Professor Elam

Accounting & Investing Info for San Antonio A & M

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  • Professor Elam

    MSFT One More Time, All the Same Again

    Murdoch's Newscorp owns the WSJ, it is considering listing WSJ articles only on MSFT Bing.

    Bing, huh?  This is the latest in a never ending series of catch up attempts by MSFT, opening MSFT stores mimicing Apple is another.  Google is the run away winner with 65% of searches, even with Yahoo, another failed effort, MSFT will fall short. 

    I mentioned in cost class last night that MSFT was not successful when viewed via a Balanced Scorecard. 

    While MSFT makes lots of money continually asking us to pay for their never ending re do of Windows, the stock price never goes over 30, there is a reason. 

  • Professor Elam

    Unemployment Taxes Pay for Unemployment, well duh…

    AS a private employer, one pays unemployment tax to the state of residence. If no one files unemployment claims on you as an employer, your rate will go down. IF general unemployment rises however there is no one left to fill the coffers but the remaining employers still in business. This article relates how that will eventually cut into employment. 

    Nest time you hear a politician like the Governor of Michigan, say let's keep extending unemployment benefits, ask yourself what is the source of that money. Note the state of Conn. is already 'borrowing' money from the Federal Govt to make its unemployment payments.

  • Professor Elam

    House Finance Comm votes to Audit Fed

    Two outsiders are winning converts to audit the FED, their bill passed the committee despite opposition from the FED itself and Barney Frank, no surprises there. The US has had three central Banks. Andrew Jackson helped kill the first one. Congress did not renew the Charter for the second. This one the FED was created in 1913 after the Panic of 1907. It has failed to prevent the Panics of 1929, 1937, 1957, 1972, 1987, 2002, 2007-8, quite a record eh?

  • Professor Elam

    Gary Kelly SW Air CEO and CPA

    Here is an interesting interview with Gary Kelly who runs SW Airlines, and is a CPA. Note how many comments he makes on analyzing the cost structure of LUV.

  • Professor Elam

    Blackrock Keeps Doubling

    The crash of 1972-74 eliminated lots of Wall Street firms from 'the business.'  Goodbody and Co, a partnership was no more. Merrill absorbed White Weld and thereby entered the real investment banking business. And upstart Shearson omigosh, gobbled hallowed Loeb Rhoads. Francis I. duPont became DuPont Glore Forgan and then Ross Perot gained control and then it was DuPont Walston and then, well, it was no more. Paine Weber.  Smith Barney has been owned by several firms. In Texas smaller firms like Underwood Nuehaus in Houston merged with other firms. 

    Eventually even First Boston, always on the first line of an underwriting tombstone, was taken by Credit Suisse but that took until 1988. Paine WEber became part of UBS in 2000. And so Blackrock becomes a new serious player. They deal in other people's wealth management, a distinct difference from Goldman or Morgan. Merrill Lehman and Bear brought on their own demise by playing the markets with leverage instead of brokering the market for clients, uh oh. Read this interview on why Blackrock is successful.

  • Professor Elam

    Skip the Gym Hit the Spray Gun

    Okay the truth is out, the dancing stars have the lean sprayed on. It certainly beats the going to the gym right, and doing it the hard way! Read this wsj article on just how far make-up has come. 

  • Professor Elam

    Carmakers Learn Cost Volume Profit

    Here is what I preach about chapter 5-6 in Garrison cost accounting

    Anybody who ever took microeconomics can understand the attraction of the strategy used by Detroit. In the short run, it makes sense to sell a car for any price greater than the added cost of producing that extra car. But if prices are so low that fixed costs are not being covered, then the company goes farther and farther into debt, until the lenders finally realize what is happening and turn off the spigot.

    That quote came from this article on how the govt is running the car companies. 

    Good observations, if one falls below fixed costs, they must be cut to stay in business. 

  • Professor Elam

    ATT On Again

    Regular readers are aware that ATT decided to disconnect my att.net e mail last friday morning, it is working again but I lost whatever got sent from friday morning to monday morning. If I did not respond to an e mail in that period it is because I was not able to do so. If you sent something in that period please re send as I cannot access it. 

    dennis.elam@att.net

    Dennis Elam 

  • Professor Elam

    Semester End Wrapping it All Up

    Please examine and read the last few posts, this is an interesting opportunity to put it all together so to speak at the end of the semester. An old fable tells the story of two animals, one who stores food for the winter and the other does not, are adults not still acting out this fatalistic play?  Jack Nicholson famously declared You Can't Handle the Truth in a movie scene, as the article about Avoidance states, this has been a problem ever since accounting was invented. Consider

    Nick Cage, in  a never ending story of celebrities going through money, is needing to borrow money from Johnny Depp

    A school district in SA just now declares a financial emergency

    A museum is a bankrupt, just a few years after getting millions from the Ford Foundation, will anyone be held responsible?

    The State of California, the City of San Francisco, are not balancing the books

    Al of this speaks to the necessity of Sarbanes Oxley Sec 404, the importance of evaluating internal control. Budgets and variances matter, a lot!.  External CPA firms are now required to report on how well internal controls are working. In advanced accounting we studied the Kaizen chart of continuous improvement, one can certainly construct a similar chart showing just how close monthly expenditures are to the adopted budget. If it is so simple, how do things get so out of whack, as in the above examples. 

    WE will be putting this all together in class this week. I make observations about the psychology of the popular culture and how it shapes what happens. In the above examples we have an example of denial or avoidance. Steve Kaplan made this observation last evening about investor psychology. His point, do not ignore the obvious. Or as a famous saying goes in investing circles, re arranging the deck chairs on the Titanic will not help, one must avoid the iceberg. 

    Understanding investors' psychology, and how that translates into the interrelationship between various asset classes, is enormously more important than recognizing true value. Of course many will disagree, and they will continue to be as puzzled during the next several major market swings as they were during the last several. If you want to know whether the weather will be hotter or colder a half year from now, then knowing the exact current levels of barometric pressures and frontal patterns will be of limited use. Knowing that it is January will be of far greater value.


    More budget cuts as we go to Monday morning press time

    City of Sam Antonio asks depts to cut back

    CPS Cuts Budget 10%

    Note the City is not too worried as they still have a general fund balance, well three years ago the NE ISD has one also, can they not see the writing on budget

    County Deputies complain about cuts

    THe last post is particularly interesting, I have noted that increasing anger and negative mood is typical of periods of economic stagnation, one can sense the frustration of the deputy just reading his e mail post….

  • Professor Elam

    The Day the Dollar Died

    This story is fiction, so far. Here is a scenario of what would happen if the world finally said no to dollars continually created out of the willingness of the chinese and Saudis to lend them back to us.