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Hershey sale ends, Accounting for options, OPEC, BoJ set to buy stock, &
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Jim Mahar
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Sep 19, 2002 23:56 PDT
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Hershey sale ends, Accounting for options, OPEC holds tight, the Bank of
Japan set to buy stock, and much much more!
FinanceProfessor News September 20, 2002
www.FinanceProfessor.com
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Top Stories
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1. FinanceProfessor loses two good friends.
2. $15,000 for dog umbrellas?! Are you mad?!?!
3. Hershey no longer for sale
4. Jack Welch gives up severance package
5. Accounting for options.
6. Bank of Japan to buy stock from banks.
7. SEC pushes Mutual Funds to disclose proxy votes
8. IMF scolds US over trade deficit
9. OPEC holds production levels, sort of.
10. What is the average PV of social security payments?
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Hi everyone,
I had hoped to have this out Monday, but as per normal, things got in
the way.
Before we get to the financial news, I have some bad news to report.
The newsletter lost two valued subscribers and friends in the two weeks
since the last edition.
First my Great Aunt Sister Mary McLaughlin died after having what was
supposed to be a minor out-patient surgical procedure. She was expected
to be home in the afternoon of the procedure, but instead died three
days later. Although 87, she was as sharp as ever and almost weekly
would write with a comment or two about the newsletter. Interestingly,
the day before her surgery, she was out walking around the Buffalo
Marina (on Lake Erie) and her last meal was actually ice cream from a
street vendor.
As surprising as her death was, it actually was less so than that of T.
Brandan McCombie. Brandan was a former student of mine and a really
great guy who had stayed in touch regularly since his graduation from
Penn State. He was a navy pilot who absolutely loved his job and
recently been in touch to discuss his MBA plans. He and two others
died when their plane was lost off of Puerto Rico. A scholarship has
been established in his name at Penn State and I would highly recommend
giving to it if you can at all afford it. There is also a memorial
service for him on Monday in State College. If you would like more
information, please let me know.
http://www.centredaily.com/mld/centredaily/4098647.htm
http://www.vnis.com/vetnews/navy.shtml#2
http://www.pilotonline.com/military/ml0912mis.html
Well, hopefully that is all the bad news for a while.
jim
jimm-@FinanceProfessor.com
Before going on, I want to correct an error in the last newsletter. I
wrote that SEOs were Secondary Equity Offerings when in fact they are
Seasoned Equity Offerings.
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Top Story: a quick update on the various Fraud cases.
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Enron:
Merrill Lynch fired two executives (a Vice Chairman and a managing
director) for their role in the Enron scandal. The two had taken their
fifth amendment rights and not testified in front of congress, but
Merrill (and others) saw this as an admission of guilt and let them go.
http://money.cnn.com/2002/09/18/news/merrill_firing/index.htm
As officials turn their attention to Enron’s Broadband unit, the Houston
Chronicle suggests that Ken Lay and Jeff Skilling may be next on Fed’s
hit list. This is in part because the evidence will be easier to
understand and is more like other insider trading cases.
http://www.chron.com/cs/CDA/story.hts/page1/1578061
It can no longer be said that all Enron employees kept their figures
hidden. Ok, so I am not a comedian. Some former employees have decided
to not hide anymore and posed for PlayGirl magazine.
http://money.cnn.com/2002/09/18/news/enron_playgirl.reut/index.htm
http://story.news.yahoo.com/news?tmpl=story2&u=/020918/161/29sw9.html&e=11
Worldcom:
Worldcom’s problems just never seem to end. More accounting errors have
been found that are expected to swell losses by another $2 billion.
This will make nearly $9 billion in losses that had been accounted for
incorrectly.
http://www.msnbc.com/news/809991.asp
A sad part of all of the corporate fraud scandals is that there are many
innocent victims. For example, we know all about the employees who have
lost their jobs at Enron. Now WorldCom Inc. has announced they will be
cutting 25 percent of its overseas staff in an attempt to return to
profitability.
http://www.nytimes.com/reuters/technology/tech-telecoms-worldcom.html
http://biz.yahoo.com/ft/020916/1031119346071_5.html
Tyco:
It seems Tyco had more problems than originally thought. Not only did
Dennis Kozlowski get many unreported perks from the firm, now reports
indicate that others at the firm also partook in the excess. Some had
loans forgiven and some rather extravagant (and unreported at the time)
perks including $15,000 for dog umbrellas and $2900 for hangers! (Can
you imagine the size of the closet?!) One theory behind this lavish
spending is that Kozlowski was trying to “buy off” those who knew what
he was doing. All told over $170 million may have been taken from the
firm.
