"there are all kinds of wonderful new inventions that give you
nothing as owners except the opportunity to spend a lot more money
in a business that's still going to be lousy. The money still
won't come to you. All of the advantages from great improvements
are going to flow through to the customers."  - Charlie Munger


Stingy Links
http://www.stingyinvestor.com/SI/articles/articlearchive.shtml

The meritocracy paradox
http://www.forbes.com/home/opinions/2008/04/10/performance-pay-meritocracy-oped-utopia08-cx_lm_0410mlodinow.html
"In business, merit supposedly determines pay. But in fact, it's
often the other way around, with pay determining merit. In
controlled studies in which people were assigned random tasks with
random pay, psychologists discovered people behave as if the
higher-paid individuals have superior ability. And they do so even if
they know that the pay scale was arbitrary. Outside of the
laboratory the calculation of someone's ability is even more
tricky."

A blunt former Fed chairman takes on Bernanke
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20080412/STBUYSIDE12
"A few days ago an unusual event took place: Paul Volcker, the
mythical U.S. Federal Reserve Board chairman from the Reagan
years, criticized the policy of the current Fed chairman, Ben
Bernanke, in a speech to the Economic Club of New York. Just so you
grasp how extraordinary this was, you should first understand that
normally a past Fed chairman scrupulously avoids saying anything
at all about current Fed policy - for the simple reason that
the current Fed chairman's words are one of his most important
tools: They can sway markets. This ability does not fade entirely
when a Fed chairman leaves. So when a past Fed chairman speaks,
his words can clash with those of the present one and make that
one's job difficult. Out of professional courtesy, past Fed
chairmen therefore keep quiet; Mr. Volcker especially - the man who
hiked interest rates to 20 per cent to kill inflation, at the
cost of a deep recession. But last week Mr. Volcker spoke his mind
bluntly. He said, in effect, that the current Fed is not doing
its job."

Paul Volcker speaks in New York
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vl8TvJRLodUg.asf
"Former U.S. Federal Reserve Chairman Paul Volcker speaks in New
York about practices leading to the current financial market
crisis, the role of the Federal Reserve in preventing and dealing
with such crises and the need for changes in market regulation."

And behind door no. 1, a fatal flaw
http://www.nytimes.com/2008/04/08/science/08tier.html
"The Monty Hall Problem has struck again, and this time it's not
merely embarrassing mathematicians. If the calculations of a
Yale economist are correct, there's a sneaky logical fallacy in
some of the most famous experiments in psychology."

Behind Monty Hall's doors
http://query.nytimes.com/gst/fullpage.html?res=9D0CEFDD1E3FF932A15754C0A967958260&sec=&spon=&pagewanted=all
"Mr. Hall continued: "Now do you see what happened there? The
higher I got, the more you thought the car was behind Door 2. I
wanted to con you into switching there, because I knew the car was
behind 1. That's the kind of thing I can do when I'm in control
of the game. You may think you have probability going for you
when you follow the answer in her column, but there's the
pyschological factor to consider." He proceeded to prove his case by
winning the next eight rounds. Whenever the contestant began with
the wrong door, Mr. Hall promptly opened it and awarded the goat;
whenever the contestant started out with the right door, Mr.
Hall allowed him to switch doors and get another goat. The only
way to win a car would have been to disregard Ms. vos Savant's
advice and stick with the original door. Was Mr. Hall cheating? Not
according to the rules of the show, because he did have the
option of not offering the switch, and he usually did not offer
it."

Sell in May and go away
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=76248
"We document the existence of a strong seasonal effect in stock
returns based on the popular market saying 'Sell in May and go
away', also known as the 'Halloween indicator'. According to these
words of market wisdom, stock market returns should be higher
in the November-April period than those in the May-October
period. Surprisingly, we find this inherited wisdom to be true in 36
of the 37 developed and emerging markets studied in our sample.
The 'Sell in May' effect tends to be particularly strong in
European countries and is robust over time. Sample evidence, for
instance, shows that in the UK the effect has been noticeable since
1694. While we have examined a number of possible explanations,
none of these appears to convincingly explain the puzzle."

Value investing is supposed to get ugly
http://www.advisor.ca/news/article.jsp?content=20080408_153429_5572
"One of the tenets of value investing is there will be times when
it's going to get ugly. Problem is, for a lot of established
value firms, things have never looked uglier - leading some
advisors to question the wisdom of the strategy. But fund analysts say
there is merit to what value firms are doing right now and
investors should wait before they write off their value holdings."

Whither Black-Scholes?
http://www.forbes.com/home/opinions/2008/04/07/black-scholes-options-oped-cx_ptp_0408black.html
"In fact, Black-Scholes may not be used that much in the markets
to begin with. New research by veteran traders and best-selling
authors Nassim Taleb and Espen Haug points in that direction.
Clearly, a formula that isn't used can't have much of an effect on
markets, let alone cause the massacre that began last summer."

Asleep at the wheel
http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2008/04/07/asleep-at-the-wheel-or-how-i-learned-to-stop-worrying-and-love-the-bomb.aspx
"However, more importantly once earnings have peaked they often
return to the low edge of the growth bands. This represents a
45%- 50% decline in earnings. This number holds for the US, Europe
and the UK. So if you want to have a worse case scenario then a
figure like this should be used."

