I wasn’t properly respectful when Sy Jacobs was last interviewed in Barron’s, but I’m paying attention this time:

“People are trying so hard to believe that the Bear Stearns crisis in March was some sort of financial crescendo and represents the bell that gets rung at the bottom, as if that happens. But just because we got saved from what would have happened that Monday if Bear went down doesn’t mean we are saved from all the forces that conspired to get Bear Stearns to the brink in the first place. Bear was not the sacrificial lamb to the market gods. It got knocked down by the same winds that are affecting everybody else. Credit destruction is a process — not an incident. And avoiding that particular meltdown doesn’t mean that things are getting better — and yet that is how financial stocks in particular and the market in general have acted ever since.”

Related: Financials Move to New Relative Low

Kathy Yakal sang the praises of Yahoo’s new charts, which I think are OK but not great. Google should acquire stockcharts.com and integrate it into Google Finance to compete with Yahoo!

Here are the (lightly edited) bits I found interesting in this week’s issue:

“Investment trusts only own about 4% of the Japanese market, while foreigners own 27%. Individuals and trust banks together are bigger than foreigners … Government spending as a percentage of GDP is lower in Japan than in the U.K. and the U.S. … In terms of consumption, Japan, at about 53% of GDP, is in line with France, Germany and Canada. The U.S. is 70%, which is further from the norm. And no, they don’t actually export a lot. Japanese exports are remarkably low as a percentage of GDP; only the Americans export less. If you want a really large exporting economy, look at Germany, where over 35% of GDP is export. What Japan has is a large trade surplus because it imports not very much … In Japan the retirement age is 60. In Italy, France and Germany, by the age of 55 more than half the people have already left the work force.” — Jonathan Allum, interviewed by Leslie Norton

“Gas futures prices jumped more than $1 to close at $8.21 per million British thermal unit — well up from the 22-month low reached July 5 of $5.765 per million BTUs … nearly 60% of U.S. homes use natural gas for their heating and cooling needs … in the week ended July 21, the U.S. used the most power ever, topping 96,314 gigawatt-hours. The majority of it was provided by gas-fired power plants … MotherRock L.P., one of the biggest New York hedge funds trading gas futures, said it was shutting down after its $230 million loss over June and July. There had been rumors that July 31’s rally was propelled in part by an investor, presumably MotherRock, forced to buy as prices rose.” — Cassandra Sweet

“Federal-funds futures are now pricing in just a 16% chance for a quarter-percentage-point move on Tuesday, down from 42% before the jobs data arrived last Friday … The European Central Bank, the Bank of England and the Reserve Bank of Australia all raised interest rates last week. That follows the Bank of Japan’s rate hike last month, its first in six years … The Fed slashed the funds rate all the way to 1%, from which it began hiking in mid-2004. The ECB stopped cutting rates when its repo rate hit 2% in early 2003 but didn’t start tightening until a year ago.” — Tom Sullivan

“In Japan, online advertising eclipsed radio last year and is set to soon pass magazines. That would make the Internet Japan’s No. 3 ad medium, behind newspapers and TV.” — Jay Alabaster

“It’s tempting to look at Charles Schwab’s announcement last week that its customers are stashing record sums in CD’s as a contrary Buy signal for stocks.” — Michael Santoli

“The iShares Silver Trust holds $1.2 billion of silver, equal to 15% of annual global mine production … Photographic uses consumed about 25% of the silver produced last year … The ETF is the simplest and perhaps the best play for investors looking for silver exposure, because it eliminates the risks — political, environmental and cost inflation — that come with mining companies. Each ETF share is equal to 10 ounces of silver … An estimated 70% of annual silver production is a byproduct of other mining operations, mainly gold, zinc and copper. The estimated amount of silver in the world — 20 billion ounces — is tiny relative to the size of the gold market … As a financial entity, Silver Wheaton employs just seven people and pays no income taxes because of its corporate domicile in the Cayman Islands. Its profits can be calculated easily by multiplying its annual silver sales by the difference between spot silver prices and its cost of $3.90 an ounce.”– Andrew Bary

Copyright © 2006 Dow Jones & Company, Inc.

