Money Management - 2007

Investment Advisors

College and University Endowments Realized 8.6 % Average 10-Year Return in 2007

1/24/08 - The 35th annual survey of 785 colleges and universities in the United States and Canada (largest participation ever) by the National Association of College and University Business Officers (NACUBO) in conjunction with TIAA-CREF Asset Management reported that:

1) college and university endowments realized an 8.6% average 10-year compounded rate of return in 2007 (superior to returns on the S&PP 500, Russell 3000 indices);

2) 1-year average rate of return of 17.2% for fiscal year ended 6/30/2007 (vs. 20.6% for the S&P 500 and 20.1% for the Russsell 3000;

3) $411.2 billiion in endowment assets, up $71 billion from 2006;

4) assets are primarily invested in equities, fixed income and hedge funds;

5) NACUBO estimates that the 1-year increase in endowment assets under management will generate approximately $3.25 billion in additional revenue during the current fiscal year.

Results were in line with the target needed to meet short- and long-term institutional spending goals while also ensuring the financial stability of colleges and universities.

Rogue Traders - Securities Fraud

Wall Street - Scandal

February 26, 1995 - Barings PLC, Britain's oldest investment banking firm, collapsed after one of its Singapore-based securities traders (Nick Leeson) lost more than $1.4 billion by gambling on Tokyo stock prices; March 2, 1995 - Leeson arrested.

January 24, 2008 - Societe Generale (one of Europe's biggest banks) revealed it had lost $7.15 billion dollars at hands of a rogue trader (Jerome Kerviel, 31); January 26, 2008 - Kerviel surrendered to the police in Paris.

Biggest Trading Losses by 'Rogue Traders

Private Equity: Job Creation or Destruction

Merchant Banks

January 25, 2008 (Davos, Switzerland) - The World Economic Forum announced results of a yearlong study of 5,000 private equity transactions (randomly chosen) from 1980 through 2005 to determine whether buyouts create jobs or result in more layoffs. It is titled “Economic Impact of Private Equity,” was led by Josh Lerner, professor at Harvard Business School, and Steven J. Davis, professor at University of Chicago Graduate School of Business, was guided by an advisory board that included policy makers, academics, labor representatives and private equity executives.

The study found that:

1) private equity does not create more jobs, but cut, on average, only about 1% more jobs than their peers,

2) two years before a buyout, a company cuts, on average, 4% more of its work force compared with its peers (possibly because it is preparing for a sale),

3) acquired companies, on average, cut 7% of their work force over two years, but at the same time, added jobs (usually new positions in new locations) at a pace of about 6%, resulting in a net loss of 1%,

4) by the fourth and fifth years of private equity ownership, the growth of a company’s work force becomes similar to its public peers,

5) 6% of all buyouts eventually end in a bankruptcy filing, slightly higher than the average for public companies (buyout companies defaulted at half the rate compared with those public companies with similar junk debt ratings),

6) public-to-private transactions reflected only 6.7% of the total number of buyouts since 1980 (28% of the firms acquired, measured in terms of dollar value). The study did not look at new or lost jobs abroad, did not examine what would have happened to employment had the buyouts not occurred.

Results contrasted with study commissioned by the Private Equity Council, a lobby group, of 42 large companies (selected by the buyout groups) acquired by eight private equity firms from 2002 to 2005 (World Economic Forum data did not look at deals from 2003 to 2005). Its results showed that employment grew 8.4% at acquired companies.

America for Sale

Mergers & Acquisitions

Thomson Financial reported foreign investors acquired positions in American companies, factories and other properties, through private deals and purchases of publicly traded stock, valued at a record $414 billion in 2007: 1) up 90% from 2006, 2) more than double the average for the last decade, 3) more than one-fourth of all announced deals for the year.

(source: Bloomberg Financial markets)

Stock Market Declines

Trading History

January 2008 - Peak to Trough Comparisons of Market Declines

L-R: January 1, 1973 - December 6, 1974 (-45.1%);

November 29, 1983 - July 24, 1984 (-15.6%);

August 25, 1987 - October 19, 1987 (-36.1%);

July 16, 1990 - October 11, 1990 (-21.2%);

July 17, 1998 - August 31, 1998 (-19.3%);

January 14, 2000 - October 9, 2002 (-37.8%);

October 9, 2007 - January 17, 2008 (-14.2%)

Subprime Bailout - 2008

Investment Banks

Summary: Cash Infusions from Foreign Investors (2007 - 2008) to Offset Subprime Losses:

Guiness Record for Packaging

Paper & Packaging

2006 - Guinness World Records named Lyle's Golden Syrup (first packaged in tins on January 10, 1885 at Plaistow Wharf in London's Docklands) as world's oldest branding/packaging.

