the revamped Google Finance

I hadn’t realized how dependent I’ve become over the past ten years on the Google Finance page.  Google Finance’s debut coincided closely with my retirement from my job as a global equity portfolio manager.  I found that GF met enough of my personal money management needs that I didn’t miss my $26,000/year Bloomberg terminal much at all.  (The ability to see a company income statement dissected in a way that revealed major customers and suppliers–and their relative importance–came to
Bloomberg later.  Assuming it’s still there, that’s a really useful feature for a securities analyst.)


What I liked about the old GF:

–everything was on one page, so I could take in a lot of information at a single glance

–it contained information about stocks, bonds and currencies, so I could see the main variables affecting my investment performance grouped together

–there was a sector breakout of that day’s equity performance on Wall Street

–I could add new stocks to a portfolio list easily, and thereby be able to see what was going up/down for a large group of stocks I was interested in

–I could compare several stocks/indices on a single chart, and vary the contents of that chart–and its timeframe–easily.


The charts themselves were not so hot.  But I could either live with that or use Yahoo Finance.  (I have a love/hate relationship with charts, in any event.  My issue is that stretching the price and/or time axes can change a bump in the road into a crisis and vice versa.)


The new Google Finance?


–All of the stuff on my “likes” list has disappeared.

–The Dow Jones Industrials–a wacky, irrelevant index whose main positive point is that it’s easy to calculate–features prominently in coverage of the US.

–The Sensex has been consistently listed as a top-five world index, even though India is an insiders market that’s extremely difficult for foreigners to access.  Same for Germany, where there’s no equity culture and little of the economy is publicly listed.  No mention of Hong Kong or Shanghai or Japan or (most days) the UK.  Yes, the UK economy is smaller than Germany’s.  But London’s significance comes from its being the listing hub for many European-based multinationals.


My conclusion:  the new page has been put together by people who, whatever their tech smarts, have no clue at all about what an investor needs/wants.  Its overall tone seems to be to provide information that an investor will like to hear, based on browsing history.  Put a different way, the new page strives to turn users into the prototypical “dumb money.”  Actually, now that I’ve come to this realization, maybe the new page isn’t so counterproductive after all.  Just don’t use it.



the Wall Street Journal’s new direction

The Wall Street Journal recently announced a reorganization intended to narrow its focus back toward politics and business, as well as to shift its orientation from print  to online.

As far as the stock market is concerned, the WSJ now seems to be trying to provide less news and more analysis.

But I’m finding the new analysis tack to be quite odd.  For example:

–two days ago, an article pointed out that shoppers are frequenting low-price retailers.  Yes, that’s true, but there was no acknowledgement that this trend has been going on for ten years

–yesterday’s paper pointed out that companies are preparing for higher short-term interest rates by tightening up their working capital management.  Potentially very interesting.  Unfortunately, the authors didn’t have much of a grasp of what working capital is, so the article’s usefulness was limited

–a third article, this one also from yesterday, contrasted the performance of value-oriented ETFs and their growth counterparts.  It also would have been a lot better if the author had a basic idea of what growth investing is   …and had refrained from using the disparaging term “momentum” for growth.


What could be going on?

–maybe it’s just August

–it could be a change in editors or in reporters

–it might also be sources.  To the degree that the Journal relies on interviews with professional Wall Street analysts, it could be that cutbacks on the sell side have diminished the available information.  Or it might be that the sell side is preparing for the day (coming soon, I think) where it will begin to charge cash instead of soft dollars for their research.  So brokers may have already begun to limit the information they will release for free.

If it’s not the first of these, we’ll all have to become a little more creative in how we access basic data.

At least there’s still the FT.


more trouble for active managers

When I started in the investment business in the late 1970s, fees of all types were, by today’s standards, almost incomprehensibly high.  Upfront sales charges for mutual funds, for example, were as high as 8.5% of the money placed in them.  And commissions paid even by institutional investors for trades could exceed 1% of the principal.

Competition from discount brokers like Fidelity offering no-load funds addressed the first issue.  The tripling of stocks in the 1980s fixed the second.  Managers reasoned that the brokers they were dealing with were neither providing better information nor handling trades with more finesse in 1989 than in 1980, yet the absolute amount of money paid to them for trading had tripled.  So buy-side institutions stopped paying a percentage and instead put caps on the absolute amount they would pay for a trade or for access to brokerage research.

All the while, however, management fees as a percentage of assets remained untouched.


That appears about to change, however.  The impetus comes from Europe, where fees are unusually high and where active management results have been, as I read them, unusually poor.

The argument is the same one active managers used in the 1980s in the US.  Stock markets have tripled from their 2009 lows and are up by 50% from their 2007 highs.  All this while investors have been getting the same weak relative performance, only now they’re paying 1.5x- 3x what they used to–simply because the markets have risen.

So let’s pay managers a fixed amount for the dubious services they provide rather than rewarding them for the fact that over time GDP has a tendency to rise, taking corporate profits–and thereby markets–with it.

