Filed under: Management, Goldman Sachs Group (GS), Morgan Stanley (MS)

What separates the winner — Goldman Sachs Group (NYSE: GS) from the losers — such as Morgan Stanley (NYSE: MS) — in this year’s Wall Street money-making game is the way information flows among decision-makers. The winning firm encourages vigorous information flow and intense debate about decisions across different levels of the organization. The losing firms shoved decisions from the top down the throats of traders who executed them.

This came to mind in reading a story about Morgan Stanley’s recently departed co-president in today’s Wall Street Journal [subscription required]. Cruz reportedly “set a tone in which she didn’t welcome dissent once higher-ups made decisions about trades. Communication broke down among some of the key decision makers involved in vetting the mortgage trades.” The lack of communication contributed to Morgan Stanley’s decision to make a largely unhedged bet on Collateralized Debt Obligation (CDOs) — one that cost it $9.4 billion in write-downs.

By contrast, as I discussed on CNBC on Tuesday, Goldman encouraged debate between its CFO and COO and a then-lowly proprietary trading desk. This debate led to the successful decision to bet heavily on a decline in the ABX which helped Goldman generate $4 billion in profits — more than offsetting the $1.5 billion to $2 billion worth of losses from its CDO holdings.

Continue reading How communication explains Morgan Stanley’s losses and Goldman Sachs’s profits

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Filed under: Management, Goldman Sachs Group (GS), Morgan Stanley (MS)

What separates the winner — Goldman Sachs Group (NYSE: GS) from the losers — such as Morgan Stanley (NYSE: MS) — in this year’s Wall Street money-making game is the way information flows among decision-makers. The winning firm encourages vigorous information flow and intense debate about decisions across different levels of the organization. The losing firms shoved decisions from the top down the throats of traders who executed them.

This came to mind in reading a story about Morgan Stanley’s recently departed co-president in today’s Wall Street Journal [subscription required]. Cruz reportedly “set a tone in which she didn’t welcome dissent once higher-ups made decisions about trades. Communication broke down among some of the key decision makers involved in vetting the mortgage trades.” The lack of communication contributed to Morgan Stanley’s decision to make a largely unhedged bet on Collateralized Debt Obligation (CDOs) — one that cost it $9.4 billion in write-downs.

By contrast, as I discussed on CNBC on Tuesday, Goldman encouraged debate between its CFO and COO and a then-lowly proprietary trading desk. This debate led to the successful decision to bet heavily on a decline in the ABX which helped Goldman generate $4 billion in profits — more than offsetting the $1.5 billion to $2 billion worth of losses from its CDO holdings.

Continue reading How communication explains Morgan Stanley’s losses and Goldman Sachs’s profits

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Filed under: Newsletters, Oil, Stocks to Buy, Best Stocks for 2008

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

“First Solar (NASDAQ: FSLR) is my favorite speculative idea for 2008,” says relative strength technician Dan Sullivan, editor of The Chartist.

“First Solar is the fastest growing manufacturer of solar modules in the world. And that’s just the beginning. The company manufactures solar modules with an advanced thin film semiconductor process that significantly lowers solar electricity costs.

“Offering clean renewable electricity at affordable prices enables First Solar to provide an economic alternative to peak conventional electricity and fossil fuels.

“The solar module maker recorded a significant increase in revenue, easily beating Wall Street estimates. The company earned $46 million, or 58 cents per share, compared with $4.3 million, or 7 cents per share in the year-ago period.

Continue reading Best Stocks for 2008: Bright prospects for First Solar

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Filed under: Newsletters, Oil, Stocks to Buy, Best Stocks for 2008

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

“First Solar (NASDAQ: FSLR) is my favorite speculative idea for 2008,” says relative strength technician Dan Sullivan, editor of The Chartist.

“First Solar is the fastest growing manufacturer of solar modules in the world. And that’s just the beginning. The company manufactures solar modules with an advanced thin film semiconductor process that significantly lowers solar electricity costs.

“Offering clean renewable electricity at affordable prices enables First Solar to provide an economic alternative to peak conventional electricity and fossil fuels.

“The solar module maker recorded a significant increase in revenue, easily beating Wall Street estimates. The company earned $46 million, or 58 cents per share, compared with $4.3 million, or 7 cents per share in the year-ago period.

Continue reading Best Stocks for 2008: Bright prospects for First Solar

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Filed under: Options

Genitope (NASDAQ: GTOP) plans to issue a press release after 4:00 pm EST today that will discuss the initial results of its pivotal Phase 3 clinical trial examining GTOP’s MyVax (personalized immunotherapy vaccine for follicular non-Hodgkin’s lymphoma). GTOP is recently down $1.24 to $3.00. GTOP call option volume of 46,827 contracts compares to put volume of 6,584 contracts according to Track Data, suggesting large price risk.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Filed under: Options

Genitope (NASDAQ: GTOP) plans to issue a press release after 4:00 pm EST today that will discuss the initial results of its pivotal Phase 3 clinical trial examining GTOP’s MyVax (personalized immunotherapy vaccine for follicular non-Hodgkin’s lymphoma). GTOP is recently down $1.24 to $3.00. GTOP call option volume of 46,827 contracts compares to put volume of 6,584 contracts according to Track Data, suggesting large price risk.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Filed under: Other issues, Rants and raves, Federal Reserve

The real problem for the Federal Reserve and Chairman Ben Bernanke is that there are no good choices. One reason the Federal Reserve Board seems to always be behind the curve, whether it is lowering rates or raising rates, tightening money supply or loosening it, is because one arrow can’t hit two targets. Seems like a simple enough concept? Any action it takes often will do some good and some bad, but how much of each? That answer requires a crystal ball, and as yet they have not been providing them one with the job.

