Option update: Exxon (XOM), Barrick Gold (ABX) volatility up on rallies

Filed under: Exxon Mobil (XOM), Barrick Gold (ABX), Options

Barrick Gold Corp. (NYSE: ABX), a gold mining company, is recently up 83 cents to $43.10. ABX has a market cap of $36.5 billion. ABX is expected to report EPS on November 1. Gold is up 1.15% to $763.90 according to Bloomberg. Dow Jones reported Blackmont lowered its rating to Hold from Buy. ABX November option implied volatility of 43 is above its 26-week average of 30 according to Track Data, suggesting larger risk.

Exxon Mobil Corp. (NYSE: XOM) recently up $1.11 to $94.60. XOM will report EPS on November 1. Crude oil futures are up 1.34% to $84.81 according to Bloomberg. XOM November option implied volatility of 26 is near its 26-week average of 24 according to Track Data, suggesting slightly larger price fluctuations.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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Pfizer (PFE) makes a MySpace move

Filed under: Launches, Law, Pfizer (PFE), Marketing and advertising

In one of the worst moves by a large pharma company in recent memory, Pfizer Inc. (NYSE: PFE) is tying up with doctor social network Sermo. According to The Wall Street Journal, "Pfizer-affiliated doctors will be able to talk candidly with the site's 31,000 members, potentially giving the company insights into prescribing patterns and a way to show doctors data on its drugs."

The paper points out that there is some risk in the move because the FDA and other federal agencies watch drug company communications with doctors very carefully. But Pfizer has cut its sales force and the internet may be a way for the company to do some not so subtle marketing.

The part of the plan that is really flawed is that Sermo could become a platform for groups of doctors to mount powerful criticisms of Pfizer drugs or offer clinical evidence that pending or current drugs may represent unacceptable risks to patients. In other words, the social network could undo as many sales as it makes for the big drug company.

It is Pandora's Box that Pfizer will wish it has not opened.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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Oil prices bust through $85 a barrel

Filed under: Bad news, Middle East, Politics, Oil

Oil prices are off to a strong start this week, rising above $85 a barrel to $85.02. Earlier in the session prices were all the way up to a new record high $85.20.

Over the past couple of weeks when I have written on oil prices, I have cautioned against assuming oil prices would have to retreat from their recent strong runs. The main reason why I caution against that idea is that there are a couple of factors out of our control right now that could at any point in time lead prices higher. These include (but are not limited to) weather and political unrest. We are in the hurricane season now, and any large storm that forms will result in higher prices. But this not what is behinds today's move.

Today's price jump is in direct reaction to political unrest around the country of Iraq. Yes, I know that hearing about instability in Iraq is nothing new, but what is new is that the most recent tension is not the battle between the U.S. and Iraq. Today's concerns are of mounting tensions between Iraq and its northern neighbor Turkey.

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Analyst upgrades: STD, ACOR, AG, NLY and IMGN

Filed under: Analyst reports, Analyst upgrades and downgrades

MOST NOTEWORTHY: Banco Santander, Acorda Therapeutics, Agruim, Annaly Capital and ImmunoGen were today's noteworthy upgrades:

• UBS upgraded shares of Banco Santander (NYSE: STD) to Buy from Neutral as they expect the acquisition of ABN Amro Holding NV (NYSE: ABN) assets in Brazil and Italy to boost earnings in 2008 and 2009.
  
• Friedman Billings added Acorda Therapeutics (NASDAQ: ACOR) to its Top Picks List, as they have confidence in fampridine-SR's safety profile.
  
• Agrium (NYSE: AGU) was upgraded to Sector Outperformer from Sector Performer at CIBC on valuation, as they believe the outlook for wholesale and retail is robust with all three nutrients at historical high levels.
• Annaly Capital Management (NYSE: NLY) was upgraded to Buy from Neutral at UBS, citing likely further FED cuts, benefits from recent secondary, and BVPS growth.
  
• RBC Capital upgraded shares of ImmunoGen (NASDAQ: IMGN) to Outperform from Sector Perform based on valuation, growing pipeline, valuable technology platform, and potential as an acquisition candidate.

