Mark Cuban & Insider Trading – Maverick or Martha Stewart

By his own admission, Mark Cuban sold his shares in Mamma.com Inc., now Copernic Inc.(CNIC), after receiving non-public information from a senior officer of the company. However, insider trading is notoriously hard to prove, for a variety of reasons. One can only imagine that the SEC is very confident in their case; surely aware of the press this charge would generate and Mr. Cuban’s financial means for a legal battle. Even if convicted, because this is a civil suit, Mr. Cuban will not face jail time. Instead, he would be required to hand over a few million dollars, which is pocket change for him. This is not to say that the SEC should not aggressively pursue this case. This whole incident merely illustrates Mr. Cuban’s solipsism and disregard for the principles of the marketplace the same marketplace that allowed him to amass his staggering wealth in the first place. Continue reading

The Poor are to Blame for the Housing/Financial Crisis – Not

Much of the focus of the country’s economic problems has been on the burst of the housing market’s bubble and the related credit crisis. While this focus is appropriate, the foreclosure rate has hit a record level and these problems are frequently blamed on “the poor.” However, much of the data shows that this is not the case.

It is often assumed that those with lower income levels are a bad credit risk in the first place. In fact, foreclosure rates are comparable across all income levels. High foreclosure rates are found in many communities across the country. There are, however, significant and surprising exceptions. The current national foreclosure rate is approximately 1 in 450. However, states that are frequently regarded as more affluent, California, Nevada, Arizona and Florida, are all facing foreclosure rates of more than 1 in 200. Conversely, Mississippi, the poorest state in the US, has a statewide rate of approximately 1 in 5,000 and West Virginia, another less affluent state, has a rate of approximately 1 in 20,000. Continue reading

Recession Recovery Track: U or V?

With the recent financial bailout of major banks and their owners, there is no doubt the US is headed into a recession, or already in a recession. The only questions that remain is how the economy will be able to recover and turn itself around and how long it will take to do so.

In 2001, after the tech bubble burst and recession loomed, the salvation came from homeowners who tapped into their home equity, thusly easing the financial burden and keeping the economy afloat and credit lines healthy. This put the country on a V-shaped, fast road to recovery by re-energizing the market and keeping values of the dollar high. After 8-months it was all over, and the economy was well on it’s way to a healthy state. However, with the recent downfall in the housing market and no light at the end of the financial tunnel, it appears more likely that the recovery time from this recession will be lengthy, and U-shaped. Continue reading

Companies Benefiting from Lower Commodity Prices

With the recent strength of the U.S. dollar and the fear of a global recession, commodity prices have plunged over 50% in some cases, over the last few months. While this is hurting the majority of industrial and commodity based companies, there are some consumer staples and consumer goods companies whose raw costs are declining because of the decrease in commodity prices, which should lead to increased profit margins. Companies which may benefit the most from these lower commodity prices are: Kimberly-Clark Corp. (KMB), General Mills (GIS), Tyson Foods (TSN), and Goodyear Tire & Rubber Co. (GT). Continue reading

Aren’t Long Calls and Married Puts the Same Thing?

Chris Smith actually bought The Blueprint. I’m okay with his review, except he should be informed that:

1) The Blueprint’s chapters HAVE been revised to name the Income Methods with the traditionally accepted terms, so that part should be eliminated if he wants a current, accurate review and be reminded…

2) The benefit of the married put at the outset is that it defines risk more readily, in a more understandable way for many. Continue reading