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Subject: Auction Market Preferred Shares

This is a class of the instrument-kind Equity. Holders of preferred shares are usually entitled to receive dividends before dividends are paid to holders of common stock or other classes of shares. In the event of liquidation, preferred shares normally rank above ordinary shares but behind corporate creditors.

Auction rate refers to preferred or preference shares in which the dividend rate is adjusted periodically based on a Dutch auction. [Capital Market Taxonomy]

Post Modern Security Analysis

Operational versus financial information

Operations: the How and Why of markets ...

The Crash of 2008 suggests that understanding the operational details of capital markets can be as important as traditional Graham & Dodd security analysis.

This article, Part Nine in the series on Post Modern Security Analysis, discusses Capital Market Taxonomy as applied to market operations and the use of a semantic wiki in collaborative research.

The Post Stock Buyback Era

Seeking investment opportunities

On a tightrope ... without a net.

The Crash of 2008 signaled a turning point in capital markets. The stock buyback era seemed to have ended. The Efficient Market Hypothesis was discredited. The inability of market experts and major institutions to place a fair value on thousands of securities indicated basic problems in security analysis and the handling of freely available information.

This article describes new challenges facing fundamental security analysts in the early 21st century, and the consequent opportunities.

Auction Market Preferred Shares

Why rating agencies overlook toxic assets

After the Crash of 2008, rating agencies were criticized

Failures of commercial rating services to do an adequate job have been widely recognized, in the wake of the Crash of 2008. Much of the criticism, however, has been directed to the conflicts of interests that are a characteristic of these services.

This article discusses other weaknesses of commercial publishers of investment information, such as the industrial nature of their operations and their marketing focus on traders rather than long-term investors. The case of Auction Market Preferred Shares, which failed in 2008, is covered in detail.

Featured articles on inside pages

Stock buybacks

Accelerating to a buyback-option blowout

By Q1 2006, stock buybacks had multiplied to five times the level of 2000. Buybacks grew by 25% in 2005, with corporate profits after taxes increasing only 5.5%. At these rates, buybacks will exceed after-tax profits by 2009.
More ...

Securities Analysis

How inflation impacts EPS and PE ratios.

The Obama administration and Congress are laying foundations for high inflation. US equity investors should consider the effect of a rapidly devaluating currency on EPS and PE ratios. More ...

US Politics

Why are the Super-Rich often liberals?

If we are to believe the old adage that, 'people vote their pocketbooks', why are so many of the Super-Rich ardent supporters of the Democratic Party? Why do the liberal Super-Rich seem to act in a way that is so contrary to their selfish interests and economic well-being? Here I show how capital flow analysis of the Federal Reserve flow of funds accounts provides an answer to this apparent conundrum. More ...

US equities

Sarbanes-Oxley and the shortage of equities

The Sarbanes-Oxley Act of 2002, by discouraging companies to go public, will exacerbate the shortage of equities, with a negative effect on the US stock market, although this was not the intent of its authors. Poorly drafted, ill-conceived, and unfair this law does little to protect investors.
More ...

US Bonds

Bond demand exceeds supply for a decade

Over the decade, 1995-2004, the demand for US bonds of all types has surpassed new bond issues in eight of the last ten years. This is the reason that bond prices have held firm, even in 2003, when net new issues reached almost $1.8 trillion. More ...

World Economy

Working off the US trade deficit

Foreigners hold $16.8 trillion in US financial assets as a result of selling more goods to Americans than they buy from them. Since the 'deficit' is in dollars, the US has no problem in 'paying it off'. More ...

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2010-08-05 10:16