Super Stock Blog

Posts Tagged ‘nyse’

It’s election season, which means over-hyped political conventions, negative TV ads and, of course, money.

And no one can toss it around like America’s billionaires. While the U.S.’ richest people aren’t making quite the news splash they did during the 2004 presidential contest–remember financier George Soros’ $26 million effort to put Sen. John Kerry in the White House?–they’re still staying plenty involved in politics, whether it’s directly through the election, or as part of some broader cause.

Since U.S. law caps individual contributions to candidates for federal office at $2,300, one of the most popular ways for billionaires to flex their political muscle is through donations to advocacy groups like “527″ committees. Lightly regulated groups that are named after a section of the U.S. tax code, 527s can sway an election but are not officially associated with a specific candidate.

In Pictures: Billionaires And Their Causes

According to the Center for Responsive Politics, Soros, Las Vegas Sands (nyse: LVS – news – people ) Chief Sheldon Adelson and Cincinnati businessman Carl Lindner are among the billionaires who have contributed most to advocacy groups during this election cycle.

Soros has contributed nearly $4.7 million to these organizations, including $3.5 million to the now defunct Fund for America, a group closely aligned with Democrats. Adelson, popular with Republicans, has dropped almost $3.6 million on American Solutions for Winning the Future, a group that’s lobbying for domestic oil and natural gas drilling. Lindner has donated at least $660,000 to the same organization.

Of course, there’s a more effective way for billionaires to make sure their money is being used for the political issues they support: they simply run for office themselves. It’s a risky bet–just ask Ross Perot–but it worked for New York Mayor Michael Bloomberg, whose name was floated last year as a possible presidential nominee after he shook off his Republican yoke and became an Independent.

It remains to be seen whether Bloomberg will have a role in the next presidential administration, but when he leaves City Hall in the big Apple, another billionaire, supermarket titan John Catsimatidis, is looking to fill his seat.

It’s obvious why billionaires take such an active role in political causes: because they can. but they’re also among the few people who have the financial resources to make a significant difference in certain issues. for example, earlier this year Blackstone Group (nyse: BX – news – people ) co-founder and former commerce secretary Peter G. Peterson committed $1 billion to a new foundation that bears his name.

It has an ambitious agenda: increasing awareness and prompting action on the national debt, entitlement programs, energy, health care, education and nuclear non-proliferation. the foundation is also behind the promotion of a new movie about the national debt, I.O.U.S.a., which premieres later this week.

Another billionaire, oilman T. Boone Pickens, is using the politically charged environment to gin up interest in his own pet cause, renewable energy. He’s launched a massive PR campaign for his “Pickens plan,” which aims to make wind power the source of 20% of the nation’s electricity within 10 years. Pickens was a major force behind the Swift Boat veterans’ successful effort to derail John Kerry’s presidential aspirations, but he’s not officially supporting either candidate this time around.

Smart move. Pickens supports aspects of both candidates’ energy plans–within the last few days he has met with both Republican John McCain and Democrat Barack Obama. Pickens stands to make a pile of money from his plan, and aspects of both candidates’ energy proposals could help him achieve this goal. (See ” Green in Greentech for Pickens.”)

Aside from the money that billionaires can funnel to a particular cause, there’s another benefit: the celebrity factor. in July, Obama very publicly convened a brain trust of top economic minds, including several former treasury secretaries and former Federal Reserve chairman Paul Volcker. but the adviser who stole the media spotlight was the one who contributed to the meeting by phone: Berkshire Hathaway (nyse: BRK – news – people ) Chairman Warren Buffett.

In Pictures: Billionaires And Their Causes

Politics Of The Billionaires

16

• Email
• Share
• Print

Shortly after Warren Buffett invested billions in Goldman Sachs (NYSE: GS), he appeared on CNBC in support of the monstrous bailout package winding its way through Congress. considering how astute and revered an investor as Buffett is, such actions raise tremendous moral and ethical red flags.

