Just Throw a TARP on It…

Apparently the treasury department has a knack for ironic naming.

There’s more than one way to deal with almost any problem – take the disposal of toxic chemicals, for example: If a chemical company needs to rid itself of toxic chemicals, they’re going to have to choose between treating those chemicals to reduce their toxicity, or something more creative… like bury them!

But burying toxic chemicals brings with it its own set of risks and drawbacks. For starters, chances are those buries 55 gallon drums of dioxin are going to seep back to the surface eventually, just as they did in the Love Canal Disaster of the 1970s in Niagra Falls. In that particular instance, 21,000 tons of toxic waste buried beneath a residential area had horrific effects on the residents who lived there.

Indeed, just throwing a tarp over a problem can certainly disguise it; at the very least it’ll keep it out of sight and out of mind for a while… but ultimately, that problem’s still there.

That’s what’s so funny about the Troubled Assets Relief Program (TARP). We’re throwing a TARP over trillions of dollars worth of toxic assets to “get rid” of it. Apparently the irony was lost on whoever’s responsible for naming the program.

(more…)

What’s the Deal with Mark to Market?

The markets were abuzz yesterday on the revelation that the Financial Accounting Standards Board was planning to change rules for mark to market accounting – the accounting process that many blame for the financial predicament we’re in now.

What do the changes mean for investors?

Well, probably not much – the change is really more of a clarification that will give auditors a bit more leeway in valuing assets. Reuters claims that the rule won’t have a big effect on next quarter’s results for financial stocks. Want the lowdown on mark to market accounting? Check out this article I wrote for Investopedia last year:

In the accounting world, the numbers on a company’s books are rarely indicative of market values. According to generally accepted accounting principles (GAAP), companies are supposed to record the value of assets at their cost in order to err on the side of caution. In other words, if a bakery buys an oven for $10,000, the purchase is recorded as an asset on the company’s balance sheet for $10,000 – even if it could be sold for more in the marketplace.


Rhino Stocks Mentioned in Investors Business Daily

A new article in Investor’s Business Daily quotes me and mentions the Rhino Stock Report when talking about share buyback programs. Here’s a small bit of it -

Companies normally jump at the chance to repurchase shares they see as undervalued. But the wretched economy makes for much-tougher choices, says Jonas Elmerraji, editor of the Rhino Stock Report, a monthly investment newsletter.

“Clearly the biggest downside is letting go of your cash,” he said. “Right now, cash is king. If companies part with liquidity on their balance sheet, they could be put in a very precarious position.”

Ultimately, I think that share buyback programs can be effective for companies looking to increase their share price, but they’re not an end all be all. True, I’ll definitely mention a material share buyback when a company I like has an initiative in place, but the chances of a buyback alone changing my tune on a stock are pretty much nill.

Seeing a flaky company stage a buyback when they don’t have a mountain of cash to sit on is a bad idea in this environment, and it’s actually one situation where I’d say a buyback program can hurt a company’s share price.

What do you think about buyback programs? Feel free to hit up our new comments on our sprarkly new website.

15 Companies that Won’t Survive 2009

Note: To get the report 10 Companies that Will Thrive in 2009, sign up here for our FREE BETA!

Ran across this interesting article on Yahoo Finance – The 15 Companies that Might Not Survive 2009.

So, who do they think will hit the chopping block in the next 10 months? The list includes companies like troubled automaker Chrysler as well as Trump Entertainment Resorts (TRMP) and Six Flags (SIX). One company that I sincerely hope won’t go bust is Sirius Satellite Radio (SIRI). Says the article:

The music rocks, but satellite radio has yet to be profitable, and huge contracts for performers like Howard Stern are looking unsustainable. Sirius is one of two satellite-radio services owned by parent company Sirius XM, which was formed when Sirius and XM merged last year. So far, the merger hasn’t generated the savings needed to make the company profitable, and Moody’s thinks there’s a “high likelihood” that Sirius will fail to repay or refinance its debt in 2009. One outcome could be a takeover, at distressed prices, by other firms active in the satellite business.

The music certainly does rock, and I’m not about to give it up just yet. Are there any other companies you think won’t make it through 2009? Light up the comments…

P.S. Interested in 10 Companies that will thrive in 2009? Join our FREE BETA and you’ll get that special report when I release it next month! Sign up here…

Wanted: A Decent Stock App for the iPhone

Why is it that even the most technologically advanced phone in the world doesn’t have an investing app worth using?

We’re increasingly becoming a wire-free society. Since the Blackberry became a cult phenomenon in the early 2000s, business-class mobile applications have been coming out in a big way. After all, you can get your Bloomberg terminal ported over to your Blackberry these days. You can even make trades from your Blackberry. For better or worse enterprise-level business software helps busy professionals stay connected when they’re not at the office.

Here’s the problem – I traded in my Blackberry a year and a half ago for an iPhone, and until now I haven’t looked back. But when you’re responsible for keeping an eye on a portfolio of stocks for a couple hundred BETA subscribers, it becomes helpful to have a half-decent investment platform on the iPhone. The problem is that it doesn’t exist right now.

If you’re after stock information on the iPhone and the standard “Stocks” program just won’t cut it, the stable of Apps available today consist of:

  1. Bloomberg – free, but doesn’t do a whole lot beyond delayed stock quotes and news. Certainly not the same as the Bloomberg Anywhere service you can get on your Blackberry.
  2. StockWatch – a portfolio tracker for the iPhone. Like Bloomberg, limited feature set.
  3. StockCharts – while I was initially excited at the prospect of interactive stock charts for the iPhone, reviews suggest that the timeframe is locked in at 1 year. Great.
  4. TickerPicker Lite – this (and its full featured cousin) offer the technicians a possible (but not yet passable?) solution for the iPhone. In addition to advanced charting features, this one offers real time quotes.

Notably left off this list are the premium Apps that offer real-time quotes for a small fee… right, because I wouldn’t just go to Google Finance, Yahoo! Finance, or one of the other free sites that have real-time data now. Unbelievable.

If you’re an iPhone developer and want to make a halfway decent investing utility for anyone who needs a feature set beyond what’s available now, consider including portfolio monitoring, news, level II quotes, and halfway decent charts. Yes, it’s easy to throw together a crappy iPhone App and sell it for a couple bucks if you know what you’re doing. If you spend the time to make a good one, you might actually build a following and make some money too.