Is anyone really independent?

I wish had the time to write about all that’s on my mind about the SEC charges vs. Goldman. The crux of my most recent post was that institutional investors – not individual investors – have few excuses for making unsuccessful investment decisions except their own lack of due diligence or the fact that what they thought was a good decision … wasn’t.

I’m happy to see that Warren Buffett agrees as he told his rapt audience in his comments at Berkshire Hathaway’s recent annual shareholder’s meeting. Of one firm, ABN Amro, Mr. Buffett said: “It’s hard for me to get terribly sympathetic when a bank makes a dumb credit bet.” (more…)

Continue ReadingIs anyone really independent?
Read more about the article Business Finance | Does EBITDA Bury Its Own Dead?

Business Finance | Does EBITDA Bury Its Own Dead?

Does EBITDA really tell you what you need to know?

“I have enough money to last me the rest of my life … unless I buy something.”–         Jackie Mason

 

Does this sound like you?

Someone recently told me that they’re bored by finance. “Don’t distract me with strategic finance stuff, just let me run my business the way I know how.”

“No problem,” I said, “if you’ll just answer one question. What if the way you’re running it is causing increasing strain on your financial resources, cash flow is dwindling and you’re destroying market value every year. Do you care about any of that?”

“Of course, I do, but when sales start picking up again, all of that will go away and my EBITDA will return to normal levels.”

“Really?” I said. “How do you know that?”

“That’s the way it’s always worked.”

“Have you had any problems with your banking relationship?” (more…)

Continue ReadingBusiness Finance | Does EBITDA Bury Its Own Dead?

Goldman Sachs -Not so fast!

Will Rogers was fond of saying, “Buy low, sell high … and if it doesn’t go up, don’t buy it!”

That’s a whimsical sentiment, but I wonder what’s in the air when I read about the alleged fraud by Goldman Sachs described in the civil complaint filed by the SEC, referenced in the recent article here. I wouldn’t jump to conclusions too quickly. In too many ways, this episode is reminiscent of earlier 1980s  battles with Michael Milken. Notwithstanding Milken’s misdeeds, my vivid memory is that there were accredited investors and savvy buyers on both sides of those transactions perfectly capable of making independent decisions. Some of them were wrong and they lost money, but in virtually every case, they were well-equipped to make sound decisions … if they did their homework.

These challenges typically arise when people lose money … and there’s no question a lot has been lost. But, to assume that people who lose on one side of a transaction, are incapable of making prudent independent decisions and were sold a bill of goods , is the flawed argument that often pervade these matters. (more…)

Continue ReadingGoldman Sachs -Not so fast!
Read more about the article White House Jabbing about Jobs

White House Jabbing about Jobs

white-elephantAs I’ve said here before, I don’t think our elected servants in D.C. know much about creating jobs. Let’s remember that the stimulus program was always “too little, too late” and we harped here that the length of time over which those funds would be deployed was way too long … witness today that jobs officials say more than 50% is still in the pipeline over one year later. So, no surprise it hasn’t help as much as they would have you believe. Robb Mandelbaum writing in the NY Times also agrees that there is very little in President Obama’s most recent speeches flowing from the Jobs Summit last week.

What do you think of the ideas being floated about, the key ones of which are summarized here? Will any of them help your business? Are there other ideas that could work? Fire up those fingers and add your comments here.

For one thing, the Administration continues to talk about incentive programs to spur business lending. While that would also be welcome, it doesn’t get at the root cause of unemployment and jobs growth. I’ve reported here before that lending is NOT the biggest problem in the middle market … it’s demand and revenue growth. Companies are not going to borrow except to meet demand and if demonstrable demand is present, borrowing is usually easier anyway.

One idea is to eliminate the capital gains tax for small business investing. (more…)

Continue ReadingWhite House Jabbing about Jobs