As submitted by I’m Right…You’re Wrong

So all the analysts are in great moods as Israel joined the rest of the world in bailing out troubled companies.

According to the JPOST.com: “A further NIS 5b. will be used to set up a number of investment funds in partnership with the pension institutions (provident funds, pension funds and managers’ insurance providers) for the provision of non-bank credit and to deal with the refinancing of bonds. The establishment of the private investment funds will be on the basis of tenders. Out of the NIS 5b., NIS 3b. will be allocated with immediate effect and NIS 2b. in five months time.
“The move is designed to support holders of corporate bonds when the bonds mature and to help assure companies’ ability to meet their commitments,” said Goshen.
“The investment funds will either refinance corporate bonds and spread the payments out, or inject capital directly into troubled companies operating in Israel to help them through the crisis.”

Great. So the taxpayers are getting left bailing out lousy portfolio managers who bought corporate bonds that had little in the way of assets to back up the bond issue. Why do these managers keep their jobs? After all, if they did such a poor job in managing pension money to the extant that they need a safety net to protect soon to be pensioners, why do they keep on working? Also, we have to bail out billionaire ‘Tycoons’ like Lev Leviev and Yitzchak Teshuva who made highly leveraged real estate investments all over the world at the height of the bubble. Why bail them out? How much do you want to bet that they will continue to make hi risk investments knowing that if the investment crashes, the Israeli government will bail them out.

So you may ask, ” why is this any different than bailing out the US auto industry?” Not that I like that either but at least I understand the case about the huge job loss that would follow if the Big 3 automakers went under. What job loss would be created in Israel if one of the tycoons went bankrupt? How many local Israeli’s is Teshuva employing in his Las Vegas hotel/casino? They lost hundreds of millions of dollars investing out of Israel, employing no Israeli’s and we still have to bail them out?

This is a scandal and it’s a shame no one is talking about it.

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Guest blog post from New Rules of Investing:

Interesting how an investor relates to a deeper understanding in a portfolio company after making the investment. Roger Ehrenberg is an investor in StockTwits.  As Roger mentions in a recent blog post, StockTwits recently release a new version of StockTwits where users can insert a ‘$’ sign before any mention of a specific stock, effectively tagging the twit with a specific stock to be included on stock pages within the StockTwits site.

Roger recently quipped about a big issue he had regarding Twitter and its ability to pair-up users with the same interests.  “If StockTwits didn’t exist, it would be much harder to find people with similar interests where one could easily be inserted into the dialogue.”

Now, as more vertical applications are being built upon the Twitter platform, Roger forsees a movement “that facilitate[s] the creation of communities that interact on Twitter but can dig in deeper elsewhere (like StockTwits), Twitter’s power as an enabling platform is rapidly coming into view.”

I found it interesting to see that Ehrenberg invested before this greater appreciation of Twitter’s ability to act as a communications platform for more vertical apps written on top of it.  While StockTwits takes users part of the way — in a sense, it recreates the perennially-broken Yahoo Message Boards into a self-selected conversation with only those stocks and users allowed into the conversation  — it will be interesting to see what unfurls next.

StockTwits creates stock pages to aid in stock discovery and promote a hierarchy of experts within the StockTwit community.  Any meta information — most commented on stocks or performance metrics — would enhance the value of all the information being created.  It still doesn’t address the problem, however, of how Joe the Plumber or Bill the Doctor decides how to build and manage his portfolio.

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For those of us following Google’s foray into online finance, it was always kinda strange that Google, the contextual search behemoth, never had any ads on its fledgling financial site, Google Finance.

Until last week.

Yes, folks, last week included that fateful moment when Google schlocked up their pretty clean interface to deliver more ads about investing in tropical hardwood floors or purchasing a financial newsletter “guaranteed to triple my money”.

So, ads are now showing up on the hompage to the right of the market charts and on under the news section on company pages like this one.

I thought this link was interesting.  Google says, “Google Finance provides up-to-date financial information, news, blog posts, and access to lively discussions; these services are entirely separate from the ads on our site. A company’s status as an advertiser with Google does not affect the way data and information about that company are displayed on Google Finance.”

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Today’s post comes from a guest blog, New Rules of Investing:

Institutional investors have powerful tools at their disposal to screen through reams of data.  Part of the institutional investment process entails screening through thousands of securities looking for a needle in a haystack — stocks that fit certain investment criteria.  From thousands of stocks, analysts can filter through a couple of hundred that fit these so called screens.  With a couple of hundred stocks in hand, analysts set out to do the hard work analyzing these companies, comparing them to one another, speaking to management and whatever else hedge fund and mutual fund analysts do when looking at prospective investments.

If I’m a value investor, I’m probably going to use some metrics that focus on Return on Capital (RoC) or Return on Equity (RoE) and Earnings Yield (E/P).  Growth investors might like to compare the price/earnings ratio (P/E) to the actual growth prospects of the stock in question.  There are literally thousands of things to look at.  So, where to start?

As we discussed in the “Piggybacking the Pros“, the Internet is a wonderful place to get information on stocks.  From monitoring actual moves that uberinvestors make to seeing what your peers think of certain firms, the information is out there.  You just need to be able to find it.  Investment Screening 2.0 is all about using screening criteria from super investors like Warren Buffett to find the next big stock.  Think of it as tapping the world’s greatest minds to see what they think of a given investment.

John Reese, a well-regarded entrepreneur with degrees from the two best schools in Cambridge, MA, has created a premium service that is the product of many years of research into the strategies of super successful investment managers.  Having devoured numerous investment books and interviews with the world’s best investors, Reese embarked on an ambitious project to computerize this information.  His firm, Validea, has created an algorithm capable of analyzing thousands of stocks according to differing investment strategies ranging from Fidelity’s Peter Lynch to Berkshire Hathaway’s Warren Buffett and applies screens to the overall market to find stocks that would fit these uberinvestors’ criteria.

John Reese joins New Rules of Investing for an exclusive interview. (Continue »)

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