Hottest Links: Enron Ethics, Shiller, Panda Uranium, Armchair Investor

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Hottest links for Tuesday October 15th, 2013 the ontime edition (see Monday’s edition of hottest links). Get our free daily newsletter (which is being updated to make it even better) and never miss a single linkfest.

Top stories for today include; The weather might not be great (at least in the New York area), but companies have found another excuse for missing earnings; When is a buyback not a buyback? When its financed with debt and other caveats; Speaking of accounting, look at how funds will now be able to wipe out 5 bad years of returns; Investing in Asia? Tips on forensic accounting for value investors; More interesting stories on probably the only economist I follow/respect, Robert Shiller; Are you an armchair investor? You might well be; An interesting study on tenure and corporate governance; That and much more below.

Hottest Links

Value Investing

Confessions of An “Arm Chair Investor”

Warren Buffett is famous for his “idea generating” process: He just walks up the stairs in his house and reads all day, mostly newspapers and annual report. Ok, he doesn’t use Bloomberg to my knowledge. [valueandoppurtunity]

Which PE Ratio is Best?

Note that most analysts use 1 year PE ratios, and also note which metric is the worst (1 year).  It seems the best range is near where old Ben Graham preferred, 5-10 years. [Mebane Faber]

PE Ratio


How to Become As Rich As Bill Gates

As a graduate student in computer science at MIT earning a $1600/month research stipend, I feel amply qualified to instruct the entire Internet on the art of becoming as rich as Bill Gates. [Philip Greenspun]


FedEx’s Buybacks?

FedEx Corporation (NYSE:FDX) this morning unveiled a sizable new buyback plan, and the stock’s 3.7% jump puts it within shooting distance of the 2007 all-time high. [Brendan Conway, Focus on Funds]

The Science of Forensic Accounting

Many investors have expressed concerns over the quality and general integrity of financial reports filed by Asian compa­nies. Often cited as a reason to be less trusting are less stringent regulatory laws that have created a historical culture of accepting transgressions in corporate governance. [Sudarshan Murthy, Matthews Asia]

Funds’ Five-Year Returns Are Magically Levitating

Daniel P. Wiener of the Independent Adviser for Vanguard Investors today sends clients a 12-year chart of the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), foreign stocks and small stocks. The record, of course, is something very different from the last five years’ nearly uninterrupted rise. The five-year annualized historical return of iShares Russell 2000 Index (ETF) (NYSEARCA:IWM) today is a juicy 17.7%, while iShares MSCI EAFE Index Fund (ETF) (NYSEARCA:EFA) has risen to nearly 12%. [Brendan Conway, Focus on Funds]

The Government Shutdown in SEC filings

While the number of companies mentioning the crisis in Washington in their routine filings to the SEC can’t quite be described as a thundering roar, we did count about 15 companies such as CalAmp Corp. (NASDAQ:CAMP), Zogenix, Inc. (NASDAQ:ZGNX), Echo Therapeutics Inc (NASDAQ:ECTE), Humana Inc (NYSE:HUM), Lennar Corporation (NYSE:LEN), URS Corp (NYSE:URS) and Red Hat Inc (NYSE:RHT), that have had something to say about the mess in Washington DC in their filings over the past two weeks. [Footnoted]

Accountants Should Focus on Detecting Fraud

Accountants have been slow to embrace the idea that a core function of their job is to identify fraud during company audits. [Ben DiPietro, The Wall Street Journal]


The Enron Code of Ethics Handbook

Enron Code of Ethics my most cherished possession. The Enron collapse now seems like a distant memory, and its scale is so tiny compared to the 2008–09 financial crisis that it almost feels like it wasn’t really that bad. [Finansakrobat, CFA Institute]

Robert Shiller

Robert Shiller’s “Animal Spirits” Lecture at the New School

“Here is a paper by a hotshot young Yale economist that says that financial markets are really lousy at their job.” And he handed me a xerox of an article by Robert Shiller. [J. Bradford DeLong, Brad Delong]

9 Fascinating Insights From Robert Shiller

Robert Shiller, a Yale economist who predicted both the dot-com and housing bubbles, says he wasn’t expecting the award. Here are nine insights he provided about economics. [Morgan Housel, The Motley Fool]



Strong Q3 Earnings Ahead For Alternative Asset Managers

Chen prefers Apollo Global Management LLC (NYSE:APO), The Blackstone Group L.P. (NYSE:BX) and Carlyle Group LP (NASDAQ:CG), all of which he rates Outperform, boosting his target price for Apollo and Blackstone. He has Neutral ratings on KKR & Co. L.P. (NYSE:KKR) and Oaktree Capital Group LLC (NYSE:OAK). [Teresa Rivas, Focus on Funds]

Five Ways Robo-advisors Will Change the Way Advisors Work

Robo-advisors is the term being used by advisors to describe a new breed of startups that directly connect tech-savvy investors with suites of analytic tools to create financial plans or investment portfolios. [Raef Lee, Advisor Perspectives]

London Property Has Become A New Global Reserve Currency

In a weekend New York Times opinion piece, London-based journalist Michael Goldfarb describes a trend of neighbors relocating from London to other metropolitan areas in Great Britain due to soaring housing prices. [Matthew Boesler, Business Insider]

The Growing Income Divide in Four Charts

Goldman Sachs Group Inc (NYSE:GS) asked the 2,000 U.S. consumers it surveyed how they characterize the current state of the economy compared to a year ago. Households that made more than $90,000 a year reported higher optimism and spending power, while the households that made under $50,000 a year reported the opposite. [Steven Russolillo, MoneyBeat]

Goldman hottest links

How Ugly Would a Default be for the Dollar?

Markets may be calm as Congress struggles to raise the debt ceiling, but a U.S. default threatens the U.S. dollar’s dominance in the world. [Nin-Hai Tseng, Term Sheet]

Long Director Tenure Could Get More Scrutiny

Board turnover at S&P 500 (INDEXSP:.INX) companies hit a 10-year low last year, with more than two-thirds of those directors serving terms of 10 to 15 years, Bloomberg reported in May. An additional 5% had tenures longer than 15 years. [Emily Chasan, The Wall Street Journal]

Premature dissemination, Bloomberg style

Bloomberg News prides itself on market-moving scoops. Today its reporters excelled themselves, getting Citigroup Inc (NYSE:C)’s Q3 earnings out a full 29 minutes before they were due. [Bryce Elder, FT Alphaville]

Lessons From The Portfolio Whiteboard Project

Rittereiser, co-author of Foundation and Endowment Investment, recently hosted the Portfolio Whiteboard Project (pdf), a financial brainstorming session during which investors and asset managers were challenged to update—or even break—Swenson’s 30-year-old investment model. [Deirdre Brennan, FINalternatives]

Hottest Links: Not The Onion

China Swaps Pandas For Uranium in Trade Deals

It works like this: Agree to export key energy technology to China; get a panda. Supply Beijing with the uranium it needs to power nuclear reactors; get a panda. Sign a free trade agreement with China; get a panda. [Sophia Yan, CNNMoney]

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