Everyone remembers Darwin's Survival of the Fittest thought process, by which, the strong will survive and the weak will not. That is the basic premise, but if you read further it also states that when the weak succumb another species will come up and take the lead role.
With that in mind let's talk about the financial world and the banking sector. I know that there are a bunch of talking heads mentioning the 'too big to fail' mantra, but the real way to solve this is to let them fail. There will be others that will come in and pick up the pieces and finish the puzzle.
Instead of bailing out the financial institutions who got themselves into hot water, let them fail and let some other better run establishment take over and do things right. By giving them tons of money and bailout after bailout, they haven't learned their lessons and will continue to do the same things. Now the issue is that we the people are being forced to bailout the crappy financial people just because.
Let them fail and let everything fix itself. If we take out new debt obligations and debt load that we've been forced to acquire to save deadbeat people, over $2 trillion and we would have just saved it for a rainy day or flat out given it to every household, we might be in a better position. The trouble with the bailout of the financial world is that non-financially educated people are in charge. The government is by far in no position to dictate how to fix a financial problem since they can't ever have a balanced budget or make a profit.
I go back to my original thought. No one is helping me with a bailout with my debt load and my small business, they just try to take more of it and waste it on the rest of the deadbeats. I'm tired of it.
Wednesday, December 16, 2009
Tuesday, December 1, 2009
Well it's been about 8 months since I last posted on this blog. Been letting the world try to sort out all the problems that we have, but I'm not so sure that things are going the way we want them just yet. I'm amazed at the resilience of the markets, but I am fearful. I feel that there is massive manipulation in the markets overall and the little investor is getting screwed. There is no rhyme or reason as to any of the events that are occurring. I feel that we don't really have a chance to profit while the big time players are completely in control.
Let's think about it for a minute. You can't believe what the government is telling you when it reports numbers. Unemployment is over 10% and rising. The only reason that companies are reporting numbers that beat estimates for earnings, is because they are slashing staff and overhead. They are also running a crazy cycle of ups and downs, that will have issues later. There are no jobs out there. Because of that, retailers don't have goods to sell and don't make money. Health of people suffers. and the biggest problem is that we continue to go into more and more debt. Individuals have more credit card debt, not less, mortgages aren't being paid, care defaults are beginning, and we have been taught this by who else, our famous Uncle Sam.
We cannot continue on this pathway. Our country is no longer the class act that we were. We are a debtor nation and have been and will only continue to be more and more in debt. We have to stop. The government has to stop. They can't play their games at getting rid of debt either, it simply has to stop. We have to trim the fat. I'll continue my rant later.
Let's think about it for a minute. You can't believe what the government is telling you when it reports numbers. Unemployment is over 10% and rising. The only reason that companies are reporting numbers that beat estimates for earnings, is because they are slashing staff and overhead. They are also running a crazy cycle of ups and downs, that will have issues later. There are no jobs out there. Because of that, retailers don't have goods to sell and don't make money. Health of people suffers. and the biggest problem is that we continue to go into more and more debt. Individuals have more credit card debt, not less, mortgages aren't being paid, care defaults are beginning, and we have been taught this by who else, our famous Uncle Sam.
We cannot continue on this pathway. Our country is no longer the class act that we were. We are a debtor nation and have been and will only continue to be more and more in debt. We have to stop. The government has to stop. They can't play their games at getting rid of debt either, it simply has to stop. We have to trim the fat. I'll continue my rant later.
Monday, April 20, 2009
Batten Down the Hatches - Bank Stress Test
Many people involved with following the economic news as of late, has heard that the government is going to place the banks of the US under a stress test. This test is to simulate what would happen if we had further economic strife with bank runs and defaults rising. The results are in, and the top 19 banks as well as over 1800 regional banks are technically insolvent. What this means is that these facilities are so overlevereged that they don't have all the capital needed to supply everyone with their money. If only 2 of the top banks fail then they will force the FDIC into failure as they do not have the money needed to insure all of other banks.
So the FDIC that insures all of our banks and money can only pay for 2 banks. Think about that like a cruise liner sinking. There is only enough room to take 2 passengers on the lifeboat, hope they pick the right ones. The rest of the passengers have to swim for it in shark infested water.
I'm tired of being pushed under the rug. I'm tired of the government telling us one thing to make us think that we are all rosy and healthy. I'm tired of people thinking that the recent rally is a new bull market. I'm tired of banks, the rich, government, thinking that they know more than we do, and that they have our best interests at heart. Bullshit to all of that!!
