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Climbing The Financial Wall of Worry

Google Wets Its Pants In China. Chinese Puzzle – Act Global or Look Backward $GOOG $MMI

Drawing of an early Chinese soldier lighting a...

Drawing of an early Chinese soldier lighting a rocket (Photo credit: Wikipedia)

Google (Nasdaq:GOOG) is trying to buy Motorola Mobility Holdings (NYSE:MMI) primarily to scoop up a huge treasure trove of patents and intellectual property. Anti-trust regulators around the world have in turn signed off on the deal. Except for the Chinese. China the worlds second largest economy seems to be officially sitting on its hands. They are holding up the deal. Google’s track record in China is poor. Let me rephrase that. Google’s track record of governmental affairs in China is poor. The whole world knows it.

The past cannot be undone. When the decision to buy Motorola Mobility was made Google’s board probably did not say “What about China”. Today its “What about China” Its not an accident that China waited until the end. This may be Google’s moment to fix things in China and develop access to the huge market. Certainly there are back room conversations. Chinese sensibility needs to save face and appear to extract something from Google. China also should understand that if they block the deal they will appear to be backward and not modern thereby losing more and bigger face.

Google will be taken out back to the Chinese wood shed and dealt with. Google is still immature globally and is probably wetting its pants in anticipation. If you are truly in the business of maximizing shareholder wealth my advice to Sergey Brin and Larry Page is cut a deal. Get into the China game. The market is too large to be ignored. You cannot have geo-political gaps in your global coverage. Hire Henry Kissinger if you need to. As a matter of fact why haven’t you done so already.

China needs something also. If they block the deal when the rest of the world has given it the imprimatur stamp they look foolishly backward. They run the danger of incurring an international backlash for a parochial approach. Not a preferred option for the Chinese. So Google make the grand gesture. The Chinese market is too large to ignore. You need to drive EPS. Your competitors have access and can use China as leverage against you. Time is money. If you make the Chinese blink first to save face you just build up a huge tab.

George Gutowski writes from a caveat emptor perspective.

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May 15, 2012 Posted by | Black Swans, Caveat Emptor Perspective, Investments, politics, Take Over Targets, Volatility, Wall of Worry | , , , , , | 1 Comment

Obituary for Common Sense #commonsense

An Obituary printed in the London Times…..Absolutely Dead Brilliant !!
Today we mourn the passing of a beloved old friend, Common Sense , who has been with us for many years. No one knows for sure how old he was, since his birth records were long ago lost in bureaucratic red … … tape. He will be remembered as having cultivated such valuable lessons as: – Knowing when to come in out of the rain; – Why the early bird gets the worm; – Life isn’t always fair; – And maybe it was my fault. Common Sense lived by simple, sound financial policies (don’t spend more than you can earn) and reliable strategies (adults, not children, are in charge).
His health began to deteriorate rapidly when well-intentioned but overbearing regulations were set in place. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition.
Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children. It declined even further when schools were required to get parental consent to administer sun lotion or an aspirin to a student; but could not inform parents when a student became pregnant and wanted to have an abortion.
Common Sense lost the will to live as the churches became businesses; and criminals received better treatment than their victims. Common Sense took a beating when you couldn’t defend yourself from a burglar in your own home and the burglar could sue you for assault. Common Sense finally gave up the will to live, after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap, and was promptly awarded a huge settlement.
Common Sense was preceded in death, -by his parents, Truth and Trust, -by his wife, Discretion, -by his daughter, Responsibility, -and by his son, Reason. He is survived by his 5 stepbrothers; – I Know My Rights – I Want It Now – Someone Else Is To Blame – I’m A Victim – Pay me for Doing Nothing
Not many attended his funeral because so few realized he was gone. If you remember him, pass this on. If not, join the majority and do nothing.
George Gutowski writes from a caveat emptor perspective.

March 29, 2012 Posted by | Black Swans, Caveat Emptor Perspective, Class Action, Disclosure, Earnings Forecasts & Guidance, Financial Engineering, Insider Trading, Investments, Investor Education, politics, Short Interest, Stocks, Take Over Targets, Value Investing, Volatility, Wall of Worry | Comments Off

Goldman Sachs Last Laugh – Disgruntled Whistleblower Un-Intended Consequences. $GS

Image representing Goldman Sachs as depicted i...

Image via CrunchBase

Goldman Sachs (NYSE:GS) is supposedly embarrassed or maybe its bemused by a very recently resigned executive who is publicly slamming his former pay cheque as “ripping off clients” He also describes the place as toxic and destructive. Finally he claims the two senior officers have lost control over the culture. An interesting play on words. Why not just call them evildoers?

So after the headlines and the notoriety what is the next move? What is the next move in the Presidential election year? What is the move for clients that the executive serviced in Europe? Say I assume he had nothing to do with the Greece stuff.

The fellow is called Greg Smith and has about 12 years of deep dive experience. We all assume he has made enough money to retire on. Because we don’t think he will get a job in financial services again. Here are a few scenario’s he probably has not modelled.

