Slashdot Mirror

The balance sheet will break out assets and liabilities on a specific basis and you can clearly see where the banks got burned - mortgages, mortgage-backed, and asset-backed securities, on both the assets and liabilities -- basically, assets which the banks clearly didn't know how to count. (See Merrill Lynch's 10-K as an example.) For ML, there were massive losses in securities financing transactions, mortgage/asset-backed securities, and considerable losses on derivatives in 2008. The summarized balance sheet clearly shows what happened -- high leverage levels means that it only takes a 3% drop to wipe out shareholder equity (for ML, it was barely 3% - $667.5b in assets against $20b in equity) and ML saw a 34.56% decline in assets FY08 ($1t in FY07 to $667.5b in FY08). They got the leverage to 13.18 in Q1 2009 (down to 13.18 on $569.8b assets, $529.6b liabilities, $40.2b equity) which gave them a 7% cushion, but with a 14.6% decline in assets during the quarter. Profits and share issuance can help raise the equity and counter a drop in assets, but you're pretty much screwed trying to make up a 34% decline.

The ratio for ML reached its peak at the end of 2008, as the subprime mortgage market cratered:

• 2004 - 20.02
• 2005 - 19.13
• 2006 - 20.57
• 2007 - 30.94
• 2008 - 32.37
• Q1 2009 - 13.18

There's always been a race between big financial firms to beat each other to the very last penny (the concept of "flash" trading, for instance, has a hint of desperation in it) so one by one they decided to out-leverage each other to bring in bigger profits faster. It's a risk management problem -- ML bet their future in FY06 on continued success in prime brokerage and securities financing, as well as commercial and residential mortgage loans and long-term debt, while ignoring a 18% drop in equity due to a net loss in continuing ops, stock repurchases, and dividend payments of $1.40/share.

My source is the well known Merrill Lynch report that puts the cost price at launch at $800.

Here's a link to the original PDF: http://rsch1.ml.com/9093/24013/ds/276873_0.PDF

No doubt you'll tell me the report is wrong and that Sony are doing it much cheaper. If they were able to make the units at a cost price of $450, then why (when Microsoft is making a loss selling at $300) would they not choose to sell the units for $300? Ok, they'll lose $150 on each system, but they'll probably sell far more... and we've already establised that big money isn't in hardware.

If you are right, and Sony are making a $150 profit on every console, then that would be another example of arrogance: inflating the price because they believe people will pay more for Sony.

This prediction is very usefull to us gamers who hate to dabble in financial data. Based on Merrill Lynch's past prediction for the PS3, they overestimated the cost of the Wii by 30% - expect a launch price of $150.

Good eye!
Indeed. According to Merrill Lynch on page 3 (230 + 70 + 350 + 50 + 5 + 5 + 5 + 5 + 80 = 900) when simple addition tells me that it is actually $800.

...I find it completely ironic that their official report gets simple addition wrong.

Someone mentioned earlier that the previous generation could survive with one income. Today many families need two incomes to make ends meet.

One, just because Apple CLAIMS they have 25 million Mac users doesn't make it true. They may have SOLD 25 million Macs, but I know a couple of people who have four or five of them, which throws off their numbers slightly. I'd need a link to verify what exactly they're claiming. Until I see a link, that's just a fluff number.

Two, *I'm* not "spreading false ideas"; if you have a problem, take it up with Merrill Lynch. But it would be prudent to believe them before you believe Apple's self-serving "impartial estimates".

(See here for the details.)

Of those 57,000 people, I'm sure one of them can afford a flying car :) I know I would if I had that kinda cash...

Merrill Lynch has over 14% of the U.S. market in its industry.

On a related note, Web Reference really does some fine stuff. Of particular note is the HierMenu script, which uses DHTML to simulate pulldown menus (it works in Netscape v4+, IE v4+, and even Mozilla). It's not Free, but still free. Major websites (such as Merrill Lynch and Trilogy Software) use the script all the time.

Alex Bischoff
---

Once you clear about $100k you start becoming interesting to the
investment community for real. And you start really needing
professional services. Below $50k investable you'll be paying a lot
for any real customized services you get; above $250k you can get a
team of people working for you for less than you'd pay a mutual fund
in management fees.

We all see the results of people dabbling in technical fields when
they aren't really professionals in it. It would have been cheaper to
have hired a pro from the start. It's the same with money. There are
a lot of smart people in the money management business, and many of
them have a lot more experience in their field than you (or I) do in
ours. Why would you want to roll your own with something so precious?

My opinion is that "best online banking solution" is an oxymoron for
real investments by people who are not full-time financial
professionals. It may be fine for cookie-cutter household finances
like bill-paying and downloading your statement into a spreadsheet,
but investing is a customized service industry.

That said, you can check out ICFP
for independents. Merrill Lynch
offers a Cash Management Account (CMA) that rolls up the household
checking, credit card, and a team of people into one package. Their
quoted rates are a maximum; it declines the more money you have with
them.