The only thing that we can be sure of is that precious metals will go up, commodities will go up, the dollar will be wiped clean, and the government will spend more of my money and lie to my face. Shame on them! That's appalling behavior for the "most powerful nation in the world". Hogwash! We've lost that title and the only way to get it back is to fight smarter and work harder. Be creative, stop buying foreign oil, think better, and get away from the political boondoggles that stop us from advancing our nation and lives.
So the FDIC that insures all of our banks and money can only pay for 2 banks. Think about that like a cruise liner sinking. There is only enough room to take 2 passengers on the lifeboat, hope they pick the right ones. The rest of the passengers have to swim for it in shark infested water.
I'm tired of being pushed under the rug. I'm tired of the government telling us one thing to make us think that we are all rosy and healthy. I'm tired of people thinking that the recent rally is a new bull market. I'm tired of banks, the rich, government, thinking that they know more than we do, and that they have our best interests at heart. Bullshit to all of that!!
The only thing that we can be sure of is that precious metals will go up, commodities will go up, the dollar will be wiped clean, and the government will spend more of my money and lie to my face. Shame on them! That's appalling behavior for the "most powerful nation in the world". Hogwash! We've lost that title and the only way to get it back is to fight smarter and work harder. Be creative, stop buying foreign oil, think better, and get away from the political boondoggles that stop us from advancing our nation and lives.
Tuesday, April 14, 2009
Repaying of Bailout Funds
There has been talk about the banks that received bailout funds and the need to pay them back. First of all, many of these institutions didn't really need the money in the first place, but were "encouraged" to take it so the other banks wouldn't feel bad. Hogwash.
Now they have to pay it back. Do we get interest? Probably not. But I'd wage a bet that the banks that received the funds, padded their capital allotment that is required by banks to keep them in good order, so that they could use that money to generate more money. Remember, all of the big banks, and small banks for that matter, have investment arms, as well as the good ole boy network where they can use the information from each other and take that borrowed money to invest.
Why do you think that they are able to report record profits and profits at all in the first quarter, when before they couldn't do anything? Why has there been so much of a market rebound since it bottomed, coincidentally at the same time when the first quarter is?
Manipulation of the banks and government by the banks and government. Our government is not longer for the people, it is for the bankers and the ultra rich. We peasants just have to pick up the scraps that the rich feed to the dogs.
The banks used OPM, Other People's Money, to invest to make some quick money and they now have taken their money off the table, by paying back the bailout, and are now playing with the houses money. Meanwhile, the talking heads and administration is coming out saying things are looking up and now we're back on track. BS.
They look at numbers on the reports and don't go into the streets, with "Joe" the plumber and talk with employees who have been laid off. They don't talk to small business owners who are trying to get to the once publicized American Dream. It is not baseball games and cotton candy. We still have a ways to go. I'd love for the economy and the markets to go straight up, but we need substance.
Patience is a virtue.
Now they have to pay it back. Do we get interest? Probably not. But I'd wage a bet that the banks that received the funds, padded their capital allotment that is required by banks to keep them in good order, so that they could use that money to generate more money. Remember, all of the big banks, and small banks for that matter, have investment arms, as well as the good ole boy network where they can use the information from each other and take that borrowed money to invest.
Why do you think that they are able to report record profits and profits at all in the first quarter, when before they couldn't do anything? Why has there been so much of a market rebound since it bottomed, coincidentally at the same time when the first quarter is?
Manipulation of the banks and government by the banks and government. Our government is not longer for the people, it is for the bankers and the ultra rich. We peasants just have to pick up the scraps that the rich feed to the dogs.
The banks used OPM, Other People's Money, to invest to make some quick money and they now have taken their money off the table, by paying back the bailout, and are now playing with the houses money. Meanwhile, the talking heads and administration is coming out saying things are looking up and now we're back on track. BS.
They look at numbers on the reports and don't go into the streets, with "Joe" the plumber and talk with employees who have been laid off. They don't talk to small business owners who are trying to get to the once publicized American Dream. It is not baseball games and cotton candy. We still have a ways to go. I'd love for the economy and the markets to go straight up, but we need substance.
Patience is a virtue.
Thursday, April 9, 2009
Here We Go Again.
With the latest news of the banking industry and that it is doing fine, we have another governmental charlatan game going on. They must think that the majority of the people actually believe what the government says about things, either that or they think that we are stupid. I'm tired of the lies that they are showing us.
There is no way that you can go from death and destruction and within 6 months go to rainbows and sunshine. Somebody is lying! We are talking a blatant, in your face, lie about what is going on. Once again, big government and the rich are manipulating the way that everyone else sees things to benefit themselves. They talk a big game and want the consumer to feel confident, but they are lying and stealing from the people to make themselves look better and to give the regulators and officials, including our representatives, a job.
