I guess what I need to do is to look at the big picture (margins, market share, etc) and see if that can be stable, while the underlying products change rapidly. Ambac’s impact on customers is hard to decipher but some articles I have read seem to imply that the market is still using bond insurance (not necessarily from Ambac but that was before the rating agency reviews). Do you still feel that way? Insightful way of looking at things. I’m sorry. I know this isn’t the answer you were looking for. And so, to the extent that one could actually make the judgment about future earnings, one would be able to know which prices were attractive. Do note that we don’t know what the actual loss will be. While calculating returns obviously makes sense, note that one of the tasks your mutual funds management company does is calculate annual returns. Note that when assessing historical prices, these represent indications of volatility, risks and historical trends, but do not present future predictions on returns. I have a habit–possibly a bad one–of trying to fit present opportunities into something that successful investors like Warren Buffett encountered.

Or if the losses are spread out over time (meaning present value of losses is slightly lower) then the upside will be slightly better. To meet your long term financial goals through stock investing, you need to buy the stock at right price, wait for the time for it to appreciate, and then sell it out at the optimum time. The profit or loss in short selling is the different between the sell price and the bought price minus the commissions. Ambac looks like American Express in 1963, when Buffett bought after the infamous Salad Oil scandal. The stock market is, uh, going up and down like a see-saw. It is better to take sure shot Stock Tips or advices from someone before investing in Stocks and Commodities market instead of losing money and then regretting. I’m switching to focus investing and would ideally have 4 holdings of 25% or 5 @ 20% each.

Things will have to be extremely severe and/or Ambac’s underwriting has to be truly incompetent. Two things are working in your favor. So looking at the market price should tell us what losses are expected by the market. I also have a habit of looking at Buffett’s AMEX investment in 1963 but I think it offers a good template for contrarian investing. Is Ambac Buffett’s American Express in 1963? Ambac will likely determine a big chunk of my portfolio performance over the next 3 years. And most property investors never formally evaluate the performance of their investments at all. Bring a contractor with you when you check out a potential investment property. What is unknown is the potential for losses on the insurance that was written. 6.62 billion in losses from an adjusted book value point of view. In both cases, there were massive one-time losses (in the AMEX case, it wiped out shareholder equity to zero) and some thought bankruptcy was a possibility. I can be wrong but there seem to be some similarities. 600 million), then the stock can drop even more (-30%).

The appreciation potential is higher if you use more optimistic scenarios. But I like to be pessimistic so my view is that the potential is around 60% if earnings were back to the 2000 levels before the recent CDO boom. To some folks, a big bag of money seems like an infinite amount. It has been calculated that out of the total amount, after taxation almost 90% of the amount goes to the investors that is quite satisfactory. A couple of years ago, they came out with a subset which attracted my interest, S&P 500 Dividend Aristocrats. The longer you stick to this dividend re-investment cycle, the larger the cushion you could enjoy in a bear market. At the time of a sale, the buyer of a bond pays the market price plus accrued interest to the seller. Just a couple of days ago, the Eco Investing Guide published one of my blog posts for the first time.

Nothing is ever going to change that, so he knew he could count on that for the entirety of his investing life. ]. Number one, he believes that in many cases, with businesses like that, it’s very difficult to look five or 10 years down the road with any reasonable degree of accuracy. Unlike other types of companies, there isn’t inventory, plant & equipment, intangibles like brands or patents, or other assets that can overstate the book value. Opes Prime and Storm Financial are two high profile Australian examples but there are plenty more. Asian stock markets rose on Monday, with China stocks nearing a seven-year peak on hopes for more infrastructure spending and policy stimulus, while oil prices suffered further from excess supply. While technologies change rapidly-a new microprocessor every 18 months, new networking stuff-technology market shares actually change much more slowly. After that, I’ll look at how much loss is being priced in by the market.