Good Morning All, Markets have had a rather interesting couple of weeks, ones during which they have largely ignored the drumbeat of current negative economic newsin favour of a more macro view of what might be, once the troubles have past. It is at times such as these, as I mentioned in a previous letter, that I have often quoted Yeats' poem "The Second Coming", please look it up if you have not already done so. I have also used past crises to remind readers of the tide of history; and to point out the leaps of human progress that followed such momentous events. Sticking to more modern history, I have most often cited the prospects for gain which followed the Napoleonic Wars when the Industrial Revolution began in earnest; the end of the U.S. Civil War, a period dominated by railways, steel and robber barons; the boom that brought the automobile and the airplane after the Great War later to be known as WW l; or the new science of computers and jet travel that arrived amidst the many innovations that gained prominence during the decades of which we have each been a part. In short, we the human race, are much smarter and much more resourceful than we occasionally appear.
It is also at times such as these that our true natures and spirit become more evident, a time when we discover the fiber from which we are made. Dichotomous as it may seem, there has lately been a rise in volunteership and stranger still, this aroused spirit of giving is most often found among the young and the old and among those who can least afford the luxury of giving. This is not a world populated by the Rick Santellis or the Rush Limbaughs but by the ordinary folk who have been stirred to action because they recognize their own stake in the future world, be it for themselves, their issue or humankind, resides with the good of all. Sadly there are those among us, mostly in their middle years, whose concern is less about "doing good" than "doing well". These are, of course, the careerists who blame everyone else for the bumps in their road to nowhere. There are among them the ranters and the suers, opportunists who seek to gain during hard times at the expense of others. It has been said that we can learn a great deal about someone's character at a poker table or on a golf course; to this I would add....or times such as these.
I could go on about history and humankind's ability to thrust great individuals and leadership to the fore, just when they are most needed, but I won't because you will think I am hyping Barack again....oh okay I am.
On a less serious note, I have once again included my 25 stock suggestions first published in late November and early December 2008. The gains in many of them have been quite striking and although the list is far from being either complete or exclusive, it does embody a practical example of what really has been happening in recent weeks and what will likely occur in the years before us. I have no idea whether any of you have yet advantaged yourselves of this generational opportunity, but I hope you have, as it has been little my way of giving.
Let the renaissance continue.
Thursday, March 19, 2009
Tuesday, March 10, 2009
March 10th Edition
Good Morning All,
I don't normally address you all in this manner but since I am somewhat compelled, for business reasons and the lack of an alternative, to spend much of my day with CNBC in the background, I thought you might enjoy Jon Stewart's take on the collection of smug, self serving, right wing blowhards who dominate the commentary and choose the interviewees. This network now challenges FOX news for leadership in the realm of idiot supremacy.Please open the attached....or don't.
http://www.youtube.com/watch?v=yJObWmN-x9I
I don't normally address you all in this manner but since I am somewhat compelled, for business reasons and the lack of an alternative, to spend much of my day with CNBC in the background, I thought you might enjoy Jon Stewart's take on the collection of smug, self serving, right wing blowhards who dominate the commentary and choose the interviewees. This network now challenges FOX news for leadership in the realm of idiot supremacy.Please open the attached....or don't.
http://www.youtube.com/watch?v=yJObWmN-x9I
March 10th Edition
Good Morning All,
Welcome to another week of gloom and doom…..or renewal and reward if you should so choose. Of course this is not really a choice one might make without significant amounts of fear and trepidation, but the latter option may deserve some consideration at this juncture, even though the economy appears to be going to hell in something larger than a hand basket.
The major market indexes have continued their headlong plunge these past weeks despite my rosier predictions and despite the underlying strength of my favourite sectors: tech, stem cells, agribusiness and gold. It may also be noted at this time that major indexes reflect the banks, the AIG’s and the General Electrics. At some point down the road some of these stocks will be replaced in the DOW and the S&P 500 by other less encumbered companies. A few may disappear through nationalization or outright bankruptcy. Interestingly enough, it may also be said that a further drop in the aforementioned can hardly bring much more distress to these egregious levels as the number zero is no longer distant.
The crux of our current dilemma resides in the foundation of our economic system, ergo the private banks and the Central Banks that provide the currency, liquidity and security with which we buy and sell goods and services. Economics 101 teaches us one principle upon which both the left and right agree. The Velocity of Money is not simply a reflection of our economic well-being but the integral component of its health. The present decline in the rate at which money travels around the economy is largely responsible for the “seizing up” of lending and therefore spending. The cause of this diminishment of lending and confidence has been well documented, the solution is less clear.
