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.
Friday, February 27, 2009
February 27 Edition
Good Morning All,
The markets can't seem to muster a serious bear rally despite their highly oversold condition; and it is still all about the banks. The Obama budget is out and as "Slate" stated, "he put the money where his mouth is"; and much to the disdain of the CNBC commentators and their chosen guests, he has largely kept his campaign promises. It should be remembered at this time that it was not Dems who got us here, it was the GOP and Wall Street greed. The complaints from the right about the Obama budget are many, but essentially the most discussed concerns are related to taxation changes for the top 2% of Americans, and to a limited degree, the top 5%. None of the contentious items have been explained in detail on any of the complaining networks. In fact, when a talking head interviews a like minded guest, they speak of the tax rise from 35 to 39.5% as if this were going to destroy America's entreprenurial spirit. Think about it; some really smart guy or gal is now going to choose "welfare" over working because they have to pay an additional 4500 dollars on every 100,000 they earn over 250k. Not bloody likely. The other bugbears include the mortgage and charitable deduction clauses in the proposal. Again, these are presented on business television as if they have been totally eliminated, when in fact they have been reduced for people in the 33% plus tax bracket from the present deduction, to 28% in both cases. Example; 1000 dollars of mortgage interest or charitable donation is presently deductible at your tax rate. Under the new tax law, it will be 280 dollars per thousand versus the former 330 or 350 dollars. In Canada we have no mortgage interest deduction and a much better housing market, not to mention a much lower deficit. And once more, let's remember that this is the top 5% of American earners at 33% and the top 2% above that level. There are 300 million citizens of the United States....you do the math. America is greatly in need of some tough love and strong leadership, it is also in need of a little sacrifice and a lot less greedy whining from the already wealthy, not to mention the Trumps of the world. This morning's defacto bank nationalization may well signal a short term end to that crisis, the fat lady is warming up.
The markets can't seem to muster a serious bear rally despite their highly oversold condition; and it is still all about the banks. The Obama budget is out and as "Slate" stated, "he put the money where his mouth is"; and much to the disdain of the CNBC commentators and their chosen guests, he has largely kept his campaign promises. It should be remembered at this time that it was not Dems who got us here, it was the GOP and Wall Street greed. The complaints from the right about the Obama budget are many, but essentially the most discussed concerns are related to taxation changes for the top 2% of Americans, and to a limited degree, the top 5%. None of the contentious items have been explained in detail on any of the complaining networks. In fact, when a talking head interviews a like minded guest, they speak of the tax rise from 35 to 39.5% as if this were going to destroy America's entreprenurial spirit. Think about it; some really smart guy or gal is now going to choose "welfare" over working because they have to pay an additional 4500 dollars on every 100,000 they earn over 250k. Not bloody likely. The other bugbears include the mortgage and charitable deduction clauses in the proposal. Again, these are presented on business television as if they have been totally eliminated, when in fact they have been reduced for people in the 33% plus tax bracket from the present deduction, to 28% in both cases. Example; 1000 dollars of mortgage interest or charitable donation is presently deductible at your tax rate. Under the new tax law, it will be 280 dollars per thousand versus the former 330 or 350 dollars. In Canada we have no mortgage interest deduction and a much better housing market, not to mention a much lower deficit. And once more, let's remember that this is the top 5% of American earners at 33% and the top 2% above that level. There are 300 million citizens of the United States....you do the math. America is greatly in need of some tough love and strong leadership, it is also in need of a little sacrifice and a lot less greedy whining from the already wealthy, not to mention the Trumps of the world. This morning's defacto bank nationalization may well signal a short term end to that crisis, the fat lady is warming up.
Tuesday, February 24, 2009
February 24 Edition
Good Morning All,
Markets continue to be ruled by the banking crisis, and in America, the Wall Street analysts, pundits, practitioners and knee jerk ideologues remain concerned, if not incensed with the word nationalization. The administration also appears fearful of using the "N" word, even as it effectively puts it into practice. In a bid for greater clarification I would humbly suggest that the President incorporate the following phrase into this evening's important address to this worried nation. First used by our own MacKenzie King in W.W.ll and later paraphrased by the new leader of Canada's Liberal party, it would sound something like this; "nationalization if necessary, but not necessarily nationalization".
Markets have been extremely noisy of late and I am not sure that they are truly reflecting the future potential of the world economy. They are certainly reflecting the nation's fears, almost to the point of exploitation. At this moment we may be looking at a generational opportunity.....or the beginning of the end of the world as we have known it. Being of the belief that the world is at a far more advanced place than at any time in history, I find myself in the former, more optimistic camp. It is usually during times such as these that I quote W.B.Yeats' first verse of his poem "The Second Coming" but in lieu of space I will ask those of you who care enough, look it up. Times are tough, but they have been much tougher many times before, times when we were not quite as smart, or quite as civilized.
Stop listening, for a moment, to the people who got us into this mess, and start paying heed to the ones who will get us out of it.
Markets continue to be ruled by the banking crisis, and in America, the Wall Street analysts, pundits, practitioners and knee jerk ideologues remain concerned, if not incensed with the word nationalization. The administration also appears fearful of using the "N" word, even as it effectively puts it into practice. In a bid for greater clarification I would humbly suggest that the President incorporate the following phrase into this evening's important address to this worried nation. First used by our own MacKenzie King in W.W.ll and later paraphrased by the new leader of Canada's Liberal party, it would sound something like this; "nationalization if necessary, but not necessarily nationalization".