Buffett’s timing is important. he made the investment first, and then he talked up the bailout. as a significant new investor in Goldman, Buffett now stands to personally benefit from that bailout. had he advocated the bailout before making the investment, that’d be one thing. by reserving public comment until after he stood to benefit from it, Buffett looks less like an advocate of reason and more like someone out to make a quick buck.

And that’s a terrible shame.

Buffett moves markets
When you’re an investor in the public eye, your reputation depends a great deal on adhering to an ethical code of conduct regarding your personal transactions. the Fool’s disclosure policy, for instance, requires us to not trade a stock for 10 days before or after we write about it, and we’re far less influential investors than Buffett is. Even Jim Cramer claims to have restrictions on when he can buy or sell stocks based on when he talks about them on the air.

Why is Buffett exempt from similar restrictions? why can he make a huge investment one day, and then advocate for a massive government-spending package that will help prop up the company he just invested in the next?

I applaud Buffett on his negotiation skills for getting such a sweetheart deal on his Goldman Sachs stake. I draw the line, however, at his subsequently supporting a governmental order to force me to fork over my own cash to help assure his investment’s success.

The market still works!
With all due respect to Buffett, nobody has yet made a compelling case to me that there is, in fact, a crisis that extends much beyond overleveraged banks with bad business practices. There’s a simple fact lost among all of this fearmongering and jawboning about how bad things could get if the government doesn’t throw $700 billion (or more) at failing financial institutions. the stock and vulture-capital markets are still generally working, in spite of the cries from politicians and failing speculators to the contrary.

Bank of America (NYSE: BAC) bought out Countrywide and is in the process of buying out Merrill Lynch (NYSE: MER) after both of those companies stumbled. if there’s value in a company’s assets and operations, a private investor will be happy to pick up the pieces. Even Lehman Brothers is finding suitors, such as Barclays (NYSE: BCS), to pick up the pieces following its bankruptcy. When a deal comes around that’s good enough, the money is there to make it happen.

The market also has a really good mechanism to help struggling financial companies get money. It’s called “price,” and it’s still functioning. you can see it in action by looking at the one-year CD rates that various banks are offering to entice people to deposit money with them:

Corus Bancshares, whose heavy bet on the condo markets in big cities left it at risk for this meltdown, has to offer significantly higher CD rates to attract sufficient funding. on the other end, now that Countrywide has been rescued by the financially solid Bank of America, the rates it needs to offer folks to deposit their cash is significantly lower.

A really bad five minutes
The market can show, will show, and repeatedly has shown itself able to recover from stresses. When the people lobbying the hardest for a bailout are those who stand to benefit from it, you have to ask whether their motives are altruistic or self-serving. that even goes for the man who holds the title of “World’s Greatest Investor.”

Buffett himself has been quoted as saying: “It takes 20 years to build a reputation and five minutes to ruin it. if you think about that, you’ll do things differently.” It’s quite a shame that Buffett’s own reputation, built over decades of impeccable ethical dealings and investing, could be put on the line over what to him is a rather modest investment.

I hope it was just an accidental oversight on the part of this great investor and not an attempt to secure his own personal profits on the backs of ordinary Americans. It’d be tragic if Buffett’s legacy would need to be rewritten as a result of this catastrophe.

More Foolishness:

• Buffett Swarms In
• What the $700 Billion Proposal Means to You
• Bailout: the Sucker Punch

Why Would Warren Buffett Stoop So Low?

NEW YORK—Wall Street investors experienced a sudden surge in optimism Tuesday when, after six tumultuous weeks that saw record drops in the Dow Jones industrial average, a $1 bill was spotted on the floor of the New York Stock Exchange.

The dollar bill was discovered in the northwest corner of the trading floor at approximately 12:05 p.m., and its condition was reported as “crinkled, but real.” Word of the tangible denomination of U.S. currency spread quickly across the NYSE, sending traders into a frenzied rush of shouting, arm-flailing, hooting, hollering, and, according to eyewitnesses, at least one dog pile.

