vindaci's Xanga

The biggest market drop EVER

Tue, 30 Sep 2008 01:46:53 GMT

Doug: Hey, the Dow is down 650 points!
Me: What? It was down only 470 when I went to the bathroom!

Lehman Brothers delisted

Fri, 19 Sep 2008 02:01:52 GMT

Now that Lehman Brothers has filed for Chapter 11 bankruptcy and is no longer meeting all the requirements to be listed at the New York Stock Exchange, they have been delisted by the NYSE. This means they can no longer be traded at the NYSE under their old symbol, "LEH".

When a stock gets delisted by the exchange, the stock can continue to be traded. This is usually done by trading the stock outside of the exchange, typically at the Pinksheet exchange where there are few requirements to be a listed symbol. The stock symbol usually changes when a stock gets delisted and starts trading at Pinksheet, because Pinksheet stocks generally have five-letter symbols. Lehman Brothers is now traded under the stock symbol "LEHMQ" at Pinksheet. Stocks that trade at NYSE and the American Stock Exchange usually have three or fewer letters in its stock symbol; Nasdaq usually has four.

So what happens to a stock when a company is bankrupt? If you buy stocks, you become one of the owners of the company, so you're basically responsible for its actions, however limited. If a company declares a Chapter 7 bankruptcy, its entire assets are sold off and an attempt will be made to pay back as much debt as possible to everyone else first, and whatever remains will belong to you in proportion to the shares you own. (There is a list of who gets paid first and who gets paid last - the government is first, and the owners are last.) In case of Lehman, however, they declared a Chapter 11 bankruptcy, which means they will continue to operate as an entity. Its worth, then, is a combination of several factors, including how much assets they may have left over for the share holders if they were to declare Chapter 7 bankruptcy, and how much confidence people have in the company to bring itself back from bankruptcy. More information about the worth of shares of a bankrupt company is available at the SEC website.

Lehman Brothers was trading at about $0.25 yesterday. It closed (price ~4pm) today around 0.075 today. As of this writing, it's trading in the after-hours market for about 5 cents. After it sells off its best pieces to Barclay's at the steep bargain of $1.6 billion, there isn't much left over - I doubt it's even worth 5 cents it's trading at right now.

Market Capitalization

Wed, 17 Sep 2008 23:17:40 GMT

How much is a company worth to the world? For a public company, its worth can be measured by the number of shares that are publicly traded times the value of its share.

For example, I can create Mark's World Corporation, declare that there are 200 million shares that represent the company, and go public with 25% of all available shares (50 million shares). This would mean that my company is 25% public and I would own the remaining 75%, assuming I started the company by myself so I share no ownership of the company with anyone else. This means that there are 50 million public shares of my company that any random Joe can buy/sell. Let's say that each share is worth $30. So that would mean that there are $30 * 50 million = $1500 million worth of shares floating around in the public, and my company's Market Capitalization is $1.5 billion.

New York Times has put up an interactive chart showing the Market Capitalization of 29 of the largest financial corporations in the U.S. and compares their values from a year ago. The difference is astounding - approximately half of their market capitalization has been lost within the past year. Their relative size difference is also quite interesting to compare.

Pokeball

Mon, 15 Sep 2008 02:26:00 GMT

It's a Pokeball!
"I choose you, Google Chrome!"

The Tale of 2 Investment Banks

Mon, 15 Sep 2008 02:10:32 GMT

In the beginning, there were 5 big investment banks. They were Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Stearns. All were happy campers, buying and selling and making profits for its investors and staff.

Then came the credit crisis. Bear Stearns, as the smallest of the five, was on the brink of bankruptcy. It was bought out by a commercial bank, JP Morgan Chase. Lehman Brothers and Merrill Lynch quickly announced that they're doing fine and the investors had nothing to worry.

Beginning of September 2008. Some say Lehman Brothers may sell portions of its business. Merrill Lynch announces its biggest loss in its history - 25% of all profits ever earned since it went public.

Then came this weekend. Lehman Brothers frantically looks for a way to avoid a collapse. Barclays PLC (another commercial bank) and Bank of America (yet another commercial bank) thinks about buying out Lehman Brothers. The story leaks. Everyone is occupied with the Lehman story.

