortgage rate will go down starting with my February 2009 payment. [See Libor Rates at a Glance]

Ninja Loans were the worst
  • No Income
  • No Job
  • No Assets
Ninja loans became popular because some borrowers and lenders believed real estate would only go up.

"One out of ten Americans is behind on their mortgage." The good news in the story is one of the people who predicted the financial melt-down is finding good values in the US stock market.

More Information:

Friday, December 12, 2008

Bernard L. Madoff Arrested for $50B Ponzi Scheme

Too good to be true? It probably was.

The NY Times reports in "Prominent Trader Accused of Defrauding Clients:"
On Wall Street, his name is legendary. With money he had made as a lifeguard on the beaches of Long Island, he built a trading powerhouse that had prospered for more than four decades. At age 70, he had become an influential spokesman for the traders who are the hidden gears of the marketplace.

But on Thursday morning, this consummate trader, Bernard L. Madoff, was arrested at his Manhattan home by federal agents who accused him of running a multibillion-dollar fraud scheme — perhaps the largest in Wall Street’s history.

Regulators have not yet verified the scale of the fraud. But the criminal complaint filed against Mr. Madoff on Thursday in federal court in Manhattan reports that he estimated the losses at $50 billion. “We are alleging a massive fraud — both in terms of scope and duration,” said Linda Chatman Thomsen, director of the enforcement division at the Securities and Exchange Commission. “We are moving quickly and decisively to stop the fraud and protect remaining assets for investors.”
More:
  • According to the most recent federal filings, Bernard L. Madoff Investment Securities, the firm he founded in 1960, operated more than two dozen funds overseeing $17 billion.
Beware of anyone who doesn't show losses.
“The numbers were too good to be true, for too long,” said Girish Reddy, a managing director at Prisma Partners, an investment firm that invests in hedge funds. “And the supporting infrastructure was weak.” Mr. Reddy said his firm had looked at the Madoff funds but decided against investing in them because their performance was too consistently positive, even in times when the market was incredibly volatile.
Success of Traders’ Funds Bemused Rivals
The success of funds run by Bernard L. Madoff, the Wall Street trader arrested Thursday on accusations of running a multibillion-dollar fraud scheme, have apparently long flummoxed rivals, who wondered how Mr. Madoff could post such high returns through thick and thin.
The website, www.madoff.com shows
The Honorable Louis L. Stanton, Federal Judge in the United States District Court for the Southern District of New York, has appointed Lee S. Richards of the law firm Richards Kibbe & Orbe LLP receiver over the assets and accounts of Bernard L. Madoff Investment Securities LLC (“BMIS”) as per the attached order. Link to Order

Should you have further questions, please contact the Receiver at the following number: 214-647-7511
The SEC press release:

SEC Charges Bernard L. Madoff for Multi-Billion Dollar Ponzi Scheme
FOR IMMEDIATE RELEASE

2008-293

Washington, D.C., Dec. 11, 2008 — The Securities and Exchange Commission today charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The SEC is seeking emergency relief for investors, including an asset freeze and the appointment of a receiver for the firm.

The SEC's complaint, filed in federal court in Manhattan, alleges that Madoff yesterday informed two senior employees that his investment advisory business was a fraud. Madoff told these employees that he was "finished," that he had "absolutely nothing," that "it's all just one big lie," and that it was "basically, a giant Ponzi scheme." The senior employees understood him to be saying that he had for years been paying returns to certain investors out of the principal received from other, different investors. Madoff admitted in this conversation that the firm was insolvent and had been for years, and that he estimated the losses from this fraud were at least $50 billion.

"We are alleging a massive fraud — both in terms of scope and duration," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "We are moving quickly and decisively to stop the fraud and protect remaining assets for investors, and we are working closely with the criminal authorities to hold Mr. Madoff accountable."

Andrew M. Calamari, Associate Director of Enforcement in the SEC's New York Regional Office, added, "Our complaint alleges a stunning fraud that appears to be of epic proportions."

