Financial Wisdom From Three Wise Men

by Hans Wagner

Some of us are more disciplined than others. Shortly after we are born, we start to learn the rules of life. Some of these rules we had to learn the hard way, through trial and error. Others we learned from our parents. Learning from others in this way is often easier, however, we seem to do a better job of remembering the lessons we learn the hard way. As investors, we have a choice. We can learn the hard way and hope that we'll survive our lessons and not run out of money, or we can learn from the following three wise men.

Three wise men - Warren Buffett, Dennis Gartmen and Puggy Pearson - found very different methods to achieve financial success, but they all share a common trait - their success came by following a strict set of rules. In this article we'll show you nine rules that three wise investors live by.

The World’s Greatest Investor
Warren Buffett, the "Oracle of Omaha," is considered by many to be the greatest investor ever. He is also known for giving much of his $40 billion fortune to the Bill & Melinda Gates Foundation, which is dedicated to bringing innovations in health and learning. Buffett is primarily a value investor that closely follows Benjamin Graham's investing philosophy after having worked at Graham's firm, Graham-Newman. (To read more about Buffett, see Warren Buffett: How He Does It and What Is Warren Buffett's Investing Style?)

Buffett has several excellent investing rules. You can read about many of them in his company's (Berkshire Hathaway) annual reports, which are an excellent source of investing knowledge.

Here are three of Buffett's rules:

1. Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
   If you lose money on an investment, it will take a much greater return to just break even, let alone make additional money. Minimize your losses by finding quality companies that are temporarily selling at discounted prices. Then follow good capital management principles and maintain your trailing stops. Also, sitting on a losing trade uses up time, money and mental capital. If you find yourself in this situation, it is time to move on.
   
2. The stock market is designed to transfer money from the active to the patient.
   The best returns come from those who wait for the best opportunity to show itself before making a commitment. Those who chase the current hot stock usually end up losing more than they gain. Remain active in your analysis, look for quality companies at discounted prices and be patient waiting for them to reach their discounted price before buying.
3. The most important quality for an investor is temperament, not intellect.
   You need a temperament that neither derives great pleasure from being with the crowd or against it. Independent thinking and having confidence in what you believe is much more important than being the smartest person in the market. Most of the time, the best opportunities are found when everyone else has given up on the stock market. Over-confidence and emotion are the enemies of a high quality portfolio.

The Great Trader Gartman
In the October 1989 issue of Futures magazine, Dennis Gartman published 15 simple rules for trading. He is a successful trader who has experienced the gamut of trading from winning big to almost losing everything. Currently, he publishes The Gartman Letter, a daily publication for experienced investors and institutions.

Here are three of Gartman's best rules:

1. There is never one cockroach.
   When you encounter a problem due to management malfeasance, expect many more to follow. Bad news often begets bad news. Should you encounter any hint of this kind of problem, avoid the stock and sell any shares you currently own. (For related reading, see Evaluating A Company's Management, Get Tough On Management Puff and Putting Management Under The Microscope.)
   
2. In a bull market only be long. In a bear market only be short.
   Approximately 60% of a stock's move is based on the overall move of the market, so go with the trend when investing or trading. As the saying goes, "The trend is your friend."
   
3. Don't make a trade until the fundamentals and technicals agree.
   Fundamentals help to find quality companies that are selling at discounted prices. Technical analysis helps to determine when to buy, the exit target and where to set the trailing stop. A variation of this is to think like a fundamentalist and trade like a technician. When you understand the fundamental reasons that are driving the stock and the technicals confirm the fundamentals, then you can make the trade. (For more insight, see Fundamental Analysis For Traders and What Can Traders Learn From Investors?)

The Gambler
The wisdom of the late two-time champion world poker player Puggy Pearson offers our last set of rules to follow. "Only three things to gamblin'," Puggy once said, "knowing the 60/40 end of a proposition, money management and knowing yourself." Well, those rules apply to investors too.

Here are Pearson's all-encompassing rules:

1. Knowing the 60/40 end of a proposition
   Understanding the odds of drawing a winning hand is essential to poker. The 60/40 bets are those that offer the best chance of winning given all the options available. If you only play hands that have these odds or better, the statistics are on your side.
   
   As investors, we should strive to put the odds in our favor with every trade. Finding the best 60/40 opportunities takes time and research, as there are many ways to find good candidates. These can be identified through individual stock selection, top-down or bottom-up approaches, technical or fundamental analysis, value-based pricing, growth-oriented, sector-leaning or whatever approach works best for a particular investor. The point is that investors must be constantly working toward finding and recognizing opportunities as they present themselves. Once you have been dealt the right cards, it's time to take the next step.
   
2. Money Management
   Managing money is an ongoing process. The first tenet is to minimize losses on each opportunity. Fortunately, investors do not have to ante up to play, as in poker, though investors must work hard to find good opportunities. Once you have a good hand, it is time to decide how much money to commit to the opportunity.
   
   While much is written on this topic, let's keep it simple. Basically it is a risk-reward decision. The more money you commit, the greater the possible reward and the higher the risk of losing some of that money. However, if you do not play, then you cannot win. (For more on this, see Determining Risk And The Risk Pyramid.)
   
   Basically, when the best opportunities present themselves, it is usually wise to make a significant commitment. For good (but not great) opportunities, committing smaller amounts makes sense as the potential reward is less. As in poker, most of an investor's money is made in small increments with the occasional big win coming along every once in a while. This requires that an investor evaluate each opportunity compared to others that have shown themselves in the past. Experience is an excellent teacher. Finally, investors can use a stop-loss strategy to mitigate greater losses should their assessment of the opportunity prove to be wrong. Too bad gamblers don't have such a tool! (To read more, see The Stop-Loss Order - Make Sure You Use It.)
   
3. Knowing Yourself
   The last gambling rule, knowing yourself, means doing everything you can to stick to your discipline. Everyone wants to get on with it to make the next trade, but if that opportunity does not fit within your measure of a good 60/40 opportunity, then you must force yourself to pass. While you will miss some good gains, this will also save you from some hefty losses. Following your discipline is essential for success as a gambler as well as an investor. You must be extraordinarily patient in your search for the right opportunities and then aggressively go after the best ones.

Conclusion
Each of these three wise men excels by following his rules. In this way, they have succeeded where many others have failed. While we might not be as wise as these three men, we can learn from the best.

Ten Worst Performers of 2008

By Peter Brimelow, MarketWatch

Recently, I listed 2008's 10 best performers, as tracked by the Hulbert Financial Digest. ( See Dec. 17 column). I list 2008's 10 worst performers at the end of this column.

Worst really means worst in 2008. The bottom performer, Charlie Buck's Win Before You Buy, is down an appalling 82.0%, and there are several close contenders.

Simple arithmetic suggests these letters will never climb out of the performance hole they've fallen into. But, paradoxically, they could still be worth watching in the years to come.

I've remarked before on an oddity whereby letters often bounce back and forth between successive year's top and bottom ten. It happened again this year: The Linde Equity Report, No. 4 in 2007, is in the bottom 10 in 2008, down 63.6%.

Of course, it may not always be wise to bet on this rebound being sustained.

To paraphrase Caesar's "Gallic Wars," this year's Terrible 10 can be divided into three parts.

First are letters that have done appallingly this year -- and have also done appallingly over the longer term. In this category, I'd put Linde, Equities Special Situations (down 74.3%), and Buck's Win before You Buy.

Then there are letters that have done appallingly this year but have done well, even been top performers, in the past.

There's some reason to hope they might rebound.

In this category: BI Research, down negative 56.3% ( See Aug. 17, 2006, column); Louis Navellier's Emerging Growth, down 57.6% ( See Jan. 17 column); Medical Technology Stock Letter, down 61.2% ( See Aug. 20 column -- Ouch!); and Oberweis Report, down 63.4% ( See March 27, 2006, column).

Then there are the hard asset/gold bug letters, which have done appallingly in 2008 but brilliantly as recently as last year: Ruff Times, down 65.2%; the Dines Letter, down 72.1%; and the International Harry Schultz Letter, down 75.6%.

In varying degrees, these letters have a long-run worldview that they regard as delayed rather than discredited. But it's still an interesting question why they didn't trade.

One of this year's top performers, Investment Models' James Rohrbach, recently wrote in MarketWatch that "buy and hold is dead." See Rohrbach's commentary.

Maybe, although it sounds like the sort of thing people say at the bottom of bear markets.

It is certainly true that letters in my Category Two (appalling this year, but reason to hope if you look further back) tend to eschew market timing and remain fully invested, often in volatile stocks.

This was a bad year to be fully invested. But there can be dramatic rebounds in bear markets. If that happens, these letters could see a radical reversal of fortune.

It may not repair their Hulbert Financial Digest records. But if you are just getting involved with them now, who cares.

The Terrible Ten:

(Data is over the year to date through Nov. 31. Remember, the Dow Jones Wilshire 5000 is down 38.68% over that period.)

BI Research -56.3%

Louis Navellier's Emerging Growth -57.6%

Medical Technology Stock Letter -61.2%

Oberweis Report -63.4%

Linde Equity Report -63.6%

Ruff Times -65.2%

Dines Letter -72.1%

Equities Special Situations -74.3%

International Harry Schultz Letter -75.6%

Charlie Buck's Win Before You Buy -82.0%

The Characteristics Of A Successful Company

by Michael Schmidt,CFA

It is often debated whether a commonly perceived "good" company, as defined by characteristics, such as competitive advantage, above-average management and market leadership, is also a good company to invest in. While these characteristics of a good company can point toward a good investment, this article will explain how to evaluate the company's financial characteristics to make a final decision. (For further reading on the other characteristics, see 3 Secrets Of Successful Companies.)

Background
The world of stock picking has evolved. What was once the duty of traditional stock analysts has become an internet phenomenon: stocks are now analyzed by all kinds of people using all kinds of methods. Furthermore, the speed at which information now travels around the world has led to increased volatility in stock prices and changes in the way that stocks are evaluated, at least in the short-term. In addition, the advent of self-directed 401(k)s, IRAs and investment accounts has empowered individual investors to get more involved in the selection of stocks to buy. (Read House Your Retirement With Self-Directed Real Estate IRAs for more on this investment vehicle.)

But while the short-term process may have changed, the characteristics of a good company to buy stock in have not. Earnings, return on equity (ROE) and their relative value compared to other companies are timeless indicators of companies that might be good investments.

Earnings
Earnings are essential for a stock to be considered a good investment. Without earnings, it is difficult to evaluate what a company is worth, except for its book value. While current earnings may have been overlooked during the internet stock boom, investors, whether they knew it or not, were buying stocks in companies that were expected to have earnings in the future. (Read more about the dotcom boom and other crazes that went wrong in Crashes: What Are Crashes And Bubbles?)

