Why Stock Prices Will Fall 33.4 Percent In 2013

The Bush Era tax cuts will expire. We spotted this today:

“After year-end, under current law, the top dividend tax rate will rise to 43.4% from 15%. That’s not only because the temporary low 15% rate granted under the 2001 Bush tax cuts will revert to the prior rate of 39.6%. In addition, a provision of ObamaCare slaps a 3.8% surtax on all forms of investment income, including dividends—the resulting total is 43.4%.

So on Jan. 1, an investor won’t keep $8.50 of that dividend—he’ll pay a 43.4% tax and keep only $5.66. Suddenly, a stock that yielded him 8.5% now yields only 5.66%.

If 8.5% was the after-tax yield that investors demanded in order to allocate their capital to that particular company, then 5.66% will not be sufficient. That company’s stock price will have to fall until it once again offers an 8.5% after-tax yield.

Precisely, the stock price has to fall by the percentage difference between $8.50 and $5.66. It will therefore fall to $66.60 from $100—that’s 33.4%. And it’s also a good first approximation of how much the overall stock market will fall when dividend taxes rise to 43.4% from 15%.”

Statistics Source: WSJ

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5 Billion A Year: What Broker Discounts Cost Investors

We spotted this today:

“In recent years, though, brokers have had another enticement that can pull them in a different direction: payments from stock exchanges in return for sending them business.
The practice has attracted criticism from several industry participants and former regulators who say the so-called rebates that the exchanges pay Wall Street firms could give those firms an incentive to profit at the expense of investors. Now a new study using industry data says that the rebates could be costing mutual funds, pension funds and ordinary investors as much as $5 billion a year”

Statistics Source: NYTimes

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Hedge Fund Statistics: Total Assets Under Management At 2 Trillion

2 Trillion USDs. That, as of April 2011, is the total assets under management of hedge funds. If you think who is moving the markets and hence the economy and hence the country and hence the world, look no further. The 225 guys are doing it. No questions please.

“During the first decade of the new century, hedge funds regained popularity worldwide and in 2008, the worldwide industry held $1.93 trillion in assets under management.[12][13] However the 2008 credit crunch was hard on hedge funds and they declined in value and hampered “liquidity in some markets” causing some hedge funds to restrict investor withdrawals.[14]
Total assets under management then rebounded and in April 2011 were estimated at almost $2 trillion.[15][16] As of January 1, 2011, the largest 225 hedge fund managers in the United States alone held almost $1.3 trillion.[17] with the largest hedge fund manager, Bridgewater Associates having $58.9 billion.[18] In 2011, the largest hedge funds were Bridgewater Associates ($58.9 billion), Man Group ($39.2 billion), Paulson & Co. ($35.1 billion), Brevan Howard ($31 billion), and Och-Ziff ($29.4 billion).[19] As of February 2011, 61% of worldwide investment in hedge funds comes from institutional sources.[20]”

Statistics Source: Wikipedia.

How do we digest this stat at all? Can we? We have already written about how much taxes the wealthy pay and how how John Paulson paid zero taxes.

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Facebook: Will The Market Value It At 96 Billion?

We had written multiple articles on Facebook valuation – we had spotted the issues with Facebook valuation as well. As the IPO date nears, Facebook is facing big issues around convincing the market on its valuation numbers. For example, it has been forced to declare that mobile is a problem area. We spotted this today:

“Facebook today amended its S-1 filing with the SEC to emphasize how the shift of its users to mobile devices is hurting what it can charge for ads, threatening its long-term revenue.
Facebook has already highlighted that it so far has no way to monetize its growing number of mobile users, and today’s additions to the document reiterate that issue.”

Statistics Source: CNet News

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Facebook IPO: Valuation Multiple Higher Than 99 Percent of S&P 500

We have written multiple posts on Facebook valuation – we had one in-depth analysis of the issues with Facebook valuation. We spotted this today:

“Facebook Inc. (FB) is betting its growth prospects will persuade investors to pay 99 times earnings for its initial public offering, a higher multiple than 99 percent of companies in the Standard & Poor’s 500 Index.

