Business Week has composed an index of Innovative Companies. The stock price performance of these companies is better than the S & P. What are you doing or what is your company doing to foster innovation?
B/W has a section on Innovation. Be sure to check out the Slide Show Index of Innovative Companies. I was taken with the way B W displayed that information. What can you learn from such a display?  Does your school or company display information in an innovative manner?

The classic example of great display through innovation is Minard's depiction of Napoleon's advance and retreat from Russia.  Please click and study this example.  Note how many different bits of information are all displayed in the same diagram. My point is, here are examples of innovative displays of information. Can you incorporate such ideas in your next exhibit?

Asustek is taking us back to where computers used to be, which is to say much simpler. Their mini laptop sells for as little as $300 and weighs about a pound, and the screen is about seven inches.  I encoutnered a student here at UNT Dallas with one last week. Needless to say they expect to sell 5 M this year. The problem with laptops is their battery drain, and coupled with a transformer for power, they just weight too much to really be portable, and if you leave one in the hotel room, well…..this is a continuation of the trend to portability and the web shown by Blackberry and the iPhone.

But a year ago LEH claims to have made $5.5 B!  My question-do you believe either number?  In the accounting books the entries are easy to understand. Mary puts $15,000 up to start her law practice and then rents an office for $1,000 a month. But accounting for intangible assets is much more difficult. Here is what is happening.

A local bank originates $10 M in mortgages. They package these and sell them to Fannie Mae.  FNM then re sells them to brokerages. The brokerages then take the loan packages apart and insert various sub prime mortgages, taking interest only payments out, leaving principal only payment tranches in.  These are then re sold to other firms. Those firms sell short term paper to finance their purchase of higher yielding long term 'mortgages/ or at least they were mortgages.  Now, I am sure the firms owe aginst the mortgages but what are the mortgages worth? Some subprime borrowers miss their first two payments. Now the holder of those notes cannot make the full re payment on the commercial paper.  That is how the commercial paper market collapsed last January.

I doubt LEH 'made' $5 B a year ago, I am sure LEH has 'lost' $3 B.'  The fact they now need to raise more capital suggests more losses lie ahead.  The stock market dropped 400 points Friday, the reason is uncertainty over such events.

The ex CFO talks with Maria Bartiromo at this link.

In the 091 section of the MBA class Thursday night I discussed how the investment banks had gotten into trouble using commercial paper (short term) to finance long term investments, sub prime mortgages.  And I specifically mentioned Lehman which has been previously discussed on the blog. Well sure enough,
Lehman dropped 14% Friday and recovered to be down 8%. Read the hyperlink, what are puts and why are people buying them?  A put is an option that grows in value when a stock declines. I suggest you take a look at the chart of LEH stock, what does that tell you?  Now look at BSC, are there similarities? We will continue our discussion as it look like the market will be most interesting during June while we are having class.

The latest J D Powers study shows Toyota, Honda, and BMW slipping. GM and Ford are gaining in quality. Back in the early 1990s, tiny Porsche was reduced to less than 3,000 cars per year brought into the USA. Long assembly and quality complaints had made the future of the brand problematic.  Actual results are
here.  We are studying Total Quality Management in Accounting.  The prominence of the survey indicates just how important this has become to consumers.

I noticed that Powers rates electronics.  So I checked and my Olympus E 510 is ranked well below Nikon. Indeed Nikon outshines its popular rival Canon as well as Sony.  This makes me wonder about some of the criteria. Latest reports are that the Olympus 12-60 zoom lens is among the finest independent testers have ever experienced.  My Ford Escape will shorty roll over 100,000 miles. Yet I have not experienced a single repair, a remarkable record.  But this alone attests to consumer behavior. When we are happy we tell people about it, when we are unhappy, we switch.

 The FED did not extinguish all the problems with Bear Stearns, and how naive to think they would. Forbes takes a look at Lehman Brothers. Now contrast these doubts with the bravado of Erin Callan when Maria Bartiromo talked with her as recently as March 20. This also illustrates the importance of continually reading what is happening and being able to make comparisons.

I was tracking this in my post March 24, Indulging the Spoiled Child.  I suggested that allowing Bear Stearns to survive simply encouraged risk takers to believe that they would be rescued. I remarked on Erin's lack of business history as she was not around for the 19673-74 bear market.This makes a good point, what exactly is on Lehman's balance sheet, go to finance.yahoo.com and find out, the symbol is LEH.

Last year I speculated that after housing the next logical industry to get into trouble would be casinos, and sure enough….Now Donald Trump and Jimmy Buffet are planning a deal in Atlantic City. Buffet's other venues are fairly modest, this will be an immodest $300 M venture. Atlantic City has never quite been what its planners hoped. Careful what you wsh for Jimmy. The Donald is good at making money for himself, I am not aware that his partners have been so successful.

Check out the stock price of TRMP to see what I mean.

Steve Forbes holds forth on what the FED should do. And that is strengthen the Dollar.  I suspect he is a bit naive on interest rates, they should be higher with all the currency floating around the world. He is quite right that a cheap dollar has led to food and energy inflation.

Which reminds me, who do you read on the economy?  Don't heistaet to sound off in the post reply section.

And here are some thoughts on the economy and markets from the minyanville site. We have reached the point on energy prices where consumers are changing behavior patterns. We are driving less, taking mass transportation, leaving SUVs on the lot.  Oil can go higher but with fewer people buying, how high?

Robert Samuleson explains the latest misguided idea in Washington. The domestic wars never end, poverty, physical fitness, ignorance, all have come in the Washington crosshairs.  Now Washington is going to tax energy or rather make someone pay an additional fee for it.  This should be up for a vote, not something Congress passes on their own, your take?

As always, http://www.townhall.com/columnists/WalterEWilliams/2008/05/28/futures_markets 

Walter Williams sheds some light on futures trading.