(Since I know you want to find out what it looks like: here is a link to
dog umbrellas. I could not find anything in the $15,000 price range,
but if you can please let me know.)
http://shop.store.yahoo.com/bsnstore/100904-1.html
And yet another problem at Tyco. Now it seems that all may not have
been on the “up and up” with respect to Tycos’s takeover of CIT. If you
remember that was the case where Frank E. Walsh a then Board member of
Tyco who just happened to own a large stake in CIT. He received $10
million for bringing the companies together. Plus a donation in his name
of another $10 million. The company is suing him for the return of the
money.
http://www.msnbc.com/news/809994.asp
As a result of the problems and the steep drop in stock price 9 of the
11 board members will not be renominated in what has been termed a
“board shuffle”.
Currently Kozlowski and other top executives Tyco have had their assets
seized and as a result had a difficult time coming up with bail money.
In the end Kozlowski’s ex-wife came up with enough money to keep Mr. K
and former CFO Mark H. Swartz out of jail. Prosecutors however are
protesting that the house, which was pledged as collateral, was obtained
with “tainted” funds. Stay tuned.
http://www.nytimes.com/2002/09/13/business/13NORR.html
http://www.nytimes.com/2002/09/16/business/16TYCO.html
http://biz.yahoo.com/ft/020916/1031119357872_2.html
http://news.bbc.co.uk/1/hi/business/2264822.stm
http://biz.yahoo.com/tsp/020916/10042359_1.html
http://story.news.yahoo.com/news?tmpl=story&u=/nm/20020917/ts_nm/manufacturing_tyco_investigation_dc_5
http://money.cnn.com/2002/09/18/news/kozlowski_jail.reut/index.htm
http://www.msnbc.com/news/810084.asp
http://www.cfo.com/article/1,5309,7676,00.html
Adelphia:
Not unexpectedly, Adelphia has chosen to not pay the Rigases the
severance pay that was originally agreed upon. The payments have been
stopped as a result of the many cases of self-dealing and probable fraud
that have surfaced since the original deal was struck back in may.
http://story.news.yahoo.com/news?tmpl=story&u=/nm/20020911/media_nm/adelphia_2
http://www.washingtonpost.com/wp-dyn/articles/A5471-2002Sep11.html
Federal officials are expected to expand the charges against the former
Adelphia officials. Reportedly, one new charge will be obstruction of
justice.
http://story.news.yahoo.com/news?tmpl=story&u=/dowjones/20020918/bs_dowjones/200209180106000025
http://www.msnbc.com/news/809475.asp
On the plus side, for the first time in a long time, Adelphia reported
operating results. Ok, so they were only for June and July. They had
to start somewhere.
http://www.nytimes.com/2002/09/16/business/16ADEL.html
Slate has decided to look ahead and see what will happen to these fallen
leaders. It predicts some (such as Ken Lay) can bounce back ala Michael
Milken. Others, like Dennis Kozlowski probably can not.
http://slate.msn.com/?id=2071203
Teaching ethics? Thinking about incorporating it more in your class?
The economist provides some useful (and interesting!) resources.
http://www.economist.com/globalExecutive/education/executive/
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Corporate Finance
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Wow, this is big news. Hershey is no longer for sale. After announcing
they that they would be selling their stake in the candy giant for
diversification reasons, the board of the Hershey trust (which owns the
majority of Hershey stock) has at least temporarily changed its mind.
