"Based on my own personal experience - both as an investor in
recent years and an expert witness in years past - rarely do more
than three or four variables really count. Everything else is
noise."  - Marty Whitman


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

The day the ticking time bombs went off
http://www.guardian.co.uk/business/2008/sep/16/marketturmoil.lehmanbrothers1
"The underlying philosophy behind derivatives sounds terrific.
The weak can get rid of risks they can't handle and the financial
system should be stronger as a result. In the right hands,
derivatives can perform this role. But the general practice is very
different, as the great investor Warren Buffett worked out years
ago. His 2002 letter to his Berkshire Hathaway shareholders made
headlines by condemning derivatives as "financial weapons of
mass destruction". They were "time bombs, both for the parties
that deal in them and the economic system"."

The mortgages of the future
http://www.nytimes.com/2008/09/21/business/21view.html
"Mortgages could be structured differently, so that adjustments
in payments would be made as a matter of routine -
systematically, automatically and continuously - starting even before any
distress is perceived by borrower or lender. By avoiding thousands
and even millions of individual family crises, we might also make
institutional crises, like the collapse of Lehman Brothers and
Bear Stearns, less likely."

Whitman's glass-half-full take on market
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20080918/RAIC18
"Marty Whitman, the octogenarian dean of deep-value investing,
sees great bargains to be snapped up from the current stock market
meltdown. "It's a great time," enthused the 83-year-old founder
of New York-based Third Avenue Management LLC before speaking
yesterday at a conference organized by AIC Ltd. "We can't try to
pick the bottom, but it seems to me that there are great values
out there now, just like in 1974," the firm's co-chief
investment officer said in an interview."

Take advantage of the dividend tax credit
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20080918/RCESTNICK18
"It's interesting, but the marginal tax rate on eligible
dividends is now lower than the rate on capital gains in most provinces
at most income levels. In fact, at lower income levels, the
marginal tax rate on eligible dividends is often negative. That is,
adding more eligible dividend income to your tax return can
actually reduce your overall tax bill. Why? Because the dividend tax
credit available will offset not only that dividend income, but
the tax on other income as well. British Columbia has the
deepest negative marginal tax rate in 2008 at negative 15.55 per cent
for the lowest income earners. This means, for example, that if
you live in B.C., are in the lowest tax bracket, and you add
one dollar of eligible dividend income, you'll actually pay 15.55
cents less in tax than without the dividend. What a bargain."

Top-earning pirates
http://www.forbes.com/home/2008/09/18/top-earning-pirates-biz-logistics-cx_mw_0919piracy.html
"Depletion of fortune due to rum and wenches was not assessed,
nor were divisions of treasure among the crew. Plunders were often
split in equal shares, with the captain receiving double--not
much of a premium for leadership. A good lesson to modern
shareholders: The best way to achieve fair compensation and rule out
golden parachutes is to have your leaders expecting murderous
revolts if they hoard profits."

Ban the shorts? A BIG mistake!
http://money.cnn.com/2008/09/19/markets/thebuzz/index.htm?postversion=2008091912
"For all the talk of capitalism now being dead given the
government's plan to likely assume much of the banking industry's
mortgage-related illiquid assets as well as the takeovers of Fannie
Mae, Freddie Mac and AIG, the SEC's action is far more ominous for
those who believe in free markets."

Pain spreads as credit vise grows tighter
http://www.nytimes.com/2008/09/19/business/economy/19econ.htm
"Lenders of all types had already been raising the bar for
borrowers, turning away all but the best customers. This week, they
became even less willing to part with their money, further
crimping budgets and family spending. An economy propelled by easy
credit for more than a decade is fraying as credit disappears.
American Express, to take one striking example, is reducing the
maximum credit limit for half of its tens of millions of
cardholders."

John Bogle says U.S. government seems 'punch drunk'
http://www.bloomberg.com/apps/news?pid=20601087&sid=aTFTNEzIH.cU&refer=home
"John Bogle, who created the $106 billion Vanguard 500 Index Fund
in 1976, said the U.S. government is 'punch drunk' with
proposals to rescue the financial system."

Mathematicians predicted crash years ago
http://www.sciam.com/blog/60-second-science/post.cfm?id=mathematicians-predicted-stock-mark-2008-09-16
"Mandelbrot, 83, contends that portfolio theory, which tries to
maximize return for a given level of risk, treats extreme events
(like, say, yesterday's market shockers) with 'benign neglect:
it regards large market shifts as too unlikely to matter or as
impossible to take into account.' The faulty assumption of modern
portfolio theorists, in Mandelbrot's view, is that price changes
do not drift far from the mean when observing daily ups and
downs - so extreme events are exceedingly rare. 'Typhoons, in
effect, are defined out of existence,' he wrote."

