Free Republic

LONDON—Any veteran investor will tell you that financial markets overshoot when trouble hits, but what if that market is the world’s second-largest economy and the regime has decided the rules of the game have changed?The Chinese regime’s months-long regulatory clampdown has included big names in e-commerce, the gig economy, exam cramming and most recently online insurance. Close to $1 trillion in market value has been wiped off China Inc. since February.For big firms that also list on markets like Wall Street because it brings in international investment, 2021 is already the worst year since the global financial crisis.It could spring...

Through the course of thirty-five years of practicing psychology, I have come to believe that the key to happiness and success in life resides in the power of valuation. True valuation is the ability to recognize the most important value in every circumstance and to behave in order to actualize that value. The happiest people automatically recognize and act upon true values. Applied psychology has not fulfilled its potential to make the world a better place because it has not focused on the powers of valuation. America's happiness and success as a nation have resulted from the one-pointed emphasis on...

Accessing Capital for Commercial Real Estate Is Difficult in the New Normal May 04, 2011 | Staff Writer By Richard Gatto Executive Vice President – The Alter Group With the nation’s banks sitting on between $1.2 and $1.3 billion worth of capital, they are nevertheless reluctant to lend on commercial real estate because of the elevated level of risk and current valuations of properties already on their books. Many banks own portfolios of commercial real estate whose valuations have declined significantly and do not want to increase their exposure. Currently, banks are under pressure to de-leverage and raise their book...

Sunday, February 21, 2010 Das: Mark to Make Believe – Still Toxic After All These Years! By Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives In 2007, as the credit crisis commenced, paradoxically, nobody actually defaulted. Outside of sub-prime delinquencies, corporate defaults were at a record low. Instead, investors in high quality (AAA or AA) rated securities, that are unlikely to suffer real losses if held to maturity, faced paper – mark-to-market (“MtM”) – losses. In modern financial markets, market values drive asset values, profits and losses,...

Time for the Darwinian flush Highlights from the latest Hayman Advisors letter to clients (i.e. the text in full): October 14, 2008 ‘The ultimate result of shielding man from the effects of folly is to people the world with fools.’ Herbert Spencer What’s Next? It is the “what’s next” that scares us the most. There is no doubt that many books will be written chronicling the times we are living through today. When we wrote to you in July 2007, we really meant “feet first”! The common denominator of everything that has gone wrong so far has been reckless amounts...

Ins and outs of ups and downs: shaken markets face up to 'recoupling' By John Authers and Gillian Tett Thu Jan 24, 3:05 PM ET This has been no happy new year for the world's equity markets. US stocks have had their worst January in more than a century - and this sell-off has prompted both a wave of selling across the world and a truly extraordinary response by the Federal Reserve, with America's central bank making an emergency cut in target interest rates of 0.75 percentage points. By the time news of a historic trading loss at France's Société...

Stocks Drop Amid Earnings, Credit Unease Wall Street Falls Sharply Amid Lackluster Profit Reports, Credit Concerns NEW YORK (AP) -- Stocks pulled back sharply and bonds jumped Friday as lackluster profit reports and unease about the credit markets touched off fresh concerns about the ability of the economy to continue to push ahead. Stocks logged their steepest declines since late August. Mixed results from Dow Jones industrial average components 3M Co., Honeywell Inc., and Caterpillar Inc. gave investors little incentive to buy. Wachovia Corp.'s weak profits renewed concerns that have dogged Wall Street in recent months about the banking sector.

April 17, 2006    Volume 13, No. 8 China's Reserves Soar: NAM Says The Time Has Come For China To Re-Value Its Currency BY RICHARD McCORMACK richard@manufacturingnews.com It has become "imperative" for the Department of Treasury to declare that China is manipulating its currency, says Pat Mears, director of international commercial affairs at the National Association of Manufacturers. Further evidence of China's manipulation is that nation's growing currency reserves. They have risen to $848 billion, and are now the largest in the world, surpassing those of Japan's at $837 billion. "China's currency reserves are nearing half of China's total gross...

Pricing and Valuing Financial Assets - It's a great time to sell! November 28, 2003 Richard Benson is president of Specialty Finance Group, LLC , offering diversified investment banking services.  Determining the price of financial assets is far easier than determining their value. However, knowing there is a difference between price and value and having the wisdom to see the difference, is a pre-condition for making the right investment decisions.  Over time, it is certainly wise to buy financial assets at a price below their long term value, and to sell them at a price above their long term value.Examining the...

The dividend and cap gains tax cuts are nice to have. But they just don't make up for the depressed earnings yields and dividend yields on stocks. More From A. Gary Shilling Does the new tax law make the current rally rational? It would be nice to think so. Signed into law by President George W. Bush on May 28, the legislation reduced the top rates on both dividends and capital gains to 15%. Before, we were paying 38.6% on dividends and 20% on cap gains. That's a nice benefit for investors, but the unfortunate truth is that it falls...

ANATOMY OF A BUBBLE: WHERE IT ALL WENT WRONG The charts on this page show the S&P 500 (black line) in relation to its normal P/E range. The lines composing the channel show where the S&P 500 would be if it were overvalued (red line), undervalued (green line), and fairly valued (blue line). The three charts below show that the S&P rarely moves outside that range. When it does, it signals extraordinary risk (higher than the channel) or extraordinary value (lower than the channel. Also, the direction in which the channel is moving tells us whether earnings are expanding or...