Markets have been extremely noisy of late and I am not sure that they are truly reflecting the future potential of the world economy. They are certainly reflecting the nation's fears, almost to the point of exploitation. At this moment we may be looking at a generational opportunity.....or the beginning of the end of the world as we have known it. Being of the belief that the world is at a far more advanced place than at any time in history, I find myself in the former, more optimistic camp. It is usually during times such as these that I quote W.B.Yeats' first verse of his poem "The Second Coming" but in lieu of space I will ask those of you who care enough, look it up. Times are tough, but they have been much tougher many times before, times when we were not quite as smart, or quite as civilized.
Stop listening, for a moment, to the people who got us into this mess, and start paying heed to the ones who will get us out of it.
Monday, February 23, 2009
February 23, 2009
Good Morning All,
Well the bad news, at least for me, is that my most recent letter which called for a market rally last week, not only fell on deaf ears but on fully plugged ones. The good news is that although some stocks may go to zero, the market itself will not, and as indexes fall to lower levels it becomes increasingly clear that we cannot continue the descent at present rates for seven more weeks. So as we begin the second month of the "fix it" Presidency we can look for a relief rally of some sort, the sustainability of which will be dependent on the reception given the Obama budget and the quasi nationalization of CitiGroup and Bank of America.
I am still in southern Florida where the class system of America is as visual as it gets. Interestingly though, it appears that the gap between the super wealthy and the much larger group, which is quickly beginning to include almost everyone else and is growing wider by the day, may not include attitude...fear and anger have been mutualized. The sense of hope that was ignited by the Obama victory has been somewhat mitigated by the attack dogs on the right who appear to control the business networks, Fox news and talk radio. It will be a sad day for us all if we lose the print media one day down the road where someone may well rant, but they can not scream.
The President, through all this, has remained calm, adult, personable and patient. His fault lies, in my opinion, in trying too hard in his quest to broaden the tent by appealing to his opponents' better instincts....my advice, stop, because as Gertrude Stein famously said about Oakland; "there is no there, there".
This niceness may of course be part of a grander plan, the one in which our Machiavellian Prince Barack practices the art of bait and switch, by giving them enough rope from which they may collectively swing.
It is necessary at this time, for Obama to show strong and unyielding leadership, leadership that purveys a sense of hope and a promise of renewal. He is more than capable of so doing and this crucial week is likely to bring new impetus to the great plan; or as I prefer to call it...the renaissance.
Meanwhile, even my late November, early December selections took a drubbing and although most remain somewhat higher than their outset prices, they are significantly below their peak prices....opportunity knocks.
Well the bad news, at least for me, is that my most recent letter which called for a market rally last week, not only fell on deaf ears but on fully plugged ones. The good news is that although some stocks may go to zero, the market itself will not, and as indexes fall to lower levels it becomes increasingly clear that we cannot continue the descent at present rates for seven more weeks. So as we begin the second month of the "fix it" Presidency we can look for a relief rally of some sort, the sustainability of which will be dependent on the reception given the Obama budget and the quasi nationalization of CitiGroup and Bank of America.
I am still in southern Florida where the class system of America is as visual as it gets. Interestingly though, it appears that the gap between the super wealthy and the much larger group, which is quickly beginning to include almost everyone else and is growing wider by the day, may not include attitude...fear and anger have been mutualized. The sense of hope that was ignited by the Obama victory has been somewhat mitigated by the attack dogs on the right who appear to control the business networks, Fox news and talk radio. It will be a sad day for us all if we lose the print media one day down the road where someone may well rant, but they can not scream.
The President, through all this, has remained calm, adult, personable and patient. His fault lies, in my opinion, in trying too hard in his quest to broaden the tent by appealing to his opponents' better instincts....my advice, stop, because as Gertrude Stein famously said about Oakland; "there is no there, there".
This niceness may of course be part of a grander plan, the one in which our Machiavellian Prince Barack practices the art of bait and switch, by giving them enough rope from which they may collectively swing.
It is necessary at this time, for Obama to show strong and unyielding leadership, leadership that purveys a sense of hope and a promise of renewal. He is more than capable of so doing and this crucial week is likely to bring new impetus to the great plan; or as I prefer to call it...the renaissance.
Meanwhile, even my late November, early December selections took a drubbing and although most remain somewhat higher than their outset prices, they are significantly below their peak prices....opportunity knocks.
Tuesday, February 3, 2009
January 31st 2009 Editon
Good Morning All,
The following article was brought to my attention by one of you (thanks for the feedback Phil). I thought it described one of the many areas in which the enormous potential of stem cell research can be brought to bear. As many of investors are fast becoming aware, markets are forward looking instruments, and what could be more forward looking than owning some of the companies that are engaged in the scientific investigation of new and better solutions to the world's ills. The Obama Presidency has kicked off an entire new and growing interest in such progress, as recent price appreciation in this sector has proven. It is my belief that many of these companies will be successful while others will fail, so as I wrote last November, "own a basket" and trade within it. I have added two additions to my list and yes I do own all or some of them.
In my opinion, the President's attempts to reach out to the Republicans have failed and it is now time for him to move on. He stated in his inaugural address that it was time to "dust ourselves off"; well if I may be so bold...it is time for the President to dust off the GOP.
The following article was brought to my attention by one of you (thanks for the feedback Phil). I thought it described one of the many areas in which the enormous potential of stem cell research can be brought to bear. As many of investors are fast becoming aware, markets are forward looking instruments, and what could be more forward looking than owning some of the companies that are engaged in the scientific investigation of new and better solutions to the world's ills. The Obama Presidency has kicked off an entire new and growing interest in such progress, as recent price appreciation in this sector has proven. It is my belief that many of these companies will be successful while others will fail, so as I wrote last November, "own a basket" and trade within it. I have added two additions to my list and yes I do own all or some of them.
In my opinion, the President's attempts to reach out to the Republicans have failed and it is now time for him to move on. He stated in his inaugural address that it was time to "dust ourselves off"; well if I may be so bold...it is time for the President to dust off the GOP.
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