The European proposal to decouple manager pay from asset size comes on the heels of one to force managers to make public the amount of customer money they use to purchase third-party research by allowing higher-than-normal trading commissions.  Most likely, customer outrage will put an end to this widespread practice.

Both changes will doubtless quickly migrate to the US, once they’re adopted elsewhere.




what a good analysis of Tesla (TSLA) would contain

A basic report on TSLA by a competent securities analyst would contain the following:

–an idea of how the market for electric cars will develop and the most important factors that could make progress faster or slower.  My guess is that batteries–costs, power/density increases, driving range, charging speed–would end up being key.  Conclusions would likely not be as firm as one might like.

–TSLA’s position in this market, including competitive strengths/weaknesses.  I suspect one main conclusion will be that combustion engine competitors will be hurt by the internal politics of defending their legacy business vs. advancing their electric car position.  The ways in which things might go wrong for TSLA will be relatively easy to come up with; things that could go right will likely be harder to imagine.

–a detailed income statement projection.  The easy part would be to project (i.e., more or less make up) future unit volume and selling price.  The harder part would be the detail work of breaking down unit costs into variable (meaning costs specific to that unit, like labor and materials, with a breakout of the most important materials (i.e., batteries)) and fixed (meaning each unit’s share of the cost of operating the factory).  An important conclusion will be the extent of operating leverage, that is, the degree to which fixed costs influence that total today + the possibility of very rapid profit growth once the company exceeds breakeven.

There are also the costs of corporate overhead, marketing and interest expense.  But these are relatively straightforward.

The income statement projection is almost always a tedious, trial-and-error endeavor.  Companies almost never reveal enough information, so the analyst has to make initial assumptions about costs and revise them with each quarterly report until the model begins to work.

–a projection of future sources and uses of cash.  Here the two keys will be capital spending requirements and debt service (meaning interest payments + any required repayments of principal).  Of particular interest in the TSLA case will be if/when the company will need to raise new capital.



’tis the season to be jolly, but…

At the end of last week I wrote a bit about one of my pet peeves, the inconsistent way in which the SEC treats inside information.  As one of my former colleagues, an SEC investigator hired by my employer at that time to advise analysts and portfolio managers how to stay on the right side of the law, once told me, “Inside information is whatever the SEC decides it is on a given day.  The cardinal rule is never to do anything that catches the SEC’s attention.”

Not very helpful counsel, is it?    …although it does accurately describe the Eliot Spitzer school of law enforcement.

Don’t get me wrong.  Honest professional investors don’t want inside information.  It taints their own research efforts and prevents them from trading on hard-won insights.  And I applaud the SEC’s efforts to shut down peddlers of stolen company information and the people who buy it from them.  What I don’t like–and what may be changing now–is the inability by the SEC so far to separate legitimate research from theft.

a second peeve

On now to my second pet peeve…selective release of information by publicly traded companies.  Yes, it still goes on, despite the fact that Regulation FD is supposed to have made this practice illegal.

Again, I’m all for a level playing field.  And I’ll admit that when I was a large shareholder by virtue of representing my money management clients I didn’t worry too much about how companies treated the average individual investor.

Even in those days, however, I saw the tremendous preference that long-established companies gave to brokerage house analysts.  Many held private meetings for sell-side analysts only (owners of the company’s stock excluded) in which they provided detailed descriptions of their operations and offered informal access between sessions and over lunch/dinner to top technical and management employees.  This still occurs (Adobe has a similar kind of get-together that everyone can come to.  It costs $1,500 or so, however, which is probably what it costs ADM+BE to host the function and which is fine with me.).

Waht bothers me is that the firms in question givelots of  important information to brokers, that brokers turn around and charge me to get.  So I’m an owner and the only way I can obtain data about my company is to be forced to pay for it from a third party.  That’s crazy. Sometimes, too, the message gets garbled in the retelling.  At least have a broadcast of the proceedings on the company website.

Since I’ve retired I’ve also found that the Investor Relations and Public Relations departments of older, stodgier firms are much less responsive to my requests for information than they were when I ran large portfolios.  Now they sometimes ignore my repeated phone calls or emails, whether I identify myself as a shareholder, an analyst in a (small) money management firm, or a financial blogger.  Either that or they respond with a big time lag.

In a way, this lack of response is valuable information in itself.   Big, stodgy, unresponsive to owners = stay away.  In cases when new management comes in to shake up the walking dead, this is a sure sign that the turnaround hasn’t gotten as far as top management thinks.

On the other hand, I’ve also had many enjoyable conversation with CFOs or CEOs of mid-sized companies who, to my mind, get it that the idea of responsibility to their owners isn’t simply a legal fiction.  My experience is that firms of this sort tend to do better in a fast-changing world.

the Bloomberg snooping scandal

About a week ago the New York Post, of all places, broke a story that reporters for Bloomberg News could (and did) access information about customers’ use of their Bloomberg data terminals–and were using the insights they gleaned to try to generate stories.   In the instance the NYP cited, a Bloomberg reporter was asking Goldman about whether a certain executive was still on the payroll.  It sounds to me that in the course of an unproductive conversation the reporter said he knew something was amiss because the person in question hadn’t been using his Bloomberg terminal for an unusually long time.