Earnings can be evaluated in any number of ways, but three of the most prominent metrics are:

• Growth
• Stability
• Quality

Earnings Growth
Earnings growth is usually described as a percentage in periods like year-over-year, quarter-over-quarter and month-over-month. The basic premise of earnings growth is that the current reported earnings should exceed the previous reported earnings. While some may say that this is backward-looking and that future earnings are more important, this metric establishes a pattern that can be charted and tells a lot about the company's historic ability to grow earnings. (Read about how earnings can be linked to future growth in PEG Ratio Nails Down Value Stocks.)

While the pattern of growth is important, like all other valuation tools the relative relationship of the growth rate matters as well. For example, if a company's long-term earnings growth rate is 5% and the overall market averages 7%, the company's number is not that impressive. On the flip side, an earnings growth rate of 7% when the market averages 5% establishes a pattern of growing earnings faster than the market. This measure on its own is only a start, though – the company should then be compared to its industry and sector peers. (For related reading, see Five Tricks Companies Use During Earnings Season.)

Earnings Stability
Earnings stability is a measure of how consistently those earnings have been generated. Stable earnings growth typically occurs in industries where growth has a more predictable pattern.

• Earnings can grow at a rate similar to revenue growth - this is usually referred to as top-line growth and is more obvious to the casual observer.
• Earnings can also grow because a company is cutting expenses to add to the bottom line.

It is important to verify where the stability is coming from when comparing one company to another. (For further reading, see Revenue Projections Show Profit Potential.)

Earnings Quality
Quality of earnings factors heavily into the evaluation of a company's status. This process is usually left to a professional analyst, but the casual analyst can take a few steps to determine the quality of a company's earnings. For example, if a company is growing its earnings but has declining revenues and increasing costs, you can be guaranteed that this growth is an accounting anomaly and will most likely not last. (Read more in Earnings: Quality Means Everything.)

Return On Equity
Return on equity (ROE) measures the effectiveness of a company's management to turn a profit on the money that its shareholders have entrusted it with. ROE is calculated as follows:

ROE = Net Income / Shareholders' Equity

ROE is the purest form of absolute and relative valuation and can be broken down even further. Like earnings growth, ROE can be compared to the overall market and then to peer groups in sectors and industries. Obviously, in the absence of any earnings, ROE would be negative. To this point, it is also important to examine the company's historical ROE to evaluate its consistency. Just like earnings, consistent ROE can help establish a pattern that a company can consistently deliver to shareholders. (For more on this topic, read Keep Your Eyes On The ROE, Earnings Power Drives Stocks and Profitability Indicator Ratios: Return On Equity.)

Relative Value
While all of these characteristics may lead to a sound investment in a good company, none of the metrics used to value a company should be allowed to stand alone. Don't make the common mistake of overlooking relative comparisons when evaluating whether a company is a good investment. (For further reading, see Peer Comparison Uncovers Undervalued Stocks and Relative Valuation: Don't Get Trapped.)

Where to Find Information
In order to compare information across a broad spectrum, data needs to be gathered. The internet can be a good place to look, but you have to know where to look. Since the majority of information on the internet is free, the debate is whether to use the free information or subscribe to a service. A rule of thumb is the old adage, "You get what you pay for." For example, if you are looking at comparing earnings quality across a market sector, a free website would probably provide just the raw data to compare. While this is a good place to start, it might behoove you to pay for a service that will "scrub" the data or point out the accounting anomalies, enabling a clearer comparison. (What you're getting isn't easy to determine. Find out how to get your money's worth in Investment Services Stump Investors.)

Conclusion
While there are many ways to determine if a company that is widely regarded as "good" is also a good investment, examining earnings and ROE are two of the best ways to draw a conclusion.

• Earnings growth is important, but its consistency and quality need to be evaluated to establish a pattern.
• ROE is one of the most basic valuation tools in an analyst's arsenal, but should only be considered the first step in evaluating a company's ability to return a profit on shareholder's equity.

Finally, all of this consideration will be in vain if you don't compare your findings to a relative base. For some companies, a comparison to the overall market is fine, but most should be compared to their own industries and sectors.

For further reading on stock evaluation, see Pay Attention To The Proxy Statement, Strategies For Quarterly Earnings Season and Spotting Cash Cows.

Securitize

What does it mean?
A pooled group of financial assets that together create a new security, which is then marketed and sold to investors. The value and cash flows of the new security are based off of the underlying value and cash flows of the assets used in the securitization process. Companies will securitize illiquid assets into liquid assets in order to increase their overall liquidity and generate immediate proceeds from their assets.

A company (the originator) begins the securitization process by gathering a series of financial assets, such as accounts receivables (AR). These assets are then sold or transferred to an issuer, or special purpose vehicle (SPV), which is used to manage the assets and legally protect the company from the assets' obligations. The SPV will then sell the securities, which are backed by the assets held in the SPV, to investors. The cash flows generated by the underlying assets are then transferred to the investors who purchased the asset-backed securities (ABS).

The originator will have received some proceeds from the securitization, which can be used for its ongoing operations or other business uses. During the securitization process, the SPV will often get a rating agency to assign the assets a rating based on the ability of the assets to meet the principal and interest payments on the new securities being sold by the SPV. The SPV may also use credit enhancements to lower the risks of the securities being sold off to make them more attractive to investors.

国际游资今又来：抄底还是博反弹？

有迹象显示，一年以前制造中国流动性过剩的游资又回来了。

12月8日，花旗银行发表研究报告称，纵然亚洲大部分的基金仍继续面对赎回，却有大量的资金持续流入中国相关基金，单在过去三星期的新资金已达8.41亿美元，相当于今年来净流入现金近三成。

追踪2,150亿美元离岸亚洲基金的EPFR Global数据显示，上一周，净流入中国内地的资金达到2.099亿美元，而过去四个星期(约11月份)，净流入资金量达到6.89亿美元，占全年净流入30.488亿美元的22.5%。而此前几个月，该机构没有录得净流入的数据。

国际游资U形回归

变化来得太快，事实上从6月份开始人们还正在对游资撤出表示担心。

依 据中国的统计数据，外汇储备减去外商直接投资与贸易顺差之和的不可解释部分，在许多情况下被认为是国外游资。据wind统计今年6月份数据，这部分不可解 释部分自汇改以来，首次录得负值，为-187亿美元。而后，在7、8两个月中，保持在低位运行，分别为27亿美元、32亿美元。9月份，再次表现出较大规 模外资流出迹象，当月不可解释部分骤降至-145.7亿美元。10月份外汇储备数据尚未公布，但也有其他数据显示，10月份外资仍在撤出。

美林的资金流向监测报告显示，11月13日到19日7天内，流入中国的热钱呈现了净流入，但在此前8周(时间主体在9、10月份中)，都是净流出。

汤 森路透向记者提供的QFII A股基金报告显示，10月份QFII在A股的资产规模初值较9月修正后终值72.48 亿美元大幅减少15.01%至61.60亿美元。在所有可得7只已公布资产数据的QFII的A股基金当中，全数QFII的A 股基金资产规模均呈大幅缩减态势，而且平均减幅均高达20%以上；进一步分析其份额增减状况，多数QFII的A股基金亦悉数呈净赎回格局，幅度则在 2%~10%间。

然而，11月开始，境外游资回流，整个过程形成U形之势。

除了花旗和EPFR Global提供的数据，从股市的盘面亦可见，11月份海外资金对流动性好的股票类资产重拾兴趣。11月份，国内机构对市场仍维持谨慎。基金从上海A股中 净流出资金量仍为负值。但一些QFII机构则大量吸货。Topview数据显示，手握瑞银8亿美元QFII额度的瑞银证券营业部11月份净买入23.86 亿元，成为当月下手最狠的营业部，排名资金净流入交易席位头名。

江南证券研究所副所长魏凤春表示，实际上，同过去两年中国资产价格整体上涨不同，眼下从期货到艺术品、从楼市到利息都成下跌态势，唯有中国股市在11月份走出了上涨行情，因此海外游资投资中国股市的可能性较大，当然也不排除债市。

搏击短期还是长期看好

实际上，从时机来看，海外游资重回中国是多方因素综合而成的必然。首先是中国政府刺激经济的政策。

EPFR Global的全球经济分析员Cameron Brandt就认为，资金重回中国是由于中国政府一系列财政刺激政策所引发的。从数据来看，在中国政府11月6日宣布4万亿元经济刺激计划后，外资开始流入。

另 一因素是，国际金融体系趋于稳定，“救驾”资金腾出手来。宏源证券首席经济学家房四海认为，现在已经进入了“去杠杆化”的尾声，表现是美元、欧元稳住了。 在“去杠杆化”前期，世界资金将美国作为避风港，美元迅速升值。美元指数从71最高攀至88.46。但11月21日之后，便开始下跌，至12月8日，下跌 2.58%。与此同时，欧美金融机构性命暂保，海外资金有强烈的觅食冲动。认为，相比世界其他国家，中国仍是最理想的投资目的地。

眼下发达经济体陷入衰退，但在新兴市场中，房四海比较包括外汇储备等14大项的经济指标，中国全部胜出。EPFR Global数据显示，过去四周中，国际资金仍然净流出其他新兴市场国家。

最 后，外资判断人民币仍将升值。尽管12月4日人民币大幅贬值让四方惊呼中国要发动货币战争,但野村证券孙明春给记者的报告认为，人民币仍将升值。他有三个 主要的理由。第一，尽管中国的出口增长正显著受到削弱，但鉴于外国需求暴跌以及一半左右的中国出口都是进口加工装配贸易的事实(抵消了汇率受益)，因此政 策转向人民币对美元贬值不可能起到太多缓解作用。更为根本的是，这与全球重新平衡相悖：中国依然拥有庞大的经常项目和国际收支顺差。预期2009年的经常 项目顺差将达到3900亿美元(相当于GDP的7.0%)。第二，人民币对美元贬值可能会引发中国的贸易伙伴极度负面的反应，从而导致对中国的贸易保护主 义抬头。第三，这有可能会鼓励国内资本的外逃以及延迟外商直接投资的流入，在投资者信心消减之际会推迟国内投资和经济增长的复苏。孙明春认为，2009年 底人民币对美元汇率将会升值到6.55。

摩根大通龚方雄也在接受媒体采访时表示，人民币贬值将引发亚洲其它货币的竞争性贬值，对中国的出口业并没有什么帮助。他并预期,人民币兑美元未来三个月内汇率将在6.8-7.0元的区间内波动，而3-12个月则将会升值约3%。