Paulson, Bernanke push new plan
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBXk2Zku0B.Y&refer=home
"U.S. Treasury Secretary Henry Paulson and Federal Reserve
Chairman Ben S. Bernanke proposed moving troubled assets from the
balance sheets of American financial companies into a new
institution. "

Money markets get a lifeline
http://money.cnn.com/2008/09/19/markets/money_markets/index.htm?postversion=2008091908
"The Treasury Department and Federal Reserve took steps Friday to
help stabilize the U.S. money market fund industry, which has
come under severe strain following the dramatic events that took
place across the financial system this week. The Treasury said
it would guarantee up to $50 billion dollars for the next year
for both retail and institutional investors."

Short sellers under fire
http://www.bloomberg.com/apps/news?pid=20601087&sid=awnfOClekeiM&refer=home
"The SEC said today that it will halt short selling of U.S.
banks, insurance companies and securities firms through Oct. 2, while
the Financial Services Authority in the U.K. banned short sales
of financial shares for the rest of the year. "

AIG booted out of the Dow
http://money.cnn.com/2008/09/18/news/companies/aig_dow/index.htm?postversion=2008091810
"Dow Jones & Company, which oversees the 30-stock index, said
that Kraft Foods (KFT) will take AIG's place."

Russian emergency funding fails to halt stock rout
http://www.bloomberg.com/apps/news?pid=20601087&sid=apNz9dgCGT6g&refer=home
"Russia poured $44 billion into its three largest banks and
halted stock trading for a second day in a bid to stem the most
severe financial crisis since its devaluation and debt default a
decade ago. The Finance Ministry extended the repayment period on
loans available to OAO Sberbank, VTB Group and OAO Gazprombank to
three months from one week. The benchmark Micex stock index
plunged as much as 10 percent, taking its three-day decline to 25
percent, and brokerage KIT Finance said it's in talks with
investors to sell a stake after failing to meet some obligations."

Counterparty risk and CDSs
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20080917/RBANKSSWAPS17
"Given the crisis on Wall Street and the focus on American
International Group Inc., one of the world's largest insurers,
everybody is suddenly talking about counterparty risk. What is
counterparty risk, and why is it now an issue? In the simplest terms,
counterparty risk is the chance that the person on the other side
of a deal - the counterparty - won't be there when it's time to
pay up. Take an example most people can relate to: Selling a
home. There's always the chance that when it comes time to close
the deal a month or so down the road, the buyer won't show up or
won't have the money."

Global equity market declines
http://bespokeinvest.typepad.com/bespoke/2008/09/global-equity-1.html
"There's no doubt about it -- it's bad everywhere" [Falling like
a BRIC. China -68.34%, Russia -57.44%, India -36.36%, Brazil
-33.04%.]

Money market fund says customers could lose money
http://www.nytimes.com/2008/09/17/business/17fund.html?_r=1&ref=business&oref=slogin
"The fund said that because the value of some investments had
fallen, customers now have only 97 cents for each dollar they had
invested. This is only the second time in history that a money
market fund has 'broken the buck' - that is, reported a share.s
value was less than a dollar."

A map of the limits of statistics
http://www.edge.org/3rd_culture/taleb08/taleb08_index.html
"We can identify where the danger zone is located, which I call
"the fourth quadrant", and show it on a map with more or less
clear boundaries. A map is a useful thing because you know where
you are safe and where your knowledge is questionable. So I drew
for the Edge readers a tableau showing the boundaries where
statistics works well and where it is questionable or unreliable. Now
once you identify where the danger zone is, where your
knowledge is no longer valid, you can easily make some policy rules: how
to conduct yourself in that fourth quadrant; what to avoid."

AIG gets up to $85 Billion Fed loan
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAkvusf5Ld7M&refer=home
"The U.S. government agreed to lend as much as $85 billion to
American International Group Inc. in exchange for a 79.9 percent
stake to save the country's biggest insurer from collapse."

Steeper drop in Canada's existing home prices
http://www.financialpost.com/reports/property/story.html?id=792278
"The average price of a home sold in Canada's major markets
dropped 5.1% in August from a year ago, the largest decline in more
than 12 years, according to the Canadian Real Estate Association.
House prices have dropped for three straight months and it's
probably only the beginning, says Benjamin Tal, senior economist
with CIBC World Markets."

