Tuesday, November 08, 2011

Recent Odds & Ends

Barry Knapp, US equity strategy chief of Barclays, was cited in a Wall Street Journal article saying that a European recession won't really affect US firms. Maybe it will trim sales 2%, and that Europe is only 13% of US economic GDP

But later that same day, on Neil Cavuto's Fox News program, another pundit forecast crushing effects on Apple and some other US firms with sizable European operations.

They can't both be right, can they? Being that Knapp is responsible for a sizable equity book, I would doubt he'd be completely candid. That would be rather like yelling "Fire!" in a crowded theater when you are near the doors. So I guess I lean more toward the guy on Cavuto's program.

Ron Baron was on CNBC as they hosted a segment from his investing conference at the Metropolitan Opera of New York. He disclosed that Jon Corzine had solicited his firm to invest in MF Global. In an all too rare example of common sense, Baron declined. His explanation?

First, MF Global's business was a bit too complicated for him to fully understand. Second, what Baron did understand that at 33x leverage, a mere 3% loss would wipe out the firm's equity.

Case closed.

Evidently Baron didn't need the CFTC, SEC or any other regulatory agency to assure him of anything.

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