Here are the (lightly edited) bits I found interesting in this week’s issue:

“Crude oil futures spiked to a record high of $75.40 a barrel last Wednesday, eclipsing the previous high of $75.35 a barrel hit in April … the average income of the top 5% of wage earners has nearly doubled from 1979 to 2004, while that of the bottom 60% has inched up just 20% over that time period” — Robin Blumenthal

“GM workers get close to $40 an hour more than workers at the North American plants owned by Toyota and Honda.” — Jay Palmer

“Merck KGaA, the German pharmaceutical and chemical manufacturer, enjoys a near monopoly in supplying the liquid-crystal gunk that makes an LCD work. The company has a 70% market share worldwide and a nearly 100% share of the largest LCD televisions. Although the liquid-crystal business accounts for only about 15% of revenues, liquid crystals contribute nearly 50% of operating profits.” — Bill Alpert

“The 7,468 U.S. diversified equity funds tracked by Lipper declined 3.26%, on average, in the second quarter … The 2,144 world equity funds tracked by Lipper lost 1.6% last quarter, as the 21 Latin American funds slid 3.36%, and the 219 emerging-markets funds slumped 5% … The 2,758 domestic long-term fixed-income funds tracked by Lipper dipped only 0.02% in the quarter.” — Angela Pruitt

“The number of individuals with financial assets of more than $30 million last year increased by more than 10% worldwide, to 85,400 … Maintenance and taxes on a 15-room place on the 79th floor of the Time Warner Center in Manhattan come to $80,000 a month. (The property recently sold for $32 million.)” — Robin Blumenthal

“Japan accounts for almost 40% of global purchases of luxury goods … Japan represents 30% of Louis Vuitton’s annual sales and 22% of Coach’s sales.” — Jay Alabaster

“In 2005, five hurricanes — Katrina, Wilma, Rita, Ophelia and Dennis — caused $58.7 billion in damage in nine states. Katrina, which devastated New Orleans, was responsible for $38.1 billion, or 65%, of that total.” — Jim McTague

“The average mutual fund turns over its portfolio by more than 100% a year… Turnover at some big, established funds can even exceed 200%. All that turnover takes a toll on performance and, of course, creates tax liabilities … Fidelity manages more than 20 large-cap growth funds. What’s the point of this slicing and dicing, except to accumulate assets? … The late Bill Ruane, who had been head of the Sequoia Fund, concluded years ago that thoughtful investing meant three things: a small portfolio (20 stocks at most), low turnover and ‘eating your own cooking,’ meaning that the managers invest substantial personal money not just in the management company but in the funds themselves.” — Louis Lowenstein

“In 2001, President George W. Bush banned federal funding for research on all human embryonic stem-cell lines not then in existence … There are now 31 state laws either allowing or prohibiting human embryonic stem-cell research … Estimates vary about how many U.S. lawmakers have college degrees in biology subjects: Less than 1% to very much less than 1% … Connecticut, New Jersey and California have laws that actively support human embryonic stem-cell research with state funding. California voters, in fact, approved a $3 billion bond issue to support this research, but it is trapped in court by such groups as Focus on the Family and the Life Legal Defense Foundation … foreign scientists in this specialty have no reason to come to the U.S., and that U.S. scientists have little reason to make human embryonic stem cells a focus of their research.” — Ingrid Eisenstadter

“What’s worse than annihilation? We don’t know, but Dick Cheney’s working on it.” — Alan Abelson

“Phelps Dodge said it expects copper to slip from an average $2.85 a pound to $2.25 next year and $1.75 in 2008. It also expects nickel producer prices to drop from $8.25 this year to $7.60 next year and $6.20 in 2008.” — Kopin Tan