AIG falls
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7owyQQ3Nxks&refer=home
"AIG, seeking to raise $20 billion in capital and sell $20
billion of assets, rejected investments from buyout firms KKR & Co.,
TPG Inc. and J.C. Flowers & Co., people familiar with the talks
said. AIG instead sought a $40 billion bridge loan from the
Federal Reserve, the New York Times reported, citing an unnamed
person. The shares plunged $6.25 to $5.89 at 9:42 a.m. in New York
Stock Exchange composite trading. Warrren Buffett, chairman of
Berkshire Hathaway Inc., 'is thought to be in talks' with AIG about
a possible investment, the Insurance Insider reported today,
citing unidentified sources." [It seems likely that Buffett would
take a pass on the firm but be willing to buy some of its assets
at fire-sale prices.]

Lehman files biggest bankruptcy case
http://www.bloomberg.com/apps/news?pid=20601087&sid=a82CD7OMEtWM&refer=home
"Lehman Brothers Holdings Inc., the fourth-largest U.S.
investment bank, succumbed to the subprime mortgage crisis it helped
create in the biggest bankruptcy filing in history. The 158-year-old
firm, which survived railroad bankruptcies of the 1800s, the
Great Depression in the 1930s and the collapse of Long-Term
Capital Management a decade ago, filed a Chapter 11 petition with U.S.
Bankruptcy Court in Manhattan today. The collapse of Lehman,
which listed more than $613 billion of debt, dwarfs WorldCom
Inc.'s insolvency in 2002 and Drexel Burnham Lambert's failure in
1990." [So much for the too big to fail idea]

Skimming the froth
http://www.economist.com/finance/displaystory.cfm?story_id=12231416
"Emerging markets have been subject to some violent downswings in
the past and, with the economic health of some countries
deteriorating, there is scope for some nasty shocks in terms of
corporate profits and bank losses. Long-term investors may be willing
to put up with the bad news in the hope of a rebound in 2009 but
it seems unlikely that we will be hearing any more safe haven
talk for a while."

Wall Street banks teeter
http://www.nytimes.com/2008/09/15/business/15lehman.html?_r=1&hp&oref=slogin
"In one of the most dramatic days in Wall Street.s history,
Merrill Lynch agreed to sell itself to Bank of America for roughly
$50 billion to avert a deepening financial crisis, while another
prominent securities firm, Lehman Brothers, hurtled toward
liquidation after it failed to find a buyer. The humbling moves, which
reshape the landscape of American finance, mark the latest
chapter in a tumultuous year in which once-proud financial
institutions have been brought to their knees as a result of hundreds of
billions of dollars in losses because of bad mortgage finance
and real estate investments. But even as the fates of Lehman and
Merrill hung in the balance Sunday night, another crisis loomed
as the insurance giant American International Group appeared to
teeter. A.I.G. sought a $40 billion lifeline from the Federal
Reserve, without which the company may have only days to survive."




Tip Sheet
http://www.stingyinvestor.com/SI/strategy/tipsheet.shtml

Shorts squeezed
http://www.ndir.com/SI/strategy/tipsheet/09-19-2008-Shorts-squeezed.shtml
Let's be practical and look for stocks that made big gains
today but are down even more over the last year.  We're picking on
these stocks with the view that the short sellers might have been
right but were forced out of their positions.

Turning Japanese
http://www.ndir.com/SI/strategy/tipsheet/09-17-2008-Turning-Japanese.shtml
Our Japanese friends are earning a king's ransom on
their government bonds compared to U.S. investors.  Are we heading
into a Japanese-style malaise?

Graham gone wild
http://www.ndir.com/SI/strategy/tipsheet/09-17-2008-Graham-gone-wild.shtml
In a nut shell, my Graham looks for low price-to-earnings and low
price-to-book-value ratios, high current ratios, plus some earnings
growth and dividend growth.  Here are a few U.S. stocks that currently
pass the test.

Banks with book value
http://www.ndir.com/SI/strategy/tipsheet/09-16-2008-Banks-with-book-value.shtml
As U.S. banks collapse one after another, let's take a quick look at
the situation north of the border.  Sure, some Canadian banks suffered
setbacks this year but life is pretty good in Canada.

A little positive momentum
http://www.ndir.com/SI/strategy/tipsheet/09-15-2008-A-little-positive-momentum.shtml
After spending the day following the collapse of financial titans, I
was in the mood for something more positive.  Thankfully there is
good news out there.  To find it, join me on a hunt for stocks with
positive momentum.




