Short Takes #5: Market Bottom, Nortel, and Carpooling

1. I think it’s funny that the day after CIBC predicted a market bottom, stock markets in Canada and the US dropped 4-5%. It seems to be human nature to listen to these predictions when all evidence shows that nobody knows what will happen to stocks in the short term. I believe those who say that current stock prices will seem low looking back 5 or 10 years from now, but that doesn’t preclude the possibility of another 20% drop in the short term.

2. Larry MacDonald makes a sensible argument that the government should not bail out auto companies. The banking system is having a short-term liquidity problem. North American auto companies have been losing the competitive battle for decades.

3. Just when the markets have just about beaten us to a pulp, Canadian Capitalist warns us to watch out for higher discount broker fees. If your accounts drop below threshold amounts, you could be charged administration fees and higher commissions on trades.

4. The Big Cajun Man asks if Nortel is a dinosaur, and discusses its prospects and planned reorganization.

5. Ellen Roseman asks who will be responsible for credit card fraud when credit card companies start giving us “chip and PIN” cards. Credit card companies would love to make consumers responsible for fraud based on the reasoning that the system is secure and the customer must have done something wrong. However, it is impossible to use even a chip and PIN card safely. Consumers are expected to insert their cards and type their PINs into a device supplied by a stranger. The consumer can’t control the risk in this situation. The risk should continue to be borne by credit card companies and banks. If the new technology is more secure, then the credit card companies and banks can look forward to lower losses due to fraud.

6. Four Pillars brings us an amusing story about a family trying to sell their “haunted house”.

7. When negotiating, Thicken My Wallet advises: never throw out the first number. I’m left with the image of two people sitting silently staring at each other. It’s amazing how few people can withstand long pauses in a conversation.

8. Preet starts a new job, and plans to explain in his blog how the financial industry works from an insider’s point of view. He also plans to create financial products with lower fees to benefit investors.

9. You may have heard a confusing story about how carpooling seems to be illegal. A web-based ride-sharing matchmaker called PickupPal.com is being sued. It turns out that much of what has been said about the law in this story is wrong. The Money Grubbing Lawyer has an entertaining explanation of carpooling law. Thankfully, I can still share a ride with my son to play some touch football.