“Dodge & Cox has boosted its asset base to $180 billion from $10 billion at the end of 1999. Dimensional Fund Advisors has tripled in size over the same stretch, to $100 billion in assets, while GMO, the former Grantham, Mayo, Van Otterloo, has grown to $122 billion from $20 billion … Fidelity earned $1.3 billion on $11 billion in revenue last year … Looking at Dodge & Cox, American, Davis Advisors and Southeastern, one common denominator is low portfolio turnover… At Dodge & Cox, the annual turnover is less than 15%, meaning the average stock is held seven to eight years, versus one year in the typical mutual fund… Dodge & Cox is unusual in having just four funds, with $110 billion in assets — plus another $70 billion of institutional money … Capital Group’s American funds now are attracting more than 20% of all industry inflows, and seven of the largest 10 funds are from the American family.” — Andrew Bary

“The cycles are very long for these commodities. It takes seven years or more to build a new greenfield copper mine. It takes up to seven or more years to develop a deepwater offshore oil field, like those off Angola. For a liquefied natural-gas project, it can take 10 or more years … China has turned from a net exporter into an importer of corn … there has been a toe-to-toe match between the potash industry and the Chinese, who want no price increase … In iron ore the biggest buyer on the open market is China. The producers increased the price last year 71½%. They just negotiated an increase this year of another 19%.” — Charlie Ober, interviewed by Jonathan Laing

Copyright © 2006 Dow Jones & Company, Inc.

Here are the (lightly edited) bits I found interesting in this week’s issue.

“Gold futures hit a 25-year high of $576.80 an ounce.” – Robin Blumenthal

“The CME and Nymex have a noncompete agreement expiring in June …. Nymex is laying out plans for an initial public offering later this year …. NYBOT sugar prices rose to 25-year highs with the March contract settling at 19.3 cents a pound Friday.” – Leah Goodman

“Toshiba is Japan’s largest manufacturer of flash memory chips …. China has suggested it wants to spend $50 billion on 30-plus nuclear reactors by 2020 …. So far this year, Asia’s best market is Chinese ‘H’ shares traded in Hong Kong, which are up 16.4%.” – Leslie Norton

“On April 1, the Investment Quality Trends newsletter turns 40 years old. Founded by Geraldine Weiss, I.Q. Trends focuses on dividends and dividend yield. For the past 15 years, Mark Hulbert, watchdog of the investment-newsletter industry, has named I.Q. Trends the No. 1 performing newsletter on a risk-adjusted basis out of some 165 he surveys.” – Shirley Lazo

“Since April 1999, small caps, as measured by the Russell 2000, have gained 70% and, as tracked by the S&P Smallcap 600, a robust 121%. Over the same stretch, the S&P 500 declined 4% …. From the time small caps peaked in 1983, through 1998, big caps beat small caps in 11 out of 15 years …. in the 18-year stretch preceding 1983, small caps outperformed big caps in no fewer than 14 years.” – Rhonda Brammer

“Federal-funds futures placed a 90% probability on another 25-basis-point increase by and a 35% chance of yet another by May …. For January, the unemployment rate fell from 4.9% to 4.7%, the lowest level since July 2001 …. Friday, the two-year Treasury note, at 4.57%, yielded more than the benchmark 10-year note, at 4.53% …. $14 billion in 30-year Treasury bonds will be auctioned this week for the first time since August 2001.” – Jennifer Ablan

“Profit margins are provably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system and it is not functioning properly …. For around 100 years, the mean price was $16 a barrel in today’s dollars. Now we’re seeing a paradigm shift, the first of my career …. Oil has clearly broken out of its old 100-year range, and it is going to stay broken out and probably trade on average higher.” – Jeremy Grantham, interviewed by Sandra Ward

“About 60% of the raw materials in a tire are tied to petroleum products …. independent dealers drive nearly three-quarter of retail tire sales …. Goodyear has 17% of the global tire market, just behind Michelin, with 20%, and Bridgestone, with 18% …. The Goodyear brand has snagged 17% of the ‘high performance’ and ‘ultra-high performance’ niche — ahead of No. 2-ranked Michelin’s 13% and Bridgestone’s 8.5%. (Dunlop and Kelly, other brands made by Goodyear, account for another 5.5% of this category) …. Goodyear is the only major tire maker still based in the U.S. …. the average age of cars in use has increased from about 5.6 years in 1970 to about nine years by the early part of this decade.” – Kopin Tan