The high end of the proposed valuation would make Facebook more costly than every member of the S&P 500 relative to earnings except for Amazon.com Inc., Leucadia National Corp. and Equity Residential, data show. While 27-year-old Chief Executive Officer Mark Zuckerberg has amassed more than 900 million users since starting Facebook in 2004, his challenge is to stem slowing sales growth amid increasing competition from Google Inc. (GOOG) and Twitter Inc.”

Statistics Source: Bloomberg

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$74K: What Google paid As Corporate Income Tax In Australia For 2011

One trend we have been spotting in the recent past is low tax numbers paid by big corporates and individuals – See how John Paulson paid zero income tax for billions of dollars income. We had spotted GE’s tax numbers as well. We spotted this today:

“Search giant Google has revealed it expects to pay just $74,000 in corporate income tax for the 2011 calendar year in Australia, off claimed local revenues of $201 million, despite the fact that industry estimates have continually pegged the search giant’s Australian income at closer to $1 billion.”

Statistics Source: Delimiter

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The Derivatives Market is 11 Times The Size of The Entire World Economy

We had spotted multiple market stats. One thing we have always wanted to do is to digest these stats – for example, we know the derivatives market is big. But how big, exactly? We spotted this today:

“The size of the world stock market was estimated at about $36.6 trillion at the beginning of October 2008.[1] The total world derivatives market has been estimated at about $791 trillion face or nominal value,[2] 11 times the size of the entire world economy.[3″

Statistics Source: Wikipedia

We recently spotted the total number of derivative contracts traded as well.

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Trading Statistics: 25 Billion Futures and Options Traded Globally In 2011

We had spotted multiple high frequency trading stats in the past. We had also written about how the trading volume is split between retail investors, algos etc – we spotted this today:

“The number of futures and options traded on exchanges around the world rose 11.4% to a total of 24.97 billion contracts. That 11.4% rate of growth was a lot slower than what we saw in 2010, but it was more or less on par with the growth rate in the years preceding the 2008 crisis.

Looking back over the last five years, global volume has grown by 60.9%. The bulk of that growth has come from the emerging markets of Brazil, China, India and Russia, which have been marching forward year by year relatively unaffected by the turmoil of 2008 and 2009. Yet even in the U.S., the total number of exchangetraded futures and options contracts has risen 33.3% over the past five years.”

Statistics Source: FuturesIndustry.org

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Banking Statistics: The “Big Four” Banks Hold 39% of All U.S. Customer Deposits

We had spotted several banking stats in the past – we know, for example, that banks made one third of all corporate profits in the world. ALL corporate profits. We also know the most profitable bank in the world – We also know Okay, this data is as of 2009, but the facts are not so much outdated – here is another reason there are some banks that are really too big to fail –

“In the United States, the “big four” banks hold 39% of all U.S. customer deposits (as of 2009), and consist of:

Bank of America
Citigroup, through its Citibank subsidiary
JPMorgan Chase, through its Chase subsidiary
Wells Fargo”

Statistics Source: Wikipedia

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Italy’s Borrowing Costs Inching Up Again

One of our favorite spotting grounds here at Statspotting has been Italy’s borrowing costs. We had spotted some stats on Italy’s borrowing costs in the past (Read 6.64 Percent: Italy’s Borrowing Costs At A Euro-Era High) – we spotted this today:

” Italy’s borrowing costs rose to 5.84 percent at a benchmark 10-year bond auction on Friday, their highest level since January, after a credit ratings cut for Spain overnight added to markets’ concerns about the debt of weaker euro zone countries.

The two-notch downgrade by rating agency Standard & Poor’s weighed on euro zone bond markets ahead of the Italian sale, further increasing the cost the Treasury had to shoulder to sell 5.95 billion euros in bonds.”

Statistics Source: Reuters

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