Friday, July 27, 2007

No Credit for you

Its here finally. After months of speculation and expectation that troubles in the housing market, in particular the subprime market, catch up with the booming stocks , the prophecy seems to be coming close to being fulfilled. Growing worries on the spill over effects of the subprime mortgage market in US have sent the american stock markets in a tailspin and the effects are being resonating all around the world. Indian stocks were down about 3% in one day, Japan's Nikkei shed weight to the tune of 2.36% and British markets were under water 3.5%. It is another stark reminder that in today's globalized world, financial problems have lost their local character. Just a few months ago, when the chinese markets tanked momentarily, the markets all over the world felt the tremors. On the face of it, it seems that markets are only recovering from a hangover after the late night drinking binge of cheap credit and the resultaning M&A activity. As the credit markets tighten a little more and the private equity premium starts disappearing, the stocks should come down even further from their previously unsustainable levels.

Thursday, July 19, 2007

Miller on Investing

Legendary investor Bill Miller has some sound advice on the art of investing. Must read. My favourite nugget, ""There ain't only three things to investing. Knowing the 60/40 end of a proposition, money management, and knowing yourself." As an aside, why is that many of the legendary investors were also philosophy students or enthusiasts, examples- George Soros, Ben Graham, Carl Ichan, Charlie Munger along with Bill Miller. Is it because study of philosophy enables people to gain some special insight about the way the world operates? Who says Philosophy does not pay.

Wednesday, July 18, 2007

Attack of the Mogul

Beware, the dark Sith Lord is fast closing in to conquer the poor Jedi Knight. Rupert Murdoch, the big daddy of all media moguls; owner of such fine shining armours of journalistic excellence such as News of the World, Fox News, New York Post is finally close to realizing his long standing dream of owning a major financial newspaper and critics are crying hoarse. Is this another blow to quality journalism? Is WSJ going to go the southbound ways of the New York Post when Murdoch acquired it? These are genuine worries and Murdoch's record does not inspire confidence. He is a staunch conservative and his media outlets have a strong conservative bias to put it mildly. However, whatever Murdoch's personal leanings may be , first and foremost he is a businessman and he is not going to do anything which will make a respected newspaper such as WSJ a losing business proposition. WSJ is the premier financial newspaper in the world and, just like Murdoch's other outlets, is strongly conservative. As far as political leanings go, the Murdoch empire and WSJ are a perfect match. So the worries that the Journal will become yet another vehicle for Murdoch's agenda are not well founded as the journal and Murdoch have the same agenda to begin with. The real concern is whether the quality of journalism at WSJ will suffer for which there is no clear answer. It depends on what Murdoch's ideas are for converting it into a profit making machine. WSJ is one of the few genuine newspapers that are profitable, even though only moderately. Just like all other newspapers, its margins have been under seize from the relentless competition of cable news networks and internet. Still, this new media attack has been less severe on WSJ than it has been on the other major newspapers as the journal dominates the financial news landscape and the readership for this bastion is strongly upper class who want quality financial news. If Murdoch decides to increase WSJ readership by taking it downmarket as he did with New York Post, he risks losing a strong and lucrative readership that is loyal to the journal for its USP, strong financial reporting. Having said that, it seems inevitable that things are going to change at the Journal. Murdoch is certainly not paying a 65% premium for this paper, if he intends to keep the status quo. He will try his best to make a much more profitable business out of it than it currently is, and being a consummate businessman, if that takes a little compromise on journalistic ethics then we all know that Murdoch is no stranger to it. So, am I renewing my subscription to WSJ? Not yet; I will wait and watch and sign up for the Economist instead.