2013년 11월 29일 금요일

About 'market value ratios'|Another way to value the stock market: Tobin's Q







About 'market value ratios'|Another way to value the stock market: Tobin's Q








Enron               was               a               trading               company               more               than               it               was               a               real               energy               production               company               when               it               went               belly               up.

It               was               modeled               after               Wall               Street               Investment               Houses               like               Goldman               Sachs               and               Morgan               Stanley.

When               all               the               euphemisms               of               "need               for               recapitalization"               for               the               companies               on               wall               street               started               to               be               parroted               by               the               financial               news               media               it               started               revealing               a               bigger               version               of               Enron               than               ever               before               imagined.

Wall               Street               has               been               selling               Feel               Good               Bonds               ,               Happiness               Bonds               and               more               Sizzle               and               Fizzle               than               Madison               avenue.

Over               the               years               the               biggest               banks               were               willing               to               give               up               collateral               and               buy               and               sell               the               Happiness               ,               Sizzle               and               Fizzle.

The               US               Treasury               and               the               Bush               administration               would               love               to               be               able               to               print               happiness               instead               of               US               dollars               the               way               Goldman               Sachs               was               doing               it.

Now               with               a               resolution               trust               company               being               devised               to               save               Goldman               the               US               Government               is               looking               to               control               the               happiness               bond               market               traded               for               a               lot               of               US               printed               cash.
               This               is               not               good               from               any               financial               stand               point.

The               idea               that               Washington               is               going               to               be               able               to               save               Wall               Street               now               is               absurd.

If               it               turns               out               to               be               a               major               Enron               like               scheme               the               assets               of               the               companies               the               Washington               plans               to               save               are               nil               and               the               taxpayer               should               not               be               involved.

There               is               plenty               of               real               capital               in               the               United               States               and               the               World               and               no               way               should               it               be               taxed               to               pay               to               keep               jobs               for               all               the               useless               MBA               mandarins               that               universities               churn               out.
               When               you               see               banks               and               brokers               interlocked               together               holding               an               empty               bag               of               happiness               bonds               asking               for               more               money               to               save               their               important               economic               operations               you               might               as               well               be               going               a               street               con               artist               and               offering               him               your               gun               so               he               can               ask               you               for               your               watch               and               wallet.
               Banks               are               supposed               to               have               real               capital               reserves               not               just               computer               codes               for               happiness.

These               banks               look               like               phantoms               of               the               imagination               created               by               con               artists.

The               real               estate               packaged               loans               get               the               blame               now               for               being               the               cause               of               the               banking               crisis               but               underlying               that               is               how               the               loans               were               generally               collateral               free.

Everyone               in               the               real               estate               industry               knows               that               security               comes               in               high               loan               to               value               ratios               .

The               problem               is               that               the               US               government               favors               easy               terms               for               home               owners               which               means               more               and               more               borrowing               for               homes               and               less               and               less               savings               invested.

That               is               how               these               financial               instruments               immediately               become               financial               happiness               home               bonds.

Wall               street               banking               firms               were               taking               the               happiness               out               of               the               happiness               home               bond               and               selling               the               happiness               separately               to               other               banks               and               sending               the               home               parts               of               the               bond               to               Freddie               mac               and               Fannie               Mae.

So               many               firms               ended               up               sitting               on               assets               that               consisted               of               nothing               more               than               happiness.
               The               Buddha               sitting               under               the               sacred               tree               never               had               that               much               happiness.

But               the               Buddha               was               not               in               business               where               one               day               he               might               need               cash.

Anyone               want               an               MBA               instead               of               Cash               when               you               withdraw               your               money               from               a               bank?






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