They need to stop interfering with the Darwinism that needs to occur and will occur regardless of what they try to do or how much money they plan to toss on the fire. The government and the regulators are crippling this nation. They are saddling us and our kids with problems that we will not be able to spend or BS our way out of.
All I can say is I'm ashamed at the audacity of the government to think that we are that stupid that they need to hold our hands. Clearly, every other historical idea that government has done has only resulted in future problems worse than the original one. If you need a refresher course, think of the dollar taken from the gold standard, almost all of the wars, the banking issues currently, subprime mortgages, everything. Leave it alone and let people figure it out in the way that nature intended us to do it.
Buy precious metals, mainly platinum, palladium, and silver, moreso than gold. Gold is the only precious metal that doesn't really have any industrial use.
There is no way that you can go from death and destruction and within 6 months go to rainbows and sunshine. Somebody is lying! We are talking a blatant, in your face, lie about what is going on. Once again, big government and the rich are manipulating the way that everyone else sees things to benefit themselves. They talk a big game and want the consumer to feel confident, but they are lying and stealing from the people to make themselves look better and to give the regulators and officials, including our representatives, a job.
They need to stop interfering with the Darwinism that needs to occur and will occur regardless of what they try to do or how much money they plan to toss on the fire. The government and the regulators are crippling this nation. They are saddling us and our kids with problems that we will not be able to spend or BS our way out of.
All I can say is I'm ashamed at the audacity of the government to think that we are that stupid that they need to hold our hands. Clearly, every other historical idea that government has done has only resulted in future problems worse than the original one. If you need a refresher course, think of the dollar taken from the gold standard, almost all of the wars, the banking issues currently, subprime mortgages, everything. Leave it alone and let people figure it out in the way that nature intended us to do it.
Buy precious metals, mainly platinum, palladium, and silver, moreso than gold. Gold is the only precious metal that doesn't really have any industrial use.
Friday, April 3, 2009
Giving Back Bailout (TARF/TARP) Funds
You are starting to hear in the media that some of the banks and companies that have received bailout funds are wanting or beginning to pay them back. I applaud them for taking these steps. I have a couple of questions for the administration though regarding this. If they are paying back the funds this early into the game, did they really need the funds to begin with? Since most of the funds is made up of the money that I (taxpayers) contributed, when do I get it back and in what form?
These are important questions that need to be asked. To answer the first, I think that you need to look at conspiracy theories and the "game" that the rich play with money. I think that those who can pay back the money this quickly, didn't really need the money in the first place, but wanted to keep their leverage capabilities open so that they could generate more returns shorting what they were betting on.
Think about it for a second! When Goldman Sachs or one of the other large firms that received money announced that they needed money, what happened to their stock: it was dumped. We, the people, will never know, but I'd be willing to bet that these firms, with their investment arms made sure that they had large short positions prior to making the announcements. If I was one of these firms, I would short sell or buy put options on my own companies stock before I made the announcement that I needed "government" funds and then sell at the bottom once the media blitz passed by. Then I would use that money generated on the downside to buy back my own stock and get ready for the upside.
Let's use Goldman Sachs for example again. When Warren Buffet "gave" them $5 billion with special conditions, the stock was around $100 per share. That news event cast a shadow that they were in trouble so the stock went down and bottomed around $50 per share. Smart money, "knowing" these events would have shorted the stock at 100 and bought back at 50, because now GS is around $100 again. The round trip in a couple of months netted a ton of money.
If you looked at the books, GS wasn't ever in need of the money in the first place. They had cash, assets, and little debt. They didn't need money, but they made a ton of it. Smart money and the rich use OPM (Other People's Money) on leverage to generate huge returns.
Now you might say that this is "insider trading". Not really if you have other companies do it for you in a round about way using different mechanisms to create these returns. I don't think it's right, but it happens all the time.
On the second question of when we get ours, I think it's gone off the reservation. You know when the money is "paid back", it probably was never really lent in the first place, because it's just numbers on a computer screen. Once again, we, the people, will never see the money. The deficit will still go up, the US debt load will still increase, taxes will go up, consumer pricing and products will still go up, and our dollar will go down.
I won't get a stimulus check from the bailout money being returned, or a large tax refund for $150,000 which is about what each person in the US owes, including children, for the debt of the US.
I hope things get better and I have faith, but not so much in the administration. I have faith in people, Americans and everyone else, that smarter and calmer heads will prevail and that the rhetoric (otherwise know as BS) that we get from the media and the administration talking heads will not cloud the minds of those more in the field and in the know.
These are important questions that need to be asked. To answer the first, I think that you need to look at conspiracy theories and the "game" that the rich play with money. I think that those who can pay back the money this quickly, didn't really need the money in the first place, but wanted to keep their leverage capabilities open so that they could generate more returns shorting what they were betting on.