“With credit frozen and the commercial paper market poised on the brink of collapse, this is the most promising development I’ve seen on Wall Street in months,” said floor trader Tim Formato, one of hundreds who gathered around the $1 bill and excitedly called their clients to inform them that they were looking at actual U.S. tender. “I think I touched it.”

According to witnesses, the trading floor was soon abuzz with energy, as traders pointed at the dollar and repeatedly shouted “Look!” and “Money!” a proposal to divide the $1 note into 1,300 equal pieces and distribute them amongst investors was considered, but ultimately rejected. Early reports estimate the dollar may have passed through as many as 65 hands before disappearing in the late afternoon.

the bill’s absence, however, did not deter the growing enthusiasm from those on the trading floor. By 2:15 p.m., more than 60,000 shares had been purchased in the new publicly traded asset, DLR, after brokers placed a flurry of calls advising their investors to buy into the booming single-dollar market.

“We couldn’t be in a better situation right now,” trader Patrick Kady said. “Unless of course it had been a euro.”

however, some financial advisers are warning against the rampant speculation the dollar has caused on Wall Street. many have cautioned investors not to make rash decisions, such as liquidating all their low-risk government bonds in order to sniff the green paper bill for just a minute.

“I bet it smells like rose petals,” mutual funds specialist Ken Stoute said. “My friend’s friend Tim Formato? He’s on the board at Westminster Securities and he says he touched it. He said it was warm and soft and wonderful. He said he knows where it is now, and I can put in an option on seeing it tomorrow for only $85.”

Since the appearance of the dollar, the Dow has spiked an impressive 993 points—its largest gain ever. Initial numbers are showing the most sizable rises in technology stocks, a trend some are attributing to Microsoft’s CFO Chris Liddell, who toured the trading floor Tuesday morning with the bill stuck to his left shoe.

the overall projection for the market following the incident has been positive, with many analysts claiming that the $1 bill may be an indication of other spare change lying around. This, coupled with reports out of Europe that there is a German college student who has not yet hit her credit card limit this month, could be enough to stabilize the Dow and jump-start the global economy once again.

“This is just another sign that the U.S. economy is as strong and resilient as it has ever been,” said Richard Fuld Jr., former CEO of Lehman Brothers. “I’m just glad we finally have these credit and subprime mortgage loan crises behind us. This $1 bill will carry us through another 10 years of reckless, unregulated borrowing.”

Added Fuld, “Just for God’s sake, don’t invest it in the stock market.”

Dollar Bill On Floor Sends Wall Street Into Frenzy

While many investors believe the fallout from the SEC’s fraud charges against Goldman Sachs (NYSE: GS) will be minimal, one billionaire investor sees it a little differently.

Legendary investor Jim Rogers told CNBC Saturday that, “Any market that goes up this much, this fast, this steadily without a correction – it’s not normal. When that sort of thing happens, the market could be setting itself up for a 15-20% correction.”

While Rogers does not think the Goldman issue itself will cause a correction, it may be the catalyst for selling.

Rogers was not surprised by the SEC’s actions, noting these kind of investigations usually take place after a major financial meltdown. Rogers said it is important to stay calm and not overreact to the situation.

He went on to add, “It’s not time to sell in any significant way.” However, he said investors should consider adding short to their portfolio and suggested investors short indexes.

Finally, as an avid commodities investor, Rogers said any pullback in gold is an opportunity to buy the yellow metal.

Related Articles

• Technical Analysis on EUR/GBPEntering into the Eve of Christmas…
• How to Play China’s Move (UUP, XLB, VALE, CSCO, FLR)
• Bob Doll Sees Opportunities (FCX, TGT, COH, COP, MRO)
• Late Day Reversal, Bullish Sign? (DJI, FCX)
• Gartman: Commodity Stocks Are Broken (FCX, X, MT, SU)

Jim Rogers Thinks Goldman Case Could Be Catalyst For Correction (GS)