Porter's exhausted... Tizzy at Bear... Weed in a foreclosed home... Buying South Korea... And Malaysia...

Goldsmith comment: I'm covering for Porter today. He's recovering from the "exhaustion" of finishing his issue.

Former Bear Stearns chairman Ace Greenberg met Jimmy Cayne at a bridge tournament and offered the young man a job as a stockbroker at the firm. That was in 1969. Cayne took over as CEO in 1993, made billions for himself and the firm, and was ousted last year for running Bear into the ground. Now there's bad blood between Cayne and the conservative Greenberg...

From the New York Times:

Greenberg says he has not spoken ill of Cayne, but he does wonder about Cayne's continued presence at the firm. "I don't understand why he comes in," Greenberg said. "He is not employed here anymore."

Such comments have infuriated Cayne, who is also wary of the broadside that may come in Greenberg's book. He recently asked his close friend and Bear's lead director, Vincent Tese, to call Greenberg's lawyer and explain that his verbal agreement with the firm allows him use of his office and two secretaries.

The final straw for Cayne was Greenberg's decision to charge Cayne a commission of $77,000 for the sale of his six million shares of Bear stock, a rate far above the maximum $2,500 commission that employees pay for a single trade. Since he was not an employee anymore, he did not deserve such a rate, said Greenberg. "If he doesn't like it, he should do his future business elsewhere," he added.

Mark Mobius, the famed emerging-market expert at Templeton, is buying South Korea. South Korea's currency, the won, is the world's worst-performing major currency this year. It's undervalued by about 8%, according to Mobius. South Korea's Kospi Index fell 3.9% this year and trades at 13 times earnings, compared to 15 times for the MSCI Asia Pacific Index. Mobius likes materials and chemicals in South Korea. In particular, he likes GS Holdings Corp, the nation's second-largest oil refiner.

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Templeton – along with PIMCO and State Street – is also buying Malaysia bonds. Rising prices for Malaysia's fuel and food exports and an increase in its surplus have sent the country's currency, the ringgit, to its highest level in a decade.

Citigroup's new CEO, Vikram Pandit, will identify up to $400 billion in noncore assets that could be sold to strengthen the bank's balance sheet (Citi's entire market cap is $128 billion). Pandit wants to cut the bank's annual costs – which total more than $60 billion – by 20%.

If you learn one thing during the subprime crisis, let it be this: If you don't pay your mortgage, don't grow marijuana in your home. This wasn't so clear to a California man.

From the San Bernardino County Sun:

Police began investigating the case Thursday when the bank employee inspecting a foreclosed house in the 14500 block of Mammoth Place found pot plants inside... Narcotics officers estimated the street value of the marijuana in the two houses at $4.5 million.

New highs: ArcelorMittal (MT), Covidien (COV), Plains Exploration (PXP), Pioneer Drilling (PDC), International Coal Group (ICO), StatoilHydro (STO), Sabine Royalty Trust (SBR), Stone Energy (SGY), Chevron (CVX).

Keep writing, and we'll keep reading... feedback@stansberryresearch.com.

"I bought some Petrobras shares about a month ago, and today had the big shock of seeing them drop by half. After reading some of the news, I found that they had a 'split'? Since I am new in investing, and don't have a finance/economics background, I don't know what to make of this, especially after seeing the price of oil continue to go up. Is this as bad as it looks, or is there some good outcome here? I still don't understand the ramifications of these operations. I saw some desperate e-mails from people who bought 1000 shares of PBR yesterday, and today is valued at
half." – Paid-up subscriber Lucy Mercia

Goldsmith comment: A share split doesn't change the value of your holdings. You now own twice as many Petrobras shares, and each share is worth half as much. Your total investment is still the same.

"In your newsletter S&A Digest you list Petrobras as a recommendation Feb 2007 with a 169% return. How do you figure? In Feb 07 it was $11 by my chart and it trades now for $13" – Paid-up subscriber Greg

Goldsmith comment: Petrobras trades for $64 today. It traded for $23 in February 2007 (both prices adjusted for splits). That's a 178% return. Are you sure you're using the correct ticker, PBR?

"I know you can't and don't give personal investment advice, but I'm wondering if you could address a category of people I don't hear much about when reading your newsletters (probably a good sign). I'm referring to the really small or beginning investor. What would you advise those who are investing and have only one thousand dollars to invest rather than the hundred thousands or even ten thousands I read about. What would you advise your starting investors, especially those who may be starting late?  I've decided to just start, but I'd like to read about people like me; after all, we have the most to learn!" – Paid-up subscriber Diane Martin

Goldsmith comment: Porter has written extensively on this. You can read some of his responses here and here.

Regards,

Sean Goldsmith
Baltimore, Maryland
May 9, 2008

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