Professor Elam

Accounting & Investing Info for San Antonio A & M

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  • Professor Elam

    Meanwhile in California…

    We reported on the student sit in at Berkeley, now read more about why. Yes California hired $600,000 per year UT Chancellor Mark Yudof who says when you have no choice, you have no choice, a $600K set of words if I ever heard any indeed!  Mark got my attention when he was at the helm of UT by remarking

    The future of the UT system is nanotechnology, 

    really he said that…..but I digress

    The students are upset in CA that tuition alone will soon reach $10K for two semesters. Mark you will recall was instrumental in having UT Austin  set its own tuition so it would not ask the State of Texas for more money, tuition promptly increased from $2500 a semester to $4000, only a $600K per year administrator could think of an idea like that!  Lt Gov Dewhurst was reportedly shocked, well…

    Just to be clear, CEOs are usually paid superior salaries for superior results. Yudof has a track record of commanding the highest salary of any higher ed official in the state. Yet he solution seems to be the same every time, raise tuition. Does that universal solution merit such a salary?

    But these are mere details, read the real story about California in general and San Francisco in particular.

    Bottom line, a museum in San Antonio, the NE School District in SA, San Francisco, you name it, municipalities are in trouble. 

  • Professor Elam

    NE ISD Declares Financial Emergency, Three Years too Late….

    North East Ind School District has finally declared a financial emergency, after using up valuable General Fund Money for the last three. Look at the financial plan . Does anyone see any discrepancy in the third power point slide?  It shows a fund balance of $50 Million Dollars, I doubt that…I will give them a call tomorrow.

    As I have said in the weekly column, the next emergency will be municipalities, cities, schools, counties, hospital districts, you name it. If this is happening in a reasonably affluent part of San Antonio, I wonder what Philadelphia PA looks like?

    The official statement is here for NEISD.

    Now consider the museum two posts back, the general inability to face financial consequences noted by the NY Times article, and now this. And this is occurring wih the stock market at new highs for the year….Imagine what another melt dow will do.

    Bottom Line, This is why we study accounting, as an accountng professional you will be called upon to sit on volunteer boards or perhaps run for local office. Trust me, you will be stunned and amazed at the inability to read a financial statement. And no one will seem to care or show much interest. Apparently the NE ISD thought the state legislature would ride to their rescue, wrong.

  • Professor Elam

    Accounting, Dread and Anxiety

    A tip of the mortarboard to Prof Sam Rock for spotting this excellent article about accounting history. I mentioned the difficulties of a local museum in the last post, perhaps they did not have the courage to look at the books. This article details this is nothing new.  Please read this article, quite interesting.

  • Professor Elam

    Museo Alameda in the Red

    The Museo Alameda had a net operating loss of $1.47 million on revenues on revenues of $1.97 million. So it lost nearly as much as it took in. It had  whopping 30 employees on the payroll while racking up the losses and went through three executive directors in a couple of years.   Initial estimates had 400,000 visitors attending the museum every year. But the actual count has been 140,000, 45,000 and 26,000 this year. My guess is that the City Internal Audit staff did the audit but I will find out. 

    How can things get this far out of whack, how could so many be so wrong? It strikes me that there is not nearly enough sharing in San Antonio. visitsanantonio.com lists  some 28 museums of various descriptions come up for San antonio.  Did SA need another one? Palo Alto CC has added a performing arts center, and it is expanding its arts school. It would seem that would be another logical place for such a venture, and of course the CC already has people in place to run such things.

    Considering the Institute of Texan Culture is alive and well, still operating from its Hemisfair Days, the idea of a Latin culture museum would have been better served as part of an already successful venture. 

    The real story here is that everyone's money is no one's money. No one looks after OPM, other people's money like they look after their own.   Even at that it is hard to see how a Board would run through this much cash. Now $1 M in debt, it will be quite difficult to get the ox out of the ditch. 

    One of may favorite sayings, it is nearly impossible to stop a bad idea cloaked in good intentions. Children are urged to share their toys with others, adults should do the same. More on this as it develops. OH, the City of San Antonio has also in the pot for $315,000 to defray admission costs the first year. 

