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Subject: Warren Buffett

Warren Edward Buffett (born August 30, 1930) is an American investor, businessman, and philanthropist. He is one of the most successful investors in history, the primary shareholder and CEO of Berkshire Hathaway. Measured by market capitalization in the Financial Times Global 500 Berkshire Hathaway as of June 2009 was the eighteenth largest corporation on earth.
Buffett is called the “Oracle of Omaha” or the “Sage of Omaha” and is noted for his adherence to the value investing philosophy and for his personal frugality despite his immense wealth. Buffett is also a notable philanthropist, having pledged to give away 85 percent of his fortune to the Gates Foundation. He also serves as a member of the board of trustees at Grinnell College. (Wikipedia Feb 2010)

Flow of funds analysis

US corporations still in recovery mode

The rubble of 2008 has not yet been cleaned away.

The Federal Reserve flow of funds accounts provide a general view of the financial situation of US corporations as of Q4 2009. The question that I would like to address is simply this: To what degree have US corporations been able to improve their financial liquidity since the Crash of 2008? Whereas behavior of US households indicates a shift to more conservative financial positions — with far higher levels of saving than prior to 2008 — corporations do not seem to have taken a similar course.

Post Modern Security Analysis

Intrinsic value

The target of classical security analysis is ‘intrinsic value’, a fuzzy concept defined as the value justified by the facts.

Financial markets have become vastly more complex since the days of Graham & Dodd.

Since the 1960’s, stock prices have generally exceeded ‘intrinsic value’. New techniques are needed now to handle the flood of free investment information.

Post Modern Security Analysis

Moving beyond Graham & Dodd

A security analyst is like a detective.

Security Analysis is the study of facts about negotiable instruments for the purpose of determining whether a particular instrument is appropriate for a specific investor at a particular time and the intrinsic value of the security compared to its market price, if any.

The technique has evolved over time with the changing nature of information.

In the 21st century, with a flood of open source information and increasingly complex, global markets, new approaches are necessary.

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Featured articles on inside pages

Stock buybacks

Buybacks + options + hedge funds

Stock buyback programs are a legalized form of market manipulation, sanctioned under SEC Rule 10b-18 and that serve to drive up the price of a company's stock and to give false value to executive stock options.
More ...

Securities Analysis

Does ‘SEC Total Return’ protect investors?

Millions of investors put money for retirement into mutual funds selected on the basis of "SEC total returns" and the name of the fund. This article explains how the SEC allows funds to use this misleading statistic to the detriment of investors and to the benefit of fund managers. More ...

US Politics

President Obama and the Lincoln Bible

The Crash of 2008 put Barack Obama in the Oval Office and was the culmination of two secular financial trends. Americans now have an untested, inexperienced leader, with strange radical friends and a leftist deficit spending agenda. More ...

US equities

Stocks surge on spurious earnings

In Q1 2009, stock buybacks came back, driving up equity prices and sparking a rally by dominating a thin market. These equity repurchases were financed from depreciation reserves and bond issues. More ...

US Bonds

The collapse of the dollar and US bonds?

The extreme spending of the Obama government, combined with irresponsible bank lending policies promoted by Barney Frank and Chris Dodd, portend rising interest rates, the collapse of the bond market, and the end of dollar supremacy. More ...

World Economy

What Is ‘International Liquidity’?

It used to be that the term 'international liquidity' meant the relative amount of resources available to a nation's monetary authorities that could be used to settle a balance of payments deficit. In the days of the gold standard, this would mean access to gold that could be used to redeem a nation's currency held by foreigners. More ...

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1969-12-31 18:15