“Commercial mortgages turned in a strong performance in 2005, generating a total return of 3.35%. This was well shy of the 5.13% registered in 2004. But while the absolute return wasn’t striking, it shellacked investment-grade CMBS (commercial-mortgage-backed securities), which garnered a 1.83% return and, in turn, outpaced duration-adjusted triple-B corporates, which recorded a minuscule 0.50% …. Credit losses were a minuscule nine basis points of the total dollar volume of commercial-property loans outstanding in 2005, a bit lower than 2004’s 11 basis points. At present, the insurance industry has some 32,000 commercial mortgages on its books, only 36 of which are delinquent.” – John Levy

Copyright © 2006 Dow Jones & Company, Inc.

Here are the (lightly edited) bits I found interesting in this week’s issue. My comments are in italics.

“New York state hosts the most lobbyists, 3,842, or 18 for every elected legislator…. Only in Maine and New Hampshire do legislators outnumber lobbyists …. Some 43% of first-time buyers put zero money down on their home purchases last year; by contrast, two years earlier, 28% bought a house with no down payment.” – Alan Abelson

“It’s no mystery why hedge funds are sometimes tax-inefficient. Many of them trade heavily and often, holding stocks for hours or days, instead of years. That means hedge funds generate a lot of short-term capital gains, which are taxed by Uncle Sam at 35% — and often they don’t generate as much in long-term capital gains, taxed at 15% …. Prospective investors should always ask a hedge fund, ‘How did the fund do on an after-tax basis?’ But most never do.” – Erin Arvedlund [Ed. – Most investors in mutual funds don’t ask about after-tax returns either.]

“Under the SEC rule, hedge fund advisers are subject to examinations and must have a compliance program, including a chief compliance officer …. Managers who ‘lock up’ invested assets for two years of more don’t have to register …. Some offshore funds, unwilling to register, are returning money to U.S. investors …. For 2005, hedge funds had net inflows of $47 billion, compared with $73.6 billion in 2004 and $70.6 billion in 2003.” – Lawrence Strauss

“Ford has two big pluses going for it — the engineering departments of Mazda and Volvo, its Swedish unit.” – Jay Palmer [Ed. – Where are the home-grown American designers and engineers?. Sheesh. ]

“Stanford now has the third-largest endowment of any North American university — over $12.2 billion — trailing only Harvard and Yale …. Silver jumped over 11% on the week to a 19-year high of $9.76 an ounce after reports that a Barclays silver ETF might be approved. Platinum hit an all-time high of $1,060 an ounce.” – Robin Blumenthal

“Federal-funds futures have priced in a 100% probability that the policy-setting Federal Open Market Committee will raise rates Tuesday by 25 basis points for the 14th straight time, to 4½%. Perhaps more importantly, futures indicated about a 70% to 71% probability that the target overnight-lending rate will reach 4¾% in March.” – Jennifer Ablan

“World 2005-06 sugar consumption should surpass output by 1.5 million to 2.0 million tons after Brazil’s disappointing center-south harvest …. Analysts and trade houses made supply-demand forecasts for the season based on sugar prices at 10.5 cents, not 18 or 19 cents …. if the market slides abruptly , some physical buyers could renege on forward purchases, as Russian and Chinese buyers have done in the past.” – Susan Buchanan

“U.K. institutions are moving heavily into long-dated government securities in response to new regulations that force them to invest in high-grade bonds to better cover their future benefits payments. Last Tuesday’s sale of 50-year inflation-index-linked gilts produced a real yield of just 0.46%, the lowest ever for an auction.” – Vito Racanelli

“Japanese shares are at a five-year high and are 100%-plus above the lows of April 2003.” – Leslie Norton