Number twisting continues with fees
http://www.ndir.com/SI/funds/04072008.shtml
"It was almost two years ago when a draft research paper - Mutual
Fund Fees Around the World - made waves by proclaiming that
'total shareholder costs' for mutual funds sold in Canada were the
highest among the 18 developed countries studied. Industry
critics and investor advocates ran with the paper's figures, without
scrutiny, to pad their case that the fund industry regularly
sticks it to investors."

Bye bye AAA
http://www.bloomberg.com/apps/news?pid=20601087&sid=aKuKDdVi4VAE&refer=home
"The six remaining borrowers with the highest rating from both
S&P and Moody's are: Automatic Data Processing Inc., Berkshire
Hathaway Inc., Exxon Mobil Corp., General Electric Co., Johnson &
Johnson and Toyota Motor Corp., according to data compiled by
Bloomberg."

Hijacking the Hermitage Fund
http://www.businessweek.com/globalbiz/content/apr2008/gb2008044_399909.htm
"Corruption, intimidation, robbery, violent assault, forgery,
large-scale fraud. No, not the subject of the latest John Grisham
novel, but sensational allegations, made public Apr. 4 by
Hermitage Capital Management.until recently the largest foreign
portfolio investor in Russia. In a detailed and damning report, titled
Criminal Justice.Russian-Style, Hermitage alleges the fund's
Russian subsidiaries have fallen victim to an elaborate con
designed to defraud the fund of hundreds of millions of dollars. The
most sensational part of Hermitage's allegations is that the
attempted larceny was carried out with the direct connivance of
officials in the Russian police. Hermitage alleges the police seized
documents and equipment that were instrumental to the attempted
fraud, which involved bogus court cases based on forged
documents, the aim of which was to sue Hermitage subsidiaries for
hundreds of millions of dollars. "The most shocking thing is not that
there are corporate raiders in Russia who attempt to steal your
shares," says Jamison Firestone, managing partner of Firestone
Duncan, Hermitage's law firm. "The shocking thing is that the
police worked hand-in-hand with them, and actually performed the
theft of the documents so that the corporate raiders could then do
their work.""


S&P/TSX60 Value Screens
http://www.stingyinvestor.com/SI/strategy.shtml 

High Dividend Yield Stocks                     P/E P/B P/S P/C P/D Yield*
============================================== === === === === === ======
Biovail (BVF)                                   5   5   4   5   5    5
Bank of Montreal (BMO)                          4   5   4   1   5    5
CIBC (CM)                                       2   4   5   5   5    5
National Bank of Canada (NA)                    3   4   4   5   5    5
Royal Bank (RY)                                 4   3   4   5   5    5
Bank of Nova Scotia (BNS)                       4   3   3   1   5    5
BCE (BCE)                                       5   3   4   4   5    5
Telus (T)                                       4   4   4   5   5    5
TransCanada (TRP)                               3   4   3   4   5    5
Toronto Dominion Bank (TD)                      4   4   3   3   4    4
More Info: http://www.stingyinvestor.com/SI/strategy/dogs.shtml 

Value Ratio Stocks                             P/E P/B P/S P/C P/D  VR
============================================== === === === === === =====
Biovail (BVF)                                   5   5   4   5   5   0.6
BCE (BCE)                                       5   3   4   4   5   1.9
Thomson (TOC)                                   5   4   2   2   4   1.9
Bank of Montreal (BMO)                          4   5   4   1   5   1.9
Royal Bank (RY)                                 4   3   4   5   5   2.6
Bank of Nova Scotia (BNS)                       4   3   3   1   5   2.8
National Bank of Canada (NA)                    3   4   4   5   5   3.0
Toronto Dominion Bank (TD)                      4   4   3   3   4   3.0
Telus (T)                                       4   4   4   5   5   3.0
Husky Energy (HSE)                              4   2   3   4   4   3.4
More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml 

Graham Stocks                                  P/E P/B P/D   G$   dG$(%)
============================================== === === === ====== ======
ACE Aviation Holdings Inc. (ACE.B)              5   5   0   93.09 374.22
MDS Inc. (MDS)                                  5   5   0   47.24 131.13
Thomson (TOC)                                   5   4   4   55.70  49.73
Magna Cl.A (MG.A)                               4   5   3  104.35  46.55
Biovail (BVF)                                   5   5   5   16.16  44.55
Nova (NCX)                                      5   4   3   36.11  44.26
Petro Canada (PCA)                              5   4   2   55.63  17.11
BCE (BCE)                                       5   3   5   41.36  12.52
Weston George (WN)                              3   5   4   51.58   8.26
Bank of Montreal (BMO)                          4   5   5   50.30   7.91
Canadian Pacific Rail (CP)                      4   4   2   70.20   6.95
Sun Life (SLF)                                  4   5   4   49.36   6.49
Canadian Tire Corporation Limited (CTC.A)       3   4   2   66.08   0.76
More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml 

*Notes: http://www.stingyinvestor.com/SI/strategy/notes.shtml 

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ISSN 1499-2795 Copyright Dan Hallett and Associates Inc., 2008.
All rights reserved. The securities mentioned in this report are not
appropriate for all investors. Consult your professional investment
advisor before making any investment decision.  While all reasonable
effort is made to ensure the accuracy of information and data
contained herein, accuracy can not be guaranteed. Past performance is
not a good predictor of future performance.  Results are not
guaranteed and we assume no liability whatsoever for any material
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information in this newsletter, and in its related website, is not
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