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Doug Poretz

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  • Does Wall Street Love Obama? [View article]
    Exactly my point -- thanks for making it. It's sort of like me going out to buy a new home, finding a model built by someone that I think is an awful home builder -- doesn't design them right, build them right, or put them in the right neighborhood. Furthermore, his approach to home building (let's say, he likes to stick-build a house) differs with my approach (I think a home built with panels manufactured at a plant is best). Not only do I dislike everything about the home builder and his policies, but I say that publicly, loudly and consistently. And then, I go out and buy a house he built and I even pay a premium for it. That is exactly what Wall Street is doing. Whether they like it or not, they are "buying Obama" and his policies even while saying that he is an awful President and that his ideology will ruin the nation, etc. Unlike the comments written by others here, I am not trying to be an Obama supporter at all -- I am simply trying to give visibility to a sort of "core irony" in our nation and especially in the investment community. If you think Obama and his policies are bad -- ruinous -- for our nation, why are you investing in the prospects for improvement in the nation's economy? Are such investors stupid, or don't they really think Obama is as big a threat as they constantly assert, or do they actually like what's happening under Obama? With a 36 percent increase in the market since Obama raised his right hand on the Capitol steps in January 2009, I conclude that Wall Street likes -- make that "loves" -- Obama, even if they won't acknowledge that. Here's the test: ask an investor: Would you take Ronald Reagan as President and incur an 11% drop in the market, or Obama and incur a 36% gain? Where do you think investors will be on that question? My point isn't about Obama or whether I love him or hate him -- it is about Wall Street.
    Mar 24 11:02 AM | 1 Like Like |Link to Comment
  • Housing Data Ignored as Wall Street Bubble Grows [View article]
    I've said this elsewhere but it is worth repeating. In a "normal" market, when someone buys their first home, unless they buy it from a builder they buy it from someone who uses the proceeds to buy their first "move-up" home from a seller who uses the proceeds to buy their second move-up home, etc. It is a food chain that starts with the small fish -- the first time buyer. That's the segment of the market that has shown at least some energy over the past several months -- but take a look at who the sellers of those first time houses are: creditors and distressed sellers. Those people do not use the proceeds from the sale to buy their next house. Hence, the food chain doesn't get going. We are so far from a normal market in those terms that it is scary. But there is another problem: one of the tactics home builders used to expand their business during the boom was to segment the market into more pieces so that there was not simply the "first move-up" and the "second move-up" but the third and fourth and all the way to MacMansions and then high-priced down-sizing homes. In other words, home builders succeeded at obliterating the traditional first rule of real estate (location-location-loc... in favor of a new rule (product-product-product) -- a bigger master bedroom suite became very important and encouraged people to sell their existing home for the newer, bigger, more tech product. The food chain became very vigorous, with help from cheap and easy financing and the ability to leverage the equity gains from the last sale into the next bigger house. Now, not only do we no longer have the cheap and easy financing, but there are no more equity gains to leverage. No wonder there is so much standing inventory. And that raises a very serious question: if people -- especially the middle class -- have been stunned by the economic conditions and shocked by the realization that even real estate is not a "sure" investment as they were brought up to believe, will they be seduced into buying their next house for the sake of a bigger jacuzzi or a media room? Look at the residential real estate market as a food chain and I am afraid you will conclude that the chain has died and that it is going to take a long time and a lot of pain for it to become revitalized. And when it does (as will eventually happen), then we will have another harsh lesson to learn: "recovery" is not synonymous with "return."
    Mar 24 08:53 AM | 26 Likes Like |Link to Comment
  • Is a Double-Dip Recession Written Between the Lines of Housing Reports? [View article]
    You can have a "double" dip only after the first dip has stopped dipping and has begun improving. I do not believe things getting worse at a slower pace allows us to assert the end of the first dip. I'd love to have a serious discussion about the prospects (or not) for a double dip recession -- that would mean that we were beyond the first dip. We ain't there yet.