12月9日，A股走出四根阳线后掉头向下。令人感到不安的是，一些大行在前期摇旗呐喊为股市升温造势后，近期再度表现出担忧。

瑞银12月5日的报告认为，这轮反弹是由利好政策预期推动的反弹。而这种强劲的回升或许终止于中央经济工作会议之后。

或许这只是部分外资的观点。因为在吸引外资进入的三个因素中，至少有两个都是较长期的。

Shell China

11月24日，中国石油天然气集团公司(下简称“中石油”)与壳牌集团签署了一份液化天然气(LNG)长期供应协议，壳牌将在未来20年内每年向中石油提供200万吨LNG，气源将来自西澳大利亚高更项目及壳牌LNG全球供应组合。

“这份协议的数量比去年签署框架协议时确定的供应量翻了一番，壳牌将从其LNG全球供应组合中补充给中国。”一位壳牌中国总部的官员透露。

2007年9月，双方签署框架协议，壳牌承诺将把它在西澳大利亚高更项目下的份额资源出售给中石油，以满足中国的需求。

位于澳大利亚西北海上的高更项目，拥有澳大利亚已探明天然气储量和潜在天然气储量的四分之一。该项目共有三方股东，雪佛龙公司持股50%，壳牌和埃克森美孚各持股25％。

目前中国已公布的在建和待建LNG项目多达近20个，其中已获国家发改委批准的几个，因气源无法确定而不得不暂缓建设。中石油能够从壳牌手中获得更多气源，无疑对巩固其国内天然气市场领导地位具有一定意义。

据悉，中石油已规划在国内多个沿海城市建设LNG项目，其中包括辽宁大连、江苏及广西各一城市等，此次采购主要用于其在大连的LNG项目。

对于此次合约中达成的价格，中石油及壳牌方面都不愿透露，但2007年签署框架协议时，曾有外电报道称大约为10美元/百万英热单位。

Timothy F. Geithner

这个“神童”将改写历史吗？

盖特纳棕色卷发下这张年轻的娃娃脸，看起来只有30来岁，以致布什总统在不久前的一次白宫会议上看到他时，不禁扭头问助手：“是谁把这个实习生带了进来？”

现在，布什大概不会再说什么了，因为“实习生”很快就要执掌这个超级大国的财政大权。

11月24日，候任美国总统奥巴马将正式提名现年47岁的纽约联储主席盖特纳(Timothy F. Geithner )为联邦政府财政部长。这将是美国历史上最年轻的财政部长、也是少数没有博士学位的财政部长之一。

消息传出的21日下午3点，原本已经下跌1.3%的道琼斯工业指数狂欢式地以暴涨6.54%收盘。人们相信，那位年轻的、有海外经历的新总统将会和这位同样年轻的、有海外经历的新财长一道，带领国家走出由金融资本主义制造的灾难。

盖特纳早在5年前开始警告金融系统存在不稳定因素。自2003年就任纽约联储主席以来，他将大部分时间用在研究和预警金融系统的脆弱性上。

“我们面对的挑战，是如何平衡效率和弹性、平衡创新和稳定。”7月份的一天，盖特纳伏案于众议院金融服务委员会听证会的证人席，低着头，眼睛上翻对着议员们说。他习惯于用纽约人的快语速说话，偶尔，他会以一个粗话词汇强调自己的观点。

童年在亚洲

“美国的(救市)措施没有世界主要金融中心的配合不可能成功。”7月份，当谁也不会想到雷曼兄弟即将倒闭时，盖特纳就向众议员们建言说。他同时列举了多个国际金融机构，包括金融服务论坛，这个在当时鲜为人知的国际合作框架机构。

他的预言应验了，4个月后，首届20国集团领导人峰会在华盛顿召开，金融服务论坛主席也出席了会议。

盖特纳丰富的国际经验与他早年的成长史密不可分。

和 同在1961年出生的奥巴马一样，盖特纳也有过在亚洲生活的经历。 “盖特纳的父亲担任福特基金会驻中国首席代表时，曾经在北京的国贸大厦工作过一年多。”哥伦比亚大学国际公共事务学院前副院长罗宾·路易斯告诉本报记者， 由于父亲是福特汽车的驻外代表，盖特纳得以在印度、泰国和中国度过他的童年和少年。

他在曼谷的泰国国际学校读完高中后，带着对亚洲的感情回到美国，选择到东部名校达特茅斯大学攻读本科，专业是政府和亚洲研究。在这期间盖特纳学习了中文和日文。他还曾经是北京大学的留学生。

随后盖特纳来到华盛顿的约翰霍普金斯大学国际关系学院深造。这里是为美国国务院培养外交人才的摇篮。毕业3年后，盖特纳进入财政部做一名普通员工，负责国际事务。此后在财政部一干就是14年。

最早注意到这个年轻人的，是如今成为奥巴马政府国家经济委员会主席的萨默斯，他当年出任克林顿政府财政部长时，使盖特纳得到越级提拔。

“盖特纳十分聪明，又善于说服别人，这与萨默斯的咄咄逼人形成鲜明对比。”11月23日，他在财政部的一位同事对本报记者说，从那以后他提升得很快，到2002年，盖特纳已经是负责国际事务的财政部助理部长。

今 天看来，盖特纳在财政部的14年里最重要的资历是经历了几次国际金融危机，包括1995年墨西哥的比索危机、1997年席卷印尼、韩国和泰国的亚洲金融风 暴，以及2002年巴西的金融危机。他参与了这几场危机的救援计划制订，包括在1997年底力排众议说服白宫必须救援韩国。这些都为他日后处理美国自20 世纪30年代以来最严重的经济危机提供了经验。

2002年起，随着民主党告别白宫，盖特纳离开财政部，被安排到IMF的政策评估部门。他在那里待了不长的时间，便于2003年出任美联储纽约主席。

闯进白宫的“实习生”

盖特纳履新纽约联储后不久，就开始严辞批评金融系统风险过大，并呼吁改革美国金融体系。“金融创新已经超过了金融体系承载的极限。刹车变成了加速器。”他忧心忡忡地说。

他的警告没能阻止危机的爆发。随着华尔街乱世的来临，盖特纳的脱颖而出，成为白宫救市“铁三角”中的一员。

“铁三角”由美联储主席伯南克、盖特纳和他的达特茅斯大学校友、现任财长保尔森组成。在9月份华尔街最紧张的四周里做出多项重大决策，包括放弃雷曼兄弟，担保AIG，这些决策既没有通过国会，也没有通过总统。

盖特纳是“铁三角”中唯一的陌生脸孔。直到9月份时，在金融界以外还没有人知道他是谁。但他在为AIG筹资方面发挥了重要作用。他设计了给AIG的850亿美元贷款，并在后来将该款项追加至1520亿美元。

此前，今年3月时，他主刀操办了贝尔斯登的破产。在次贷危机看起来还远没有今天这样严重时，他坚定地为这笔交易提供紧急融资，并安排了300亿美元的信贷支持，保证了贝尔斯登被成功消化吸收。

纽约特殊的金融地位是盖特纳跻身“铁三角”的重要原因。美联储为应付金融危机而开发的5项临时工具中，有些是专供纽约联储使用，比如允许纽约联储的主要会员用其他债券换国债。因此从去年次按危机发生的第一天起，盖特纳就与伯南克、保尔森站在一条战壕里。

由于在“铁三角”中的地位，盖特纳标志着一种政策的连续性，表明新政府对金融危机的政策将不会发生重大的摇摆。盖特纳将继续使用7000亿救助资金中的剩余部分，并推进第二套经济刺激法案出台。

“选择盖特纳的好处是他有处理问题的经验，参与了这次处理过程，上任后不用从头开始熟悉 。但是不利方面是他不一定能给市场带来新的办法。”哥伦比亚大学商学院教授魏尚进说。

危机中的长短臂

盖特纳的性情看上去与奥巴马有些相似：年轻，青睐改革，善于团队协作。他怀疑意识形态、质疑被普遍承认的智慧，喜欢观点上的竞争，对这个世界的诸多不确定性充满了敏感。

成功的财政部长不仅需要得到总统支持，还必须得到国会信任。盖特纳的任命首先要获得国会通过。此后，还要考验他向国会“推销”政策的能力。比如，向国会解释出台第二套经济刺激法案的必要性。

在纽约联储工作期间，盖特纳因为定期述职的关系而与国会有所接触。“应该说他熟悉国会运作。”魏尚进说，当然更重要的或许是，下届国会将由民主党控制，这减少了盖特纳说服国会的阻力。

不 过，财政部的工作也与美联储毕竟不同。盖特纳不是经济学家出身，对税收和财政的立场不甚清晰。外界只能从他的早期发言中些许体会到他支持用税收政策缩小贫 富差距和减少财政赤字的想法。未来，当奥巴马政府遇到医疗改革、财政政策、税收等方面的问题时，他将没有专业知识背景来应对。

他将要加入的新总统的财经团队，是一支由包括他的老上司萨默斯在内的多名重量级经济学家组成的队伍。如何与这支队伍磨合是他面临的一大挑战。

但盖特纳的长处是学习很快，当初刚到纽约联储的一年内，他就可以与专业的经济学家辩论货币政策的复杂性。

因 此，市场仍然相信盖特纳的当选将给华尔街带来好运。面对更多的呼救声，他将决定是否需要向7000亿美元的救助计划中追加投资——比如像有人建议的那样加 到1.2万亿美元，将决定满足什么样的要求公司才能得到救助，是不是要拯救、怎样拯救失血过多的汽车业，怎样处理“两房”的烂摊子，怎样与各国的财经部门 携手合作，以及怎样处理未来经济恢复中出现的其他问题。

China fund in talks to acquire AIG's Alico

AIG (AIG:

American International Group, Inc

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4:03pm 11/20/2008
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AIG 1.44, -0.12, -7.7%) is holding preferential talks with the CIC-led consortium, which also includes Chinese insurance companies, with the end of the year as their set deadline, Japanese business daily Nikkei said on its Web site in a report dated Friday.

If the parties are unable to agree on details, the negotiations could end without a deal, Nikkei said, citing sources familiar with the matter.

Alico has operations in more than 55 countries. Citing Alico's future growth potential, AIG is said to be considering a sale on the condition that it will keep more than 50% of voting rights in the firm, thereby allowing it to maintain management control, the report said.

Based on Alico's business value, the acquisition of a 49% stake by the Chinese investors would likely cost the Chinese camp around 500 billion yen ($5.1 billion) to 1 trillion yen.