    We study budgeting in cost accounting as well as variances from planned expenditures. This is a case study of why internal accounting controls need to be in place BEFORE ventures begin. 

  • Professor Elam

    More Nick Cage

    It turns out Nick Cage did hire a CPA, Sam Levine. Levine has countersued claiming he warned Cage it would cost $30 M  a year to maintain his lavish lifestyle. Castles, yachts, nine Rolls Royces (not even a very interesting car quite frankly), gee, not as bright as he appears to be in his movies I guess.

  • Professor Elam

    Market Topping?

    Picture 3

    This will take a bit of study but that is what college is all about, eh? The red and black line tracks the number of stocks trading above their 50 day moving average. The three blue arrows show a pattern of lower highs. This mean fewer and fewer stocks are trading up, more are trading down. The purple line is the actual SPX or St and Poors 500 average. So the overall average has gone to a new high with fewer and fewer stocks higher. A divergence occurs when one indicator does not confirm another. This rally has thinner and thinner participation. Only the price of a handful of large stocks are still going up. Since the S & P is weighted to reflect the larger stocks, this can happen. 

    At bottom the Moving Average Convergence Divergence MACD indicator is rolling over. The party from March 9 is about to end.

    Picture 6

    The advance decline line is a computation of the number of stocks up for the time period minus the numb er down. The stock market is advancing when advances outnumber declines. Note this is a WEEKLY chart. The market actually started down in the summer of 2007. It bottomed in March of 2009. The market has apparently finished a move up. The A/D Line is starting to top as shown by the blue arrow, similar to 2007.  The red arrows at bottom show MACD rolling over. Since this is a weekly chart the signals are usually more reliable and slower to register than on a daily chart. 

    bottom line, Bernake has gotten all he will get out of flooding the market with money. As in 2007 it may last a while longer before a real meltdown occurs but the markets are on borrowed time now. 

  • Professor Elam

    Here’s a Movie with A Bite to It

    WE have tirelessly tracked, someone has to do it, the popularity of the vampire movies with the downturn in the economy. I suspect stocks topped this past week which makes the New Moon timing about perfect. Dan Glaser went with his daughter, I will have to ask his impressions. 

    From Wired.com

    The Twilight Saga: New Moon made history at the box office Friday, with midnight showings racking up $26.3 million in ticket sales, according to Variety.

    The teen vampire sequel played in 3,514 theaters, according to the trade publication, and soared past the previous record-holder, Harry Potter and the Half-Blood Prince, which earned $22.2 million with its midnight opening this summer.

    Based on Stephenie Meyer’s popular teen vampire novels, the original Twilight movie has grossed $383 million worldwide since its release last year.

    Summit Entertainment will follow up the PG-13 New Moon with a third movie, The Twilight Saga: Eclipse, in 2010.

  • Professor Elam

    Sony Reader, Kindle look to College Textbook Market

    This article explains that Sony and Amazon Kindle e books are expecting big things in the college market. Believe me, the textbook companies want this to eliminate the book re sellers. After the book is sold the first time, the companies get nothing, the e book puts them back in charge. 

  • Professor Elam

    Ethics Continued

    One of the interesting things about teaching ethics is that I never need to search for examples. Each class brings  anew list of ethically challenged office holders. South Carolina may begin impeachment proceedings against Gov. Sanford.  Roland Burris earns a rebuke from the Senate Ethics oversight group. 

    And in a move sure to make the Texas  Monthly Bum Steer Awards, UT awarded fund managers bonuses because the losses in the massive Permanent Fund were not as bad as if they had been in the S & P index. Of course if the money had been in the bank no one would have lost anything…..And they would not have had to pay the bonus…

  • Professor Elam

    1969 deja vu

    Regarding the similarities between now and the late 1960s, 41 students barricaded themselves in a UC Berkelely building protesting an increase in student fees. Now admittedly there may be a requirement that students occupy buildings in a protest fashion just to keep up appearances at UCB for all I know….