William Fox Would Be Pleased

Entertainment

1904 - William Fox (born Wilhelm Fuchs) acquired 146-seat Brooklyn storefront Nickelodeon theatre for $1,660.67, started Greater New York Film Rental Company; 1912 - Supreme Court ruled against movie monopoly of Motion Picture Patents Company (Thomas Edison); 1913 - Theater "chain" pioneer William Fox (born Wilhelm Fuchs) established Greater New York Film Rental, distribution firm, Fox Office Attractions Company, production company.; 1915 - consolidated companies, formed Fox Film Corporation; concentrated on acquiring, building theaters; 1916 - moved company to 13 acres in Hollywood, CA; March 3, 1929 - acquired Loew's Corporation's 500 theatres (added to existing nationwide circuit of 1100 theatres), large equity position in Metro-Goldwyn-Mayer Picture Studios; July 1929 - Fox seriously injured in car accident; October 1929 - net worth valued over $400 million wiped out; 1930 - Fox forced out as CEO; May 31, 1935 - president Sidney Kent, new owners merged company with Twentieth Century Pictures, formed 20th Century Fox; 1936 - Fox forced into personal bankruptcy; 1942 - began jail time for felony conviction of bribing judge during bankruptcy proceedings; 1985 - Twentieth Century Fox Film Corporation acquired by News Corporation; renamed Fox, Incorporated; 1989 - film production unit renamed the Fox Film Corporation; October 7, 1996 - Fox News Channel made its debut.

Find a Need and Fill It

Business Growth & Influence

December 7, 1998 - One Hundred Great 'Things' of the 20th Century (Time magazine):

Brownie Box Camera (1900), Paper Clip (1901), Barnum's Animal Crackers (1902), Teddy Bear (1902), Safety Razor (1903), Ice Cream Cone (1904), Bakelite (1907), Model T (1908), Automatic Washing Machine (1910), Neon (1910), Electric Range (1910), Vitamins (1912), Zipper (1913), Brassiere (1914), Sneakers (1916), Insulin (1921), Band-Aid (1921), Kleenex (1924), Pop-Up-Toaster (1926), Refrigerator (1927), Penicillin (1928), Peanut Butter (1928), Strained Baby Food (1928), Domestic Air Conditioner (1928), LA-Z-BOY Chairs (1928), Television (1929), Scotch Tape (1930), Flashbulb (1930), Sliced Bread (1930), Alka-Seltzer (1931), Do-It-Yourself Hair Dye (1931), Electric Razor (1931), Stereo System (1931), Tampons (1931), Detergents (1933), Tape Recorder (1935), Kodachrome Film (1935), Garbage Disposer (1935), Blender )1937), Releasable Ski Binding (1937), Spam (1937), Fluorescent Lighting (1938), Ballpoint Pen (1938), Teflon (1938), Nylon Stockings (1938), Jet Engine (1939 and 1941), Nylon (1939), Electric Kettle (1940), Permanent-Press Fabric (1941), Velcro (1941), Cake Mix (1940s), Tupperware (1946), Automatic Electric Clothes Washer (1947), Long-Playing Record (1948), Instant Camera (1948), Electric Guitar (1948), Photocopier (1949), Computer (1951), Color TV (1953), Saran Wrap (1953), Reddi-wip (1954), Portable Home Dishwasher (1954), TV Dinner (1954), Polio vaccine (1955), Transistor Radio (1955), TV Remote (1956), Frisbee (1957), --LEGO system (1958), Hula Hoop (1958), Barbie (1959), Snowmobile (1959), Skateboard (1959), Pantyhose (1960), Tylenol (1960), Oral Contraceptive (1960), Soft Contact Lenses (1961), Compact Audio Cassette Player (1963), Metal Tennis Racquet (1963), Touch-Tone Telephone (1963), Disposable Baby Diaper (1963), Pop Top Can (1963), Microwave Oven (1967), Quartz Wristwatch (1969), Electronic Hand-Held Calculator (1972), Food Processor (1973), Cell Phone (1973), Snowboard (1978), Walkman (1979), Liquid Paper (1979), Post-It (1980), Polartec (1981), Prozac (1988).

First/Worst Trading Days of New Year

Trading History

Worst first trading days of a new year for the S.&P. 500 index:

1. January 4, 1932 - down 3.7% in last year of the worst part of the Great Depression (National Bureau of Economic Research estimates recession ran from August 1929 - March 1933).

2. January 2, 2001 - down 2.8%. Recession began in March.

3. January 2, 1980 - down 2.0% as recession began that month.

4. January 3, 1949 - down 1.6%. Recession had begun in November 1948.

5. January 3, 1983 - down 1.6%. Recession had ended in November 1982.

6. January 2, 2008 - down 1.4 percent.

Numbers 1-5: came when the economy was in a recession, or not far from one.

(source: Howard Silverblatt, S&P Senior Index Analyst)

Stock Market Returns - 2007

Trading History

December 31, 2007:

1) Dow Jones Industrial Average closed at 13,264.82, an annual increase of 6.43% (vs. 16.29% jump in 2006; 6.3% down from all-time high October 2007);

2) S&P 500 index (companies with median market value of $12.8 billion) closed at 1468.36, an annual gain of 3.53%, up 10% excluding financial stocks (6.2% below record close on October 9, 2007; down 3.8% in fourth quarter, first for any fourth quarter in seven years; up 67% since 2002); first November/December decline since 1974.

3) Russell 2000 closed at 766.03 (down 2.8% in 2007, first loss in five years, underperformed S&P 500 for first time since 1998);

4) Nasdaq closed at 2652.28, up 9.81% for the year (down 7.2% from record high in October 2007);

5) Dow Jones Wilshire 5000 Index (companies with median market value of $589.6 million), broadest measure of U.S. shares, closed at 14,819.58 ($115 billion decrease in value of stocks);

6) Chicago Board Options Exchange Volatility Index (VIX), market's ``fear gauge'' (rises as stocks fall), closed at 22.50 (up 95% percent in 2007, biggest annual rise in its 18-year history).