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International Strategic Management & The True Worth of Debt

Two articles I wanted to share with readers today that I found of some interest on my day off…

The first article is titled, “How to cope when the competition puts in 130-per-cent effort” by George Stalk of the Globe & Mail.

The article goes along contrasting two managers of companies in the same industry and the likelihood of success that each will achieve during their respective time on site. Make key observations on how the strategic management of resources can lead to improved relationships and operations. Although Manulife is the company which is referenced (a stock I own) this story also reminds me of my post on BNS where I described in reference to my SWOT on the company how integrating key personnel in new markets (South America) has led them to achieve impressive inroads by developing key resources and gaining market share.

The second article is titled, “What’s all that debt really worth?” by Sara Perkins of the Globe & Mail.

The article outlines the current troubles many financial institutions are having when they attempt to mark-to-market their debt including CDO’s, Mortgages and consumer debt vehicles. Already the article tells that $150B has been written off on bad debt, but the interesting point I wanted to bring to readers attention was the line,

“… the mark-to-market rules mean that many of the complicated debt securities that have been created in the past decade are being written down long before it’s clear how much they will ultimately be worth to the bank.”

“…one possibility is that some of the securities that banks have been writing down will turn out to be worth more than the value they’ve been given, resulting in gains in coming quarters.”

The article goes on to also point out that these instruments could turn out to be worth substantially less, but if these companies were so bad valuing these instruments before (by over valuing) who’s to say that they’ll be accurate enough in valuing these instruments now (by under valuing).

While the majority of these companies will continue to suffer losses, not all of this debt is going to be worthless or in default. Someone, somewhere is going to make a killing on capturing the best of this debt during the fire sale and at this moment I’m trying my best to figure out how I can benefit from that as a retail investor.

Only time will tell…

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