Sources: Coventry League; Bloomberg; Zero Hedge
Apparently, one would need more than 200x the amount of U.S. dollars and 6x the amount of gold to buy a ticket for Super Bowl XLVIII versus a ticket for Super Bowl I (1967).
Sources: Coventry League; Bloomberg; Zero Hedge
Large scale solar energy projects heated-up in 2013.
According to EcoWatch’s recent blog and Mercom Capital Group’s white paper titled 2013 Fourth Quarter and Annual Solar Funding and M&A Executive Summary, dollar amounts of projects financed increased from $8.7 billion in 2012 to $13.6 billion in 2013, representing a 56% increase year-over-year.
Below is a chart provided by Mercom Capital Group:
And, if you are wanting a little something to show your solar energy enthusiasm, below is a creative product offered by the T-shirt Guy (and, no, we are not getting paid in any way by sharing this link):
Source: Cleveland Scene Magazine
Baseball is a game of skills and probabilities. Baseball is also “six minutes of action crammed into two-and-one-half hours,” as Boston Globe’s Ray Fitzgerald describes it.
So, if you like geeky analysis, economics, or baseball, then you might like the article titled Baseball’s Fiscal Cliff by Pete Kotz of Cleveland Scene Magazine.*
* The story was reprinted with permission of Voice Media Group in this week's issue.
Star Trek (Next Gen): Jean-Luc Picard
A growing number of folks are becoming aware that the performance of most mutual fund managers over an extended period does not exceed that of benchmark indexes such as the S&P 500. More specifically, 99.6% of all mutual fund managers failed to beat (i.e., only 71 funds out of 17,785 matched or beat) the performance of the S&P, net of fees, over a ten year period according to data compiled from the Mutual Fund Screener of The Wall Street Journal. Please reference the entire article titled “Wall Street Is a Rentier Rip-Off: Index Funds Beat 99.6% of Managers Over Ten Years” at the blog Of Two Minds.
Talented investors are often not managing formal, traditional funds but rather managing one’s own accounts or a small number of accounts (e.g., friends and family). These individuals are more likely to fit the mold of idiosyncratic entrepreneurs or founders of technology start-ups.
Nevertheless, one of several takeaways is “don’t judge a book by its cover.” In other words, just because a money manager is nicely dressed, displays stereotypical good credentials, and has friends in high places (partly enables said manager to either procure capital or secure the fund management role), shouldn’t imply an above average talent for investing. One can present a similar case against most (not all, of course) hedge fund and venture capital fund managers, as highlighted in two Zero Hedge articles titled “Most Hedge Funds Underperforming The S&P 500 For Fifth Year In A Row - Full YTD Performance” and “Venture C(r)apital: Myth And Reality.”
According to Thomson Reuters and the DealBook, edited by Andrew Ross Sorkin of the New York Times, the pace of worldwide M&A during the first quarter of 2013 was relatively slow. The summary, highlighted below, reflects announced transactions and ranks them by value. Goldman Sachs is on top of Thomson’s League Tables in both number and value of announced deals in the quarter.
For those who want a free, interactive graphic regarding investment banking activity, then reference the Investment Banking Scorecard compiled by Dealogic and the Wall Street Journal.
And, lastly, for a comical perspective on League Tables, spend a few minutes to read The iBanker’s blog titled “Lies, Damned Lies and League Tables.” The art of presentation, however, is nothing new to bankers and the most discerning clients.
Yuan Dynasty Banknotes (circa 14th century)
Let's end the year with some humor from The Daily Capitalist and its recent post titled “Top Ten Reasons Why Fiat Currency Is Superior To Gold (Or Silver) Money.”
The Top 10 Reasons are below; the commentary can be found at The Daily Capitalist.