In the mean time, over the same weekend, Merrill Lynch silently starts looking for a buyer, too. They approach Morgan Stanley to buy them out - quickly and silently... Alas, Morgan Stanley was not ready to make a deal so vast so quickly. Merrill Lynch gets the bright idea that perhaps one of those buyers already thinking about buying Lehman would be interested in purchasing them instead and approaches them. Bank of America started salivating over the idea of purchasing one of the biggest investment firms on the street.

Lehman Brothers, unable to find a buyer, gets ready to declare bankruptcy.

Monday. The world opens up to a new reality - a reality where only 2 big investment banks remain. All eyes are now on Goldman Sachs and Morgan Stanley.

L.E.M.

Mon, 21 Jul 2008 05:12:32 GMT

My mom used to attend a Catholic church back when our family lived in Korea. My mom's hope was that I would one day become an alter boy. But that hope never came to see the light of day because I rarely ever went to church as a boy.

Fast forward a couple decades. It appears I have gotten myself into an adult, Episcopal version of an alter boy. An "alterman" if you will. The technical term for the job is a "Lay Eucharist Minister," or "LEM" for short. I'll be wearing a robe, lighting and blowing out the candles, and serving wine during the Eucharist. (Eucharist is an orthodox term for the Communion, also known as The Lord's Supper.) I had my training today, and I look forward to serving in this capacity on a regular basis.

The Episcopal Christians have the Eucharist every Sunday. While the familiar wafer is served as the body, real wine is used instead of the grape juice as the blood. The wine is shared among the entire congregation from one or two cups called "Chalices." For this reason, the LEM, who serves the wine to the congregation, is also called "the Chalice Bearer."

Sharing of a drink from a single cup with a roomful of people can sometimes (or always) feel dirty and gross, even if it is alcohol. What makes it feel worse is that the service that I attend (the evening service) has several homeless people that are not exactly hygienic. Did I mention that the left-over wines are consumed by the volunteers after the service in order to prevent the blood of Christ from going to waste?

Yes, this is absolutely gross. Yet is this not what the Christ has commanded us to do? - To share, and love, and to commune with those less fortunate than us?

Before the Eucharist, the congregation sings the following song together:

Come to the table, come to the feast
All are invited, greatest to least
Sins have been pardoned, divisions have ceased
Come to the table, come to the feast
Come to the feast

This is a pretty song. It used to be just a pretty song. But once I started attending this service, the song has come to have a new meaning. As you sing this song you look around, see the homeless with whom you are worshiping together and sharing a cup together. It is a glimpse of the day with no division of different classes or races or have's and have-not's.

This is our communion. After the service I call up mom to see how things are back home, and she tells me I should go to a Korean church so I can meet a Korean girl. I simply tell her, "I don't like Korean churches." And it's true that I generally don't like Korean churches for its politics and its culture. But more than that, All Angels Church is this good. I wouldn't trade this experience for a girl.

Boy Meets Kina Grannis

Sun, 18 May 2008 23:00:30 GMT

The Digg Girl was previously mentioned here and here.

Well, she was in New York this weekend so I finally got to meet her in person:

Wow I look fat. It's okay, it only makes Kina look prettier. =)

Bear on the Wall

Sat, 22 Mar 2008 05:17:14 GMT

I had predicted that JP Morgan may buy out Bear Stearns, but who would have thought it would be at $2/share, down from $160/share they were worth last year, $80/share they were worth last week, and $30/share they were worth at Friday's market closing before the buyout announcement on Sunday?!

This announcement came unusually early, before the stock market opened Monday. It turned out the Feds had their hands on this deal, offering to cough up $300 billion to help JP Morgan buy out Bear Stearns. Bear Stearns, it turns out, was in that bad of a shape, and the Feds, having noticed the horrible opening in the Asian market, moved in quickly to salvage the economy by having the only Investment Bank that had the power to buy out Bear Stearns buy it out before the European market opened. Since the Monday Asian market opens Sunday afternoon our time, the Feds had to make all this happen on a Sunday - an unprecedented move involving several high ranking officials in the government as well as at JP Morgan working endlessly on a holiday.

