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Still buying
Yes, the markets fell dramatically today. I think that this fear is quite crazy at this point. The new presidential Administration of Barack Obama has already made clear that they are not going to let the financial crisis become ridiculous. Effectively this is a promise of “whatever-it-takes” effort and eventual recovery. How can they promise this? The U.S. has many options, from increasing government spending (and concomitant borrowing), selling U.S. assets, legislating that banks actually stop sitting on their cash, printing...
read moreLife has a way of humbling people
We are going to swerve away from investment-type topics a bit for today’s post. I wanted to excerpt a story from “The Week” magazine. Specifically page 10 of the January 23, 2009 issue. Here is the excerpt: Pastor Ted Haggard, who was exiled from his Colorado church in 2006 in a gay sex scandal, said this week that the incident has altered his views on religion and the culture wars. “The church told me to go to hell,” he said. “I now know more about hatred and judgment than ever before, and I know it...
read moreWhat is real economic growth?
Happy Saturday to all of you out there! Today’s post is a missive as to what qualifies as real economic growth. This may sound like a very dry topic, but having a handle on this actually then gives you a powerful tool for evaluating the health of any country’s gross domestic product (GDP) – alias, an economy. This, in turn, allows you to accurately assess the quality of investments that exist in any nation and for any company. I have tangentially hit this topic in a couple of other postings, but here I felt it...
read moreDecember’s unemployment report, slight return
I had wanted to mention several posts ago about December’s unemployment numbers that pushed unemployment up to 7.2% that this figure is fairly normal historically speaking. The recession of 1991 had higher unemployment than 7.2%. The recession of 2001 had about the same unemployment. And so on and so on. Unemployment was especially tragic back in 1982 and even entered double digits! My point is that recessions suck, but let’s keep things in perspective and let’s stop with the Great Depression comparisons as they are...
read moreGDP stimulus plan from the Democrats
I wanted to provide some commentary about the Democrat’s stimulus package that has just been introduced. The most important thing about the plan is not the dollar amount of the package. That will surely change as the proposal makes its way through Congress and as businesses and State and local governments adjust to the recessionary economy. The most important thing is to examine the details for suggested stimulus to get a feel for how the Obama Administration plans to Administer the economy. Turns out that there are some...
read moreToday I bought stocks
Hello everyone, Just a quick note to let all of you know that for the first time in about 4 years I bought U.S. equities today. Absolutely everything is on sale. We are talking about businesses whose future prospects remain strong for the far foreseeable future that are trading at prices not seen since the 1970s. More specifically I am talking about the P/E ratios (a valuation shorthand) being so very low for so many businesses. I strongly encourage those of you who are interested in investing to read my posting on P/E ratios. Then, if there...
read moreFear
In this posting I wanted to address the bizarre, ominous and ponderous fear that is hovering over the financial markets. Where is all of this coming from? Do you remember early on I wrote a piece about the fact that around 60% of all U.S. equities were owned by institutional investors? These folks are insurance companies, pension companies, and investment companies (i.e. mutual funds). The majority of this money is managed in three money centers: New York, Chicago and San Francisco. However, by far the most major of these three centers is New...
read moreRe- retail sales
OK, you probably saw, or heard, that retail sales were down 2.7% in December according to the Commerce Department. And you probably saw that the DJIA, due to the retail sales figures and banking industry problems, was down 2.9%. All I can say is: “Give me a break!” Yes, I know that things are seemingly really scary out there, but the end of the world is not upon us. It is as if the collective guilt of our culture over having lived our lives on borrowed money and borrowed time for the last three decades has finally come to a raging...
read morePlan Obama
Another post. Today almost-President Barack Obama announced plans to create 212,000 jobs by creating digitizing healthcare records for the nation over the next 5 years. This suggestion is an effort to help revive the economy and it appears that it is being met with skepticism from the press. Part of the skepticism is that the task is extremely technical in nature. Another source of skepticism is the $75-$100 billion that it is expected to cost to achieve the goal. Additionally, it is thought that there is a shortage of skilled labor to be...
read moreWeapons of mass destruction
Hello everyone – I hope that each of you had a relaxing and rejuvenating weekend! I typically don’t like to write about politics because it is typically beyond the scope of the blog. I really only feel qualified to comment when political issues touch on business and investing issues. But today is an exception, and it has to do with the (dreaded) Iraqi weapons of mass destruction, alias WMD. Why do I bring this up? Well, soon-to-be ex-President George W. Bush today said that he is disappointed that U.S. armed forces never found WMD...
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