“The Russell 2000 small-cap index is up 8.8% for the month and is at an all-time high. The S&P Small Cap 600 and the NYSE Composite likewise hit all-time highs …. short interest in tech is the lightest of any sector of the S&P 500 …. assets in the Rydex Precious Metals Fund amounted to 18% of the assets in all Rydex funds, and the two Rydex energy funds together account for more than 35% of all firm assets.” – Michael Santoli

“Moody’s and Standard & Poor’s, the two leading bond-rating agencies have a duopoly with a combined market share of almost 80% …. Moody’s was spun off from Dun & Bradstreet in 2000 …. Standard & Poor’s is McGraw-Hill’s crown jewel, accounting for almost 70% of total profits …. McGraw-Hill could follow the successful Moody’s model and spin off S&P to shareholders …. McGraw-Hill is one of the two top producers of elementary and high-school textbooks, along with Pearson, the British publisher …. Since 2000, S&P’s operating profits have risen to $1 billion from under $400 million. In comparison, profits in the education unit are up a more modest 35%, to $410 million, while information and media earnings have collapsed to $60 million from more than $200 million …. S&P now gets 37% of its ratings revenue abroad …. Moody’s has a lush operating profit margin of 55%, above S&P’s 42%.” – Andrew Bary

“Henry Schein today holds 32% of the $5.8 billion dental market in North America, virtually even with Patterson …. Schein is the single largest supplier of flu vaccines, with about 50% of the market.” – Neil Martin

“Plum Creek Timber is the nation’s second-biggest manager of forestland, with just under 8.5 million acres …. timber assets are seen as a hedge against traditional stock and bond investments …. The company’s plan to sell nearly half of the million acres it owns in Maine’s North Woods and Moosehead Lake region has set off enormous controversy. Opponents refer to the company as Scum Creek and Plum Creep …. Though the bulk of Plum Creek’s revenues come from timber sales, land sales also make a sizable contribution. About 55% of cash flow comes from timber sales, 35% from land sales and the rest from manufacturing wood products …. One sign of timber’s current cachet is the decision by International Paper to sell its 6.8 million-acre portfolio — what some are calling the biggest transfer of land since the Louisiana Purchase.” – Sandra Ward

“Last year saw 187 initial public offerings, totaling $33.7 billion. While the dollar volume was down 22% from $43.4 billion in 2004, the number of deals was off only 8% …. three sectors attracted the greatest number of offerings: technology, with 34 deals; finance, 26 deals; and 35 health-care deals … Refco, 2005’s eighth-largest IPO, disappeared before the year’s end in bankruptcy …. Back in 2000, VC-backed deals accounted for almost 40% of the IPO dollar volume and 66% of the deals. In 2005, they comprised 10% of the volume and 22% of the deals — the lowest percentage of transactions in 16 years. ” – Jack Willoughby

“A third of Citigroup’s earnings come from emerging countries …. The top 10 homebuilders account for 22%-24% of the industry.” – John Neff

“Investments in oil infrastructure declined from their 1981 peak for 20 years. Supply does not respond quickly to rising demand, as investments are capital intense …. A few years ago it was a buyer’s market, and drillers accepted multiyear contracts at low prices. Today the drilling industry still has about 70% of its fleet contracted at rock-bottom rates. Most of these contracts are ending this year …. The total market value of all gold-mining shares is a little over $100 billion, about a third of Microsoft’s market value …. only 4% of the money in Fidelity’s sector funds is in precious metals, up from 1% at the bottom of 2002.” – Felix Zulauf

“In the next 15 years, there will be a dearth of great-quality arable land. We’ll have to use existing acreage. To feed the world’s population, productivity per acre will have to increase by about 40% …. Research in Motion has 75% of the market for wireless e-mail users. The company makes money on handsets, but not nearly as much as it makes on having a network and providing the service. There are over 60,000 BlackBerry enterprise servers.” – Art Samberg

Copyright © 2006 Dow Jones & Company, Inc.

Kathy Yakal wrote up footnoted.org in the Electronic Investor column this week. Michelle’s excellent blog has long been on my A-list.

