John's Dance School~!

BOK

The Bank of Korea's decision is to change the benchmark seven-day repurchase rate at 2.25 currently. Heightened volatility of economic activity is caused to leave the benchmark at 2.25. There are two main factors that the recovery of US economy is slowing, and China's rapid expansion and growth is cooling. The global economy is uncertain and unstable, but it is not extent to a recession with double dip.The Korean won weakened by 0.8 percent from 1182 to 1192. its decision is to leave the rate on hold. They predict Korean consumer price index will rise at a faster pace and exceed the bank's inflation target of 3 percent. South Korea is under pushing the inflation rate beyond their target.

Investopedia

1) Short selling (공매도): Short selling is the selling of a stock that the seller does not own, also it is the sale of a security that isn't owned by the seller. When you short selling a stock, your broker will lend the share to you! the stock will come from the brokerage's own inventory and brokerage changes a fee about its borrowing. Covered shot selling means

2) Sovereign Wealth Fund: KIC (Korea Investment Corporation) government-owned investment (funded by Bank of Korea and government) only investing outside of Korea, but try to change the policy to new one to be able to invest its funds on Korean market and Swap market

3) Grid Parity: will reach the point where the cost of solar power equal to the cost of fossil fuels.

4) BSI (Business Survey Index (in term of Korea): BSI measures manufacturers' outlook on business condition for upcoming month. good condition should be over 100. (we are at 103 in August) Also, CSI (Consumer Survey Index)

5) Bonds provides specific interest payment (coupon) and a promised return of money (principle) on a specific date (maturity).

6) Dow Jones Industrial Average represents the stock market. This is made up of 30 American industrial companies

7) Predatory pricing is under antitrust law in the US, such as Amazon is in a dominant or monopoly position and used to sell below its own cost to drive rivals out of business and destroy them.

Prolonged slowdown!

Take a look at our economy. "Prolonged slowdown!" Major concern is of a global slowdown. No one is expecting "double-dip recession", but we know slowdown economy seems to be real. China and the US shows the signs of prolonged slowdown. Also, Korean government shows unemployment rate keeps rising and soaring to the highest level. We know that Fed keeps its interest rates at low, so the market acts less aggressive. We do not know when the market will boost and investors will come out to put its money on the market. Anyway, they are really cautious to bet on this market under the slowdown circumstance. 

Korea Stocks stumble after FOMC meeting

Shares in LG Display, LG electronics, SSanyoung Motor,Hynix Semiconductor shed and declined around 3 to 4 percent. Renault-Samsung Motor pulled out of the bidding for SSangyong Motor, the Korea's smallest automaker. Shares of SSanyoung motor plunged 14 percent from 15,000 won to 12,950 won on Wednesday. Japan worries about a further strengthening in the yen against the dollar, while Korea worries about a further weakening in the Won against the dollar.  




plunge, shed, drop, decline, stumble, <-> Surge, climb, gain

No Way~ Did Goldman Sachs Lose Money? It is impossible!

People calls the GS as A greed investment bank! Gordon Gekko who was a main character in the movie "Wall Street" directed by Oliver Stone left a famous phase, "Greedy is good"
Likewise, Goldman Sachs loves a greed move and has always followed profits and growths on the Wall street! But, Bloomberg reports Goldman Sachs lost Money! Wow! What a astonishing story! In this year, GS has had rough moments. Government pointed a target as GS and investigated the company about a fraud lawsuit filed by SEC.SEC argued GS hide the contract with John Paulson who short position in Mortgage Backed Securities (MBS) created by GS and Chosen by John Paulson. Here is the story about the transaction between GS and John Paulson. John Paulson who is most aggressive and successful hedge fund manager had made a contact with GS and GS asked John to choose pieces of Mortgages to create a Big MBS portfolio. OF CAUSE! JOHN were willing to choose slices for GS because he would short position in the mortgages chosen by himself and he knew the mortgage would go bad. He bought Credit Default Swap (CDS) related to the selected mortgages, so the MBS would be insolvent and default, the John's company made big profits from the insurance (CDS) he bought before. However, the investors who bought the MBS from GS lost all money, but GS had no liability to pay back the loss. GS just got brokerage fees from investors and Paul and they were just in the middle of the product.

Sorry.What a long explanation. Anyway, GS is still managing its company under a greed motivation, they care less customers (investors) and care more themselves even though they are acting like a service company! I will make another comment later! Anyway, I will keep tracking on GS's performance!

We need to be cautious about volatility from slightly change in positions.