I was prompted to write this after reading numerous blog comments on various posts where the Fed gets no sympathy, never mind understanding. The fear of doing the wrong thing — which is very real — creates a form of paralysis. No matter what the Fed does, it will displease someone. Fight inflation or ease market liquidity? Prop up the dollar or let it fall to unknown depths? Even when it comes to energy and food prices the Fed has a difficult time.

Although the government excludes energy and food from the consumer price index making the CPI one of those wink and a nod figures we all love, the Fed has to consider these things and does. On top of all this, it is operating from the jaded perspective of Washington D.C. and Wall Street. They might do better, moving their offices to Nebraska or Michigan or Ohio. I know that board members are not all in Washington, but often their actions give that impression.

One last thought, and I know it is as clear as mud, but, whatever the Fed does may not have the desired effect and we do not get to see the result of them doing the opposite. While we may not like the result of a decision, ours or theirs, we do not have the luxury of knowing both outcomes — that is pure speculation. That is what is reflected in many comments.

To find potential opportunities and verify my track record, read Chasing Value or Serious Money.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

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Filed under: Other issues, Rants and raves, Federal Reserve

The real problem for the Federal Reserve and Chairman Ben Bernanke is that there are no good choices. One reason the Federal Reserve Board seems to always be behind the curve, whether it is lowering rates or raising rates, tightening money supply or loosening it, is because one arrow can’t hit two targets. Seems like a simple enough concept? Any action it takes often will do some good and some bad, but how much of each? That answer requires a crystal ball, and as yet they have not been providing them one with the job.

I was prompted to write this after reading numerous blog comments on various posts where the Fed gets no sympathy, never mind understanding. The fear of doing the wrong thing — which is very real — creates a form of paralysis. No matter what the Fed does, it will displease someone. Fight inflation or ease market liquidity? Prop up the dollar or let it fall to unknown depths? Even when it comes to energy and food prices the Fed has a difficult time.

Although the government excludes energy and food from the consumer price index making the CPI one of those wink and a nod figures we all love, the Fed has to consider these things and does. On top of all this, it is operating from the jaded perspective of Washington D.C. and Wall Street. They might do better, moving their offices to Nebraska or Michigan or Ohio. I know that board members are not all in Washington, but often their actions give that impression.

One last thought, and I know it is as clear as mud, but, whatever the Fed does may not have the desired effect and we do not get to see the result of them doing the opposite. While we may not like the result of a decision, ours or theirs, we do not have the luxury of knowing both outcomes — that is pure speculation. That is what is reflected in many comments.

To find potential opportunities and verify my track record, read Chasing Value or Serious Money.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

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Filed under: Deals, Microsoft (MSFT), Viacom (VIA)

Microsoft (NASDAQ: MSFT) has joined up with media giant Viacom (NYSE: VIA) to share revenue and license content across its platforms — like its online MSN and Xbox 360 platforms — to the tune of $500 million.

The partnership will likely have an impact stretching over five years ($100 million a year) and will involve advertising in addition to content and revenue sharing during that time. Microsoft will gain the ability to get Viacom’s bevy of popular content on its properties, with lucrative shows and television channels Comedy Central, MTV Networks and Nickelodeon among others.

Microsoft will also buy ads on Viacom’s television networks as well as its online properties, and Viacom will most likely eventually drop Google’s (NASDAQ: GOOG) AdSense platform for Microsoft’s adCenter online advertising system in a blow to the search leader. Is Microsoft serious about competing with Google’s stranglehold on internet advertising? This latest deal with Viacom would seem to suggest a definite yes.

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Filed under: Deals, Microsoft (MSFT), Viacom (VIA)

Microsoft (NASDAQ: MSFT) has joined up with media giant Viacom (NYSE: VIA) to share revenue and license content across its platforms — like its online MSN and Xbox 360 platforms — to the tune of $500 million.

The partnership will likely have an impact stretching over five years ($100 million a year) and will involve advertising in addition to content and revenue sharing during that time. Microsoft will gain the ability to get Viacom’s bevy of popular content on its properties, with lucrative shows and television channels Comedy Central, MTV Networks and Nickelodeon among others.

Microsoft will also buy ads on Viacom’s television networks as well as its online properties, and Viacom will most likely eventually drop Google’s (NASDAQ: GOOG) AdSense platform for Microsoft’s adCenter online advertising system in a blow to the search leader. Is Microsoft serious about competing with Google’s stranglehold on internet advertising? This latest deal with Viacom would seem to suggest a definite yes.

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