According to regulatory filings, the Madoff firm had more than $17 billion in assets under management as of the beginning of 2008. It appears that virtually all assets of the advisory business are missing.

Madoff founded the firm in 1960 and has been a prominent member of the securities industry throughout his career. Madoff served as vice chairman of the NASD, a member of its board of governors, and chairman of its New York region. He was also a member of NASDAQ Stock Market's board of governors and its executive committee and served as chairman of its trading committee.

The complaint charges the defendants with violations of the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940. In addition to emergency and interim relief, the SEC seeks a final judgment permanently enjoining the defendants from future violations of the antifraud provisions of the federal securities laws and ordering them to pay financial penalties and disgorgement of ill-gotten gains with prejudgment interest.

The SEC's investigation is continuing.

The SEC acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York.

# # #

Buyer beware!

The good news is those of us with honest records of significantly beating the market can point to this story about why our bad years where we under perform the markets are a "good thing" as it aids our credibility.

To find out how I've profited greatly from these difficult market conditions, subscribe to "Kirk Lindstrom's Investment Newsletter" today!

.

Thursday, December 11, 2008

GM Retains Bankruptcy Counsel, GeoGlobal Awarded Two Onshore Blocks

Hello from Baja Mexico. It was 83F when I arrived at La Paz airport Monday afternoon and I've been in shorts ever since. Good windsurfing Tue, Wed and today.

News from GM and GGR:

From the WSJ: GM Retains Bankruptcy Counsel; Tentative Pact Reached on Bailout
General Motors Corp. has hired lawyers and bankers to consider whether to file for bankruptcy protection, said several people familiar with the matter, while Senate lawmakers neared a tentative agreement on an emergency auto-bailout package that could see a vote Thursday night.
Thought question to discuss in the comments: How much does the government collect in taxes from the people employed by GM each month when you add up Social Security, Medicare and income taxes? It may make financial sense to make the loan so they don't fire everyone and collect zero taxes while paying unemployment benefits.

From RIGZONE: GeoGlobal Snags 2 NELP-VII Blocks Onshore India
The Government of India has awarded GeoGlobal a 100% participating interest in two new onshore Exploration Blocks in India under the Seventh round of the New Exploration Licensing Policy (NELP-VII) bidding which closed on June 30, 2008.

These onshore blocks include Exploration Blocks VN-ONN-2005/1 (VN-01) and VN-ONN-2005/2 (VN-02). These adjacent exploration blocks cover an area of approximately 3,776 and 4,908 square kilometers, respectively, onshore in the eastern portion of the Vindhyan Basin which is located in the north eastern portion of the State of Madhya Pradesh in central India. GeoGlobal will be the operator for both of these blocks.
La Ventana Wind chart for today from iwindsurf.com
Click for full size image.
We are in El Sargento, just up the beach from La Ventana.

My Workstation with "Sea of Cortez" view.

My Room with a View.


New Web Pages to Bookmark:

Wednesday, December 10, 2008

CNBC Bonus Bucks Trivia Answers: Week 4

CNBC's Million Dollar Portfolio Challenge: Contestants have the opportunity to earn extra money for their portfolio by answering "Bonus Bucks Trivia Questions." Daily answers to the trivia questions will be posted when available at:
Weekly Question for week 4:
  • Standard expirations for US options occur on the _ of the month?:

Kirk's Investment Newsletter
Click for a FREE SAMPLE issue
(should open an email window)
Corvette driving into mailbox

Weekly Answer for week #4:

  • Third Friday of the month

To find out how I've profited greatly from these difficult market conditions, subscribe to "Kirk Lindstrom's Investment Newsletter" today!
  • Since 1/1/1999 through 11/9/08 my "explore" portfolio is up 116% while the S&P500 is DOWN 25% and Warren Buffett's Berkshire Hathaway is only up 60%
    .
  • Subscribe TODAY and get the December 2008 issue for FREE!