Many stakeholders are claiming a victory but the shareholders (the most
important stakeholder group) are not among the celebratory as the stock
price fell sharply on the news.
http://www.nytimes.com/financialtimes/business/FT1031119335793.html
http://www.washingtonpost.com/wp-dyn/articles/A36563-2002Sep18.html
http://www.nytimes.com/2002/09/18/business/18CND-HERS.html
http://www.washingtonpost.com/wp-dyn/articles/A37111-2002Sep19.html
http://www.msnbc.com/news/809407.asp
http://slate.msn.com/?id=2071150
http://www.marketplace.org/shows/2002/09/18_mpp.html
Retirement has not been kind to former GE top man Jack Welch. Rather
than basking in the glow of a successful career, Welch has been
surrounded in controversy most of the year. With an affair, then a
divorce, and now the controversy surrounding his severance packages,
Welch would have been better off to stay working. What started as
nothing more apparent jealousy over a very large severance package with
many perks (tickets to professional sporting events, use of corporate
jets, apartments, etc) grew into a possible SEC investigation. From
published reports it seems that Welch has done nothing wrong, but
against consul he has agreed to end the pay plan and even to consult for
free saving his reputation at the expense of his wallet. Good move!
http://www.nytimes.com/2002/09/16/business/16CND-WELCH.html
http://story.news.yahoo.com/news?tmpl=story&u=/nm/20020916/people_nm/people_welch_dc_12
http://story.news.yahoo.com/news?tmpl=story&u=/ap/20020916/ap_wo_en_po/us_welch_perks_3
http://www.businessweek.com/bwdaily/dnflash/sep2002/nf20020918_7629.htm
http://www.fortune.com/indexw.jhtml?channel=artcol.jhtml&doc_id=209546
The Conference Board joined the growing chorus of voices calling on
firms to expense stock options. The conference board also went a step
further and urged boards of directors to be more diligent in dishing out
pay and to end a reliance on industry averages and put more emphasis on
judgment--that is, they want boards to not pay executives so much.
Amazingly, former Fed Chairman Paul Volker, who is on the panel, went
even further and called for firms to quit using stock options! Wow!!!
(A part of this story is also listed in the Accounting section)
http://www.cfo.com/article/1,5309,7719,00.html
One problem with expensing options is at what price should they be
recorded. While we do have option pricing models (for example the
Black-Scholes or the Binomial Option Pricing model), these overestimate
the value to managers who are undiversified. Moreover, if they are
expensed, should the managers have to record them as income at the time
of grant? At the same price? If so, then watch option grants drop
significantly.
http://www.nytimes.com/2002/09/20/business/20NORR.html
Debt, both personal and corporate, is rising faster than at any point
since 1989. While whether this is a problem or not is debatable (as a
percentage of net worth it is still not at record levels), it definitely
can increase the risks to the economy. (remember debt makes good times
great, and bad times horrible). Along those lines, the Washington post
reports that foreclosure rates have hit 30 year highs.
http://www.chron.com/cs/CDA/story.hts/business/1578025
http://www.washingtonpost.com/wp-dyn/articles/A13549-2002Sep13.html
Many finance classes begin off with a discussion of the various
organizational forms and their effects on taxation. Typically in any
upper level corporate class, someone asks how a firm can get around the
double taxation of dividends. One way is to pay yourself more. The
danger with this is that the IRS might deem it to be a dividend. (Note
this article has a good review of various corporate organizational
forms.)
y.news.yahoo.com/news?tmpl=story&u=/ap/20020919/ap_on_bi_ge/small_talk_1
Speaking of which, President Bush has been pushing a plan to end the
double taxation of dividends. While it is almost assuredly not ready to
pass, in class this week we discussed some of the implications. For
example: if firms paid out more would agency costs problems be reduced?
Probably. Would firms use less debt? Probably as equity would be
relatively cheaper and there would be less cash lying around, so less of
a Free Cash Flow problem (debt is a means of reducing the FCF problem.)
Would the cost of equity go down? Yes because investors are concerned
with after tax returns. Growth? Probably down. Definitely down if you
go by the growth = plowback * ROE model.
A very useful discussion that would make a great essay question.
http://www.nationalreview.com/nrof_bartlett/bartlett091602.asp
As the US stock market falls, more and more firms are announcing stock
buyback plans. However, as one Stern Stewart analyst points out, getting
investor’s attention with these plans is not as easy as it once was.