Alico Japan, a branch of U.S. firm Alico, accounts for 60 to 70% of the company's entire insurance premium revenue. If the CIC consortium invests in Alico, this will give China an effective entry into the Japanese insurance market. Alico Japan's insurance policies are expected to be maintained in principle even in the event of an acquisition of shares by the Chinese investors, the Nikkei report said.

AIG said in October it would sell Japanese subsidiaries AIG Edison Life Insurance Co. and AIG Star Life Insurance Co. along with Alico Japan.

Initially, the sale of the three firms had been expected to spark an intense bidding war among domestic and overseas insurance companies. But major Japanese insurers expressed caution about acquiring the units, because plunging Japanese share prices have hurt their own financial situations.

大小非III

通过数据分析发现，未来两年，大小非的阴霾将持续笼罩A股市场，2010年，大小非解禁将达到最高峰，对未来两年的市场资金形成巨大的考验。

统 计数据显示，截至08年3月31日，两市预计共有流通市值为75565.74亿元，而如果按照现在的价格水平，到08年年底，两市总流通市值将增长至 93149.81亿元；到09年年底，总流通市值为155370.68亿元，增长61570.79亿元，增幅达到66.10%；到2010年，总流通市值 为222854.94亿元，增长67232.66亿元，增幅为43.27%。2010年的市场总流通市值同比现在的流通市值增长194.9%，相当于在现 在市场上再增加近2个市场的流通值。

“截至今年2月，中国城乡居民的储蓄存款余额为18万亿元，就是这些储蓄存款全部进了股市，也无法接住这些巨量的大小非。”认为股市进入了长期熊市的市场人士韩志国说。

http://roll.jrj.com.cn/news/2008-04-07/000003496065.html

2007-09解禁高峰统计

http://www.zqxuexi.com/zqzx/2008/0403/article_81.html

2008解禁分析

http://www.zqxuexi.com/zqzx/2008/0401/article_66.html

中金在线解禁专题

http://special.cnfol.com/2670,00.shtml

大小非II

中国南车A股申购冻结资金高达2.27万亿元，8月18日登陆上交所，上市当天的最高价为4元，涨幅为83％，全天收盘价3.45元，涨幅为58％。而同一天，沪深股市分别暴跌了5.34％和4.86％，两市跌停的股票高达500只。

　　“流通股占比越小，股价越容易呈现出强势特征，越容易被操纵，而通过推高流通股股价，就能为解禁股换取一个更高价位套现的平台。”时寒冰指出，较小流通盘为股价炒作创造了客观条件。

　　中国南车总股本达到116亿，但流通A股只有24亿股。最新在中小板上市的美邦服饰（002269行情,爱股,资讯），其总股本为6.7亿股，流通股仅5600万股，所占总股本比例仅为8.36％。

　　同样，由于流通股占比少，供求关系失衡也推高了市盈率。美邦服饰发行价格为19．76元／股，此价格对应的市盈率为22．74倍，而中国南车的发行市盈率为18.59倍。

　　“提高流通股比例，降低上市公司的发行价，保证我国股市的市盈率从新股发行的时候开始就同国际股市接轨，而不是通过暴跌让广大投资者付出巨大代价后强行同国际股市接轨。”皮海洲说。

大小非

　　中国证监会2005年9月4日颁布的“上市公司股权分置改革管理办法”规定，改革后公司原非流通股股份的出售，自改革方案实施之日起，在十二个月内不得上市交易或者转让；持有上市公司股份总数百分之五以上的原非流通股股东，在前项规定期满后，通过证券交易所挂牌交易出售原非流通股股份，出售数量占该公司股份总数的比例在十二个月内不得超过百分之五，在二十四个月内不得超过百分之十。这意味着持股在5%以下的非流通股份在股改方案实施后12个月即可上市流通，因此，“小非”是指持股量在5%以下的非流通股东所持股份，这就是“小非”的由来。与“小非”相对应，“大非”则是指持股量5%以上非流通股东所持股份

http://www.csrc.gov.cn/n575458/n4001948/n4002120/4069846.html

http://www.csrc.gov.cn/n575458/n4001948/n4002030/10257495.html

http://www.csrc.gov.cn/n575458/n4001948/n4002030/10950682.html

有数据显示，2009年全年涉及限售股解禁的上市公司共有1138家，合计解禁股数为6850.94亿股，占A股总股本的37.81%，合计解禁额 度为34587.11亿元，占A股总市值的27.16%。2009年将成为限售股解禁股数最多的一年，占到今年年底无限售条件A股的105.70%，也就 是说，即便没有新股IPO，明年的流通股也将一变二。

　　新股发行制度受到拷问 现行新股发行制度存在着许多缺陷，比如同一公司境内外发行价不同、比如高市盈率发行，特别是新增大小限源源不断。为此，市场期待新股发行制度改革的呼声越来越高。

　　据WIND统计数据显示，新老划断前，股改所产生的大小非解禁股总数为4356亿股，解禁市值为4.43万亿元。而新老划断之后，截至2008 年10月，深市中小板上市了220只新股，沪市上市了40余只大盘股，首发限售股总数高达7963.27亿股，解禁市值6.35万亿元。例如中国南车，虽 然近3天连连大涨，但是6亿股限售股于昨日获得上市流通权，就按昨日4.65元的收盘价，以2.18元价格参与中国南车首发的机构投资者，目前的收益率已 超过一倍。

　　与股改限售股是固定的存量相比，首发限售股会随着今后新股的不断发行，越滚越大，是一个无法计算的变量，这样的增量比存量更加厉害。

年初至今，指数跌去68%，市场普遍认为，06年股改“大小非”解禁抛售是二级市场下跌的最大祸首，市场尤为担忧的是，06年新股发行量庞大，其发行后形成新的限售股（新“大小非”）解禁压力，时下孱弱的沪深市场能否承受其重？本周我们专题研究了新老“大小非”潜在扩容对市场的压力。

　　新老“大小非”09、10年解禁高峰来临，年解禁市值过万亿

　　统计数据显 示，新、老“大小非”各自锁定期限不一，解禁时间集中在2009和2010年，如按照10月9日收盘价作为市值统计基期计算，解禁市值分别达到3.6万亿 和3.8万亿，潜在扩容速度超过07、08年70%以上。解禁市值按照新老“大小非”划分，新股发行产生的新“大小非”在两个明显的解禁高峰中市值分别占 了63%和97%。初步统计数据显示，新“大小非”接棒股改老“大小非”成为市场最主要的压力。

　　新“大小非”占比最大的“原股东配售”实际解禁市值月均不到130亿

　 　新“大小非”中占主要比例是“原股东配售股”，经调整出第一大股东为央企性质部分后，实际解禁市值大幅下降，2009年从1.90557万亿骤然下降到 只有682.33亿；2010年从调整前的2.49万亿下降到1566亿。上述两年的解禁高峰期月均解禁市值不到130亿，略等于每月发行一大蓝筹股。

　　新老“大小非”解禁高峰特点

　　采用调整后新“大小非”数据，考察2012年前三年限售股解禁特点：

　　1、股改老“大小非”仍是潜在的扩容大军，过去的07、08年月度平均解禁市值占比是82%、53%，未来09-11年分别是92%、59%和55%；解禁市值最高峰是即将来临的2009年，是07、08年的1.7倍以上。

　　2、新“大小非”2009到2011年解禁市值年度分别为954亿、1566亿和738亿，实际的新老划断“大小非”并不构成一级市场大的扩容压力。

　　因此，大宗交易、发行可交换债等限售股流动管理制度应在2009年发挥更大的作用，而19日证监会正式公告的两个制度《上市公司股东发行可交换公司债券试行规定》、《证券发行上市保荐业务管理办法》，强化了制度的可操作性。

市首日流通股比例太低 IPO新增大小非源源不断 新股发行制度亟待改进

　　现行新股发行制度缺陷颇多，诸如低价折股高价发行、高市盈率发行和高价上市、同一公司境内外发行价不同、上市首日流通比例太低、新增大小非源源不断……当前深沪股市不断创出新低之际，市场呼唤新股发行制度改革的呼声越来越高。

　　上市首日流通股比例太低

　　新股上市有一定溢价是完全正常的，但由于新股上市首日流通股占比太低，导致新股上市首日普遍涨幅过大，给二级市场投资者带来巨大风险。

　　据统计，2006年“新老划断”IPO以来，两市共有第263只新股上市。A股市场虽然已经“新老划断”了，但是新股并未“全流通”，而是继续制造着更多的“大小非”。

　　新股首发上市股份小到什么程度？据初步统计，在这263只全流通新股中，上市首日流通A股占全部A股的比重最低仅1.85%，这只股票就是中国石油(601857,股吧)。此外，中国银行(601988,股吧)、工商银行(601398,股吧)的上市首日流通率也仅有1.94%、2.73%，除了这些“大家伙”，还有太平洋(601099,股吧)2.79%、金风科技(002202,股吧)8%、滨江集团(002244,股吧)9.23%、露天煤业(002128,股吧)9.54%这些中小市值股。263只新股上市首日流通率平均值约20%。但到昨日止，这一数值已提升至32%以上，相当于又有60%左右新增大小非“隐性”上市。

　　经济学家华生指出，现在A股市场最大的风险就是头重脚轻。很多大蓝筹公司上市时的流通股比例只有2%～3%，如此创造出来的市值是不可能持续的，解决大蓝筹的流通比例过低问题十分迫切。

　　有分析人士认为，“新老划断”意味着进入全流通时代，管理层就没必要厚此薄彼“保护”一级市场，就应该让新股发行市场化，就应该让新股上市全流通。新股上市定价高、投机性强、“大小非”无休止产生、行业并购无法开展等问题就会迎刃而解，投资者如果不是以质论价、胡乱追捧，就会产生重大投资亏损，投机力量就会受到原始股东的强有力制衡。

　　IPO新增大小非源源不断

　　目前深沪股市累计最大跌幅超过60%，大小非解禁无疑是当前股市暴跌的主因。据统计，目前A股市场股改大小非约4572亿股，而新股上市带来的新增大小非则高达1.1万亿股。源源不断的新增大小非成了压垮市场的最后一根稻草。

　　有分析人士指出，就从新股发行带来庞大新增大小非看，改革现行新股发行制度也势在必行。

　　资历深分析人士皮海洲认为，新股发行带来的新增大小非，是一个无法计算的变量，因为以后还会源源不断地增加。所以说，相比股改带来的有限大小非数量，新股上市新增的大小非数量才更加可怕。

3 Secrets Of Successful Companies

Some companies are just better than others. It could be name recognition, innovation, market share or any number of other attributes that makes a good company stand out from the herd. The important thing for an investor is being able to spot the eventual winners before they become household names.

