Writecall.com

By JASON ZWEIG

This Thanksgiving weekend, Wall Street should say a prayer of gratitude for Occupy Wall Street.

While some bankers and brokers have sympathized with or supported this ragtag protest movement, others grouse that they are being demonized.
Also See

AAA-Rated Companies With 3% Dividends
Funky Mutual Fund Grooming
Bottom-Fishing: Netflix Vs. H-P

But compared with financiers of the past, who faced nasty rhetoric, political hostility and physical danger, today’s bankers and brokers seem like a bunch of babies when they whine about being targeted by these dissidents.

The “Occupy” rhetoric might sound overheated, but it is golden praise alongside what bankers used to hear.

In 1870, the essayist Henry Adams compared the financier Jay Gould to a spider; Joseph Pulitzer, the famous editor, later called Gould “one of the most sinister figures that have ever flitted bat-like across the vision of the American people.”

In 1883, a young New York state legislator named Theodore Roosevelt lambasted “the wealthy criminal class” on Wall Street. In 1910, Sen. Robert LaFollette of Wisconsin called J.P. Morgan “a beefy, red-faced, thick-necked financial bully, drunk with wealth and power.”

Between 1892 and 1911, at least 53 bills were introduced in Congress to stifle speculation and derivatives trading, although none quite became law. No fewer than 21 states including California, Illinois, Massachusetts, Ohio and Texas passed laws restricting speculation, short selling or trading in futures or options.

The Occupy Wall Street protesters have also been far more peaceful than their forebears.

On the original “Black Friday” not the shopping day after Thanksgiving, but Sept. 24, 1869, when Jay Gould cornered and crashed the gold market fury was in the air. “An angry mob gathered howling for vengeance,” wrote historian Maury Klein in his biography “The Life and Legend of Jay Gould,” and “a company of militia was hurriedly ordered into readiness.” Gould slunk out a backdoor to safety, guarded by a gang of armed thugs.

In 1877, a speculator who had lost money betting against Gould ambushed him on the sidewalk, slugging the financier and then flinging him down an eight-foot flight of stairs into the basement of a barber shop. Gould was battered but unbowed, although he never again walked the streets without a bodyguard.

In 1891, an assassin tried to kill the investment banker Russell Sage by detonating 10 pounds of dynamite. The bomber and Sage’s secretary were killed; Sage survived, perhaps by using a messenger as a human shield. In 1892, an anarchist shot Henry Clay Frick point-blank in the neck; the mogul survived. J.P. Morgan and John D. Rockefeller, among other financial barons, faced frequent death threats.

In September 1920, a bomb went off in a horse-drawn wagon parked in front of J.P. Morgan & Co. on Wall Street, killing 40 people; the criminal was never found.

Wall Street rarely concedes that regulation has made the markets safer not only for investors but for Wall Street itself. Because the public believes that modern regulation enforces standards of fairness that were lacking in the past, bankers and brokers don’t have to fear for their lives when they walk down the sidewalk.

Wall Street hasn’t yet had to answer to a higher authority, either. In 1940, the investing writer Fred Schwed recalled the eve of the Crash of 1929:

“There was a luxurious club car which ran each week-day morning into the Pennsylvania Station. When the train stopped, the assorted millionaires who had been playing bridge, reading the paper, and comparing their fortunes, filed out of the front end of the car. Those who needed a nickel in change for the subway ride downtown took one [from a bowl near the door]. They were not expected to put anything back in exchange; this was not money. It was only five cents [roughly 65 cents in 2011 dollars].

“There have been many explanations of the sudden debacle of October, 1929. The explanation I prefer is that the eye of Jehovah, a wrathful god, happened to chance in October on that bowl. In sudden understandable annoyance, Jehovah kicked over the financial structure of the United States, and…the bowl of free nickels disappeared forever.”

Mr. Schwed, who died in 1966, might be shocked to realize that the bowl didn’t disappear forever after all. Government bailouts in the latest financial crisis distributed billions of free nickels to failing banks staving off collapse and enabling the banks to speculate anew with cheap money.

