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

“… after spot month natural gas futures hit an all-time high of $15.378 per million British thermal units on Dec. 13, prices tumbled by $6.45, or 43%, in the next month.” - Spencer Jakab

“In 2005, the U.S.-derived earnings of European companies are expected to have jumped 24%, to about $82 billion, after soaring 39% in 2004 …. the biggest beneficiary is Germany, whose corporate sector has earned $14.6 billion in the past two years, more than in the previous decade.” - Vito Racanelli

“Volume was remarkably heavy as the crush of January options traded their final week. More than 11.5 million options changed hands Thursday — a one-day record that was promptly surpassed Friday as 14 million options traded. It was the busiest expiration cycle in the U.S. option market’s 33-year history, and roughly 40% of all contracts outstanding expired this weekend.” - Kopin Tan

“Far from representing any tectonic shift in finance, covered-call funds represent a reprise of the late options-writing funds of the ‘Seventies and early ‘Eighties, many of which ultimately produced millions in investor losses …. Closed-end funds are offered at a premium to NAV at their IPOs; the premium represents the compensation to the underwriters, although few retail buyers understand this. Afterward, closed-ends frequently fall to discounts in the aftermarket …. More often than not, these premiums disappeared when the underwriters withdrew so-called price support techniques after the offering, leaving the small investors holding the bag.” - Jack Willoughby

“Traditionally, trading and research costs have been lumped together, making it difficult to glean how much was allocated to either expense. Hence, the term soft dollars …. ‘hard-dollar payments for research remain unpopular with U.S. institutional investors, who would much prefer to preserve a system in which research is provided by the sell-side in exchange for commission business.’” - Lawrence Strauss [ed. Why should the fund management company pay for research out of its own pocket when it can stick unwitting investors with the bill?]

“Most investors think that dividend payouts historically have accounted for just 5% to 20% of overall stock returns. In fact, around 65% has come from the compounding of reinvested dividends. Even without reinvestment, payouts accounted for 40% of total return.” - Shirley Lazo

“On the Tax Foundation’s index of business-tax climate, New York ranks 49th, meaning it’s more burdensome than all states but Hawaii …. New York state and its citizens have chosen a road to ruin. Those who want a different destination will have to take a different path — for example, to Kansas, Colorado or Virginia, which lead the Pacific Research Institute’s list of states providing the greatest economic freedom.” - Thomas Donlan [ed. This New Yorker’s “different path” led him to China.]

“Sony’s Bravia flat-screen LCD sets, which sell for $3,500 in the 40-inch style, are fast attaining the status among couch potatoes that Sony’s top-notch Trinitron sets enjoyed in the 1960s through the 1980s. Launched in August to rave reviews, Bravia is now the top-selling LCD brand in the U.S., well ahead of Samsung and Sharp [ed. I went to a local store to compare Sony’s Bravia with Sharp’s Aquos, and the Aquos is vastly better.] …. In a joint venture with Germany’s Bertelsmann, Sony has created the world’s second-largest music-recording outfit …. Sony distributes roughly half of all Hollywood color films ever made, giving it a huge library for release to home viewers on the emerging technology of high-definition DVD.” - Jay Palmer

“XM Satellite Radio, which began its service in 2001, about a year ahead of Sirius, now has six million subscribers, while Sirius has 3.3 million …. There now are more than 200 million listeners to conventional AM and FM radio …. XM’s automotive partners control about 60% of the U.S. auto market …. The vast bulk of Sirius radios are purchased by consumers at retailers like Best Buy and Circuit City, rather than as standard equipment in cars …. XM’s cost per acquiring a subscriber is roughly $100, versus about $200 for Sirius…. Both charge $12.95 a month or $142 a year for 125-plus channels of commercial-free music, news, talk and personalities …. Both recognized that there was a broad national audience for jazz, classical, blues and folk music — even if those genres couldn’t support commercial stations at the profit margins demanded by Clear Channel or CBS Radio …. Compare the duopoly in satellite radio with the looming free-for-all as satellite TV, cable TV and the Baby Bells fight for video and voice customers …. The music industry isn’t crazy about devices that allow subscribers to record off the air. XM and Sirius now pay less than $1 a month per subscriber in royalties to the music industry, far less than the estimated $4 to $6 a month that RealNetworks’ Rhapsody and other subscription services pay.” - Andrew Bary

“The structural-steel industry in the U.S. is now made up of three low-cost, profit-driven players. Nucor has 45% of the market. Chaparral has 30% and Steel Dynamics 15%. Imports make up the rest …. Water pipe installed in the U.S. over the past 100 years is beginning to fail. A large portion of America’s water pipes and valves will need to be replaced in the next 25 years.” - Meryl Witmer

“You have to emphasize international investments, largely in Asia. To give you an example, the market cap today of General Motors is $12 billion, Ford is $15 billion, Honda is $55 billion and Toyota is $172 billion. In 1970, IBM alone had a bigger market cap than the entire Japanese stock market. Over the next 10-20 years Asian markets, including Japan, could have 25% to possibly 50% of the world market cap, from 14% currently …. In the former Communist countries, property rights are improving dramatically because everything that can be stolen has already been stolen. The people who stole it want to have property rights so they can keep it …. In 1980, people were worried about consumer price inflation. No one dreamed the Dow, at the time around 900, would approach 12,000 or so, or that home prices would explode upward. However, consumer-price inflation gave way to asset-price inflation for the next 20-25 years. Now, if you look around the world, everybody believes asset inflation will continue. The Dow will continue going up, and home prices will keep rising. Nobody is concerned about consumer-price inflation.” - Marc Faber

Copyright © 2006 Dow Jones & Company, Inc.