Many on either side of the issue believe that the initial answer lies with the creation of a bad bank that would take up the toxic assets that were originally produced by the money center banks and brokerages that have recently undergone shareholder destruction (as opposed to management destruction whose suffering appears to have been mitigated somewhat through their non recouped bonuses), Further to this many wish to combine this basket approach with a change in the “mark to market accounting rules”. It is believed that many toxic assets are actually worth more than their presently assessed value, and that less distressed last trade prices would immediately improve bank balance sheets. Look for a form of this to come about in the coming week or weeks; it will not be called nationalization in America but it will quack like it. This event will send markets much higher.
Over the past 30 years America has seen CEO salaries rise from 42 times that of the average hourly wage earner to 364 times while peaking at over 500 times a few years ago. This destruction of the middle class has had a disastrous effect upon U.S. savings and long term consumer spending, the latter of which has largely been funded by credit card excesses and the phony housing equity boom. The United States has funded its last ten years of growth on such credit expansion, and the plug has since been pulled. History provides many examples of nations wherein 80%, or more, of the wealth, is held by 2% of the population. Think South America or Russia in recent times. Oligarchies such as these always end badly, either through collapse or revolution or evolution. It has been suggested that the policies of Franklin Roosevelt brought about such peaceful evolution during another troubling era. It is now hoped that the policies of the Barack Obama administration may bring about a similar conclusion.
Despite the now famous Rick Santelli rant on CNBC, it was not Joe the pizza delivery guy or Joe the bogus plumber or even Joe the house flipper that caused this mess. It was mortgage lenders, the investment bankers and the bond desks that scooped billions of yet to be repaid commission dollars that were happily responsible. Remember always “to follow the money” and know that Wall Street believes that greed is good and that Republican cant still repeats the mantra, “trickle down works”….but for whom.
Welcome to another week of gloom and doom…..or renewal and reward if you should so choose. Of course this is not really a choice one might make without significant amounts of fear and trepidation, but the latter option may deserve some consideration at this juncture, even though the economy appears to be going to hell in something larger than a hand basket.
The major market indexes have continued their headlong plunge these past weeks despite my rosier predictions and despite the underlying strength of my favourite sectors: tech, stem cells, agribusiness and gold. It may also be noted at this time that major indexes reflect the banks, the AIG’s and the General Electrics. At some point down the road some of these stocks will be replaced in the DOW and the S&P 500 by other less encumbered companies. A few may disappear through nationalization or outright bankruptcy. Interestingly enough, it may also be said that a further drop in the aforementioned can hardly bring much more distress to these egregious levels as the number zero is no longer distant.
The crux of our current dilemma resides in the foundation of our economic system, ergo the private banks and the Central Banks that provide the currency, liquidity and security with which we buy and sell goods and services. Economics 101 teaches us one principle upon which both the left and right agree. The Velocity of Money is not simply a reflection of our economic well-being but the integral component of its health. The present decline in the rate at which money travels around the economy is largely responsible for the “seizing up” of lending and therefore spending. The cause of this diminishment of lending and confidence has been well documented, the solution is less clear.
Many on either side of the issue believe that the initial answer lies with the creation of a bad bank that would take up the toxic assets that were originally produced by the money center banks and brokerages that have recently undergone shareholder destruction (as opposed to management destruction whose suffering appears to have been mitigated somewhat through their non recouped bonuses), Further to this many wish to combine this basket approach with a change in the “mark to market accounting rules”. It is believed that many toxic assets are actually worth more than their presently assessed value, and that less distressed last trade prices would immediately improve bank balance sheets. Look for a form of this to come about in the coming week or weeks; it will not be called nationalization in America but it will quack like it. This event will send markets much higher.
Over the past 30 years America has seen CEO salaries rise from 42 times that of the average hourly wage earner to 364 times while peaking at over 500 times a few years ago. This destruction of the middle class has had a disastrous effect upon U.S. savings and long term consumer spending, the latter of which has largely been funded by credit card excesses and the phony housing equity boom. The United States has funded its last ten years of growth on such credit expansion, and the plug has since been pulled. History provides many examples of nations wherein 80%, or more, of the wealth, is held by 2% of the population. Think South America or Russia in recent times. Oligarchies such as these always end badly, either through collapse or revolution or evolution. It has been suggested that the policies of Franklin Roosevelt brought about such peaceful evolution during another troubling era. It is now hoped that the policies of the Barack Obama administration may bring about a similar conclusion.
Despite the now famous Rick Santelli rant on CNBC, it was not Joe the pizza delivery guy or Joe the bogus plumber or even Joe the house flipper that caused this mess. It was mortgage lenders, the investment bankers and the bond desks that scooped billions of yet to be repaid commission dollars that were happily responsible. Remember always “to follow the money” and know that Wall Street believes that greed is good and that Republican cant still repeats the mantra, “trickle down works”….but for whom.
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