    Mar 24 08:18 AM | 11 Likes Like |Link to Comment
  • What's Next for Greece? [View article]
    Thanks for the reply. If my comments came off as a criticism of democracies, nothing could have been further from my intention. What concerns me is that economic, fiscal and investing issues are too often looked at in isolation. In fact, these issues are intimately tied to social, political and cultural issues that are too often ignored. How long can a vigorous and viable investment community prosper when a minute sliver of a nation owns nearly all the nation's wealth? How can investors make money from a consumer stock when consumers stop buying? What should we conclude when the government of Iceland falls not because of protests from the extremes but from the middle class? How can a nation's debt be a safe investment when the nation's citizens are in revolt -- regardless of how rational the nation's fiscal policies may seem at the time from the perspective of economic standards alone? I agree that the governments of France and Germany are at political risk as are other governments, including the government of Greece. That's an important part of my major point. Investors who focus on economic and fiscal issues alone may well find that they are getting a powerful punch to the jaw that they didn't see coming from social and cultural changes occurring worldwide. I am not an advocate of citizen rebellion, and I (along with most others) would hate to see it, and fear it. But to ignore the prospects .... to dismiss political dissent as a major factor on a nation's economy .... that would be folly.
    Mar 24 08:12 AM | Likes Like |Link to Comment
  • Top Twelve TV Commercials: Sign of the Times [View instapost]
    interesting -- i'd be curious to know the source
    Mar 23 07:43 PM | Likes Like |Link to Comment
  • Why a Double Dip Recession Isn't Likely [View article]
    Before we have a double dip, don't we have to get out of the FIRST dip? Excuse me, but CNBC doesn't call either the beginning or end of a recession -- that is the job of the National Bureau of Economic Research -- -- Note their official explanation: "It’s more accurate to say that a recession—the way we use the word—is a period of diminishing activity rather than diminished activity. We identify a month when the economy reached a peak of activity and a later month when the economy reached a trough. The time in between is a recession, a period when economic activity is contracting. The following period is an expansion." An expansion has not yet begun. The current recession is still with us; it can't go "back down" into a "double dip" until it goes up and it hasn't done that.

    Furthermore, I think it is important to consider the possibility that when there is a recovery at some point in the future, we will probably have to learn a harsh lesson that "recovery" is not synonymous with "return."
    Mar 23 11:22 AM | 3 Likes Like |Link to Comment
  • What's Next for Greece? [View article]
    I think the problem with Greece is that whatever deals, appropriate or not, the government will do to win the financial support it needs and to institute the economic policies to create stability and a chance for a sane balance sheet some decade in the future, the people of Greece will not stand for it. There is a major tension between what is right in fiscal and economic terms and what the people will tolerate -- and they just aren't likely to tolerate the draconian cuts to their entitlements that will be economically necessary. So, then what happens? Either the Greek government backs off the demands of those who would support it economically and keeps the support of its people (and face dire financial consequences), or adhere to those fiscal requirements and lose the support of its people (and face dire political and social consequences). Either way, unfortunately, Greece loses and that loss will be felt globally.
    Mar 23 10:47 AM | Likes Like |Link to Comment
  • Everyone Should Read Markopolos' 'No One Would Listen' [View article]
    Who is listening now, as virtually every financial indicator in the world is going south, and political activism increases globally as well .... as fundamental revolutionary changes are occurring in such key industries as communications and critical resources are being depleted and/or undergoing incredible volatility in price, and as wealth transfers rapidly around the world? Certainly, Wall Street is not listening as they invest on the premise that "recovery" (which will come in some form some day) is synonymous with "return." Does it really matter if it as an obvious Ponzi scheme or a less obvious market hype that results in a temporary self-fulfilling prophecy and an ultimate crash?