Perhaps, as was true after the Crash of 1929, we will only know that this long bear market is over when, at long last, it consumes the people who perpetrated it. Above all, Wall Street should be grateful that Jehovah hasn’t kicked over this bowl of nickels, too at least, not yet.
—intelligentinvestor@wsj.com; twitter.com/jasonzweigwsj
5 Growth Stocks for 2012Discover Your Best Opportunities For Safe Portfolio Growth.
www.insideinvestingdaily.com
Edward JonesRead reviews for this business wit directions, offers and more
National.Citysearch.com
ING DIRECT InvestingBuy Stocks for $4 – No Minimums. $50 Account Bonus. Learn More!
www.sharebuilder.com/ingdirect
Financial Analysise-Learning course covering CAMELS appraoch & financial institution.
www.kesdee.com

Read the full article here:
Bankers Are Getting Off Easy With Occupy Wall Street

Large numbers are difficult to conceptualize. The Wall Street Journal reported Monday that Facebook is targeting a spring initial public offering that would value the company at $100 billion. Is that a lot or a little for a website with more than a half billion daily users?
More From Jack Hough

Why Investors Should Sell Their Losers Now
Bottom Fishing: Netflix Vs. H-P
AAA-Rated Companies With 3% Dividends

One way to make sense of the price investors are paying for a company is to compare it with the thing investors are attracted to in the first place: underlying prosperity. Facebook’s revenues doubled to $1.6 billion during the first half of 2011, according to a Reuters report citing a source with knowledge of company financials. Given the growth trajectory, many investors believe Facebook will bring in $4 billion in sales this year. That puts the stock’s projected price at 25 times revenues.

By that measure, Facebook would be more expensive than all stocks in the S&P Composite 1500 index of large, midsize and small companies. The index’s median price-to-sales ratio is 1.2.

Profits are more difficult to guess, but here’s a start: During the first three quarters of 2010, Facebook reportedly had a profit margin of nearly 30 cents on the dollar. Google (GOOG: 621.72, -2.05, -0.33%), a dotcom firm with comparable scale and publicly reported finances, turns 27 cents of each sales dollar into profit, so 30 cents seems credible.

That puts Facebook’s 2011 profit at $1.2 billion, and its price-to-earnings ratio at 83. Among peer companies, only Amazon.com is that expensive — and only because its profits this year are expected to plunge by half on higher expenses before rebounding next year. Historically, U.S. firms have traded at an average of around 15 times earnings.

Another way to think about Facebook’s estimated $100 billion value is as a Wall Street shopping budget. What sort of firms could investors buy with that money?
Stocks Resources

Map of the Market
Market Movers
Track Your Portfolio

They could buy General Mills (GIS: 40.32, -0.13, -0.32%), the packaged food giant, plus insurance underwriter Travelers (TRV: 54.88, -0.06, -0.11%) and Clorox (CLX: 65.35, -0.31, -0.47%) — which sells far more than bleach. Add Waste Management (WM: 31.51, -0.11, -0.35%), the nation’s largest trash collector, and Raytheon (RTN: 45.62, -0.02, -0.04%), a key defense contractor. Throw in Darden Restaurants (DRI: 41.67, -0.17, -0.41%) , owner of the Olive Garden and Red Lobster chains. Top it off with tool specialist Snap-On (SNA: 51.63, -0.35, -0.67%) and toy maker Hasbro (HAS: 36.84, -0.29, -0.78%). Either pocket the extra couple of billion dollars or grab a utility.

Fast growers, these eight firms aren’t. Most are expected to increase their sales by single-digit percentages in their current fiscal year. But they’re starting off from a much higher income base: 24 times Facebook’s estimated sales and six times its estimated profits. Plus, they pay an average dividend yield of 3.5%.

The point, of course, is that the earliest glimpse of Facebook’s IPO makes it look plenty pricey. This column voiced similar concerned about recent dotcom IPOs from LinkedIn (LNKD: 73.40, 0.16, 0.22%) and Groupon (GRPN: 19.29, 0.05, 0.26%), both of which rocketed higher on their first day of trading but have since fizzled. Facebook is worth a lot, but it’s not worth any price. If $100 billion is indeed the figure, prudent investors should leave it alone.

Read the full article here:
$100 Billion for Facebook? Buy This Instead