In this article we'll take a look at three key attributes that make a company successful. Learn to spot them early, and you could find ride the coattails to success too.

Three Secrets of Success
So, what is it about one company that makes it a good company, and does that description equate to a good stock to invest in? The answer depends on whether you ask an accountant, an economist, a marketer or a human resources expert, but by pulling all of those disciplines together, you generally can define a good company by these three characteristics:

1. Competitive advantage
2. Above-average management
3. Market leadership

Competitive Advantage
Michael Porter pioneered the concept of competitive advantage and broke it down into two forms: differentiation advantage and cost advantage. Differentiation advantage is when a company provides a superior service or product for the same price charged by the market. Cost advantage is when a company provides the same service or product as the market, but at a lower price. Porter collectively refers to these as "positional advantages" because they define the firm's position as having the leading service or product in its specific industry. He also states that these advantages cannot be sustained for any length of time because the promise of economic rents invites competition.

• Barriers to entry
  Good companies can also maintain their high status if there are significantly high barriers to entry into their fields. This can include large fixed costs, such as those associated with heavy manufacturing, or long-term research and development costs, like those found in the pharmaceutical or computer software development industries. All of these entry costs can deter competition from entering the market, thus helping the company sustain its leading status. (To learn more about these barriers, check out Economic Moats Keep Competitors At Bay.)
  
  
• Name Recognition
  We tend to take the value of name recognition for granted when looking at a company's status. Brand names like Kleenex and Coke have become synonymous with their products. The problem with name recognition is placing a value on that name, and there is no easy way to do that. A name only has qualitative value, but it can provide a long-term relationship between a company’s products or services and its customers. While it can be debated whether this trait alone makes a company good, when combined with the other characteristics it can be a powerful source of success.
  
  
• Price Leadership
  There is nothing more powerful than providing comparable services or products to the market for a lower price. In any economic environment, boom or bust, there will always be a demand for low-priced services and products. Being able to come to the marketplace with consistently lower prices across the board can fill a niche in the market that can attract customers for a long period of time. The key in price leadership is being able to sustain that level and fend off others who try to compete in that space. (For greater detail, check out Competitive Advantage Counts.)

Above-Average Management
The quality of its management is a big factor in whether a company is successful, and an important attribute in any management team is a blend of experience. Experienced managers can not only lead a company through market cycles, but they can also provide mentorship for the next generation of managers.

Another telling attribute is when management tends to stay at a company for a long period of time. Talented managers can be swayed to move from company to company with handsome compensation packages, but tend to stay at companies where they like to work and they believe in their company's future successes. (Learn how to investigate the management behind the numbers in Evaluating A Company's Management and Is Your CEO Street Savvy?)

Market Leadership
One of the most important characteristics in becoming a good company is market leadership. Leadership can come in many forms, but the reputation that comes along with this tag is priceless. The label of "industry standard" is one that every company strives for. Examples include leading the market in quality, innovation, customer service or even warranties.

Market leadership is probably the hardest status to maintain. No competitor is content being No.2 in the industry. This is where barriers to entry come into play. If the company you are watching competes in an industry with high barriers to entry, it's much more likely that its market dominance can continue. Companies can also move toward market leadership by buying and merging with other successful companies to improve their market share, vertical and horizontal integration, and technological bases. (For more on this topic, read Which Is Better: Dominance Or Innovation?)

Conclusion
So what is it about one company that makes it a good company, and does that good rating equate to a good stock to invest in? If the company has a competitive advantage, above-average management and market leadership, you are looking at a potentially strong investment. While these traits alone don't necessarily tell the whole story, they are important factors in evaluating whether a company might be recognized by investors globally as a good investment.

the challenges facing Obama

21世纪网讯 美国媒体认为，新总统上任伊始将面临三大经济难题，即挽救美国经济、重建遭受重创的金融系统、明确贸易政策。

《华尔街日报》说，经济下滑是头号挑战。国际货币基金组织前首席经济学家肯尼思·罗格夫说：“美国处在深刻的衰退阴影中，新总统就任后，形势将跟现在一样糟糕，甚至更糟。”

尽管大多数经济学家不认为大萧条会重演，但美国经济出现衰退几乎已是不可避免，并且衰退程度可能是上世纪80年代以来最严重的。美国经济界和政界普遍希望下届总统能迅速表明态度，在明年1月20日正式入主白宫前拿出经拯救经济的方案。

美国参议院银行委员会主席、民主党人克里斯托弗·多德说，新当选总统应在几天内就开始挑选关键的财政部长一职，同时组建经济政策团队。

新 总统的第二个挑战是理顺政府与市场的关系。在上一届政府大举介入金融机构及其他民间资本领域后，新政府需要平衡市场与政府的关系。麦凯恩阵营攻击奥巴马是 “社会主义者”，显然是要唤起以大企业、金融资本为代表的市场力量对奥巴马的戒心。新政府介入市场的力度以及拿捏水准，将决定美国金融系统究竟是浴火重生 还是一蹶不振。

第三个挑战是贸易政策。相比麦凯恩，奥巴马在贸易问题上带有更多“保护主义”色彩，倾向于重新审视与别国的贸易协议。奥巴马上台后，美国与其他国家的贸易摩擦可能增多。

英国巴克莱资本公司分析师罗德里戈·吉马朗伊什认为，短期看奥巴马的胜利连同民主党在国会的强势，将使新政府更主动地应对金融危机；但从长期看，奥巴马执掌白宫可能倾向于扩张性财政政策和贸易保护主义。

中国今年煤炭消费或同比增5%

21世纪网讯 中国国家发展和改革委员会经济运行调节司煤炭处处长贾复生于11月4日预计，今年全国煤炭消费量将达27.4亿吨左右，同比增长4.5%。增幅较去年回落五个百分点，他并建议应尽快理顺煤电价格关系，坚持市场化改革方向。

贾复生在中国煤炭市场高峰论坛上称，今年煤炭消费量同比增幅放缓的原因是主要耗煤产业增速减慢，预计今後煤炭需求将继续保持增长减缓的基本态势。

他同时表示，随着能源供需形势整体缓解，要继续坚持市场化改革方向，调整目前的电煤价格政策，同时调整电价，推进电价形成机制改革。

贾复生并建议，应进一步完善和严格执行煤炭产业政策和标准，提高准入门槛，严防低水平重复建设，以保持供需总量的基本平衡。

发改委经济运行调节司相关负责人稍早亦表示，随着能源供需形势整体缓解，应尽快理顺煤电价格关系。预计今後几个月，中国煤炭市场总体上仍将向宽松方向发展，动力煤有望维持总体基本平衡并随季节变化而有所波动，冶金煤面临着进一步下行的压力。

美联储导演的流动性假象：美元Libor创97年新低

美联储大力度、全方位提供流动性的努力至少在伦敦银行间拆借市场上有了成效。

到11月3日，美元Libor(伦敦银行同业拆放利率)各期限品种的下跌趋势已持续两周，三个月Libor比10月8日的最高点5.39%下降了2.5个百分点，而隔夜Libor更是创出97年以来的最低水平，至0.39%。

但尽管银行间市场对交易对手有了信心，市场人士仍表示，流动性的恢复并不像Libor表现得那样快，对经济衰退的担忧开始让银行不愿意对企业进行借贷。

第三轮美元流动性服务启动

在向银行开放各种窗口以及向欧洲各央行提供贷款后，美联储开始第三轮的美元流动性服务，向新兴世界国家提供流动性。11月4日，巴西、墨西哥、韩国和新加坡各获得300亿美元流动性。

“如果这些措施能够覆盖到各个主要国家，新兴市场国家紧缺美元的情况也会缓解，美元的借贷需求就暂时不会那么大。”中信银行市场分析部喻璠表示。

一家欧洲银行的资金部人士表示，联邦基准利率和Libor关系密切，一般隔夜Libor和基准利率的利差在20个基点左右。但金融海啸使银行间的信誉毁损，市场就把Libor价格拉得很高。

9月15日雷曼兄弟破产后，Libor的价格开始从4.96%的水平上节节攀升，10月8日达到了5.39%的价格。

“但即使以这个价格，银行也无法拆借到现金，而只能向美联储提供的短期标售等工具拍卖得到现金。”喻璠表示，由于担心其他银行破产，让银行在拍卖得到现金后囤在内部而不愿借贷。

而随着美联储通过短期标售、一级交易商信用工具(PDCF)、货币互换、商业票据融资、资产支持商业票据等手段，不顾一切注入流动性，各主要央行对困难银行实行部分国有化，市场信心逐渐恢复，Libor和美联储基准利率的价差缩小很多。

正如美联储在10月29日决定降息到1%后的表态，“这次降息和其他央行联合行动，将帮助信贷市场的恢复。”而德国一家银行的货币交易员则表示，美联储的降息对此有帮助，但更重要的是近段时间没有再传出其他银行陷入危机的消息。

流动性并未完全恢复

“ 但这两个礼拜Libor的变化，并不是说明市场的流动资金充足。”上述欧洲银行资金部人士表示。喻璠也认为，尽管三个月Libor已接近雷曼破产前的水 平，不过Libor价格本身不代表流动性，“市场的流动性确实在慢慢恢复，但没有Libor表现得那样快，代表流动性指标的三个月Libor和OIS(隔 夜指数掉期)利差的缩小程度则要缓慢得多。”

10月10日，Libor和反映市场降息预期的OIS利差曾达到364点的最高点位，目前则下降到在225点左右，但仍高于9月15日雷曼破产前后100点的水平。而在截至2007年7月31日的一年中，该利差平均值仅为8个基点。

在市场人士看来，这轮Libor的快速下降主要是持续的降息以及未来降息预期引起。伦敦拆借的价格在正常情况下只高于美联储基准利率15个基点，如果市场降息预期很强烈的状况下，短期内还可能低于Libor。3日OIS显示只有0.6%，意味着还会降息近50个基点。

上述资金部人士表示，Libor只是多家银行报价的平均值，很多银行在此次金融危机后评价被降低，这意味着如大摩这样的金融机构必须在Libor水平上加更多的点才能借到钱。

目前市场更严重的问题是，银行出于对经济衰退的担忧，开始不愿意向企业借贷。

企业的借贷成本已经大幅提升。以GE等高评级的企业为例，尽管过去其资金成本很低，一般发债的价格仅比同期美国国债高出二三十个基点，但现在其债券和国债的价格差已和商业银行一样高。

美联储11月3日公布的一项调查显示，各大银行负责信贷的主管都表示前三个月对企业的信贷处于紧缩状态。

喻璠认为，此后流动性会继续慢慢恢复，但三个月Libor可能到2%左右就会停滞直到再次降息。“整个市场流动性、借贷意愿的恢复可能是比较长期的过程，金融危机最坏时候已过去，但经济衰退刚刚开始。银行间的借贷意愿在几年之内再也回不到之前信贷非常宽松的状态了。”

The new capital raising move of Barclays and the rate cut of Japan Central Bank

Earlier this month, Barclays said it wanted to raise capital but would raise it privately rather than take UK government cash, as rivals Royal Bank of Scotland, Lloyds and HBOS are.

