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Norb Vonnegut

11 January 2011
Top ten reasons Facebook may not be worth US$50 billion

1. Lemming portfolio theory. The consensus is always wrong. Facebook is a media love orgy right now. 2. Private valuations are opinion, not science. A few years ago the Winklevoss twins used Microsoft’s $15 billion valuation to settle their lawsuit. Meanwhile, Facebook’s board appraised the company at $3.7 billion Is there more than one valuation […]

11 January 2011
Why hedge fund fees scuk*

A few days ago I came across a terrific post by Terry Smith on his blog, Straight Talking. Using Warren Buffett's investment returns, he illustrates why the two-and-twenty standard is egregious. Hedge funds win disproportionately when they charge two per cent on assets and keep 20 per cent of the profits. Here's what Smith writes: […]

6 December 2010
Insider trading: 'Tis the season

After returning from three strip malls, Phoebe Jenkins kicked off her shoes first thing. Right there in front of the kitchen sink. She was exhausted from the holiday crowds – all the pushing and shoving, the occasional hip check or two. Her swollen dogs were screaming for a break. I’ll try again tomorrow. Phoebe sat […]

13 October 2010
Return of the flash crash

Did you see the 60 Minutes exposé on speed trading? I've embedded the video, which explains how high-frequency trading works. It sheds light on the 6 May flash crash – why the Dow dropped nearly 700 points in twenty minutes. It's only a matter of time before we experience another flash crash. Here's why: High […]

23 August 2010
The Giving Pledge - what do we want from the wealthy?

I’ve been thinking about the ‘Giving Pledge’, a campaign championed by Bill Gates and Warren Buffett. They're asking fellow members of the über-rich to pledge 50+ per cent of their fortunes to charities – more money to philanthropy and less to family. Among the billionaires who have taken the “pledge” are Larry Ellison, Michael Bloomberg, […]

21 July 2010
Darth Goldman: The Enterprise Value Strikes Back

On 15 July, Goldman Sachs settled fraud charges associated with Abacus CDOs for $550 million. Not surprisingly, the settlement excluded Fabrice P. Tourre, who will no doubt be hung out to dry as the Tourre de Toxic winds to a close. Personally, I think the government just got pimp-slapped. Here's why: The $550 million settlement […]

25 May 2010
US financial reform and the Fungus Five

Recently, I described financial reform as a “petri dish” of pending legislation. The government is tackling too many issues at the same time. Without constants—we don’t know how markets will react to all the moving pieces. It gets worse. Last night The Wall Street Journal profiled the back-room deals working their way through pending legislation. […]

13 May 2010
Morgan Stanley and Dead Presidents

The news is out. US prosecutors are investigating several Morgan Stanley CDOs. Like the Abacus inquiry at Goldman Sachs, the issue is what representations Morgan Stanley made to clients. How did the bank market those Weapons of Money Destruction? Here’s what The Wall Street Journal reports: Among the deals that have been scrutinized are two […]

11 May 2010
US Financial Reform: What Crawls Out of the Petri Dish?

I believe in financial reform. Let’s lose synthetic CDOs, credit default swaps, and other Weapons of Money Destruction. Let’s cut the leverage and focus on systemic risks to our economic order. But let’s be smart. In the wake of last Thursday, it appears our government is tackling too many issues at the same time. The […]

4 May 2010
Financial reform: who's the fox in the henhouse?

Wall Street has taken its lumps in Washington recently and Goldman Sachs has become everyone’s whipping boy, but hedge funds and private equity firms have escaped relatively unscathed. I don’t get the disparity. Hedge funds, through leverage, can inflict major damage on economies. John Paulson’s fund made $1 billion dollars on Abacus 2007-AC1—the casino bet that cost […]

2 May 2010
Too Big to Do the Right Thing?

I’ve been extremely critical of Goldman Sachs. The bonuses, funded by taxpayer bailouts, teed me off. Now, I have a different concern: Is the prosecution of Goldman Sachs going too far? Federal prosecutors are considering a criminal case against employees. This isn’t about fines. This is about hard time behind bars. It’s not clear, though, whether […]

30 April 2010
Financial reform - lost in translation?

In the Senate chamber yesterday, our elected officials grilled reps from Goldman Sachs. The Senators illustrated, I think, the outrage felt by Americans over bailout dollars that turned into banker bonuses. Even if—Senator Carl Levin (D-Michigan) trash-talked like shock-jock Howard Stern: "You knew it was a sh-tty deal and that's what your e-mails show," he […]

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