BACK!

....coming back from the financial wilderness!

Sadly it is the day that Steve Jobs passed away.

Does association with Tiger really hurt brands after scandal?

Felix Salmon just pointed out a bogus study from UC Davis researchers that ascribes a loss of upto $14billion to the shareholders of the companies whose brands Tiger endorsed. But this set me thinking as to whether there is a way tell in today's day and age if the publicity ("Hey, there's no such thing as bad publicity in the PR world!") that Accenture and Gatorade got due to Tiger's scandal will be net negative or even positive from the higher brand recall that many readers will experience! I would love to read a study if someone has found a way to determine this!

On publicradio.org,  Stacey Vanek-Smith for Marketplace got at least the following quote on the scandal

MARISSA GLUCK: I think for Nike, being mentioned on Craig Ferguson, being part of the popular culture keeps them top of mind and it, in a way, makes them maybe a little hipper because they're part of the joke.

The best part in all this for a moneyverse observer like myself is that predictably the insurance companies are now touting reputation risk insurance! One insurance product offered by DeWitt Stern will supposedly pay for lost sales, crisis-management fees, lost advertising campaign expenses and pre-committed and incurred endorsement fees. We can be sure that at least this firm will profit from the scandal!

Christmas Gifts... Are they only worth $? What about ;-)

 Indeed, some economists would have us believe that Christmas gifts are an inefficient allocation of capital - that one should really just give cash or at worst gift cards because what if you end up giving a bad/unwanted gift? They profess that it is economically maximizing for the gifter to actually just give the cash to the giftee and let the giftee pick out a present on his/her own!

This train of thought conveniently forgets that part of the gifting process is the thought and effort that goes into thinking of a suitable gift, then going out and purchasing it (or going online and ordering it). It also removes the value of having a gift item associated with a particular person, i.e. the memories linked to the gifter that will be attached with the gift that is given. The Economix blog on NYT explores this idea somewhat.

Remember, gifts are not about counting the dollars and cents, truly it's the thought (and lets face it, thought=time=money) that one puts into them that really counts!

Buffett Back on Board!

The Global Investing blog on Reuters points out that Warren Buffett is getting back into the real estate market. I think Buffett is a genius and this news is definitely another vote in favor of the economy turning around soon.

However, the thing everyone needs to remember with Buffett is that his time horizon for a long term investment is probably a lot longer than most other people's. Though housing may have hit a bottom, that does not necessarily mean that it will definitely be a good investment for the next 5 years or so. Actually it might be, but that's not to say that there aren't other better investments available.

And heaven forbid, if haven't seen the bottom, then housing is one of the most illiquid investments to be in! Just tossing in my two cents to say that people should not read this news as a signal to get long second mortgages again!

GDP Indexed Bonds... are they really such a Bad Idea?

Felix Salmon on Reuters has just put up a piece criticizing GDP bonds proposed (again) by Robert Shiller in the NYT. I'm not convinced that they are an entirely bad idea, and a first level dig around the web yields some interesting tidbits. Here's one that give a quick and dirty summary of their features.

Yet Another Airline Proposes Bankruptcy

Here's the problem with the airline business... a lot of countries will subsidize the operation of their country's airline so that they have the prestige of having their own "National Airline". So it doesn't really matter whether their airline, makes a profit or loss, it will simply continue to operate  and outcompete most private airline businesses who have to worry about such things as their bottom line or profitability! Thus we see another airline proposing to file for bankruptcy.

And this comes very shortly after a Spanish airline went bankrupt this week and a Scottish airline went under earlier this month. Yet another reason why I like to stay away from airline stocks

Air Travel Stocks to sing the Blues

As if air travelers weren't subject to enough ordeals, going through long travel lines and security check and strange rules about what you can and cannot carry-on, crazy delays before Flights and on the tarmac, the new guidelines issued by airlines, and the expected "unexpected" security arrangements, in the wake of the recent sabotage attempt by a Nigerian terrorist will make things tougher still.

To be fair, the airlines and the security authorities have to been seen to do something and tightening the checkpoint procedures seems to be the easy thing to do. However, it seems more like a knee-jerk reaction instead of a well thought-out strategy. One would assume that these guidelines will be tweaked over the coming weeks so that they actually make sense rather than just make flying an even more trying ordeal for all passengers.

One thing is for sure though, and it is that the airlines are going to take a hit to their revenues and profits as more people on the margin get dissuaded from taking short flights and instead choose to drive or take the bus/train wherever possible, and in the grand scheme of things that is not an altogether bad prospect. Despite what some bloggers have said, I feel that Airline stocks will definitely feel the pinch going forward. We'll see what the market thinks in the weeks and months ahead

Microfinance - What can we Learn? KYC

I'm a regular listener to Peter Day's World of Business Podcasts on BBC Radio 4. A recent program about the workings of Microfinance, its benefits and potential pitfalls, brings me back to a very important concept in banking... Know Your Customer or KYC.

As microfinance depends on using one's social capital than actual collateral as the basis of a loan, it is paramount to really know the customer who's taking out the loan. It is the strength of this social capital that really pushes the customer to make the loan successful, right from asking for the right amount of loan, to using the money wisely, and then repaying it promptly. Perhaps the bankers should have kept this in mind instead of making all those NINJA loans!

You have a mortgage? Oops! Maybe you can't choose where you live!

An interesting post on the ever excellent Planet Money blog points out how the recession is preventing people from moving around, as they are staying put in their mortgaged home (that might be underwater on the mortgage). What would be interesting to see is whether a whole generation grows up being less likely to own a mortgage, and preferring instead to rent. Or maybe home ownership as part of the American Dream is just too deeply embedded in the American psyche?

A little wall street humor..

I refer to myself as a jaded wall street worker. Part of the reason for this is all of the unsavory behavior going on with the likes of Bernie Madoff, Jerome Kerviel etc. What is actually true is that most people on wall street are honest and just want to get paid to do the right thing, but we get a bad rap for the scammers who invariably get attracted by the money on wall street.

Someone sent me a link to this little piece "A Parable On How Wall Street Works" on the blog An Investment Banker's Take On Life". What's not so funny is that a significant percentage of people on wall street would actually do this if they could!