"There has been a significant shift in the availability of capital and economic power in the world over the last five years and we're ensuring we're aligned with those changes," said John Varley, Barclays' chief executive.

The Bank of Japan's move followed a rate cut from the U.S. Federal Reserve earlier in the week and likely presaged the same from the European Central Bank and Bank of England next week.

The Bank of Japan cut its benchmark overnight call rate to 0.30 percent from 0.50 percent, a slightly smaller reduction that the quarter point many had expected.

Inflation in the euro zone fell to 3.2 percent year-on-year in October, the European Union's statistics office said, data likely to ease any concerns at the ECB about rising prices.

Five Stocks to Buy When Cash Is King

We devised a simple screen to root out these firms:

1. Morningstar Rating of 5 stars
2. Debt/Total Capitalization ratio of less than 10% in the most recent year

We think these criteria are self-explanatory. However, in this environment, this screen may uncover a large number of candidates (56 as of Oct. 1, 2008). The art is in deciding which companies to research further. It's difficult to quantitatively screen for these other characteristics, but we'll do our best to outline a few ways in this article. It may require a little work, but the signs are easy to follow, even for relatively inexperienced investors.

For example, it's helpful if the company has a large healthy net cash balance. In today's world, the definition of cash can be hazy. Earlier this year, due to turmoil in the municipal and auction-rate securities markets, many companies took surprise losses on these supposedly solid cash-equivalent instruments. An investor would do well to scrutinize the balance sheet and footnotes carefully, making sure there are no similar land mines.

Furthermore, it's a positive sign if the company is the most powerful player in its industry. There are many easily discernable signposts here. Our premium members can gain access to a list of a firm's competitors in our Analyst Reports. This will shed light on several questions: Does the firm consistently earn superior margins and returns on assets or equity versus its competitors'? Or even better, does the firm have the most competitive advantages in its industry? Having a moat is important--it increases the chance that the company's rivals will be more distressed, thereby opening windows of opportunity.

Last, the company may have a history of taking advantage of downturns. Many giants today took advantage of recessions to snap up assets on the cheap. It may be helpful to look back on how the firm behaved during the last business cycle. Take note if it bought rivals, invested in production capacity when costs were low, or bought back significant chunks of stock cheaply, allowing earnings to multiply when the tide turned.

Counter Intuitive Trading ideas

One of the most important: When it comes to investing, "risk" is not what you think it is. Wall Street doesn't tell you this, but the investments you are told are "safe" may turn out very risky indeed, and the investments you are told are risky may actually turn out not to be.
An example? If I asked you to name areas of the US market that have actually risen during the crises of the past three months, here's two that most people wouldn't pick: Homebuilders, and regional banks.

No kidding. Out in the real world, these two industries are right in the path of the economic hurricane. But on the stock market, you'd think it was all sunshine and pina coladas.
The Dow Jones Home Construction iShare, an exchange-traded fund that tracks homebuilding stocks like Pulte Homes, Toll Brothers, and Lennar, actually rose 26% in the third quarter.
And KBW's Regional Bank exchange-traded fund, which tracks that shell-shocked sector, has soared 34%.

What's the reason for this bizarre paradox? Easy. Shares in both these sectors had already collapsed. Everyone had sold out in panic. So because the market thought these sectors were too "risky," they no longer were.

When itcomes to investing, risk is a function of price.

By the end of June, homebuilding stocks were down about 75% from their all-time peak. They were in the final leftover bin, in the lowest level of the bargain basement. History says an industry that isn't going to vanish completely is usually a good investment at these levels.

It's a similar story with the regional banks. At their July lows they were down 68% from their peak. I concede I still wanted to stay away. The shares hadn't fallen as far as homebuilders. They weren't as cheap. And it was impossible to know what you were buying.

Of course if you invest through a broadly-based fund that tracks the sector, you are at least spreading your bets. This is the way to do it.

There's another side to this story. A couple of years ago investors were being pushed into so-called "value" stock funds, which tend to invest in more stable and mature companies with lower growth, higher cash flow, and higher dividends. The argument: They were more "safe" than so-called "growth" funds, which tend to bet on younger, faster growing and more volatile companies.

Result? Value funds, which were supposed to shelter investors from some of the storm, have actually done worse.

Over the past two years, the S & P Growth index has fallen 9%. Value? Oh, 14%. And that includes the gains from those big dividends.

It isn't that the value companies are doing worse in the real world. It's that their share prices got too high. Everybody bought them because they were supposed to be "safe."

We saw something similar just last winter, when lots of people reacted to inflation fears by rushing out to buy inflation-protected government bonds. The result? They bid the price of these bonds up so high that people who bought at the peak were, in some cases, locking in no after-inflation return at all.

I pointed out the absurdity – and got waves of angry emails from investors, and financial advisors.

Well, some of those "safe" TIPS have now fallen as much as 13%. Even a broadly based TIPS fund, like Vanguard Inflation-Protected Securities, is down nearly 6% from the peak - and that includes reinvested dividends.

That may not sound like much, but it's quite a fall for an investment that always offered very little upside in return for supposed security.

There was nothing wrong with TIPS per se. It was just the price. Anyone who waited until last month to buy some TIPS, on the other hand, could get a much better deal.

What does this mean for you?

Successful investing is counterintuitive. When it comes to the stock market, there is no safety in numbers. And there is no such thing as a "risk free" investment.

Treat conventional wisdom with skepticism. Always be very wary of the most popular and "safest" investments. You may be better off taking a look at those investments that everyone is scared of, and no one wants to touch with a ten foot pole.

Analyze Cash Flow The Easy Way

http://www.investopedia.com/articles/stocks/07/easycashflow.asp

Analyze Cash Flow The Easy Way
by Richard Loth (Contact Author | Biography)
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If you believe in the old adage, "it takes money to make money," then you can grasp the essence of cash flow and what it means to a company. The statement of cash flows reveals how a company spends its money (cash outflows) and where the money comes from (cash inflows). (To read more about cash flow statements, see What Is A Cash Flow Statement?, Operating Cash Flow: Better Than Net Income? and The Essentials Of Cash Flow.)

We know that a company's profitability, as shown by its net income, is an important investment evaluator. It would be nice to be able to think of this net income figure as a quick and easy way to judge a company's overall performance. However, although accrual accounting provides a basis for matching revenues and expenses, this system does not actually reflect the amount the company has received from the profits illustrated in this system. This can be a vital distinction. In this article, we'll explain what the cash flow statement can tell you and show you where to look to find this information.

Difference Between Earnings and Cash
In an August 1995 article in Individual Investor, Jonathan Moreland provides a very succinct assessment of the difference between earnings and cash. He says "at least as important as a company's profitability is its liquidity - whether or not it's taking in enough money to meet its obligations. Companies, after all, go bankrupt because they cannot pay their bills, not because they are unprofitable. Now, that's an obvious point. Even so, many investors routinely ignore it. How? By looking only at a firm's income statement and not the cash flow statement."

The Statement of Cash Flows
Cash flow statements have three distinct sections, each of which relates to a particular component - operations, investing and financing - of a company's business activities. For the less-experienced investor, making sense of a statement of cash flows is made easier by the use of literally-descriptive account captions and the standardization of the terminology and presentation formats used by all companies:

Cash Flow from Operations: This is the key source of a company's cash generation. It is the cash that the company produces internally as opposed to funds coming from outside investing and financing activities. In this section of the cash flow statement, net income (income statement) is adjusted for non-cash charges and the increases and decreases to working capital items - operating assets and liabilities in the balance sheet's current position.

Cash Flow from Investing: For the most part, investing transactions generate cash outflows, such as capital expenditures for plant, property and equipment, business acquisitions and the purchase of investment securities. Inflows come from the sale of assets, businesses and investment securities. For investors, the most important item in this category is capital expenditures (more on this later). It's generally assumed that this use of cash is a prime necessity for ensuring the proper maintenance of, and additions to, a company's physical assets to support its efficient operation and competitiveness.

Cash Flow from Financing: Debt and equity transactions dominate this category. Companies continuously borrow and repay debt. The issuance of stock is much less frequent. Here again, for investors, particularly income investors, the most important item is cash dividends paid. It's cash, not profits, that is used to pay dividends to shareholders.

A Simplified Approach to Cash Flow Analysis
A company's cash flow can be defined as the number that appears in the cash flow statement as net cash provided by operating activities, or "net operating cash flow", or some version of this caption. However, there is no universally accepted definition. For instance, many financial professionals consider a company's cash flow to be the sum of its net income and depreciation (a non-cash charge in the income statement). While often coming close to net operating cash flow, this professional's short-cut can be way off the mark and investors should stick with the net operating cash flow number.

While cash flow analysis can include several ratios, the following indicators provide a starting point for an investor to measure the investment quality of a company's cash flow:

Operating Cash Flow / Net Sales: This ratio, which is expressed as a percentage of a company's net operating cash flow to its net sales, or revenue (from the income statement), tells us how many dollars of cash we get for every dollar of sales.

There is no exact percentage to look for but obviously, the higher the percentage the better. It should also be noted that industry and company ratios will vary widely. Investors should track this indicator's performance historically to detect significant variances from the company's average cash flow/sales relationship along with how the company's ratio compares to its peers. Also, keep an eye on how cash flow increases as sales increase; it is important that they move at a similar rate over time.

History of Free Cash Flow: Free cash flow is often defined as net operating cash flow minus capital expenditures, which, as mentioned previously, are considered obligatory. A steady, consistent generation of free cash flow is a highly favorable investment quality – so make sure to look for a company that shows steady and growing free cash flow numbers.

For the sake of conservatism, you can go one step further by expanding what is included in the free cash flow number. For example, in addition to capital expenditures, you could also include dividends for the amount to be subtracted from net operating cash flow to get to get a more comprehensive sense of free cash flow. This could then be compared to sales as was shown above.