Why? A few reasons are that many firms announce repurchase plans and do
not complete them, firms are repurchasing a small percentage of the
shares, and the sheer number of firms doing open market repurchase
plans. Moreover, just like dividends, a buyback is in some ways an
admission there are not many good investment opportunities for the firm.
http://www.cfo.com/article/1,5309,7662,00.html
Ok, so this is not necessarily news, but it is such a perfect example of
ratios being used to analyze the operations of a firm, I could not
resist.
http://www.cfo.com/bench/SelectWork?sessionID=&command=createScard&measure1=Working_Capital_Effeciency_Rank&measure2=Cash_Conversion_Efficiency&pageNumber=1&scardID=2&tframeID=2&ticker1=GAP&ticker2=KR&ticker3=&ticker4=&ticker5=&industryCode=
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Investments
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The SEC is now pushing a plan that would require mutual fund managers to
disclose how they vote their proxies. Why this is even controversial is
beyond me. It would cut down n fraud and pressure managers to do the
right thing and not merely sway large investors (possibly with gifts
etc) to vote their way.
http://www.washingtonpost.com/wp-dyn/articles/A36382-2002Sep18.html
Stocks around the world fell yet again this week. In London the FTSE is
now near a 6 year low and the Dow is as I write this, below 8000, down
roughly 10% since the last newsletter.
http://www.guardian.co.uk/business/story/0,3604,794640,00.html
http://news.bbc.co.uk/1/hi/business/2267910.stm
Money Magazine has put together a list of so-called experts to give
their investment advice. The interesting part of this is to see how
much they disagree. http://money.cnn.com/pf/investing/features/uic02/
Quick, what is the largest US actively managed mutual fund? If you said
Fidelity Magellan you are wrong. It is the PIMCO Total Return Fund.
This makes the fund’s manager Bill Gross somewhat of a celebrity. Thus,
when he said that Stocks are overvalued and that the Dow should fall to
5000, people listened. Even if he is a bond investor. (BTW one error
in his analysis is that he says return in the long run should equal
dividend yield. It does not. As any good finance student can tell you,
required return also must account for the expected growth in dividends
r = div(1)/Price + g
http://slate.msn.com/?id=2070897
Perpetuities (or consols) are financial instruments that pay a set cash
flow every year forever. Virtually every investments and corporate
finance text lists them and many even mention them in the same breath as
the UK (where they were first issued). But try to find an example of
one and you will likely run into trouble—they simply are not listed
anywhere and searching the web for them is difficult at best. However,
thanks to Syedda Ramla of Pakistan, we now know at least a bit more.
http://wfhummel.cnchost.com/consol.html
There are now over 100 ETFs (Exchange Traded Funds) in the US. These
are like mutual funds in that they are a collection of shares, but also
like stocks because they trade in secondary markets.
http://story.news.yahoo.com/news?tmpl=story2&cid=509&ncid=749&e=10&u=/ap/20020918/ap_on_bi_ge/of_mutual_interest
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Financial Institutions and Markets
(also Money and Banking)
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One likely solution to the impending deficits in pension plans worldwide
(including social security in the US) is a later retirement age.
http://news.bbc.co.uk/1/hi/business/2269167.stm
As interest rates continue to fall (mortgages are now near a 30-year
low), refinancings are at an all time high. This has strained the
industry’s capacity and resulted in some complaints of poor service.
http://www.washingtonpost.com/wp-dyn/articles/A36620-2002Sep18.html
http://story.news.yahoo.com/news?tmpl=story2&cid=668&ncid=749&e=5&u=/ap/20020920/ap_on_bi_go_ec_fi/economy
A Business Week editorial calls for the return of the 30-year Treasury
bond. Rationale: some investors liked the risk free asset and the
government is running a deficit and needs the money.
http://www.businessweek.com/magazine/content/02_38/b3800059.htm
The wheels of justice turn slowly, but steadily. Over a year after the
FTC (Federal Trade Commission) brought suit against Citigroup’s
Associates First Capital Corp. subsidiary, the two sides have settled
for a reported $215 million. The charges accused the bank of making
deceptive loans to “sub-prime” lenders. That is they engaged in what is
called predatory lending in less refined circles. Opponents of
predatory lending accuse its practioners of targeting the poor and
poorly educated with loans that often have payments schedules and fees
that make payment difficult at best. The FTC and the Fed have stated
they want to end these practices.