Think about it for a second! When Goldman Sachs or one of the other large firms that received money announced that they needed money, what happened to their stock: it was dumped. We, the people, will never know, but I'd be willing to bet that these firms, with their investment arms made sure that they had large short positions prior to making the announcements. If I was one of these firms, I would short sell or buy put options on my own companies stock before I made the announcement that I needed "government" funds and then sell at the bottom once the media blitz passed by. Then I would use that money generated on the downside to buy back my own stock and get ready for the upside.
Let's use Goldman Sachs for example again. When Warren Buffet "gave" them $5 billion with special conditions, the stock was around $100 per share. That news event cast a shadow that they were in trouble so the stock went down and bottomed around $50 per share. Smart money, "knowing" these events would have shorted the stock at 100 and bought back at 50, because now GS is around $100 again. The round trip in a couple of months netted a ton of money.
If you looked at the books, GS wasn't ever in need of the money in the first place. They had cash, assets, and little debt. They didn't need money, but they made a ton of it. Smart money and the rich use OPM (Other People's Money) on leverage to generate huge returns.
Now you might say that this is "insider trading". Not really if you have other companies do it for you in a round about way using different mechanisms to create these returns. I don't think it's right, but it happens all the time.
On the second question of when we get ours, I think it's gone off the reservation. You know when the money is "paid back", it probably was never really lent in the first place, because it's just numbers on a computer screen. Once again, we, the people, will never see the money. The deficit will still go up, the US debt load will still increase, taxes will go up, consumer pricing and products will still go up, and our dollar will go down.
I won't get a stimulus check from the bailout money being returned, or a large tax refund for $150,000 which is about what each person in the US owes, including children, for the debt of the US.
I hope things get better and I have faith, but not so much in the administration. I have faith in people, Americans and everyone else, that smarter and calmer heads will prevail and that the rhetoric (otherwise know as BS) that we get from the media and the administration talking heads will not cloud the minds of those more in the field and in the know.
Sunday, March 29, 2009
Separation of Business and State
In a recent article, the White House is forcing the chairman and CEO of GM to resign. I personally think that the CEO and many others of some of the companies that have gotten us into this mess should resign or be forced out by the Boards of Directors, but I have troubles with the government doing it.
I understand that the government, because of the bailouts, have taken a "Board" position in the companies, but I have trouble having the White House getting rid of people in the corporate world. I think that the Boards of the companies, maybe with the influence of the government, should remove the people in charge.
We are getting dangerously close to a more socialistic type leadership, where they are starting to control the corporate world, through forcing people out or big bailouts. That is why Goldman Sachs and Bank of America are trying to quickly pay back the bailouts loans. They are finding out that the way the government works, is not conducive to corporate dealings.
I agree and everyone else should as well. Just look at history and the management of the government when it comes to different things. If the government ran the government like a small or medium sized business then we'd be in a much better position. However, we know that is not the case.
But I have a problem having the government tell individual companies how to run their businesses. We really need to be careful about how we are going forward.
On a similar note. With the troubles of all the largest companies, banks, etc., and their management issues, which have gotten most of these companies into trouble, I think it would be prudent for some of these companies to look outside of their own kind and similar companies to find better management.
I personally know a lot of small business owners, including myself, who could run these companies better than what they've got. The big wig CEOs have been in their own kind and running in their own circles for too long and have a jaded view. They can no longer think efficiently and conservatively. Small business owners must think like that if they are going to be able to survive. Large corporations are getting bogged down with their size.
Large corporations are simple to run! They are just a bunch of small companies under one roof, but they can't think that way any more. I think that government and large corporations should look at other avenues. We need to start fixing these problems, quickly.
I understand that the government, because of the bailouts, have taken a "Board" position in the companies, but I have trouble having the White House getting rid of people in the corporate world. I think that the Boards of the companies, maybe with the influence of the government, should remove the people in charge.
We are getting dangerously close to a more socialistic type leadership, where they are starting to control the corporate world, through forcing people out or big bailouts. That is why Goldman Sachs and Bank of America are trying to quickly pay back the bailouts loans. They are finding out that the way the government works, is not conducive to corporate dealings.
I agree and everyone else should as well. Just look at history and the management of the government when it comes to different things. If the government ran the government like a small or medium sized business then we'd be in a much better position. However, we know that is not the case.
But I have a problem having the government tell individual companies how to run their businesses. We really need to be careful about how we are going forward.
On a similar note. With the troubles of all the largest companies, banks, etc., and their management issues, which have gotten most of these companies into trouble, I think it would be prudent for some of these companies to look outside of their own kind and similar companies to find better management.
