Walk the Walk if You’re Going to Talk the Talk

Maybe I’m just naïve … and maybe I don’t understand corporate travel policies that well … but news this week that the heads of the Big Three auto makers flew private jets to Capitol Hill while asking for $25 billion in tax payer money to keep them liquid, seems a little out of whack to me. Certainly, if analysts are correct in assuming that each of the roundtrip flights by private jet cost about $20,000, there had to be a less expensive way to travel the 524 miles from Michigan to Washington, right?
 
I’m all for helping out the next guy, and genuinely believe we need to do what we can to help our severely ailing economy, but leadership comes from the top and by way of example.  If you ask me, Chrysler, Ford and GM need to do a little soul searching.

 

– Laurie Berman, Senior Vice President, lberman@pondel.com
 
 

Yes, Virginia, There is a Santa Claus

All is not doom and gloom for this coming holiday season.  While pundits and prognosticators are predicting less than robust (to put it mildly) retail sales through the rest of the year, one industry, at least, anticipates great holiday sales.
 
Let’s here it for this country’s gamers, who are expected to help the sales of video games remain strong this year and in 2009.  A recent Yahoo! Tech article points out that industry executives said their optimism is fueled by “solid sales of advanced game consoles made by Nintendo, Sony and Microsoft.”  While this projection, which was made at the BMO Capital Markets interactive entertainment conference in New York, seems to defy common sentiment, we could all use a bit of good news today.
 
So, the next time you run into a video game freak or perhaps just an average 10 year old boy, thank them for shining a bit of a bright spot on the economy.
 
Let’s hope those industry executives are right.

 

– Laurie Berman, Senior Vice President, lberman@pondel.com
 
 

Today’s Top 10

CFO magazine recently published a list of the top 10 questions being asked on quarterly earnings conference calls.  Given the recent market meltdown, there are really no big surprises on the list.  However, it’s always a good idea to know what trends analysts and investors are following in preparation for your own call.
 
The top 10 list was compiled by think tank and research company, the Corporate Executive Board.
 

  1. Impact of the market slowdown on a company’s business.
  2. Impact of the market slowdown on a company’s industry.
  3. Short-term growth plans.
  4. Impact of currency fluctuations.
  5. Market liquidity and leasing.
  6. Outstanding loans.
  7. Supply and demand environment.
  8. Customer credit.
  9. Product pricing structure.
  10. Sales growth expectations.

 

Laurie Berman, Senior Vice President, lberman@pondel.com
 
 

Putting Stock in an Elephant or Donkey

Following last week’s historic election, many investors are probably wondering if their obliterated 401(k)s will take a turn for the better under Barack Obama. Is your stock portfolio really better off with a Republican or Democrat in the White House? Well, frankly, trying to determine the differences between the parties using stock market data is folly…but let’s do it anyway.
 
According to a recent New York Times graphic, if you had to invest exclusively under either Democratic or Republican administrations, here’s what the results would have been.  For the sake of fairness, Herbert Hoover’s presidency under The Great Depression has been excluded.
 
In nearly four decades, a $10,000 investment in the S&P stock market index would have grown to $51,211 under Republicans. Invested under Democratic presidents only, $10,000 would have grown to $300,671 at a compound rate of 8.9 percent during the same time period.
 
Four Republicans with solid gains include George H.W. Bush, who wins out with the best average annualized return – excluding dividends – of 11%, followed by Dwight D. Eisenhower (10.9%), Gerald Ford (10.8%) and Ronald Reagan (10.2%). The Republican bell curve was weighed down by the Richard Nixon years (-3.9%) and, of course, President George W. Bush, whose number stood at -5.1% as of mid-October. Barring huge gains over the next few weeks, Bush’s number will be the worst since Hoover, a whopping -30.8%.
 
Bill Clinton’s term was the only double-digit gain among the Democrats, finishing with an average annualized return of 15.5%. The rest of the Democrats – Franklin D. Roosevelt, Harry Truman, John F. Kennedy, Lyndon B. Johnson and Jimmy Carter – ranged from 6.5% to 8.2%.
 
Whether you’re running with the Elephants or the Donkeys, I’m certain both parties would agree that a bull run would be nice during the next presidency.

 

Ron Neal, Senior Associate, rneal@pondel.com
 
 

SECrets

For the first time since the SEC created the Division of Enforcement in 1972 to consolidate enforcement activities that previously had been handled by the various operating divisions at the Commission’s headquarters, the agency has published a document containing the internal policies and procedures that SEC staff must follow when conducting investigations.
 
According to Bowne’s SEC and Edgar Monitor, there are several noteworthy sections:
 

  • Witness Assurance Letters – Provides witnesses offering testimony with assurance that no SEC action will be taken against them.  Prior, the SEC was required to obtain the written approval of the Department of Justice to grant such assurances.
     

  • Ranking Investigations and Allocating Resources – Describes the internal procedures in place at the SEC to manage open investigations and allocate resources.
     

  • External Communications Between Senior Enforcement Officials and Persons Outside the SEC Who Are Involved in Investigations – Adoption of internal best practices on communications between senior officials and non-SEC persons concerning an ongoing investigation.
     

  • Termination Notices – Explains notification procedures about the conclusion of an investigation with no action taken.

 
While most of us will never be involved in an SEC investigation, it is good to know we now have more insight into exactly what to expect should such a situation arise.

 

Laurie Berman, Senior Vice President, lberman@pondel.com