OTHER UPGRADES:

• Soleil upgraded ExpressJet Holdings (NYSE: XJT) to Hold from Sell.
  
• Goldman upgraded Assurant (NYSE: AIZ) to Buy from Neutral.
  
• Merill upgraded Forest Labs (NYSE: FRX) to Buy from Neutral.
  
• Citigroup upgraded Domtar (NYSE: UFS) to Buy from Hold.

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Gabelli tries to block Cablevision (CVC) buyout

Filed under: Deals, Comcast Cl'A' (CMCSA)

Legendary fund manager Mario Gabelli thinks that price for the Cablevision Systems Corp. (NYSE: CVC) buyout is way too low, and he has some independent backing. According to The Wall Street Journal, ISS Governance Services, one of the leading proxy advisory firms to institutional investors, said in a report Friday that "the theoretical target price for Cablevision, by a number of analysts, is much higher than the current offer price."

Gabelli's funds own over 8% of Cablevision. While the company's shares trade below $35, Gabelli says they are worth $50.

The fight between the powerful fund manager and the Dolan family, which founded Cablevision and plans to take it private, is going to get messy and will probably end up in court. Gabelli probably has one of two goals in pushing the Dolans on the deal's price. The first would be to get them to increase their buyout offer. The other would be to bring a third party like Comcast Corp. (NASDAQ: CMCSA) to the table to make a higher bid of its own.

The Dolans have tried to take the company private twice before. Each time the deal has floundered on price.

The founding family may have a card up its sleeve. The value of cable companies has fallen sharply in recent months on increased competition from satellite TV and broadband and video offerings from the big telecom companies. Shares in Comcast have fallen from $30 earlier this year to $24.

For the Dolans, an interesting defense of their bid goes like this: the value of cable companies is falling, so actually we are overpaying to take our company private.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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Analyst downgrades: BEAS, NOK, MHS, DGX and PETM

Filed under: Analyst reports, Analyst upgrades and downgrades, Nokia Corp. (NOK), Qwest Communications Intl (Q)

MOST NOTEWORTHY: BEA Systems, Nokia, Medco Health, Quest Diagnostics and PetSmart were today's noteworthy downgrades:

• Citigroup downgraded shares of BEA Systems (NASDAQ: BEAS) to Hold from Buy on valuation following the $17/share offer by Oracle (NASDAQ: ORCL) as they think a public bidding war for the company is unlikely.
  
• ABN Amro downgraded shares of Nokia Corporation (NYSE: NOK) to Hold from Buy on valuation and believes above consensus Q3 results are already priced into shares.
  
• Wachovia downgraded Medco Health Solutions (NYSE: MHS) to Market Perform from Outperform on valuation.
  
• The firm also downgraded Quest Diagnostics (NYSE: DGX) to Market Perform from Outperform, as they believe the prospects from stabilizing volumes and cost savings are reflected in valuation and Street estimates.
  
• Credit Suisse downgraded shares of PetSmart (NASDAQ: PETM) to Neutral from Outperform citing aggressive pricing at Petco, accelerating growth initiatives, limited visibility around expense management, and lack of consistent results.

OTHER DOWNGRADES:

• Methanex Corporation (NASDAQ: MEOH) was downgraded to Sector Underperformer from Sector Performer at CIBC.
  
• Rochdale downgraded Heico Corporation (NYSE: HEI) to Neutral from Buy.
  
• JP Morgan downgraded BankUnited Financial Corp (NASDAQ: BKUNA) to Neutral from Outperform and removed Qwest Communications (NYSE: Q) from its Focus List.
  
• Goldman removed MetLife (NYSE: MET) from its Conviction Buy List.
  
• Coldwater Creek (NASDAQ: CWTR) was downgraded to Hold from Buy at Standford and at Stifel.

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ExxonMobil (XOM) a big winner as crude futures move higher

Filed under: Good news, Industry, Exxon Mobil (XOM), PetroChina Co Ltd ADR (PTR), Options, Technical Analysis, Oil

Exxon Mobil Corp. (NYSE: XOM) shares are trading higher today as the oil sector is getting a boost today from PetroChina (NYSE: PTR), which is up over 11% so far this morning after news of increased production and possible major new discoveries. PTR's market value is now up to $430 billion, catapulting the company ahead of General Electric (NYSE: GE) and just behind XOM as the world's most highly valued public company. Crude oil futures are also on the rise today, hitting record highs again as concerns rise that Turkey may invade northern Iraq. If you think that XOM won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on the company.