I personally know a lot of small business owners, including myself, who could run these companies better than what they've got. The big wig CEOs have been in their own kind and running in their own circles for too long and have a jaded view. They can no longer think efficiently and conservatively. Small business owners must think like that if they are going to be able to survive. Large corporations are getting bogged down with their size.
Large corporations are simple to run! They are just a bunch of small companies under one roof, but they can't think that way any more. I think that government and large corporations should look at other avenues. We need to start fixing these problems, quickly.
Monday, March 23, 2009
Insanity
Doing the same thing over again and expecting a different outcome. The glass half full side of me wants to think that people do learn from their mistakes, but they obviously don't. I don't want to see our country fail or the banks or people in tent cities around the country. We are smarter than that, but we are not thinking.
The poor lending tactics, bad banks, unscrupulous people, and private and government folks lining their pockets with taxpayer monies, hasn't changed. The policies and people who got us into the mess we are in are in charge of bailing us out and thinking of ways to fix things. If they haven't been able to do it with their own companies, then what makes you think that they can do it with the country.
I know that the markets are cheering because this frees up lending money, but everyone is already in debt. We cannot trust the policy makers, we cannot spend more money, we cannot trust that the government has our own best interests at heart, we cannot trust Social Security, Medicare, Medicaid, or any other programs.
We are smart people and you tell me that this is the best that we can do, add more fuel. I beg to differ. Do you think that our policy makers, folks in politics are smarter than we are, than I am? That they know more than us? No they most certainly do not. I'm appalled at our behavior in one of the greatest countries in the world. We should be ashamed.
The poor lending tactics, bad banks, unscrupulous people, and private and government folks lining their pockets with taxpayer monies, hasn't changed. The policies and people who got us into the mess we are in are in charge of bailing us out and thinking of ways to fix things. If they haven't been able to do it with their own companies, then what makes you think that they can do it with the country.
I know that the markets are cheering because this frees up lending money, but everyone is already in debt. We cannot trust the policy makers, we cannot spend more money, we cannot trust that the government has our own best interests at heart, we cannot trust Social Security, Medicare, Medicaid, or any other programs.
We are smart people and you tell me that this is the best that we can do, add more fuel. I beg to differ. Do you think that our policy makers, folks in politics are smarter than we are, than I am? That they know more than us? No they most certainly do not. I'm appalled at our behavior in one of the greatest countries in the world. We should be ashamed.
Stop the Insanity
Let's talk about debt for a minute. We are having troubles in the economy right now, that's pretty obvious. There are a number of ways to fix the problems, and we're quickly going through all of the options. Now we are throwing about a $trillion at removing the bad loans from the banks so that they can begin lending again.
Does anyone see a problem with this? I understand that in order to get things flowing correctly you have to change how things are done and get money flowing again. No problem there, but when you try to do the same things over again that got you into the mess then you haven't fixed anything.
Spending, whether it is consumer or governmental, has created a deficit of money supply. If you print counterfeit money, which is basically what the government is doing, then how do you think that we are ever going to get out of the problem. We are a nation in deep debt and probably can't get out of it at this stage. So how is throwing my money at some debt problem going to help out, in the long run?
We have been running a budget deficit for decades and now this currently proposed one takes the cake. This is like trying to put out the fire with gasoline. Our generation and my kids and my grandkids are going to have to pay for this somehow. China has already to sell our bonds back because they think we'll not pay them back. That's a smart move on their part.
Sometimes you've got to just let your kids get hurt in order for them to learn an important lesson. The government needs to learn that lesson right now.
Does anyone see a problem with this? I understand that in order to get things flowing correctly you have to change how things are done and get money flowing again. No problem there, but when you try to do the same things over again that got you into the mess then you haven't fixed anything.
Spending, whether it is consumer or governmental, has created a deficit of money supply. If you print counterfeit money, which is basically what the government is doing, then how do you think that we are ever going to get out of the problem. We are a nation in deep debt and probably can't get out of it at this stage. So how is throwing my money at some debt problem going to help out, in the long run?
We have been running a budget deficit for decades and now this currently proposed one takes the cake. This is like trying to put out the fire with gasoline. Our generation and my kids and my grandkids are going to have to pay for this somehow. China has already to sell our bonds back because they think we'll not pay them back. That's a smart move on their part.
Sometimes you've got to just let your kids get hurt in order for them to learn an important lesson. The government needs to learn that lesson right now.