As a practical matter, if a company has a history of dividend payments, it cannot easily suspend or eliminate them without causing shareholders some real pain. Even dividend payout reductions, while less injurious, are problematic for many shareholders. In general, the market considers dividend payments to be in the same category as capital expenditures - as necessary cash outlays.

But the important thing here is looking for stable levels. This shows not only the company's ability to generate cash flow but it also signals that the company should be able to continue funding its operations. (To read more about cash flow, see Free Cash Flow: Free, But Not Always Easy, Taking Stock Of Discounted Cash Flow and Discounted Cash Flow Analysis.)

Comprehensive Free Cash Flow Coverage: You can calculate a comprehensive free cash flow ratio by dividing the comprehensive free cash flow by net operating cash flow to get a percentage ratio - the higher the percentage the better.

Free cash flow is an important evaluative indicator for investors. It captures all the positive qualities of internally produced cash from a company's operations and subjects it to a critical use of cash - capital expenditures. If a company's cash generation passes this test in a positive way, it is in a strong position to avoid excessive borrowing, expand its business, pay dividends and to weather hard times.

The term "cash cow," which is applied to companies with ample free cash flow, is not a very elegant term, but it is certainly one of the more appealing investment qualities you can apply to a company with this characteristic. (Read more about cash cows in Spotting Cash Cows.)

Conclusion
Once you understand the importance of how cash flow is generated and reported, you can use these simple indicators to conduct an analysis on your own portfolio. The point, like Moreland said above, is to stay away from "looking only at a firm's income statement and not the cash flow statement." This approach will allow you to discover how a company is managing to pay its obligations and make money for its investors.

by Richard Loth, (Contact Author | Biography)

Richard Loth has more than 38 years of professional experience in the financial services sector, including banking, investment consulting and capital markets development, both internationally and in the U.S. He has worked with Citibank, Fleet National Bank and the Bank of Montreal. Mr. Loth is currently the managing principal of Mentor Investing, an independent Registered Investment Adviser based in Eagle, Colorado. Over the years, he has authored several investment education articles, publications, and books.

Using Consumer Spending As A Market Indicator

http://www.investopedia.com/articles/07/retailsalesdata.asp

Using various individual retail sales figures in December and January may be one of the best indicators available for how to predict the next five to nine months of retail economic activity. Read on to discover how retail groupings can be used as a market indicator.

Same Store Sales
Before getting into individual metrics, the single commonality that is defined among analysts and investors in the retail space is same store sales. This is simply a measure of the change in sales over a defined period - usually year over year - for all stores open for more than a year.

As with most stocks, earnings per share and revenues do matter and should be a point of focus, but it is just as vital to watch the important retail metric of same store sales. Retailers that produce strong and steady same store sales are often those that offer the best performance.

Important December/January Data Release
The holiday onslaught is not just confined to the shopping malls of America, but finds itself on Wall Street with the torrid release of same store sales data. It usually starts after the first week of December and continues through to late January, as retailers have differing release dates.

In the 1990s, before the advent of online shopping and gift cards, this time frame was late December to mid-January horizon, but online sales growth and the proliferation of Christmas gift cards has since widened out the holiday shopping season. (For related reading, see Capitalizing On Seasonal Effects.)

Retail chains have also standardized their release of same store sales within a few days of each other for consistency, which typically occurs on the first trading Wednesday evening and Thursday of January. After the release of this holiday sales data, the investment community usually tries to make its assumptions for the next four to nine months. The reason that analysts wait for one month's data to forecast six to nine months in the future is because the holiday season is the most critical quarter to retailers.

Gaining an Idea of the Overall Consensus and Outlook
For a forward fiscal year, retail analysts usually make their largest fiscal forecast estimate changes in mid-January to early February of each year right after most companies report earnings and all of the major holiday misses or surprises are apparent. Generally, they do not make any additional major changes until the summer, when the "back to school" effect can be seen. There are exceptions, such as a firm-specific changes or a major market event, but this pertains to the group as a whole.

Upon the release of Q4 earnings reports, which encompasses the holiday season, companies tend to offer their year-ahead guidance. Analysts will also shore up their previous forecasts and will often change their ratings on retailers, especially if large forecast changes need to be made. (For more insight, see Strategies For Quarterly Earnings Season, Surprising Earnings Results and Earnings Forecasts: A Primer.)

This helps to provide additional clarity in the projected strength of a company's sales looking forward, along with the overall retail climate. If several major retailers start to issue weak guidance, it is usually a sign of large-scale retail weakness and should be a warning sign to retail investors.

The Importance of Retail Grouping
There are a wide number of very different retailers in the market. To gain an overall understanding of the retail market along with distinguishing strength and weakness within retail segments it is wise to group similar retailers.

For broader-based retail chains, consistent leaders, such as Wal-Mart, Target and Costco Wholesale might be the key players to consider. Of course, the companies that top this list will vary and the list itself will change over time. While these are just a small segment of the wide retail sector, due to their size, the retail sales data of these companies are some of the most important to watch to be able to gauge spending health in the economy.

To gain an understanding of whether or not consumers are buying bigger ticket items, check out the consumer electronics, mainly brick-and-mortar companies like Best Buy, who sell big screen TVs. You can also look to online retailers, such as Amazon.com, to gauge the health of consumer internet spending.

To gauge how often people are going out for dinners, which is often a sign of consumer health, look to mega-chain restaurants like Brinker International and Darden Restaurants. However, chains such as McDonald's, Yum! Brands and other fast food or quasi-fast food chains should not be in the equation, because their products fall more into the range of consumer staples than discretionary goods.

The list can grow longer by the minute if you want to be very specific in your segmentation, but breaking down the retail space into just a few segments can still give you insight into how consumers are spending. The following chart provides an example of how your retail spreadsheet might look:

Retail Component December Guidance & January Reporting Guidance for Calendar Q1 Guidance for Calendar Q2 & more
Wal-Mart (WMT) - - -
Target (TGT) - - -
Costco (COST) - - -
Ralph Lauren (RL) - - -
VF Corp (VFC) - - -
Limited (LTD) - - -
Nike (NKE) - - -
Brinker (EAT) - - -
Darden (DRI) - - -
Kohl's (KSS) - - -
Federated (FD) - - -
JC Penney (JCP) - - -
Best Buy (BBY) - - -
Amazon.com (AMZN) - - -
UPS (UPS) - - -
Fedex (FDX) - - -
JB Hunt (JBHT) - - -
YRC Worldwide (YRCW) - - -
RailAmerica (RRA) - - -
Packaging Corp (PKG) - - -
Bemis (BMS) - - -

Which Retail Components Should You Ignore?
Not all retailers will shed light on the spending health of consumers, typically, these are the companies that sell life staples, which are purchased regardless of the economic conditions. Examples of these companies include basic-level food chains and drugstores.

Also, autos and other transportation-related sectors aren't a good gauge as U.S. auto manufacturing and sales since the '90s have been steadily less correlated to overall economic spending, partly because of foreign auto sales forging ahead into the U.S. and partly because of the perpetual woes of the Big Three and the incentives they use to lure new car buyers. As this has grown to be more and more of a problem each year, it is not likely that any sizable change would be expected there. (For related reading, check out the Industry Handbook.)




Housing product sellers like Home Depot and Lowe's also aren't the best indicator of consumer health because of the inherent ties to housing and the drastic swings that the housing sector tends to experience.

Why should investors care?
If the retail consumer's spending is going to slow down for three to six months, the rest of the economy has to operate on different assumptions. Housing is volatile, autos are volatile and durable goods are volatile, and the swings are often temporary, but systematic retail change can be longer-lasting.

What can alter these factors as an indicator?
A severe positive or negative global shock event can impact discretionary retail spending overnight. A drastic decision out of the Federal Reserve on its monetary policy or a rapid and unexpected interest rate cycle shift can change this scenario as well. Critical changes are rare, but when they unexpectedly occur, it changes the game.

Severe commodity or energy price changes can also drastically alter the cost structure of this scenario, although this is often well publicized. A severe bull market or severe bear market must also be taken into consideration.

Conclusion
General consumer discretionary spending and the related parts of retail are what define a good or bad economy, and catching this trend can be invaluable. Picking a year's high-flier or a severe laggard in each group does not usually help, because of overall index misrepresentation. Therefore, using the traditional, steady choices of stocks in each retail group can provide savvy investors with a wealth of information.

by Jon Ogg, (Contact Author | Biography)

Jon Ogg has been a financial news analyst since 1997. Some of his accomplishments include creating an audio squawk for active traders called TTN (it was sold in 2003 and became a news broadcast desk that became part E*Trade); working as a licensed bond broker to U.S. and E.U. financial institutions; acting as a financial advisor and portfolio manager in Copenhagen, Denmark; and gaining experience in private financings. He received a Bachelor of Business Administration in finance at University of Houston. Jon has lived in New York, Chicago, Copenhagen and Houston. To read more of his work, see his blog site www.247wallst.com.

Cashing In On Corporate Restructuring

Companies use mergers, acquisitions and spinoffs to increase their profits. Strategic mergers and acquisitions can help a company become more competitive in its field and improve its bottom line, while spinoffs are a way to get rid of underperforming or non-core business divisions that can drag down profits. While mergers, acquisitions and spinoffs can be great moves for companies, they can be even better for the enterprising investor willing to do a little research! If you do your homework, you can find profitable opportunities in these corporate actions - we'll take you through this process step by step.

Spinoffs
Why are spinoffs such a great investment opportunity? Typically, underperforming business divisions are loaded with debt. When they are cut off from the parent company, that company can become more valuable as a result. (For more insight, check out Conglomerates: Cash Cows Or Corporate Chaos?)

The Process
Here's how a typical spinoff situation works:

The company decides to spin off a business division.
The parent company files the necessary paperwork with the Securities and Exchange Commission (SEC).
The spinoff becomes a company of its own and must also file paperwork with the SEC.
Shares in the new company are distributed to parent company shareholders.
The spinoff company goes public.
Notice that the spinoff shares are distributed to parent company shareholders. There are two reasons why this creates value:

Parent company shareholders rarely want anything to do with the new spinoff. After all, it's an underperforming division that was cut off to improve the bottom line. As a result, many new shareholders sell immediately after the new company goes public.
Large institutions are often forbidden to hold shares in spinoffs due to the smaller market capitalization, increased risk, or poor financials of the new company. Therefore, many large institutions automatically sell their shares immediately after the new company goes public.
Simple supply and demand logic will tell you that such a large number of shares on the market will naturally decrease the price, even if it is not fundamentally justified. It is this temporary mispricing that gives the enterprising investor an opportunity for profit.