XOM has been charging hard over the past two months, hitting a new one-year high of $95.07 last week. It opened this morning at $94.15. So far today the stock has hit a low of $94.15 and a high of $95.00. As of 10:55, XOM is trading at $94.64, up $1.16 (1.2%). The chart for XOM looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $75 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just 3 months as long as XMSR is above $75 at January expiration. Exxon would have to fall by more than 20% before we would start to lose money.

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Analyst initiations: STD, SLH, FCN and BCSI

Filed under: Analyst reports, Analyst initiations, China Mobile Limited (CHL)

MOST NOTEWORTHY: Banco Santander, Solera, FTI Consulting and Blue Coat Systems were today's noteworthy initiations:

• Societe Generale expects the Banco Santander's (NYSE: STD) strong organic growth in earnings to continue with the purchase of ABN Amro's (NYSE: ABN) assets in Brazil and Italy, starting shares off with a Buy rating. Shares were started at Merrill Lynch with a Neutral rating.
  
• William Blair initiated Solera Holdings (NYSE: SLH) with an Outperform rating, as they believe underlying trends for auto insurance claims are favorable.
  
• FTI Consulting (NYSE: FCN) was initiated at Deutsche Bank, as they believe the company is positioned to sustain double-digit growth, and with a Buy rating and $65 target and at Goldman with a Neutral rating and $62 target.
  
• Pacific Crest initiated Blue Coat Systems (NASDAQ: BCSI) with a Sector Perform rating on valuation and estimates fair value at $50/share.

OTHER INITIATIONS:

• BNP Paribas started shares of China Netcom (NYSE: CN) and China Telecom (NYSE: CHA) with Buy ratings and China Mobile Limited (NYSE: CHL) with a Hold rating.
  
• Cosan Limited (NYSE: CZZ) was initiated with a Neutral rating at Goldman.
  
• Methanex Corporation (NASDAQ: MEOH) was started at HSBC with an Overweight rating.

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First Airbus Superjumbo A380 delivered to Singapore Airlines, better late than never

Filed under: Good news, Products and services, Management, Competitive strategy, Marketing and advertising, Boeing Co (BA)

Sure it's two years late, but that does not take away from the excitement as the first Airbus A380 Superjumbo plane was delivered today. The first company to get the revolutionary plane is Singapore Airlines, which is now the proud owner of the world's largest passenger plane.

It was definitely a rocky road for Airbus maker European Aeronautic Defence and Space Co. (LSE: EAD). Delays on this project have taken their toll on the company in terms of personnel, profits and reputation. On the road to today's product handover, Airbus has torn through 5 CEOs, billions of dollars in extra costs, and a restructuring plan that will likely result in the loss of around 10,000 jobs. As if that's not bad enough, the company is also dealing with the fact that Boeing (NYSE: BA) was able to take its #1 sale spot in 2006.

While it is great to see the new A380 being delivered, it would be foolish to think that this marks of the end of hard times for the company. There is still an ongoing investigation in Airbus' parent company EADS over "massive insider trading" that the French Financial Markets Authority has claimed to uncover in its preliminary investigation into trading allegations against the company's senior managers.

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Broadcom (BRCM) shares forming a bullish flag pattern

Filed under: Analyst upgrades and downgrades, Good news, Cisco Systems (CSCO), Hewlett-Packard (HPQ), Motorola (MOT), Broadcom Corp'A' (BRCM), Technical Analysis, Stocks to Buy

Broadcom Corporation (NASDAQ: BRCM) provides semiconductor products that enable broadband communications and networking of voice, video, and data services. Based in Irvine, California, it holds over 2,200 U.S. and 900 foreign patents and is one of the largest companies in its field.The firm's integrated circuits are used in a wide variety of applications, including digital set-top boxes, wireless communications equipment, cable modems, servers and networking devices. Customers include Hewlett-Packard (NYSE: HPQ), Motorola (NYSE: MOT) and Cisco Systems (NASDAQ: CSCO).