Here are the bits I found interesting in this week’s issue of Barron’s:

“Monsanto’s flagship product, Roundup, is the No. 1 herbicide. The company estimates that over 70% of the world’s insect-resistant and herbicide-resistant crops bear its stamp.” — Shirley Lazo

“New demand for commercial aircraft is coming mainly from Asia, particularly from India and China, where airline deregulation is spurring a big travel boom. Asia as a whole is expected to remain strong, with China’s air traffic forecast to grow at 8.5% a year over the next 20 years, nearly double the average world rate.” — Jay Palmer

“Venezuela is America’s second-largest foreign supplier of refined petroleum products …. The United States of America is the world’s largest energy producer, consumer and net importer. Yet, it ranks 11th worldwide in reserves of oil and sixth in natural gas. The U.S. ranks first only in coal reserves.” — John Licata

“The Palestinian Stock Exchange… happens to sport the best returns in the region — a whopping 310% year-to-date gain. What would likely surprise American investors even more is that the PSE, which now has a market capitalization of around $5 billion, is as big or bigger than stock markets in seven of the 10 new European Union members, including Slovakia and Lithuania…. the PSE’s Website is www.p-s-e.com.”
– Vito Racanelli

“Today, just 40% of visitors stay one night in a hotel in Macau — so few that, tellingly, Wynn and MGM are building hotels with just 600 rooms each. Were every visitor to spend the night, the city would need 20,000 additional hotel rooms, up from 9,000 now, reckons CLSA Asia Pacific Markets, a research firm. Two nights: 50,000 more. …. CLSA Asia Pacific Markets expects visitor arrivals, which totaled 16.7 million last year, to surge to 35.2 million in 2010. A key: 100 million people live within a three-hour drive, and some are swiftly getting richer.” — Leslie Norton

“Irving Kahn will be 100 this Monday …. He’s in the office every business day, reading scientific periodicals, annual reports and newspapers in search of undervalued stocks …. In warm weather, he walks the mile from his apartment on Manhattan’s Upper East Side to the firm’s offices on Madison Avenue and 55th Street. On a cold recent afternoon, this reporter rode on a city bus with Kahn from his office to his home. Although his firm would gladly pick up the tab for a car service, Kahn finds the $25 cost ‘obscene,’ relative to the senior-citizen bus fare of $1 …. ‘Irving is a voracious reader. He reads several newspapers a day, plus numerous scientific journals’ …. ‘The thing that makes our style different from the typical firm is that we read much more broadly outside Wall Street on subjects like science and technology to locate trends that are not obvious,’ Irving says. ‘One reason that it’s hard for many people to manage money is that they’re influenced by what other people do. Buffett’s not like that’ …. ‘My dad says he doesn’t have time to read fiction,’ Tom Kahn says. ‘I remember as a kid he would come home with a briefcase full of annual reports. His business is his hobby. He doesn’t play golf or bridge, and he gave up tennis a while ago.’” — Andrew Bary

“The economy in this country appears to be slowing. But that doesn’t mean it is slowing every place in the world and the big shift in our view is to think about the United States as being a part of the world economy …. As the world matures, the first thing developing countries need is raw materials. The next thing they need is some form of infrastructure technology …. Much of what state capitalism is paying for is real basic: clean water, electricity and roads. And a lot of the participants are U.S. capital goods or cyclical companies …. [explaining ‘intermodal integration’]: if you go to Target and buy something, Target sends the dollars back to China and China sends the dollars back to the Treasury and the merchandise is put together in China, the container comes across the Pacific and is offloaded on the West Coast, picked up in its container by the railroad. The railroad takes it to a distribution area where it is sorted out and truckers pick it up and take it to the various Target or Wal-Mart centers or whatever. At that point, the merchandise is broken up further and sent to whatever store needs certain items, say, for Christmas …. You have to think of this increasing worldwide trade as a super logistics play.” — Interview with Susan Byrne by Sandra Ward [I love the line: ‘Target sends the dollars back to China and China sends the dollars back to the Treasury.’
Susan Byrne is sharp and clearly “gets it.”]

Copyright © 2005 Dow Jones & Company, Inc.