Tuesday, March 10, 2009
Citigroup
So Citigroup is actually very profitable so far this year. That is great, but how and why? How can a company go from doing well, to a penny stock and almost bankrupt, to being profitable in such a short amount of time? Not just breaking even, or a few million over operating costs, but $8 billion dollars profit in 2 months of a year. Those are staggering numbers and a turn around.
Also remember that the government took an equity stake in the company recently, so from an investment standpoint and as a taxpayer and a owner of Citigroup through the governments purchasing of this stock using my money, what is the return of the investment and when do we get to pull out the initial capital to "take the money off the table" and return it to the taxpayer?
I think that there are many levels to the bailout scheme that is being battered around Washington DC and Wall Street, and that "We the People" are not being told every step along the way. If we are told it then we are getting the sugar coating and not whole M & M.
Also remember that the government took an equity stake in the company recently, so from an investment standpoint and as a taxpayer and a owner of Citigroup through the governments purchasing of this stock using my money, what is the return of the investment and when do we get to pull out the initial capital to "take the money off the table" and return it to the taxpayer?
I think that there are many levels to the bailout scheme that is being battered around Washington DC and Wall Street, and that "We the People" are not being told every step along the way. If we are told it then we are getting the sugar coating and not whole M & M.
Bear Market Rally
If this is it, it's about time. We've been at multi-year lows for a while, with very oversold conditions. Noticeably, the financial sector is making good headway. That is pretty typical as it leads us into and out of recessions. It's not time to back up the truck and buy. If you are more of a speculator, or have long term views, and are willing to ride some waves, you might start to invest new money. If you can't stomach things then wait. I don't think this is the end. I hope it is, but more confirmation is needed.
Even though the markets are leading indicators of the economy by about 6 months, our economy is far from "cured" of it's ailments. On the contrary we have a ways to go before the patient can leave the hospital.
I would start to add to your wish list of investments now, and maybe start very small positions that can be added to later, but wait to buy in earnest. Also, closely follow the precious metal markets. They are getting beat up right now, but should be good buys going forward. Long term lookers must know that inflation will come back and the metals will be the recipients of huge moves.
These market rallies are necessary for consumer confidence as well as to scalp some money to not make positions look so bad. Remember, us individual investors don't do anything in the market except ride the waves. But you have to be ready at a moments notice if you want to profit.
Even though the markets are leading indicators of the economy by about 6 months, our economy is far from "cured" of it's ailments. On the contrary we have a ways to go before the patient can leave the hospital.
I would start to add to your wish list of investments now, and maybe start very small positions that can be added to later, but wait to buy in earnest. Also, closely follow the precious metal markets. They are getting beat up right now, but should be good buys going forward. Long term lookers must know that inflation will come back and the metals will be the recipients of huge moves.
These market rallies are necessary for consumer confidence as well as to scalp some money to not make positions look so bad. Remember, us individual investors don't do anything in the market except ride the waves. But you have to be ready at a moments notice if you want to profit.
Monday, March 9, 2009
Consumer Confidence
I also want to discuss confidence this morning. We hear all of the doom and gloom from the news media about how terrible we are and how dire our circumstances are and are going to be. First of all, it is what you make of it. If you feel like hell hath no fury, then it will, but if you are more positive and see the glass half full side of things, then you will find a bounty of opportunities in this marketplace right now.
It reminds me of the mythical creature, a Phoenix. The small, fiery, red bird who possess great attributes, but dies in a burst of flames. But out of that pile of ashes comes a magnificent create to start anew.
We are bursting in to flames right now, but we are going to emerge victorious from this. When it looks like all else is going to fail, that's when things are going to be there best. I could go on with a number of other feel good quotes and sayings, but they are all true, it really boils down to perception.
Yes we are in a protracted downturn, call it recession, deep recession, mild depression, the symantics don't matter, but times are tough. We all know that and we have adjusted our lives to compensate for that. We need to stop dwelling on it like the earth is going to collapse tomorrow. Got news for you, if the earth is going to blow up, not a lot we can do about it, so stop fretting.
We have some great opportunities to fix some of the problems that we've created for decades, so instead of adding fuel to the fire, let's all take our lumps and fix them. Let's stop putting duct tape on the leaky pipes and just replace the pipes. Let's create something new and good and become a productive country and society again and stop being a "user" or consumer society.
Why do you think things are so bad? We keep doing the same things over again, because we don't want to face reality, so the "fix it people" keep doing what we've been doing, and see how far that has gotten us.
I for one am using this time as a great time for opportunity and I encourage everyone else to do so as well. If you want stocks, then pick good companies or ETFs that have a slim chance of going bankrupt and write covered calls against them until things turn around. Don't complain about how bad your portfolio is, try to gain knowledge and learn how to nickel and dime your way back until things turn around. Once again, covered calls work great.