The stock popped last week, on word cell phone maker Samsung Electronics was shipping next-generation handsets that use Broadcom chips. The brokerage community reacted positively. Deutsche Bank predicted a large increase in the volume of chips Broadcom will ship to Samsung over the next year. UBS initiated BRCM with a "buy." AmTech Research and Lehman Brothers reiterated their "buy" calls. Now, shares are consolidating the gain and the price is forming a bullish "flag" pattern. Equities frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

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AOL to cut thousands of jobs starting on Tuesday

Filed under: Google (GOOG), Time Warner (TWX)

According to a Reuters story based on an internal memo, AOL will trim some 2,000 positions starting tomorrow. Job cuts at the Time Warner Inc. (NYSE: TWX) unit have been rumored for some time.

If this number of cuts is accurate, it will represent roughly 20% of the unit's global workforce. Reuters is saying the cuts will be spread out over the United States and Europe. It also notes that spending will increase in higher growth areas, such as advertising.

It looks like AOL is trying to make its operations run much leaner ahead of what very well could be an independent, or partially independent, AOL stock. Time Warner already has a tracking stock for its cable unit, and a separate AOL tracking stock would give it a currency that could be used to make acquisitions or do strategic deals that wouldn't rely solely upon cash outlays. Part of AOL's year and a half old deal with Google Inc. (NASDAQ: GOOG), in which the search giant bought a 5% stake for a $1 billion investment, requires some sort of liquidity event, but any amendments to original terms could change that.

AOL already switched to a free service a year ago, except for the old customers who just won't stop using their dial-up access. That move already resulted in job cuts. AOL is also in the process of moving its headquarters to New York City to be closer to advertising customers. We'll have to see where the actual cuts in this mega-round of layoffs come from before any verdict can be made.

Jon C. Ogg produces the Special Situation Investing Newsletter for 247WallSt.com; he does not own securities in the companies he covers.

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Goldcorp (GG) hits 52-week high on surging gold futures

Filed under: Good news, Industry, Options, Technical Analysis, Goldcorp Inc (GG), Commodities

Goldcorp Inc. (NYSE: GG) hit a new 52-week high today as gold futures are up by more than $10 or 1.4% this morning with more and more investors getting into gold as a hedge against inflation and the recently shaky US dollar. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on GG.

The stock has been surging over the past two months after drifting lower for much of the past year. GG opened this morning at $33.12. So far today the stock has hit a low of $32.98 and a high of $33.48. As of 11:05, GG is trading at $33.03, up $0.50 (1.5%). The chart for GG looks bullish and steady.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $25 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just 3 months as long as GG is above $25 at January expiration. Goldcorp would have to fall by more than 24% before we would start to lose money.

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Option update: Yahoo (YHOO), Intuitive Surgical (ISRG) risky into EPS

Filed under: Earnings reports, Analyst reports, Forecasts, Yahoo! (YHOO), Options, Intuitive Surgical Inc (ISRG)

Intuitive Surgical Inc. (NASDAQ: ISRG) develops, manufactures and markets robotic technologies designed to improve patient returns.

• ISRG is expected to report EPS on 10/18.
• Oppenheimer says: "We believe any competition ISRG faces is at least 7-10 years away. We believe the recent sell-off offers an opportunity. We continue to rate shares Buy and reiterate our $270 price target."
• ISRG October 250 straddle is priced at $30.90. ISRG overall option implied volatility of 80 is above its 26-week average of 48 according to Track Data, suggesting larger price risk.

Yahoo! Inc. (NASDAQ: YHOO) is expected to report EPS of 8 cents 10/16 according to Thomson First Call.