DOW 30 Value Screens
http://www.stingyinvestor.com/SI/strategy.shtml 

High Dividend Yield Stocks                   P/E P/B P/S P/D Yield
============================================ === === === === =====
Bank of America (BAC)                         1   5   1   5    5
Pfizer (PFE)                                  3   4   2   5    5
Citigroup (C)                                 0   5   2   5    5
AT&T (T)                                      2   4   3   5    5
Verizon (VZ)                                  2   4   4   5    5
Merck (MRK)                                   2   2   1   4    4
General Electric (GE)                         4   4   3   4    4
AIG (AIG)                                     0   5   5   4    4
JP Morgan Chase (JPM)                         4   5   2   4    4
EI DuPont (DD)                                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/D  VR
============================================ === === === === =====
Pfizer (PFE)                                  3   4   2   5   2.0
Bank of America (BAC)                         1   5   1   5   2.2
Chevron (CVX)                                 5   4   5   4   2.6
AT&T (T)                                      2   4   3   5   2.8
General Electric (GE)                         4   4   3   4   2.9
EI DuPont (DD)                                4   3   3   4   3.2
Verizon (VZ)                                  2   4   4   5   3.3
Merck (MRK)                                   2   2   1   4   3.3
JP Morgan Chase (JPM)                         4   5   2   4   3.4
Caterpillar (CAT)                             5   2   4   3   3.9
More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml 

Graham Stocks                            P/E P/B P/D   G$   dG$(%)
======================================== === === === ====== ======
JP Morgan Chase (JPM)                     4   5   4   50.11  26.53
Alcoa (AA)                                5   5   2   33.24  17.47
Chevron (CVX)                             5   4   4   91.63  14.22
Bank of America (BAC)                     1   5   5   35.50  10.14
More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml 



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)                            1   5   3   5   5    5
Bank of Montreal (BMO)                   3   4   4   1   5    5
CIBC (CM)                                0   4   5   5   5    5
National Bank of Canada (NA)             2   4   4   4   5    5
Telus (T)                                5   4   4   5   5    5
Husky Energy (HSE)                       4   2   2   3   5    5
Bank of Nova Scotia (BNS)                3   2   3   1   5    5
Royal Bank (RY)                          3   2   3   5   5    5
BCE (BCE)                                5   3   3   4   5    5
TransCanada (TRP)                        3   3   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)                             1   5   3   5   5   1.8
Thomson (TOC)                             5   4   2   2   4   1.9
Telus (T)                                 5   4   4   5   5   2.1
Petro Canada (PCA)                        5   5   5   4   3   2.2
Husky Energy (HSE)                        4   2   2   3   5   2.2
BCE (BCE)                                 5   3   3   4   5   2.3
Bank of Montreal (BMO)                    3   4   4   1   5   2.4
Sun Life (SLF)                            4   5   4   1   4   2.7
First Quantum Minerals Ltd. (FM)          5   2   3   4   2   3.0
Toronto Dominion Bank (TD)                4   3   3   2   4   3.3
More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml 

Graham Stocks                            P/E P/B P/D   G$   dG$(%)
======================================== === === === ====== ======
ACE Aviation (ACE.B)                      5   5   0  124.56 1343.3
Petro Canada (PCA)                        5   5   3   66.56  75.75
Magna Cl.A (MG.A)                         4   5   3   95.03  51.85
Thomson (TOC)                             5   4   4   55.77  48.79
First Quantum Minerals Ltd. (FM)          5   2   2   68.75  35.60
Canadian Tire (CTC.A)                     4   5   3   65.10  26.78
Sun Life (SLF)                            4   5   4   49.12  24.82
Nova (NCX)                                5   3   2   32.26  16.05
Inmet Mining (IMN)                        5   4   1   68.78  15.49
Telus (T)                                 5   4   5   44.76  11.77
Canadian Pacific Rail (CP)                4   4   3   64.84   7.19
Weston George (WN)                        4   4   4   52.46   2.07
BCE (BCE)                                 5   3   5   38.37   1.37
More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml 

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


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Books for Stingy Investors

Common Stocks and Uncommon Profits
by Philip A. Fisher

Fisher takes a qualitative view of stocks and stresses the
importance of intangible aspects of a firm with heavy emphasis on
research and human capital. He also falls into the focused camp of
investors who buy only a few carefully selected stocks and hold
them for long periods. As Warren Buffett's second favourite book
on investing, Common Stocks and Uncommon Profits is a must read
for students of the market.
Amazon Link: http://www.amazon.ca/exec/obidos/ASIN/0471445509/


Stock Research From Dan Hallett & Associates

The Rothery Report
http://www.rotheryreport.com/ 

The Rothery Report provides research on select deep-value stocks in
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Rothery Report Performance (03/31/2001 to 06/30/2008)
  Average Capital Gain    Average Holding Period
          40.7%                   2.4 Years

Learn More
http://www.rotheryreport.com/store/store.shtml

Subscribe Today
http://www.rotheryreport.com/store/order.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
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information in this newsletter, and in its related website, is not
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