Once the story broke, J P Morgan revealed that it had been pressured for information on the fate of the disgraced “London whale” trader by Bloomberg reporters who said the same thing–that they could see changes in his usage of Bloomberg data.

Bloomberg says reporters’ access to customer data has since been turned off.

good news/bad news

The good news, for Bloomberg users, is that the reporters in question made no effort to disguise the fact that they had been analyzing their target’s Bloomberg usage.  This has brought to light fine print in Bloomberg contracts that apparently allow such behavior.  The contracts will doubtless be changed.

Also, the ineptitude of the Bloomberg reporters suggests to me that the practice of mining customer information was not kept quiet for long.  They went directly to the companies; their main tactic seems to have been to beat them over the head with the privileged information they had–ensuring instant publicity.   So the problem has likely been nipped in the bud.


Whether and when the London whale lost his job isn’t really a market-moving story.  It would be inconceivable that a trader could rack up monumental losses, hide them while trying to recoup through further trades, and still keep his position once discovered.  And the workout of the mess he made would follow easily predictable steps.  So this was not investment news.

No, this was a general news story.

That’s the interesting part of the tale.  If we figure there are 300,000 Bloomberg terminals in use, at, say, an annual fee of $25,000 each, that would mean they generate $7.5 billion in yearly revenue for Bloomberg LP.

Why in the world would you put that revenue stream at risk by undermining customer confidence in your discretion?   …especially by going after stories that have no direct relevance in helping investment industry customers do their jobs?

My guess is that someone high up in Bloomberg LP has decided that it’s a good idea to try to develop a new source of profits by building a general news capability using the investment researchers already in the company as a base.   I’d also guess that this is a relatively recent development, one that coincides with the fading of Bloomberg Radio as a source of investment information.

Peter Lynch of Fidelity called it “diworsification” (a term I hate), when a company strayed from what it was successful at to enter an allied field.  Often, the diversification make the company worse, not better.  We may be seeing an instance of it here, particularly if worries about being spied on cause customers to start looking for alternatives to important Bloomberg services.

the fading of Bloomberg Radio

first ESPN…

Over the Thanksgiving holiday my older son pointed out to me that family friend, John Koblin, had written a critical article for Deadspin on how ESPN has gradually lost its journalistic way as it chases television ratings.

The example John focusses on is the network’s apparent obsession with New York Jets football player, Tim Tebow–a legendary college football figure who appears to be the latest in the parade of Heisman Trophy quarterbacks not quite good enough to make it in the NFL.

How is Tebow a continuing story?  ESPN2’s unsuccessful morning show First Take switched format in late 2011.  The new look:  …a staged debate between two cartoonish figures who duel in vintage WWF fashion over some item of sports news.  Their favorite topic:  Tebow.

ESPN discovered that the new First Take was surprisingly popular, even taking audience share away from its mainline morning show, Sportscenter.  It reacted in two ways:

–more phony debates all over the network, complete with loud voices, exaggerated gestures and bombast, and

–Tim Tebow all the time, no matter what the ostensible topic of a given show.

I’m of two minds about this ESPN development.  As a holder of DIS shares I guess I should approve.  As a sports fan, I’ve got to find other sources of sports information and analysis.

…now Bloomberg

Yesterday I was on my way in the car to Delaware and turned on the Bloomberg Radio morning broadcast for the first time in a while.  Five years ago I used to listen every day, either live or through podcasts of important segments.  No longer.  As Bloomberg dialed down the information content and dialed up the reporter self-congratulation I began to look elsewhere.

Anyway, I caught the last part of The First Word, with Ken Prewitt, who strikes me as the only savvy professional journalist left on Bloomberg.  Then came Bloomberg Surveillance, which appears to have had a format tweaking since the last time I listened.  Mr. Prewitt is gone (…or maybe he was just taking a day off from the insanity).  What remains is a veritable First Take of loud voices and self-congratulatory glorification of trivia.

To my mind, this can’t be an accident.  The radio personalities must have been trained, à la ESPN, to speak louder, create fake “debate” and constantly tell the audience how important the topics–and the radio hosts themselves–are.

And, as with First Take, the quest for higher ratings is the most likely explanation, with Fox News and CNBC as the models.  It’s probably also cheaper to simply act as if you’re conveying relevant information rather than to do the research and analysis needed to create it.

The written Bloomberg news appears not to have been infected by this broadcast tendency.  I figure the investment professionals who pay $30,000 a year or more for Bloomberg terminals wouldn’t put up with the stuff that’s now on Bloomberg Radio.

Where is the real financial news today?  It’s in newspapers like the Financial Times  and the Wall Street Journal.  And, like sports, it’s in the blogosphere.

We may mourn the loss of Bloomberg Radio as an information source, and the fact that the search for relevant stock market information is somewhat more difficult without it.  But this also means that insights we may develop are that much more valuable–because they are less likely to have been fully disseminated into the market at the time we figure them out.