Number 10: There Is Not Enough Gold (Or Silver) In The World To Serve As Money
Number 9: Gold And Silver Are Old-Fashioned, Cumbersome Money
Number 8: Gold Restrains Growth
Number 7: The Gold Standard Caused The Great Depression
Number 6: Rules Can Be Broken
Number 5: Gold-Backed Money Favours The US Versus The Rest Of The World
Number 4: Gold Favours Gold-Mining Countries Over Others
Number 3: Gold Favours The Rich
Number 2: PhDs Know What’s Good For Us
Number 1: If Given A Choice, We Would All Prefer Fiat Over Gold-Backed Money
Samuel L. Clemens stamp, 1940
November 30th is Mark Twain's birthday, which makes me think of some of his witty quotes such as this one:
“It could probably be shown by facts and figures that there is no distinctly native American criminal class except Congress.”
Keeping that quote in mind, the webcomic xkcd has a fine infographic cheat sheet of the economic vortex appropriately titled “Money Chart.” It's available in a wall poster, which could make for a unique holiday gift for any finance geeks among you. Also, Chris Turner, a sustainability blogger and author wrote a short article referencing a few interesting sections of the diagram such as cost externalities of electricity (upper right corner; coal).
Governing.com: Municipal Bankruptcies
Governing provides a dynamic map concerning municipal bankruptcies. It and ZeroHedge offer plenty of commentary, so we won’t regurgitate.
For perspective, however, keep in mind the size of the municipal market is $3.7 trillion.
Also, Warren Buffet has written $16 billion of municipal credit default swaps (CDS), which might imply that he believes the Federal government would step-in to assist certain issuers upon distress (this can happen indirectly - a backdoor bailout - as some are suggesting regarding California's high-speed train plans).
1886 Bank Run: "The War of Wealth"
As Mitch states in his recent blog titled "Greece Public Finances Face Collapse...", if you have your money in Greek, Spanish, or Portuguese banks, get it out - now.
Meanwhile, Niall Ferguson, a Harvard University history professor, urges people to remember what happened to begin the second half of the Great Depression in the early 1930's: European bank runs.
Speaking of which, Wikipedia summarizes a recent list of bank runs; expect the content to be updated soon.
SecondMarket provides a timeline of trades in Facebook (FB)'s common stock since April 2008. If one applies a discount (let’s use 30% for example purposes) to account for a limited supply of shares available via SecondMarket versus a larger supply of shares otherwise available in a publicly traded market, then one could derive a "fair" value of FB in a public market (note 1).
Further, SecondMarket data from 2012 along with a January 2012 tiny venture capital round (only $9.6 million at about $31 per share) seem to have been used and publicized to anchor in a price and valuation to justify the targeted IPO price range. Accordingly, it would be reasonable to consider this data as less reliable and an outlier.
So, using data from the last half or last quarter of 2011 would provide a reasonable benchmark share price in which to apply a discount (or a discount range). A back-of-the-envelope calculation indicates a share price on SecondMarket that averaged about $32. Applying a conservative 30% discount indicates a “fair” share price of roughly $22 if supply were not as constrained as it was on SecondMarket. Given this assessment, the investment bankers apparently earned their commission since they priced the IPO at a 72% premium to the adjusted share price calculated using SecondMarket data.
Our opinion is even at $22 per share, which implies a market capitalization of $60 billion (note 2), FB is considerably “overvalued," especially in light of the most highly valued companies depicted in the chart below and highlighted on InvestmentNews by Mark Bruno.
Regardless, to incorporate a downside valuation range, one might want to further consider the picture highlighted in the upper left above from a ZeroHedge blog title "PeakBook?" that compares search volume between Facebook and Myspace. Or, read a post at Forbes by Mark Evans titled "Warning: Stay Away From The Facebook IPO."
(1) Securities and Exchange Commission. 424(b)(4) Prospectus filing dated 17 May 2012. . Total Class A and Class B shares being offered in the IPO is 421,233,615 or about 20% of actual common shares outstanding as of 31 March 2012 of 2,138,085,037 and 15% of adjusted common shares outstanding after the IPO of 2,741,527,754.
(2) Total Class A and Class B common stock to be outstanding after initial public offering: 2,741,527,754 multiplied by the calculated common stock price per share of $22.