Gathering the

news
How to get, use and maintain
sources of information
 Lesson outline
 The primacy of reporting
 Key sources of financial information
 Interviewing skills
 Homework review
 Practice interview
 In-class writing assignment
 Financial terms: Credit meltdown, the
Great Recession, credit freeze, etc.
 The primacy of reporting
 The best writing is no substitute for
poor information.
 The best editing is no substitute for
weak context.
 Reality checking
 Feedback loop
 Integrity
 Key financial news sources
 Company public relations
Analysts
Investors
Industry organizations
Rival journalists

1. starting points
2. relationship development
3. ethics and integrity
 Interview Techniques
 Listen actively, carefully
 Ask open-ended questions. Avoid yes-or-no questions.
 Ask questions that break news. For example: company
plans, targets, personnel moves
Keep questions short and clear and assume you will follow
up.
Repeat the interviewees wording back to them.
Ask for “color” descriptions, emotions.
Don’t ask for information you already have.
Be as prepared as possible.
Make friends with public relations people and ask them to
help you get your questions answered. But only offer to
give questions in advance when that is the only way you
can get the interview.
Avoid starting with the more difficult questions.
 Black Swan
An event that is extremely hard to predict. Nassim
Nicholas Taleb applied the concept to finance in
his book, The Black Swan, which many credit with
predicting the global financial meltdown.
Black swan events are typically random and
unexpected, and some think the current financial
crisis is a black swan. The term arises from teh
fact that, before Europeans arrived in Australia, it
was assumed that all swans were white because
nobody had seen one of a different shade. Taleb’s
point was that markets tend to ignore the
possibility that financial ``black swans’’ may
occur, even if we have never seen one.
 Capital ratio
 Capital ratios are a measure of a bank's capital
strength used by regulatory agencies. Tier 1
(core) capital, the more important of the two,
consists largely of shareholders' equity. This is
the amount paid to originally purchase the shares
of the bank and retained profits (minus losses). If
the original stockholders paid 100 million yen to
buy their stock and the bank has made 10 million
yen in profits each year since, paid out no
dividends and made no losses, after 10 years the
bank's tier one capital would be 200 million yen.
National regulators now allow instruments other
than common shares to count in tier one capital.
 CDO
 Collateralized Debt Obligation. A
structured debt security backed by a
portfolio of bonds issued by a variety of
corporate or sovereign sellers.
By combining bonds in a portfolio, then
selling off parts, or tranches, of the
portfolio, the seller can achieve a higher
credit rating for some tranches, enabling
them to sell the securities to institutional
investors such as pension funds or
insurance companies.
 CDS
 Credit default swaps are securities that insure
against defaults on bonds. The contract involves
a buyer paying an agreed interest rate to the
seller in exchange for the right to a payoff if a
credit instrument goes into default.
 The CDS market has been largely unregulated
and last year was valued at twice that of the US
Stock Exchange. The lack of transparency has
meant exposures to bad debt is unknown.
 Libor
 London interbank offer rate - the
interest rate banks charge each
other for loans up to one year. The
short-term international interbank
market allows banks to borrow
quickly, allowing them to avoid
having to keep large amounts of
liquid assets. Libor is officially fixed
once a day at around 11:45 a.m. by a
small group of large London banks,
but the rate changes throughout the
day.
 Naked shorts
Naked short-selling, or naked-shorting,
is the illegal practice of selling a stock
short without first borrowing the shares or
ensuring that the shares can be borrowed.
When the seller does not obtain the shares
within the required time frame, the result
is known as a "fail to deliver." However,
the transaction generally remains open
until the shares are acquired by the seller
or the seller's broker, allowing a trade to
occur when the order is filled.
 Preference shares
 Shares in a company which pay a
fixed dividend but which do not
usually carry voting rights. If the
company goes bankrupt, preference
shares are usually repayable at par
value, and rank above the claims of
ordinary shareholders, but behind
banks, bond holders and other
creditors. Also known as preferred
shares.
 Short-selling
 Short-selling involves selling
borrowed shares in the hope that the
price will fall and they can be bought
back at a profit later on.
Authorities in the U.S., Britain,
Japan and elsewhere have, at times,
banned short-sales of financial
shares, and ordered speculators to
close down all short positions in bank
shares, or have their names made
public.
 TARP
Troubled Asset Relief Program
The key bank rescue program in
the U.S. TARP gives the U.S.
Treasury purchasing power of $700
billion to buy up mortgage-backed
securities (MBS) from financial
institutions to encourage them to
lend money to others. The fund was
created by a bill that was made law
in October 2008.
 Glass-Steagall
The Glass-Steagall laws were enacted
in 1933 to separate commercial from
investment banking, on the basis
that the depression had revealed the
dangers of commingling such
activities. The rules were dismantled
by President Bill Clinton’s
administration in 1999. Some blame
the current crisis on the re-entry of
commercial banks into the securities
business.
 Homework Questions
Is this possible that Goodcar would
conduct further restructuring other than
production-cost cuts and bonus salary cuts
in order to secure the dividend payments
in 2010 if the company forecasts a loss on
net income and operating income again on
this fiscal year? 
How would the company use this
corporate bond of about JPY 700bn ?
  Is this possible if Good car would
consider receiving a sale offer from
competitors based on the recent instance
such as Fiat-Chrysler merger and Porsche-
Volkswagen merge?
Goodcar reported consolidated earnings results for the year ended March
31.  Figures are in millions of yen.
                                 Operating    Pre-Tax   
Net 
      Revenue     Profit     Profit    
Income
 Full-Year Results     20529570   -461,011   -560,381 
 -436,937
 Year Earlier Period   26289240  2,270,375  2,437,222 
1,717,879
 Versus Results          -21.9%    -120.3%    -123.0%   
-125.4%
 Company Forecast      21000000   -450,000   -500,000  
-350,000
 Versus Results            -2.2%      -2.4%     -12.1%    
-24.8%
 Toyo Keizai Est.      21000000   -450,000   -500,000  
-350,000
 Versus Results           -2.2%      -2.4%     -12.1%    
-24.8%
 2nd-Half Implied     8,339,165   -1043079   -1196868  
-930,406
      Goodcar Motor Corp., the world's
largest automaker, cut its annual dividend
for the first time and predicted a loss
that's almost twice analysts' estimates as
global car demand plunges.
      The loss may total 550 billion yen
($5.5 billion) for the year ending March
2010, compared with a loss of 436.9 billion
yen a year earlier, the company said in a
statement today. The maker of Lexus LS
sedans and Corolla small cars was
expected to forecast a loss of 284 billion
yen, according to the median of 17 analyst
estimates compiled by Temple University.