Even though the financial sector has been left for dead, if you look at history, the financial stocks and sectors lead us into and out of recessions. Small cap stocks have much better returns, especially coming out of a downturn, moreso than a large or mid cap stock. Maybe use ETFs for these right now until stocks emerge.
I'm confident in what is to come. Yes, we might hit DOW 5000! like a lot of people try to foresee, but if we do then the upside is much greater. This downturn will be one of the greatest times in history for wealth to be generated. Just wait and watch, hopefully join the train.
It reminds me of the mythical creature, a Phoenix. The small, fiery, red bird who possess great attributes, but dies in a burst of flames. But out of that pile of ashes comes a magnificent create to start anew.
We are bursting in to flames right now, but we are going to emerge victorious from this. When it looks like all else is going to fail, that's when things are going to be there best. I could go on with a number of other feel good quotes and sayings, but they are all true, it really boils down to perception.
Yes we are in a protracted downturn, call it recession, deep recession, mild depression, the symantics don't matter, but times are tough. We all know that and we have adjusted our lives to compensate for that. We need to stop dwelling on it like the earth is going to collapse tomorrow. Got news for you, if the earth is going to blow up, not a lot we can do about it, so stop fretting.
We have some great opportunities to fix some of the problems that we've created for decades, so instead of adding fuel to the fire, let's all take our lumps and fix them. Let's stop putting duct tape on the leaky pipes and just replace the pipes. Let's create something new and good and become a productive country and society again and stop being a "user" or consumer society.
Why do you think things are so bad? We keep doing the same things over again, because we don't want to face reality, so the "fix it people" keep doing what we've been doing, and see how far that has gotten us.
I for one am using this time as a great time for opportunity and I encourage everyone else to do so as well. If you want stocks, then pick good companies or ETFs that have a slim chance of going bankrupt and write covered calls against them until things turn around. Don't complain about how bad your portfolio is, try to gain knowledge and learn how to nickel and dime your way back until things turn around. Once again, covered calls work great.
Even though the financial sector has been left for dead, if you look at history, the financial stocks and sectors lead us into and out of recessions. Small cap stocks have much better returns, especially coming out of a downturn, moreso than a large or mid cap stock. Maybe use ETFs for these right now until stocks emerge.
I'm confident in what is to come. Yes, we might hit DOW 5000! like a lot of people try to foresee, but if we do then the upside is much greater. This downturn will be one of the greatest times in history for wealth to be generated. Just wait and watch, hopefully join the train.
Economy and Money
Over the weekend, I just read a great book by Harry Brown entitled Money - 99% of All You Need to Know About Money and the Effect on the Economy. It is a very simple manuscript, written in easy to understand language, but it shows the powerful mistakes we have made as a country, and world, through our own mistakes and those of our leaders.
One poignant part was the effect that our government has on the money supply. The book's description is much more eloquent, but the gist is that when a government prints money, it is essentially counterfeiting. We would go to jail, but it just keeps on going. I hope we all know what happens when money is just printed like it is being done. The value of that money goes down. It's great that you might get the stimulus check and be able to use it, but it's value has gone down.
Along the same lines, I found an interesting clip about the problem with our money supply and the fact that we are not tied to the gold standard any more, and haven't been since 1971. That is really when the problems began. Not with Bush, Clinton, Bush, or Obama. The finger needs to be pointed at history and Nixon. The problem is that we can not possibly get back to the gold standard without some serious tightening, because of the gold supply. Our country has the most bullion in the vault, but not enough to erase the $10 trillion dollars we owe.
I'm going to try to post the video link.
Anyway, I don't think that we have seen the end of this mess, and it seems like everything we do is just digging a deeper hole. Now I hear folks about just giving things a chance, and I'm willing and optimistic, but history does repeat itself, and common sense tells us that if you have too many apples to sell and no one is buying them, that you have to reduce the cost of the apples.
One poignant part was the effect that our government has on the money supply. The book's description is much more eloquent, but the gist is that when a government prints money, it is essentially counterfeiting. We would go to jail, but it just keeps on going. I hope we all know what happens when money is just printed like it is being done. The value of that money goes down. It's great that you might get the stimulus check and be able to use it, but it's value has gone down.
Along the same lines, I found an interesting clip about the problem with our money supply and the fact that we are not tied to the gold standard any more, and haven't been since 1971. That is really when the problems began. Not with Bush, Clinton, Bush, or Obama. The finger needs to be pointed at history and Nixon. The problem is that we can not possibly get back to the gold standard without some serious tightening, because of the gold supply. Our country has the most bullion in the vault, but not enough to erase the $10 trillion dollars we owe.