The fact is, JP Morgan was deemed the only firm capable of taking over Bear Stearns without taking a detrimental hit by Bear's debts. Bear Stearns is deemed to be the 5th largest Investment Firm yet there was only one firm in the whole country (possibly the world) that could rescue it, albeit at $2/share!

Some argue that this is a ripoff for Bear Stearns. Their headquarter building in Midtown Manhattan New York (shown to the right) alone is worth more than $2/share, they argue. Add to it all their other assets, it is a pure theft to buy Bear Stearns at $2/share, especially when the government is providing a financial aid. But this is not necessarily so, most analysts agree, because of all the debts incurred by Bear Stearns that JP Morgan will have to back up with their own assets. Bear Stearns can still reject the offer, but this is unlikely - the only other alternative, no one disputes, is to declare bankruptcy.

Although this news broke out Sunday night, Bear Stearns' stocks were trading well above $2/share Monday morning during the pretrading hours. Officially, the stock market opens at 9:30am, but some early birds will start trading earlier; the earliest usually being 8am. The opening trading price for Bear Stearns was $3.80, almost double $2/share offered by JP Morgan. This is both a good and bad sign for Bear Stearns - First, this is a bad sign for Bear Stearns because it means that people really believe Bear Stearns cannot make it through without getting bought out by JP Morgan. But it is also a good sign for Bear Stearns because people believe Bear Stearns is worth more than $2/share, and JP Morgan may increase its offer before the buyout. JP Morgan's stock was also up, so many traders must have believed JP Morgan was making a good deal with the buyout. It'll be interesting to see how this plays out... Sadly, it feels a lot like watching someone suffocating to death - the death of Bear Stearns.

It reminds me of a quote by Paul Harvey:

If you found yourself in a situation where you could either save a drowning man, or you could take a Pulitzer prize winning photograph of him drowning, what shutter speed and apature would you use?

... and we're all taking our cameras out to watch Bear Stearns drown.

The market panicked otherwise on Monday, especially for other investment firms like Lehman Brothers and Morgan Stanley. If either or both of these firms tanked, there would not be another JP Morgan to buy out another firm, let alone a bigger firm - that would be the death of Wall Street! Perhaps the market knew this or perhaps they had some confidence remaining on these remaining firms, but Monday wasn't as bad as it could have been for either firms. Both made immediate statements Tuesday, ensuring the public that their Q1 loses do not look as grim as they had initially forecasted, allowing their stocks to regain the Monday losses.

The market fluctuated throughout the remainder of the week, both domestically as well as internationally. There are some words that the futures market is doing badly. The only good news is that the oil prices are down.

It'll be interesting to see how this coming week plays out.

Here is more information on how the market played out this past week.

PS: Did anyone notice I misspelled "Bear Stearns" in my Sunday post? I'm a ditz... I should know how to spell "Stearns" by now.

Thursday, March 20, 2008

Thu, 20 Mar 2008 02:37:42 GMT

This is the New Math taught in schools today. I almost cried at the end of this video...

I still remember the day in 1997 my calculus professor came into the class and announced that the California education board made the decision to no longer require long division in the California elementary curriculum. What idiots...

BTW, Korean kids master multiplication, division, and fractions by the end of the third grade.

Thursday, March 20, 2008

Thu, 20 Mar 2008 01:48:40 GMT

A binary calculator made of wood pieces:

This sort of illustrates how computers think. You know what they say: "computers are all one's and zero's". This contraption sort of shows how computers calculate, except computers use electrons instead of marbles, and tiny tiny wires instead of wood pieces. Voltages are used instead of gravity to move the electronics (marbles) in computers, and those "levers" in computers are called "transistors". It's just an illustration, albeit a very nice one; you won't see tiny wires that looks like this wooden calculator inside a computer.

Transistors are tiny, which is what allows computers to be small. Before transistors, vacuum tubes were used instead, which were pretty big (a little larger than your thumb.) It's the invention of the transistors that allowed computers to become small.

Trivia: who or what company invented transistors? Click on the comments to see the answer.