http://www.msnbc.com/news/809747.asp
http://news.bbc.co.uk/1/hi/business/2269261.stm
For those of you at Cornell, or in Toronto, or New Orleans, or in any of
about ten cities in America, this is old news, but to the rest of us it
is sort of novel. The “it” in this is local communities printing their
own currency. It is an attempt to reward local businesses. For
http://www.lightlink.com/hours/ithacahours/
http://www.marketplace.org/morning_report/goodman/2002/0905LCM.html
As mentioned in the last newsletter, the Fed, and in particular Alan
Greenspan, continue to draw criticism for their failure to act quicker
to burst the stock market bubble of the late 1990s. One view has
Greenspan changing his mind as to whether there was a bubble during
1996. This opinion says that after his famous irrational exuberance
speech, Greenspan came to the conclusion, that the implied growth rate
of the economy was in fact possible due to improved technology and
improved productivity. .
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International Finance
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The Bank of Japan announced that it would begin buying stocks directly
from banks. While in the long run this may be troubling in that the
government is creating an atmosphere where investors may feel stock
prices are faked, the move may be the best available option. The move
has several good points: it to both increases the value of the Japanese
stock market (which is down 75% from its 1989 high), it serves to
increase the money supply (much like Open Market transactions by the US
Fed), and it allows banks to sell these shares without driving down
prices on liquidity grounds. What will be interesting to see is how the
Bank of Japan sells the shares for presumably the ownership will be a
temporary occurrence.
http://money.cnn.com/2002/09/18/news/international/boj/index.htm
http://www.washingtonpost.com/wp-dyn/articles/A36412-2002Sep18.html
http://biz.yahoo.com/rc/020918/markets_japan_stocks_9.html
Doing business internationally is still risky. Sometimes more is at
risk than just your wealth. Take for example the news this week that
Sergei Kukura the VP of finance at Lukoil was kidnapped at gunpoint.
This will not help spur more economic ties with Russia.
http://www.cfo.com/article/1,5309,7712,00.html
The IMF again scolded the US for running such a large trade deficit and
said that the dollar is significantly overvalued.
http://www.latimes.com/business/la-fi-tradegap19sep19(0,5726906).story?coll=la%2Dheadlines%2Dbusiness
Polling data from Britain suggest that the majority of Brits still want
to keep the poun as the official currency.
http://news.bbc.co.uk/2/hi/business/2260683.stm
http://news.bbc.co.uk/2/hi/in_depth/uk/2001/uk_and_the_euro/
International markets are definitely not perfectly correlated, and hence
provide at last some diversification benefits. For example, since the
terrorist attacks of 911, the Pakistan stock market is up over 50% while
most markets around the world are below their previous levels.
http://www.dawn.com/2002/09/19/ebr3.htm
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Economics
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US housing starts were down 2.2%, job data suggested that the recovery
is not as robust as hoped, and inflation was higher than expected.
Additionally, new car sales were below expectations. However, every
cloud has a silver lining and the trade deficit was down.
http://news.bbc.co.uk/1/hi/business/2266862.stm
http://biz.yahoo.com/rb/020919/economy_usa_4.html
http://www.msnbc.com/news/810180.asp
http://biz.yahoo.com/cbsm-top/020907/df7696df92d29650881f9adc91cae225_1.html
http://www.latimes.com/business/la-fi-rup19.3sep19(0,3631929).story?coll=la%2Dheadlines%2Dbusiness
CFOs are more pessimistic about the economy than at any point this year
according to CFO.com. 58% admitted being concerned or pessimistic!
http://www.cfo.com/article/1,5309,7711,00.html
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Personal Finance
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Here is an interesting look at the US Social Security system. For
example, while many know the return on this type of forced savings is in
the low single digits, social security is still the largest portion of
most American’s retirement savings. And yet few understand it.