• Alex Brown has a Hold rating and a $24 price target on YHOO.
• Alex Brown says: "We expect YHOO to report 3Q results in-line to slightly below expectations, as US traffic declines of 9% and search volume slowdown may pressure growth."
• YHOO October 27.5 straddle is priced at $2.71. YHOO November option implied volatility of 51 is above its 26-week average of 36 according to Track Data, suggesting larger risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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Dell (DELL) server sales forecast to hit turbulence in 2008

Filed under: Bad news, Rumors, Dell (DELL)

Although Dell, Inc. (NASDAQ: DELL) has slowly risen from the depths in 2007, the company still has a long way to go in order to regain former growth rates and again challenge competitor Hewlett-Packard Co. (NYSE: HPQ) for the world's largest computer maker crown.

Last week at a ZDNet forum, company CEO and founder Michael Dell said that the company he now leads again has seen an increase in server sales powered by the Linux operating system. Linux is a freely available software operating system that runs more web servers globally than any other platform, although Microsoft Corp. (NASDAQ: MSFT) likes to ignore that fact as it trumpets its own Windows Server products. Both operating systems are fine products that are battle tested -- though one is free and the other is not.

But does that mean Dell is set for a triumphant return as 2008 approaches? Some don't think so, since it seems likely that Dell's server products will experience a sales decline in the coming six months. Dell resellers may also be planning to stock less of the company's server products in that same time frame as well.

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SABMiller sales still soft in North America

Filed under: International markets, Economic data

The latest sales update from SABMiller PLC (OTC: SBMRY) demonstrates why the company has partnered with Molson Coors to form MillerCoors. In the relatively flat U.S. market, SAB will look to the cost savings of shared operations to sweeten its earnings. SABMiller's North American sales in the first half of 2007 have risen only 1.4%, when the impact of the recent purchases of Sparks and Steel Reserve are backed out. Its Miller Light product fared slightly better, recovering from the damage inflicted in the U.S. market by Anheuser-Busch's (NYSE: BUD) earlier price drop to finish up 2.1% in the first half of this year. New products including Miller Cheleda and Leinenkugel are performed well.

Internationally, the company is looking to the success of new brands such as its popular Hanza Marzen Gold in South Africa to offset the blow of losing the brewing and distributing rights to Heinken's Amstel brand in that country. SAB's growth in Central and South America continued to be strong, up 8% in the second quarter. The Africa and Asia markets, which accounted for 12% of the company's EBITA last year, were also up by 20%, led by a 22% increase in China.

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Kodak (EK) ends Olympic sponsorship: A bad omen?

Filed under: Marketing and advertising, Eastman Kodak (EK)

As Brent Archer recently wrote, Eastman Kodak (NYSE: EK) has been one of the most visible sponsors of the Olympic games for years, but it's a partnership that's coming to an end. After the Beijing games in 2008, Kodak will no longer pay the $50 million plus per Olympiad to be the official film and imaging sponsor.

Shares of Kodak have been terrible performers over the past decade as the company faces increased competition in the digital age. The Street appears to approve of dropping the Olympics, and the stock was up more than 5% on the news.

And maybe it is a sensible cost-cutting move -- cost-cutting moves nearly always send a company's share price up. Movie Gallery (NASDAQ: MOVI) soared last month after the rental-chain announced it was closing 13% of its stores, only to tank when bankruptcy rumors emerged on Friday.

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Pinnacle West (PNW): How the West will win

Filed under: Getting started, Hilary On Stocks, Stocks to Buy

For the past several days, I've been giving tips about how to predict trends and ride them to profits. My last tip is that sometimes you can make money by taking a clear trend -- and then ignoring it and investing in a less trendy stock, or even a stock that seems to be losing out because of that same trend.

Before you throw up your hands in frustration, hear me out. For just one example, take Pinnacle West (NYSE: PNW). This Arizona company has two divisions: real estate development and an electric utility. Not surprisingly, the stock has really sunk since the spring as investors started fleeing with the intensifying real estate woes; back in April PNW was trading just above $50, and in early August it was down around $37.

Most trend followers would sell this stock too -- who wants to be involved with any real estate development company? As I see it, however, the company has been excessively punished for its real estate division, and it's currently undervalued when one considers its electricity division. Arizona is a hot place with a growing population, and there's only going to be increasing demand for electrical power to cool the homes and offices of all these people. The company may not return to its previous profit levels, but I think investors have overreacted, and we could see this gain several dollars back. When you add some modest growth to a 5.3% dividend, you could find yourself with a nice little profit.

