An Interesting Kvetch

I usually turn to CEO letters to shareholders to show that the those letters sometimes reflect the corporation's financial data through a slightly warped mirror.

But today I'll quote from Donald A. Guloien, President and Chief Executive Officer of Manulife in the company's 2011 annual report. Here we see a Canadian's view of the difference in govermental monetary policies between the U.S. and Canada:

"Yet my optimism is tempered by some of the challenges posed by regulatory uncertainty in our industry. I am proud to be the CEO of a leading Canadian company, and I know first-hand that respect for the prudence and stability of the  Canadian government and the Canadian financial  services industry has made us attractive to many  knowledgeable people around the world. But I  fear that overly conservative Canadian accounting and capital standards are further tilting an  uneven playing field, depicting Canadian insurers  as weaker than we really are and lessening our  ability to compete in some areas. The impact of this goes beyond the technical  and esoteric. When Manulife’s financial performance is viewed through the lens of U.S. generally accepted accounting principles, our company earned $3.8 billion in 2011, a stark contrast to the $129 million reported under Canadian rules. If the intent of highly conservative mark-to-market accounting principles used in Canada is to ensure companies are transparent about the value of their assets and obligations, policymakers cannot be insensitive to  the resulting volatility."

It's refreshing to see a CEO delivering something besides a sterile and self-congratulatory header to an annual report, even if it does come across as a bit of sour grapes.


Words are Wonderful

Reading through Wendy's 2011 10-K SEC filing I came across this gem (emphasis mine):

"Several chains have also sought to compete by targeting certain consumer groups, such as capitalizing on
trends toward certain types of diets (e.g., low carbohydrate or low trans fat) by offering menu items that are promoted
as being consistent
with such diets."

The crucial difference being between items which actually are healthier, as opposed to being promoted as being consistent with a certain diet. Talk about skirting an issue.

The latest McDonald's 10-K filing has this to say:

"The impact of nutritional, health and other scientific inquiries and conclusions, which constantly evolve and often have contradictory implications, but nonetheless drive popular opinion, litigation and regulation, including taxation, in ways that could be material to our business;"

Oh, those pesky scientific inquiries and conclusions! When will the public learn to ignore them and listen to ads instead?



Capricious but Right

I can now follow up my article from back in September of 2011, in which a Merrill Lynch analyst predicted that the S&P 500 would hit 1,450 in 12 months. When the prediction was made the S&P 500 was close to 1,153. 12 months later we saw around 1,440, and the interim was pretty much a linear climb. The numbers have it, and so I'll mark this prediction as correct on The Scoreboard


Double Edged Swords are a Double Edged Sword

Futures magazine, a publication which focuses on upcoming prospective prophesies which may be looming, has released a perfect specimen of an article.

I'll completely ignore the content, which is a mass of technical terminology which makes as much sense to a layman as listening to one side of a phone conversation in which a professional plumber orders parts for a industrial job, and I concentrate instead on the tantalizing title "Stock market drama may be close to resolution point" and the amazing conclusion.

What is amazing about the conclusion of course is that it doesn't seem to determine anything. It contains two paragraphs, connected with a "Perhaps, Or ...". According to the article the market will go up... or it won't.

In mathematics (logic) there is something called a tautology; a statement which is always true, no matter what are the variables (e.g. It will either rain tomorrow, or it will not rain tomorrow.) Technically speaking this is a prediction that will be correct no matter what the market will actually do, but I don't intend to record it. Just observe that this species exists.


Look at Me, I'm Writing About Apple Too!

According to the Periodical Table of SEO I need to keep the content on this site "fresh". So with no further ado, let's talk about Apple's stock price:

Today we will record a stock prediction by Dunstan Prial of Fox Business. In his article, Mr. Dunstan compares AAPL's meteoric rise in stock price to recent big boom-bust cycles (the dot-com bubble, the housing bubble, etc.) . We will give this prediction a full year to mature and come back to measure the results in late 2013.

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