Interesting trivia (and I do not know what interest rate was used), the
present value of the average payoffs from Social Security are over
$300,000.
http://www.dallasnews.com/business/scottburns/columns/2002/stories/090302dnbusburns.a0457.html
Continuing the social security theme, Scott Burns looks at the advantage
of delaying your social security payments. The benefit? You get large
checks later. http://www.chron.com/cs/CDA/story.hts/business/1577578
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Energy Markets
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After much lobbying by the US and other heavy users, OPEC has decided
that their current production quotas are adequate to meet demand.
However, unofficially, the cartel seems willing to look the other way as
member nations continue to produce more than their quotas.
http://www.msnbc.com/news/809126.asp
http://www.nytimes.com/2002/09/16/business/16OPEC.html
http://biz.yahoo.com/rb/020918/energy_opec_10.html
http://money.cnn.com/2002/09/18/news/international/opec.ap/index.htm
http://story.news.yahoo.com/news?tmpl=story&u=/dowjones/20020909/bs_dowjones/200209090945000347
http://news.bbc.co.uk/2/hi/business/2263063.stm
http://www.nytimes.com/reuters/business/business-energy-opec.html
http://money.cnn.com/2002/09/18/news/international/opec.ap/index.htm
http://www.chron.com/cs/CDA/story.hts/business/1582925
In a related story, oil prices continue to respond to any news on a
possible war with Iraq. War talk drives up oil prices, while any move
towards peace allows prices to drop.
http://www.nytimes.com/2002/09/15/business/yourmoney/15INSI.html
After Iraq made its concessions to allow weapons inspectors into the
country and ended its oil surcharge, several major oil companies have
expressed an interest in buying again. This is seen as one reason why
OPEC decided to not raise production levels.
http://www.nytimes.com/reuters/business/business-energy-iraq-sales.html
http://www.msnbc.com/news/809473.asp
Remember those blackouts in California caused by the electricity
shortage? Well, maybe the shortage was caused by producers holding back
supplies in order to drive up process. That is the view held by many
state regulators.
http://www.nytimes.com/2002/09/18/national/18ENER.html
http://story.news.yahoo.com/news?tmpl=story&u=/ap/20020918/ap_on_re_us/california_power_1
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Financial Service Industry
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GE bought Deutsche Bank’s leasing unit for $2.9bn (£1.86bn).
http://news.bbc.co.uk/2/hi/business/2262490.stm
It seems likely the CSFB will be next in the spotlight for fraudulent
research reports.
http://www.washingtonpost.com/wp-dyn/articles/A41783-2002Sep19.html
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Derivatives
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Financial Engineering News has relaunced their free monthly newsletter.
The first issue has an interesting interview with Cornell’s Thomas
Coleman on surprise surpise, Financial Engineering.
http://www.fenews.com/fen27/ColemanInterview.html
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Accounting News
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The Conference Board joined the growing chorus of voices calling on
firms to expense stock options. The conference board also went a step
further and urged boards of directors to be more diligent in dishing out
pay (essentially they want boards to not pay execs so much). Note also
the cut on FASB by Intel Chairman Andrew Grove. (note this is also in
Corporate section)
http://www.cfo.com/article/1,5309,7719,00.html
Great Atlantic and Pacific Tea Company dropped Deloitte and Touche and
selected PriceWaterhouseCoopers as their auditor. Interestingly (a
cynic would say troublingly) the next day D&T publicly stated that Great
Atlantic had a “reportable condition” involving poor internal controls.
Of course Great Atlantic said the timing of the report and the auditor
change were purely coincidental.
http://biz.yahoo.com/djus/020918/1749000868_2.html
The International Accounting Standards Board and the FASB have announced
they will move towards making a single set of rules. Of course they
warn the changes will not be immediately coming. However, if they are
serious about the standardization of the rules, it is a good thing.
http://www.chron.com/cs/CDA/story.hts/business/1581493
http://www.cfo.com/article/1,5309,7730,00.html
http://www.washingtonpost.com/wp-dyn/articles/A36451-2002Sep18.html
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Of interest to students
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Not sure what you want to do? Careers-in-Business is a good place to
consider various types of jobs.
http://www.careers-in-business.com/
Looking for resume builders? Do not forget volunteer work. For
example, tutoring shows employers that you know the material and that
you are good at working with others.
