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Sub rosa / The new sport on Wall Street By Eytan Avriel Tags: israel news, stock market Life is boring these days for stock market analysts. During normal times, sell-side analysts work 16 hours a day, sharing their opinions on equities free of charge, in the hope that someone would notice and choose their investment house to broker purchases and sales, or hire their services to handle a stock issue. Essentially, sell-side analysts are a kind of salesperson whose job is to bolster the reputation of the investment house that employs them, to advertise it and attract customers. These days, however, sell-side analysts have no work. New stock offerings, the main source of income for investment firms in boom years, have evaporated. Trading volumes have plummeted. Nobody's in the mood to listen to recommendations or advice on which cheap shares to buy. Advertisement The terms Buy, Sell and Neutral are of no interest to anyone just now. Americans do not want to hear about shares, read about commodities or invest in corporate bonds. What little money Americans have left, they are willing to invest only in government bonds, with the outlandish outcome that 90-day T-bills were trading last Friday at an annual yield of 0.01%. That's right, anyone investing $100,000 with Uncle Sam will receive just $99,750 three months from now, and that is before paying the sales commission. In their misery, a few analysts have contrived a new sport in th espirit of the times: guessing who's going to fall next. Which stock is going to hit rock bottom, pass that and be delisted from Wall Street. The pioneers of this new sport are analysts at Morningstar, the leading company worldwide for information and analysis on mutual funds. Morningstar has so far listed 35 shares that are likely to disappear from trade and each week, adds more candidates. Its analysts mentioned five shares in their latest report: mortgage backer Fannie Mae, Sirius Satellite Radio, Trump Entertainment Resorts, Valassis Communications and Forest City Enterprises. Does this list have any real value? None whatsoever, the analysts themselves say. The prices of the listed companies' shares have already crashed. It would be unwise and impractical to sell them short and almost impossible to purchase put options on them. The zero forecasts are therefore intended for the unfortunate investors who still own such shares, since even $0.50 per share is better than nothing. The analysts also cite "professional integrity." "If we think a certain share is worthless, there is no point in saying otherwise," write the analysts, and this sport is spreading to other capital market research companies and investment houses. One thing the analysts are gaining is attention. When analyst Mark Sue of RBC Capital Markets declared that communications equipment giant Nortel Networks was likely to plunge from $1.50 per share to nothing, company representatives and other capital market players hastened to decry that statement as irresponsible, unfair and harmful. Despite the protestations, Sue's forecast prompted other analysts to lower their horizons for Nortel. Last week UBS analysts said Nortel would probably declare bankruptcy and seek court protection from creditors in January 2009. Since most things that happen on Wall Street are usually copied in Israel, will we see "zero" outlooks for shares on the Tel Aviv Stock Exchange? Maybe not. The market for Israel's investment firms is tiny to begin with and is shrinking by the day. Everyone knows everyone else. There is little personal or professional interest for an analyst to get up and blare one morning that Company X's stock will soon bite the dust. That dire forecast would not generate work for the analyst's employer and could generate a backlash from the company's executives, who might take revenge by withdrawing funds from the investment house or by suing. Reputation and professional integrity don't put food on the table, you know. But it's clear that at least some of the companies on the TASE are heading for the floor boards. When the corporate bonds of dozens of companies are trading at triple-digit yields and at prices that are a fraction of their face value, this means that investors feel the companies will reach some sort of debt arrangement, or end up in court, receivership or liquidation. When one remembers that during a receivership the creditors (who include the banks, bondholders, employees, suppliers and local and income tax authorities) take precedence over the shareholders, it is clear that even after declines of tens of percentage points, some shares are still priced way above their real value - which is zero. So who will be the first Israeli analyst to speak this truth? The race is on. Bookmark to del.icio.us   Can war be avoided? Can Israel accept Hamas rule, and ease, rather than tighten its chokehold on Gaza? Latke eating champ Body builder eats 46 latkes in 8 minutes to win N.Y. Hanukkah contest and set a new record.

Read & React Bradley Burston: Can the First Gaza War be stopped before it starts? Responses: 184 Strikes on Negev drop as Hamas holds 24-hour truce Responses: 162 Renowned author Amos Oz lays into Barak for 'letting settlers wreak havoc' Responses: 13 B'Tselem: 58% of Ofra settlement built on Palestinian land Responses: 81 More Headlines 01:30 Olmert to Turkish PM: We must advance toward direct Israel-Syria talks 23:59 Mubarak extends rare invite to Livni for talks on Gaza violence 23:50 U.S. warns Russia against sale of advanced missiles to Iran 00:03 Fight against settlements not about boycotting Israel, says U.K. envoy 00:38 Strikes on Negev drop as Hamas holds 24-hour truce 00:44 Renowned author Amos Oz lays into Barak for 'letting settlers wreak havoc' 22:49 YouTube allows Web users to interview Israel's future prime minister 21:19 Can the First Gaza War be stopped before it starts? 20:20 Trial begins in Yemen over murder of local Jew 19:52 Israel's main TV channels bump political ads from primetime 17:40 Livni, on her home life: We're a completely normal family 15:23 Man eats 46 latkes in 8 minutes to win N.Y. Hanukkah contest 14:39 World Bank: New crossings for Palestinian goods may hurt exports 17:31 ANALYSIS / Israel must choose between bad and worse Gaza options 07:43 2008 marks record-breaking year for returning Israeli citizens Previous Editions Select Day 22 dec 21 dec 19 dec 18 dec 17 dec 16 dec 15 dec 14 dec 12 dec 11 dec 10 dec 09 dec

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