Subpoena from the attorney general and or congressional committees. He has made many black claims. Surely there is malfeasance and wrong doing to back up these serious allegations. If there is Greg Smith needs to spill it and come clean. Allow the Karma Police to issue warrants and let the investigation begin. You cannot be making these public comments and assume nothing will come of it.

Would it not be extraordinarily funny if Goldman Sachs commenced an investigation and attempted to compel Greg Smith to divulge what he feels he knows. His refusal to co-operate would invoke the law of un-intended consequences and make him the pouting bad guy who wants to suck on his thumb in public and maybe get a book deal.

Goldman can easily take the high  road and say “Whats this all about? Please let us know so we can fix it. Oh you wont talk. Then you are are just libelling and slandering and lets start an expensive lawsuit that will bankrupt you” The squid already has a rather bad public persona or some will think. So playing the role of the aggrieved party attempting to right wrongs my serve up karma that Greg Smith cannot handle.

So right now the only thing that maybe the whole world can agree on is that “Goldman Sachs acts in its own interests just like we all do. If that makes Goldman Sachs a corporate son-of-a bitch with a face eating squid so what of it. Most of us are sons-of-a bitch. Admittedly most of us do not have a face sucking squid. small point but true.

Greg Smith buckle up. The ride may have just started.

George Gutowski writes from a caveat emptor perspective.

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March 14, 2012 Posted by | Black Swans, Caveat Emptor Perspective, Due Diligence, Investments, politics, Stocks, Volatility, Wall of Worry | , , | Comments Off

Air Canada Follies Conservatives Save NDP Convention $AC.B

English: Air Canada #616 Boeing 767-200ER at T...

Image via Wikipedia

Air Canada (TSX:AC.B) is not going on strike. Well sort of. The machinists and baggage handlers rattled the chains pretty good and made to look like they would go on strike during March break. The union has no PR sense. The Federal government steps in to protect the public during a key travel time. They had no choice. If something had happened and they had not pre-positioned a blocking move the political fallout would have been unacceptably huge. Easy move for conservative party.

But was the union really serious? The travel disruption would have continued for quite some time. The NDP which one can only assume is supported by the unions in question is about to hold its national leadership convention. Delegates from across the country will be flying in to Toronto. If Air Canada goes on strike many delegates would have been seriously inconvenienced.

The spectacle of a left-wing socialist party leadership convention being derailed by a militant union local has been avoided. The welfare of the general public has been placed first.

In the mean time Air Canada continues to be a penny stock with ambitions of acquiring the new Boeing 787 Dreamliner. Shareholder wealth maximization is hard to identify.

George Gutowski writes from a caveat emptor persepctive.

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March 11, 2012 Posted by | Black Swans, Caveat Emptor Perspective, politics, Stocks, Volatility, Wall of Worry | , | Comments Off

Goldman Sachs continues its slippery ways. Results and maybe riots on Jan 18 $GS

goldman sachsGoldman Sachs (NYSE:GS) will release Q4 and year-end results on Jan 18, 2012 at 08:00 ET by way of press release. When the market opens at 09:30 ET they will start their conference call. Lots of companies do it this way. You have a precious 90 minutes to digest information and take a crap shoot on what management may or may not say on the conference call.

At the same time there may be a traffic jam around the front door of fortress Goldman Sachs as various activist groups may take the opportunity to yet again show pathetic ineptitude. Personally I am concerned for the squids in the January weather.

We all know the market is off and Europe just smells bad. The real issue will be the impact of government regulators on how Goldman Sachs conducts its business and cranks out profits. These are all back room machinations not in public view. Goldman Sachs may throw a bone with a few market comments, but will not address the real issues.

What will Goldman Sachs look like in a few years? What will Goldman Sachs look like with a second term Obama presidency? Investors will still have to read between the lines and just plain guess at it.

George Gutowski writes from a caveat emptor perspective.

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December 28, 2011 Posted by | Black Swans, Caveat Emptor Perspective, Disclosure, Due Diligence, Earnings Forecasts & Guidance, Investments, Investor Relations, politics, Reg FD, Stocks, Wall of Worry | | Comments Off

Corzine is a criminal? Yes or No. Will Obama prosecute Democratic Wall Street rogues? $MF $GS

Jon_Corzine

Image by deb via Flickr

Jon Corzine of MF Global fame (OTC:MF) is stunned and apologetic about the missing billion dollars. After running Goldman Sachs (NYSE:GS), being a US Senator and then Governor of New Jersey (why did New Jersey have to suffer him twice) he proceeded to ignore his risk officer and make bets he did not understand. The risk officer resigned after he went to the board and was ignored and pushed aside.

There is a concept of reckless endangerment. It fits Jon Corzine like a bespoke suit with matching accoutrements. If Obama is serious about cleaning up Wall Street, start with rogue members of the Democratic party who have raped, looted and pillaged the most effectively.

After that we need a damn good witch hunt, to identify the foolish investors who backed him. When you lose billions it has to be institutional. What Wall Street again? Yep its Wall Street again. What were the terms and conditions of the investment? How can professional money managers condone such huge bets? 