I'm going to try to post the video link.
Anyway, I don't think that we have seen the end of this mess, and it seems like everything we do is just digging a deeper hole. Now I hear folks about just giving things a chance, and I'm willing and optimistic, but history does repeat itself, and common sense tells us that if you have too many apples to sell and no one is buying them, that you have to reduce the cost of the apples.
Thursday, March 5, 2009
Current Market Condition
It's hard for individual investors to get a grasp on what is going on right now with the markets because there is no defined direction. Sideways markets are tough for traditional investors because they don't know how to deal with the daily fluctuations. All of your gains on one day can be wiped out the next day, so you lose confidence.
One noticeable thing with these markets lately is the volume. There is very little! Prices fluctuate tremendously during low volume times. The key to dealing with this is to know why things are moving. If a company declares bankruptcy, that's a big deal and you expect the volume to pick up greatly as people get out of it. But if good companies are stable and nothing changes, the price could move on low volume and this is most likely people repositioning their portfolios. Look at these times to gain more shares at a cheaper price.
There are tons of opportunities out there with good solid investments. Knowing what type of individual investor you are is the first part of determining what to invest in. Are you a trader, short-term or long-term, are you a buy and hold investor, do you like income and dividends or growth, or a combination of the above.
Personally, I'm all of the above. I've spent years learning how to do this, and constantly learn more along the way. I think that it's important for individuals who want to manage all or some of their money to know all different approaches so that you can take advantage of the market when opportunities present themselves.
Many people try to predict the market, but you really can't. You can only react to what it offers you. Take advantage of it when you are given the situation. Be smart with your money because it's hard to get it back. Even if you have someone else watching your money, you have to know as much as they do to be able to ask the right questions to safeguard it.
One noticeable thing with these markets lately is the volume. There is very little! Prices fluctuate tremendously during low volume times. The key to dealing with this is to know why things are moving. If a company declares bankruptcy, that's a big deal and you expect the volume to pick up greatly as people get out of it. But if good companies are stable and nothing changes, the price could move on low volume and this is most likely people repositioning their portfolios. Look at these times to gain more shares at a cheaper price.
There are tons of opportunities out there with good solid investments. Knowing what type of individual investor you are is the first part of determining what to invest in. Are you a trader, short-term or long-term, are you a buy and hold investor, do you like income and dividends or growth, or a combination of the above.
Personally, I'm all of the above. I've spent years learning how to do this, and constantly learn more along the way. I think that it's important for individuals who want to manage all or some of their money to know all different approaches so that you can take advantage of the market when opportunities present themselves.
Many people try to predict the market, but you really can't. You can only react to what it offers you. Take advantage of it when you are given the situation. Be smart with your money because it's hard to get it back. Even if you have someone else watching your money, you have to know as much as they do to be able to ask the right questions to safeguard it.
Where are We Now
There have been a lot of changes with the economy lately, but nothing concrete and directional. The talking heads would like to think that they've got things figured out and can help you, but they are just people too. They don't have the answers any more than anyone else does. If you watch a lot of news shows or read economic news, you can find a different stance depending on who you listen to, and their political feelings.
Frankly, I don't think anyone does know or can guess right, that is why you get so many different opinions. I don't agree completely with all of the bailouts that are going on, because taxpayers are going to have to take care of everything, without anything to gain from it.
Since I don't know any more than anyone, I can't recommend anything that would be earth shattering. I do know that a few things will start to come up, and that is inflation, albeit eventually. I think precious metals is a good safe place. A combination of physical coins and paper in ETFs for gold and silver. I also personally like using a covered call strategy for stocks that I own to generate some income.
I know the markets will come around, and thankfully I'm young enough that I can work myself out of the mess. Fortunately I chose to not participate in the decline of my investments, as I've been in cash for at least 18 months. I still feel bad for those who lost everything because of the fault of greedy bastards living on their private islands and luxurious surroundings.
Frankly, I don't think anyone does know or can guess right, that is why you get so many different opinions. I don't agree completely with all of the bailouts that are going on, because taxpayers are going to have to take care of everything, without anything to gain from it.
Since I don't know any more than anyone, I can't recommend anything that would be earth shattering. I do know that a few things will start to come up, and that is inflation, albeit eventually. I think precious metals is a good safe place. A combination of physical coins and paper in ETFs for gold and silver. I also personally like using a covered call strategy for stocks that I own to generate some income.
I know the markets will come around, and thankfully I'm young enough that I can work myself out of the mess. Fortunately I chose to not participate in the decline of my investments, as I've been in cash for at least 18 months. I still feel bad for those who lost everything because of the fault of greedy bastards living on their private islands and luxurious surroundings.
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