You have to like Hank Paulson. The Treasury Secretary grew up on a farm in Illinois. Many leaders in American history learned the value of hard work while planting seed and harvesting crop. George Washington was a farmer. Thomas Jefferson was a farmer and envisioned our country as a republic of farmers with a strictly limited federal government. That was when agriculture dominated the economic composition of the United States. Since then, the original federation of thirteen states has grown to fifty while the percentage of the citizenry employed in …

Henry Paulson, the Secretary of the U.S. Department of Treasury, recently announced a plan to purchase equity stakes in large public financial institutions to stem the tide of bankruptcies and failures brought on by the credit crisis. By buying shares in big banks, the government is essentially providing much needed cash to stabilize the companies and provide for some liquidity and credit stimulus. This is just one of many actions announced in an attempt to diffuse the credit crisis. Equally busy are Ben Bernanke and the Federal Reserve. Paulson swears …

Have you ever wondered what could happen to the stock price of Berkshire Hathaway (BRK-A) when its amazing CEO, Warren Buffett, is no longer able to captain the ship or passes away? This topic has swirled atop investors’ minds for at least a few years now and consistently keeps getting addressed by the Oracle of Omaha himself during Berkshire’s annual shareholder meetings. Last year, I sent my wife Cynthia to the shareholders’ meeting and she reported that the continuity or succession topic was one of the most widely talked about.
Let’s …

Even the mighty are falling. The last two major independent investment banks on Wall Street, Goldman Sachs (GS) and Morgan Stanley (MS), have received permission from the Federal Reserve to convert from traditional investment banks into commercial banks or bank holding companies. Plenty of ink, digital or otherwise, has been spilled about the disappearance of investment banks so I won’t dwell much on that. We’ve seen the collapse of Lehman Brothers (LEH) and Bear Stearns. Still somehow, I’m sure there were some who sentimentally held out hope that the two …

Patrick Byrne, CEO of Overstock.com (OSTK), was one of the lone voices sounding caution while the market was steadily marching upward to record levels. In good times when everyone in the market is making money, few will listen to the radical iconoclast in the corner warning of an impending end to the party. Contrarians are often seen as party poopers. The financial press regularly ridiculed Byrne for his passionate crusade against naked short selling. Many perceived his actions as a desperate attempt to save his own company from short sellers. …

Don’t start giving in to panic as the market works its way lower. Sure some once impressive financial institutions are going the way of dinosaurs. Perhaps your 401(k) looks like it might lose weight faster than you can. Whether you’re managing your own account or entrusting your nest egg to a professional mutual fund manager, the market and your investments have seldom felt more bleak. Whatever you do, don’t panic.
Don’t make a run to your bank and demand to close out your savings and checking accounts. …

I wrote about my short thesis on Netflix (NFLX) just about ten days ago. The company just the other day reported growing earnings but disappointed with a weak outlook. The stock fell a whopping 24% as investors ran for the exits. The market responded negatively to the increase R&D costs for developing streaming technology that would allow the company to deliver long-form digital video content over the Internet. These recent expenses have slowed down profit growth and promise to weigh on foreseeable future earnings.
My short thesis …

Two finance professors from UCLA and the Helsinki School of Economics released a study exploring the correlation between individuals prone to getting speeding tickets and the tendency to churn investment portfolios. They conclude that an average investor’s portfolio saw an 11 percent increase in the turnover ratio for each additional ticket received. This is a highly significant finding according to statistical methods.
A couple of possible explanations the academics propose are overconfidence and thrill seeking behavior. Although overconfidence might play a small explanatory role, they find that the trait of thrill …