==>
Daily CNBC Bonus Bucks Trivia Answers

Friday, December 05, 2008

Inflation Pressure Plummets: ECRI's FIG at 47-Year Low

The Economic Cycle Research Institute, a New York-based independent forecasting group known as ECRI, said inflation pressure is at a 47-year low. (More about ECRI)

ECRI's US Future Inflation Gauge (US-FIG), an index designed to anticipate cyclical turning points in inflation, plunged to a 47-year low.

The USFIG dropped to 88.5 (1992=100) in November from 92.7 in October, while its smoothed annualized growth rate dived to -35.3% from -31.8%. The gauge was pulled down in November by disinflationary moves in all available components.
"With the USFIG nose-diving to its lowest reading since 1961, U.S. inflation pressures have collapsed" said Lakshman Achuthan, managing director at ECRI.

Click to view full size chart courtesy of ECRI

The very low US-FIG means means the Federal Reserve can keep the Fed Funds rate low or cut it more since inflation pressures are still in a cyclical decline.

Oil Prices Per Barrel courtesy of Stockcharts.com
With gasoline selling for under $2.00 per gallon, even in Taxifornia, this should act as a stimulus package to help consumers.

The US Fig is at a 47-year low. Curious enough, my father bought his first home to raise our family in 1960 about 48-years ago, using a 4.00% CAL-VET loan. (He served in the US Navy during the Korean War.) Now there is talk the Fed will buy home loans to target a 4.5%, 30-year fixed mortgage rate. The low interest rates of the 1960s were followed by the high inflation of the 1970s and 1980s. Will history repeat itself?

More Information:


"Highest CD Rate Survey + Current US Treasury Rates"
Easier to read table here
Term
Date
Highest
Rate (APY)
Where?
(Click link for Full Rate Sheets)
Daily Savings
12/04/08 2.60%
Vanguard Prime Money Market Fund
Tax Exempt
12/04/08 1.13%
Vanguard Tax Exempt Money Market Fund
Online Savings 12/04/08 3.25%
High Performance Money Fund @ Wachovia Bank
3-Month Treasury
12/04/08 0.01%
US Treasury Rates at a glance
6 Months 12/04/08 4.32%
State Bank of India & 3.76% at Ascencia Bank
6-Month Treasury
12/04/080.29%
US Treasury Rates at a glance
7 Months 12/04/08 2.60%
Wachovia Bank
1 Year
12/04/08 4.68%
State Bank of India & 4.10 @ Umbrella Bank
1 Year Treasury 12/04/08 0.64%
US Treasury Rates at a glance
18 Months
4.40%
UmbrellaBank & 4.30% @ Capital One
2 Years

4.51% 1st Source Bank & 4.45% @ GMAC Bank
1 Year Treasury 12/04/08 0.90%
US Treasury Rates at a glance
3 Years
4.80% 1st Source Bank & 4.75% @ Intervest National Bank
3-Yr Treasury
12/04/081.09%
US Treasury Rates at a glance
4 Years

5.05% Intervest National Bank & 4.96% @ Capital One
5 Years

5.25% Intervest National Bank & 5.20% @ Capital One
5 Yr Treasury
12/04/081.61%
US Treasury Rates at a glance
7 Years
5.50% Capital One & 5.00% @ PenFed CU
10 Yr Treasury
12/04/08 2.63%
US Treasury Rates at a glance
7 Years 12/04/08
5.31%
Intervest National Bank
30 Yr Treasury 12/04/08 3.13%
US Treasury Rates at a glance

Wednesday, December 03, 2008

Real Estate Downfall - Housing Bubble Bursts

The Housing Bubble bursts on a speculator who explains why he thought housing only went up. Dark humor showing what happened to many.

YouTube Video titled "Real Estate Downfall"


The line "I'll get you a job as a dog groomer" is funny. So many "luxury jobs" like that will vanish as people stop spending on silly things that are not necessities. $4 for a cup of coffee at Starbucks is another luxury. How many have switched to the $1.85 cup of better tasting brewed coffee at Starbucks already?

New Web Pages to Bookmark:


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Kirk Lindstrom's Investment Letter Performance

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