We need to know which institutions had such bad judgement as to give Jon Corzine carte blanche. What were they thinking? You will probably find that a lot of public sector unions are absorbing losses. They will report the debacle as investing losses and not egregious errors in judgement. Pension regulators will be hard pressed to discipline stupidity but they should try anyway.

Finally you have state governors and mayors of all political persuasions with guaranteed public sector pension plans which now have bigger unfunded liabilities. Tax payors have to cover the losses on the back-end. Hard to blame unions on this point.

Thank you Jon Corzine. Apologies and being stunned does not do it.

George Gutowski writes from a caveat emptor perspective.

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December 8, 2011 Posted by | Black Swans, Caveat Emptor Perspective, Disclosure, Due Diligence, Investments, politics, Stocks, Volatility, Wall of Worry | , , , | 1 Comment

Apple Cash becomes a political target or corpgov issue? iCash solution soon or it’s dead money. $AAPL

English: The logo for Apple Computer, now Appl...

Image via Wikipedia

Apple (Nasdaq:AAPL) has an $81 Billion cash hoard. This amounts to 25% of its market cap. The stock does not pay a dividend. Everyone clearly agrees that they have enough for a robust R&D effort. This ensures that they can beat up any direct competitor and/or buy up smart ideas while they are still small.

The cash issue becomes a governance question. This is shareholder money with no clear purpose. Shareholders to date have been delighted with iPhones and iPads. But lets face it, the market is not going to let this dead money stick around on the balance sheet forever.

Apple executives have a big problem. They are good at technology but are they good at investing? Apple does not have a track record investing money. They have bought a few things here and there to augment their technology. But it stops there.

The question also becomes political. Apple is global. The cash most likely is spread out in bank accounts around the world. Uncle Sam has a perverse habit of taxing cash as it comes into the United States. So you will understand the reticence of some executives to repatriate profits. Democrats want and need to tax. Will politicians help hurt Apple.

Investors will be clamouring. IRS will be salivating. Politicians will be hiding. Apple executives will be confused. The public will read about the problem on their iPads thereby creating more profit.

Apple needs to pick a direction with the cash and develop a strategic plan. The problem is much more complex than just a little bit of dividend yield. So far they have no game.

George Gutowski writes from a caveat emptor perspective.

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November 30, 2011 Posted by | Black Swans, Caveat Emptor Perspective, Dividend Income, Earnings Forecasts & Guidance, Investments, M & A, politics, Reg FD, Share Buy Back, Stocks, Take Over Targets, Value Investing, Volatility, Wall of Worry | , , , | Comments Off

#Anonymous needs a Valium #ows #occupytoronto

Anonymous has threatened to exterminate Toronto from the internet if Toronto authorities move to dismantle the occupy Toronto. Sure they can launch a denial of service attack and probably cause some grief. But what about the citizens of Toronto who actually expect their government to continue functioning and providing the day-to-day services that make a city work properly.

Threatening to shut down a city is a fascist like threat which will eventually turn the people against you. Right now you live under a rock somewhere because a few people in the know are not talking. When you threaten to screw up cities Hmm.

This post was written from a caveat emptor perspective.

November 13, 2011 Posted by | Anonymous, politics | 1 Comment

#OWS Will it disturb Macy’s Thanksgiving Day Parade? $M #Macys #NYC

83rd ANNUAL MACY's THANKSGIVING DAY PARADE 20...

Image by asterix611 via Flickr

The parade logo
Image via Wikipedia

Occupy Wall Street the original version has been rather quiet of late. Oakland has been in one form of riot or another. Oakland even closed down the port which will have a huge negative impact on the economy and the working man. The NYC contingent in order to avoid sliding into irrelevance may decide to march along with the parade and hijack it for publicity value.

Then people can vote for which cartoon character they like the best.  The NYPD marching band is scheduled and that just might be all the provocation that OWS needs.

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November 3, 2011 Posted by | politics | , | Comments Off

MasterCard walks into a buzz saw. Automating foreign graft and poor practices. $MA #corruption

MasterCard

Image via Wikipedia

Black swans
Image via Wikipedia

MasterCard (NYSE:MA) announced some pretty good results rewarding shareholders with an increase in wealth. But here is a line in their press release which just begs the Black Swan to show up.

“We also continue to work with governments around the world, most recently in India and Mexico, to replace some of their paper-based, manual procurement systems with MasterCard commercial products.”

OK international expansion is important. I know they cannot come out and say the governments and societies are corrupt and to use a politically correct term economically challenged. But when you highlight those two economies as drivers of future growth it’s only  a matter of time before problems abound. The security costs and file remediation costs will be enormous. They have promised cost efficiencies. but will the cultures allow them to deliver.

Disclosure: George Gutowski writes from a caveat emptor perspective. I fear Black Swans.

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November 2, 2011 Posted by | Black Swans, Due Diligence, Earnings Forecasts & Guidance, Investments, politics, Stocks, Value Investing | , , | 1 Comment

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