Type of stock: An Arizona company dealing in real estate and electricity.

Price target: If you can get this below $40, I think you'll see it get up to around $45 over the next year. That's a ten percent gain right there, plus a dividend to make it nearly a 15% gain. Plus if you hold long enough, real estate has to come back sometime. That could be at least a few years though, so you'll need to be patient.

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Discovery to buy HowStuffWorks.com

Filed under: Deals, Products and services, Internet, Marketing and advertising

Discovery Communications, which owns the Discovery Channel and Animal Planet, hopes to turnaround its failed efforts to get a foothold on the Internet by buying the popular website HowStuffWorks.com for $250 million, according to the Wall Street Journal. Discovery will use this popular base to make its library of videos more easily available to the public.

HowStuffWorks.com, a privately held company whose best known owner is investor Carl Icahn, was founded by Marshall Brain in 1998. Brain is a university professor in North Carolina. He built the audience for the site by analyzing what people were searching for on the Internet and creating content to answer those queries.

In addition to HowStuffWorks.com, the purchase will include several other digital properties including a map database, which are not yet profitable. Discovery hopes that by controlling a website that already gets 3.8 million unique U.S. users each month it will have more success drawing Internet users to its online content. Chief Executive David Zaslav, who has been redesigning Discovery in his own image since taking over in January, told the Journal he believes this acquisition will give Discovery the "online firepower" it's been lacking.

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Just another manic Monday at the stock market

Filed under: Major movement, International markets, Google (GOOG), Intel (INTC), Exxon Mobil (XOM), Middle East, Private equity, Citigroup Inc. (C), JPMorgan Chase (JPM), Bank of America (BAC), Chevron Corp (CVX), ConocoPhillips (COP), Commodities, Oil, S and P 500, DJIA

Good thing the stock market isn't a person because it would have probably had a heart attack or two given the stress it's been under lately.

Continued worries about consumer confidence, the subprime mortgage meltdown and life in general can turn the mood on Wall Street from serene calm to the depths of despair faster than you can say "buy, buy, buy" or "sell, sell, sell." The volatility can be breathtaking to behold at times. Today, the Dow Jones industrial average plunged more than 163 points to 13929.60, and the Nasdaq took its biggest loss in a month, following Citigroup (NYSE: C)'s lackluster earnings report and comments from the CFO saying that late payments on mortgages may rise in the fourth quarter.

Tim Hartzell, chief market strategist at the $2 billion Kanaly Trust Co. in Houston, told Bloomberg News that, "It's not a good spot to be in right now for a consumer here in America.``As for the Citigroups of the world, there's too much unknown that still has to work itself out."

For glass-is-half-empty types, there is plenty to be grumpy about. SLM Corp. (NYSE: SLM), better known as Sallie Mae, continues to fight to prevent its private equity suitors from walking away from their planned $25 billion purchase of the student lender. Citigroup, JPMorgan Chase & Co. (NYSE: JPM) and Bank of America Corp. (NYSE: BAC) today agreed to create a fund to buy $75 billion to $100 billion in highly rated bonds and other debt, including subprime mortgages from structured investment vehicles that have had difficulty obtaining financing, according to the New York Times.

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Calpers may stiff underperforming money managers

Filed under: Management, Personal finance, Politics

Here's a novel idea: Pay someone only if they are providing better performance than no one -- not anyone, no one -- could provide.

Well according (subscription required) to The Wall Street Journal, the California Public Employees Retirement System (Calpers) is contemplating doing just that with the money managers it hires: "Calpers' investment staff plans to present to the board a system in which the pension fund's global stock managers would receive a fee only if they outperformed certain benchmark indexes. Managers whose returns failed to beat the index would be paid nothing for that period."

This makes perfect logical sense. Why pay a management fee to someone who's doing worse than an index fund? But the possible risk is that paying strictly for performance would induce managers to take bigger risks -- possibly increasing the incidence of blow-ups and rogue traders.

But these kinks could probably be worked out with careful monitoring of risk, and tailoring the bonuses to the level of risk a manager assumed. But it's time for money managers to be paid for performance. Too often, it seems they are paid just for having a pulse.

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