The Homework
Information is easy to find when it comes to spinoffs. Every parent company is forced to file paperwork with the SEC outlining everything that an investor needs to know (and then some). The most important form to look for is Form 10, which outlines the spinoff distribution terms. This document contains a few key things to look for:

Basic Company, Share and Pricing Information
Look at the new company's market cap. If it's smaller, large funds are more likely to sell it. Also look at the share distribution terms to see whether it makes sense to buy the parent company shares or to buy on the open market after the company goes public.

Distribution Type
Oftentimes, spinoff shares are distributed to parent company stockholders; however, in some cases partial spinoffs, rights offerings or other formats are used. This can provide increased leverage, or other advantages.

Insider Distributions
Insider holdings and activity are key when determining the value of a spinoff. High insider ownership gives management incentive to perform well and drives shareholder value. (For more on this, see When Insiders Buy, Should Investors Join Them? and Can Insiders Help You Make Better Trades?)

It is also a good idea to read press releases, related news coverage and other available media to determine how the public is going to react to the new spinoff. Press releases can be found under the company's ticker on Yahoo! Finance and company news can be found on Google News.

Overall, spinoffs outperform the market because of the inherent flaws in the spinoff process. Although not every spinoff opportunity represents an attractive investment, investors willing to dig a little deeper into SEC filings and press releases can find those that are with relative ease.

Mergers and Acquisitions (M&A)
Companies are notorious for failing at mergers and acquisitions - especially the mergers where two extremely large companies join forces. Add to that the fact that the M&A field is heavily dominated by arbitrage funds and other big players, and you may wonder how any small investor can make a profit. In fact, M&As can provide good opportunities for investors - it's just a matter of knowing how to find them. (For further reading, see The Basics Of Mergers And Acquisitions and The Wacky World Of M&As.)

The Process
While most M&A transactions are handled through stock and cash offerings, others are handled through the use of merger securities. These can include bonds, warrants, preferred stock, rights, and many others. Here's how the process works:

The acquiring company decides that it wants to buy or merge with another company.
It announces this intention either privately or publicly in a statement, hostile acquisition of stock, rumor, offering, or other means.
The company being acquired then considers the bid. The board of directors advises shareholders of the company's recommended vote and then sends out a proxy to all shareholders who vote on whether or not to sell the company.
If the merger is approved, both companies file the necessary paperwork with the SEC outlining the terms, time and other details of the sale.
The company is bought and integrated into the acquiring company, and the acquired company's shareholders are compensated.
The Homework
As mentioned above, these M&A transactions take place with cash, stock or other instruments. Cash transactions provide limited opportunity for retail investors because any value has already been taken away from arbitrageurs well before the transaction takes place. The same is often true with M&A's that take place with stock offerings because these provide the opportunity to short or buy the acquiring company's stock.




Merger securities are another story. Oftentimes, nobody wants to deal with merger securities for the same reasons they don't want to deal with spinoffs - because they aren't allowed to (as is the case for larger funds) or because they don't care for or understand the new securities. This presents another great opportunity for investors to profit.

The most important forms to look at when researching merger securities are:

Form S4 - This form covers any new securities issued as a result of a merger.
Schedule 14D - This form covers tender offers filed by public acquiring companies.
Schedule 13E - This form covers tender offers when a company is going private.
M&A deals vary greatly in what's offered; therefore, it is important to carefully analyze each deal. Mathematics can tell you the fair value of the securities being offered and a look at management can show how serious the company is about maintaining performance.

Overall, M&A deals involving merger securities rather than cash or stock present a great investment opportunity for the same reason as spinoffs - they are ignored by the majority of the public. However, like spinoffs, it is important to carefully research each opportunity before buying.

Conclusion
Both spinoffs and M&A activity present great investment opportunities for investors willing to dig in to the SEC filings and press releases to find the information they need. In best of situations, spinoffs continue to outperform the market, while mergers involving obscure offerings continue to cause unjustified selling.

Resources
-"You Can Be A Stock Market Genius" by Joel Greenblatt (1997) - This is one of the best books on mergers, acquisitions, spinoffs, rights offerings, bankruptcies and other unique investment opportunities for retail investors.

-Edgar Database - This is the SEC's database where investors can find all company filings free of charge.

-SECFilings.com - This is a free website that lets you sign up for email alerts whenever certain types of filings are made - an excellent way to have investment opportunities delivered to your inbox every day!


by Justin Kuepper, (Contact Author | Biography)

Justin Kuepper has many years of experience in the market as an active trader and a personal retirement accounts manager. He spent a few years independently building and managing financial portals before obtaining his current position with Accelerized New Media, owner of SECFilings.com, ExecutiveDisclosure.com and other popular financial portals. Kuepper continues to write on a freelance basis, covering both finance and technology topics.

Trademarks Of A Takeover Target

Is it possible to determine whether a company is a potential takeover candidate before a public announcement has been made? Absolutely - if you know what to look for. Read on to learn the characteristics that well-financed suitors look for in their target companies. Once you know what the big companies are looking for, you'll be able to determine which companies are prime candidates for takeovers. (To learn about how you can benefit from takeovers as an investor, read Trade Takeover Stocks With Merger Arbitrage and Cashing In On Corporate Restructuring.)

Product/Service Niche
A large company has the luxury of being able to develop or acquire an arsenal of varying services and products. However, if it can buy a company at a reasonable price that has a unique niche in a particular industry (either in terms of a product, or service), it will probably do so.

Smart suitors will wait until the smaller company has done the risky footwork and advertising before buying in. But once a niche is carved out, the larger firm will probably come knocking. In terms of both money and time, it is often cheaper for larger companies to acquire a given product or a service than to build it out from scratch. This allows them to avoid much of the risk associated with a startup procedure.

Additional Financing Needed
Smaller companies often don't have the ability to market their items nationally, much less internationally. Larger firms with deep pockets have this ability. Therefore, look for not only a company with a viable product line, but one that, with the proper financing, could have the potential for large-scale growth. (For more insight, see Venturing Into Early-Stage Growth Stocks.)

Clean Capital Structure
Large firms want an acquisition to go forward on a timely basis, but some companies have a large amount of overhang that dissuades potential suitors. Be wary of companies with a lot of convertible bonds or varying classes of common or preferred stock, especially those with super voting rights. (For related reading, see Knowing Your Rights As A Shareholder.)

The reason that overhang dissuades companies from making an acquisition is that the acquiring firm has to go through a painstaking due diligence process. Overhang presents the risk of significant dilution and presents the possibility that some pesky shareholder with 10 to 1 voting rights might try to hold up the deal. If you think a company may be a prospective takeover target, make sure it has a clean capital structure. In other words, look for companies that have just one class of common stock and a minimal amount of debt that can be converted into common shares.

Debt Refinance Possible
In the latter half of the 1990s, when interest rates began to decline, a number of casino companies found themselves saddled with high fixed interest first mortgage notes. Because many of them were already drowning in debt, the banks weren't keen on refinancing those notes. And so, along came larger players in the industry. These larger players had better credit ratings and deeper pockets, as well as access to capital and were able to buy up many of the smaller, struggling casino companies.

Naturally, a large amount of consolidation occurred. After the deals were done, the larger companies refinanced these first mortgage notes which, in many cases, had very high interest rates. The result was millions in cost savings.

When considering the possibility of a takeover, look for companies that could be much more profitable if their debt loads were refinanced at a more favorable rate.

Geographic Proximity
When one company acquires another, management usually tries to save money by eliminating redundant overhead. In other words, why maintain two warehouses if one can do the job and is accessible by both companies? Therefore, in considering takeover targets, look for companies that are geographically convenient to each other and, that if combined, would present shareholders with a huge potential for cost savings.

For example, many analysts believe consolidation in the drug industry is likely because it is not uncommon to see company headquarters and operations in this industry situated near competing firms. As such, consolidation of these firms could lead to higher margins and increased shareholder value.

Clean Operating History
Takeover candidates usually have a clean operating history. They have consistent revenue streams and steady businesses. Remember, suitors and financing companies want a smooth transition, so they will be wary if a company has, for instance, previously filed for bankruptcy, has a history of reporting erratic earnings results, or has recently lost major customers.

History of Enhancing Shareholder Value
Has the target company been proactive in telling its story to the investment community? Has it repurchased its shares in the open market? Suitors want to buy companies that will thrive as part of a larger company, but also those that, if needed, could continue to work on their own. This ability to work as a standalone applies to the investor relations and public relations function. Suitors like companies are able to enhance shareholder value.

Experienced Management
In some cases, when one company acquires another, the management team at the acquired company is sacked. However, in other instances, management is kept on board because they know the company better than anyone else. Therefore, acquiring companies often look for candidates that have been well run. Remember, good stewardship implies that the company's facilities are probably in good order, and that its customer base is content. (For related reading, check out Evaluating A Company's Management.)

Minimal Litigation Risk/Threats
Almost every company at some point in time will be engaged in some sort of litigation. However, companies seeking acquisition candidates will usually steer clear of firms that are saddled down with lawsuits. In general, suitors avoid acquiring unknown risks.

Expandable Margins
As a company grows its revenue base, it develops economies of scale. In other words, its revenues grow, but its overhead - its rent, interest payments and maybe even its labor costs - stays the same, or increases at a much lower rate than revenue. Acquirers want to buy companies that have the potential to develop these economies of scale and increase margins. They also want to buy companies that have their cost structure in line, and that have a viable plan to grow revenue.




Solid Distribution Network
Particularly if the company is a manufacturer, it must have a solid distribution network or the ability to plug into the acquiring company's network if it is going to be a serious takeover target. What good is a product if it can't be brought to market?

Make certain that any company you believe could be a potential takeover target has not only the ability to develop a product, but also the ability to deliver it to its customers on a timely basis.

Word of Warning
Investors should never buy a company solely because they believe it is, or may become, a takeover target. These suggestions are merely meant to enhance the research process and to help identify characteristics that may be attractive to potential suitors. (To learn more about these companies, read Pinpoint Takeovers First.)

Bottom Line
With the investment community focused on ever-increasing profitability, large companies will always be looking for acquisitions that can add to earnings fast! Therefore, companies that are well run, have excellent products and have the best distribution networks are logical targets for a possible takeover.

by Glenn Curtis, (Contact Author | Biography)

Glenn Curtis started his career as an equity analyst at Cantone Research, a New Jersey-based regional brokerage firm. He has since worked as an equity analyst and a financial writer at a number of print/web publications and brokerage firms including Registered Representative Magazine, Advanced Trading Magazine, Worldlyinvestor.com, RealMoney.com, TheStreet.com and Prudential Securities. Curtis has also held Series 6,7,24 and 63 securities licenses.