Japanese market dropped from the start following disappointing of US job data, and this put a strain on Japanese currency-sensitive stocks such as Toyota, Cannon, Sony and other makers. US job data announced and it sank both Wall street and the dollar against Yen! The dollar is trading at Y85.55, but the dollar is still dropping and if the dollar is below Y85, we may see a 200-300 point fall of stock market! ,so we should be cautious about volatility of Japanese stock market and its currency! 

About Politic

OK! President Lee selected new prime minister "Kim" to support and promote for "the poor" policy. The new prime minister is expected to show a leadership based on communication and harmonization with creative visions.Lee tried to pursue to change urban development programs which moved government agencies into new city to a new proposal which attract companies to invest in the city. Why Lee changed the formal program proposed by formal president Roh? Because Lee thought it would be more effective in fueling regional development rather than moving government agencies. Formal prime minster failed to pursue the people who lives in the city to revise its development under Lee's favor, and Finally he decided to resign in the office. We got a new prime minster and he is young and more passion toward a lot of things that Formal prime mister has not completed yet!

Bye Bye Blockbuster!

Wow! Blockbuster which was the largest video rental firm was removed from NYSE and is trading on OTC. They lost market shares from Netflix. Netflix stock price is soaring over the years when Blockbuster stock was plunging. When I had a project about Video Rental Kiosk dominated by Redbox, Blockbuster tried to open its kiosk with Coinstar, but it did not work well and they closed stores and could not install its kiosks into Malls and retail stores where Redbox has already installed its kiosks over the years. Blockbuster faced a threat from Netflix which changed customers' tastes to renting DVDs through online. its Founder tried to sell his own shares at fire prices. Hey! Wattles! Don't run away from your business. You would better think about how to deal with this situation rather than running away from this!

LBO (leveraged Buyout)

Let me clear this term! In LBO, there is a ratio of 90% debt to 10% equity. Because of this high debt/equity ratio, its bonds are referred as JUNK BONDS. IF you need to know about the largest LBO which was the acquisition of HCA (Healthcare company). Kohlberg Kravis Roborts (KKR), Bain & Co and Merrill Lynch organized a group to make this deal and transaction. The three companies paid around $33 billion for the acquisition. HCA will be prepared for IPO in this year! Keep watching its move on IPO

Market volatility affects its earnings and Bank lending!

Although most of companies showed its high earning reports in this quarter, I am really concerned about the mounting debt of some states and cities such as Seoul, SeonNam and other states also. Investors should worry about sovereign risks.

WOW! KIA motors

Kia motors which is the affiliate of Hyundai motor posted an increase in quarter profit. I expected to increase values of KIA several years ago when the company was struggling with its growth. In 2008, Stock prices of Kia was around 8000 won (around $7.5) and traded its stock with the lower price. Why I argued that it was right time to buy Kia motors's shares due to replacing its top designer to Ex-Audi Head designer. they hired a head designer from German Auto Maker with high compensation and him as the Head designer of Kia Motor. He did not show its ability to change everything soon after taking the spot, but I assumed that Kia would dominate in its car industry someday. Now! Kia launched several cars and the sales of the cars has been increased over the years.  NOW, Its stock is trading at 30,000 Won ($30) However, I expect the stock is overvalued and it should be around $20 rather than $30.

About Hyundai Motor

Before writing about this issue, I should understand what Operating Profit is.
Operating Profit = Sales - COGS - Administrative Expenses

Hyundai rose its Operating profits 31% to 863.3 billion won from 657 billion won.
Hyundai motor share have gained 19 percent this year and keep rising its values.

Thoughts about Amazon Kindle and its stock

I read the article from Bloomberg about Amazon Kindle!
Amazon introduced two versions of Kindle.
1. $139 model working with Wi-Fi
2. $189 model working with 3G and Wi-Fi
Kindle is still best selling product on its e-reader and book industry, but there are other competitors such as Apple and Banes and Nobles, called Nook. Amazon wants to maintain its position as the market leader, but they face challenges from IPAD offering color pictures and video. However, Kindle only displays text in black on whiter without colors.
Founder of Amazon, Jeff Bezos is not convinced the Kindle needs a color or touch screen right now, but how he explains the fact that Amazon bought a company called Touchco and testing color technology! I think Bezo feels a need for color screen to boost sales of next Kindle and dominate the e-book market!

However, a good thing for Amazon is the scale of supplier of its library offering 81% of books are $9.99 or less to lure more customers. They have been selling more e-books than paper books over the years.

Amazon's current stock price is around $117 and when I looked the stock prices over 5 years, I feel the stock price is little overvalued, so I think its stock price will be declined in this year. Average of the stock price will be between 90 and 100.

OK~This is first time to write my thoughts on Blog!

It will be fun to do this!