It is never too early to work on your resume. CFO.com provides some
tips:
http://www.cfo.com/Article?article=7357
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FinanceProfessor.com Lesson of the week
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A large part of learning finance is trying to keep track of everything
that is going on. A good way to do this is to rely on various models.
For example, I stress the nexus of contracts model to show how various
stakeholders are affected by virtually any corporate event. Moreover
the financial system model is useful in keeping students and teacher on
the same age. And finally, use a timeline in any time value of money
calculation.
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Teaching Ideas
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If you do not have too big of class, schedule a quick (10 minutes seems
to work well for me) meeting with each student. You get to know them
much better and vice versa! Additionally, some students who never speak
out in class will open up much more in a one-on-one setting.
Tie some test questions to current events. It makes the class more
interesting and more relevant and teaches the students to apply what the
theory and models that they learn in class.
If you are forced to miss a class, schedule a video that can be shown.
In many instances the class will learn just as much as if you were there
(more in my case!).
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Financial Trivia/History
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Swiss banks are famous for their privacy laws, but did you know that
Swiss bank privacy laws got their start in 1934 in large part to aid
Jews who wanted to hide their money from German Nazis.
On September 18, 1873 the Wall Street firm of Jay Cooke and Company
failed. The collapse led to a large decline on the 19th of September
after which the NYSE was closed for ten days. The collapse and crash
set off a severe recession that left millions out of work.
(source for both: The People’s Chronicle by James Trager)
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What I am reading
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I finished May Day by Nelson Demille and Thomas Block. While neither
will be confused with Frank Reich (the ex-Buffalo Bill QB who
masterminded the best comeback in NFL history), the book was better in
the second half. That said, it was still only average at best.
http://www.amazon.com/exec/obidos/ASIN/0786101792/finpapers/104-9378365-5272442
I just started the Other Path: the Economic Answer to Terrorism by
Hernando De Soto It is the famous book on the economic response to
terrorism. Oroginally a response to the Shining Path Terrorist group,
the book has been updated from when first released, but is still
economically sound. The basic idea: improve the economy, you will have
fewer terrorists.
http://www.amazon.com/exec/obidos/ASIN/0465016103/finpapers/104-9378365-5272442
I just started Tom Brokaw’s An album of Memories. It is his second
follow-up to the Greatest Generation. While this book has some
incredibly interesting letters (seemingly the entire book is a
collection of letters), overall the book just seems like an incredibly
long introduction.
http://www.amazon.com/exec/obidos/ASIN/0375419829/finpapers/104-9378365-5272442
Pickett’s Charge in History and Memory by Penn State’s own Carol
Reardon. Sure the book is about the famous charge at Gettysburg, but it
serves to point out a much larger and more important truth, that
accounts of what happened (in battle or elsewhere) are just that. My
favorite line: “History is an Agreed Upon Lie.” Good!
http://www.amazon.com/exec/obidos/ASIN/0807823791/finpapers/104-9378365-5272442
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Quotes of the week:
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Do not wait for ideal circumstances not the best opportunities; they
will never come.---Janet Stuart
The best place to find a helping hand is at the end of your own
arm---Swedish Proverb
A good scare is worth more to a man than good advice---Edgar Watson Howe
Knowledge is power, but enthusiasm pulls the switch---Ivern Ball
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Thanks for reading! I hope you liked it and learned something (or even
many things) from it!
If you have any ideas for the site or the newsletter please let me know.
Jim
JimM-@FinanceProfessor.com
In Western NY where the weather has been remarkably un-Fall like :-)
Who is still picking some tomatoes. The apples however as so sparse as
to not even make a trip to the orchard worthwhile.
Who cannot remember a weekend like last football-wise. The Bills, JMU,
PSU, and Alabama all won in the same week. The Bills game was
unbelievable!
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Oh and a final favor…pass this on to someone you think would like it….a
fellow student, a past teacher, your current teacher, your parents,
anyone who it might help. Thanks!
Thanks for forwarding this so much. That is the only way I know this
newsletter is growing so fast. :-)
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copyright 2002 FinanceProfessor.com
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