    Mar 6 11:53 AM | 5 Likes Like |Link to Comment
  • ISM Index Continues to Support an Ongoing Recovery [View article]
    Assume that we are indeed in a recovery (personally, I tend to think not, but that doesn't matter for this point), it will be highly critical to remember that "recovery" and "return" are not synonymous.
    Mar 2 09:05 AM | Likes Like |Link to Comment
  • Many Suddenly Seeing Double (Dips) [View article]
    For there to be a "Double Dip," isn't it necessary for the first dip to actually reverse its downward movement and start moving north? The only thing that I see that has headed north has been the stock market; although critically important, the market is a refection primarily of market dynamics itself, not necessarily the true direction of the economy. Every other indicator (except for exceptions that prove the rule) is going south. We can't speak yet of a "double dip" because we aren't done with the first dip. Things are still going south. You can't look at the most recent homebuilding statistics or new jobless claims or name-it and say that we are even bouncing along bottom. In essence, in addition to an economic crisis, we are going through a crisis in correctly using words. We are not in a "recovery." We continue to be in a downturn. We are not out of "recession" (regardless of what any CNBC commentator may say). And, when it does occur, we will acutely learn that "recovery" is not synonomous with "return."
    Mar 1 08:10 AM | 5 Likes Like |Link to Comment
  • Markets Hitting Humpty's Great Wall [View article]
    Next time some news article or TV commentator says "this is something that could slow down the recovery," the natural response should be "what recovery?" There is no recovery until things actually start improving, or at the least go horizontal. That isn't happening, despite what pundits and market hype artists on CNBC want to intimate by talking about "the recovery." There is no recovery -- yet! There is likely to be one at some point, but it doesn't exist at this time, and when it does, we will clearly learn that "recovery" is not synonymous with "return."
    Feb 26 09:16 AM | 2 Likes Like |Link to Comment
  • Bottomless New Home Sales [View article]
    Another way of saying it is: "recovery" is not synonomous with "return" -- a recovery of some sort at some time is a good bet -- a "return" is a dream, in my opinion.
    Feb 24 07:31 PM | 6 Likes Like |Link to Comment
  • Bottomless New Home Sales [View article]
    A problem often over-looked .... in a "normal" market (which we do not have), when a first-time homebuyer buys a home, the sellers of that home become buyers of their first move-up home, which often is a new home rather than a resale. When a seller of a move-up home sells a house in a "normal" market, they become a buyer of their "second move-up" home, also often newly built by a homebuilder. And thus, homebuilders benefit by a true food chain. But when a first time buyer buys from the bank or a distressed property, the seller does not become a buyer of anything -- the food chain stops. That's what is happening in the residential real estate market and has been happening for quite some time. It is especially dangerous to homebuilders because they have promoted sales by segmenting the market into "starter" homes, "first time move-ups," and second and third move-ups eventually culminating in mini-mansions etc. The food chain has died. There is no evidence of the food chain being restored, at least in the short term. More trouble ahead for the homebuilders and the en tire residential real estate market.
    Feb 24 03:53 PM | 14 Likes Like |Link to Comment
  • Recovery or Intermediate Bounce? [View article]
    Fine article. I have a nagging question. There is widespread use of the word "recovery" to describe the current economic situation -- sometimes, the word is hedged as in "the nascent recovery." But to me, a "recovery" happens when things actually start improving. A cancer patient who has experienced rapid spread of cancer is not said to be in "recovery" when the cancer continues to spread but at a slower pace; rather the patient is considered to be in "recovery" only when the cancer stops spreading and starts to shrink. Nor is a patient even considered "stable" when the spread of cancer slows. So, why do we use a different standard when applying the word "recovery" to the economy? I haven't seen the job situation reverse its decline, albeit the pace of loss appears to be slowing. I haven't seen the residential or commercial real estate start to "recover" in real terms, albeit when a house is priced low enough, a buyer may be found -- sometimes. The only actual sign of a "recovery" in objective terms that I see is the improvement in the stock market -- why is that the case? I think the answer is: the professional investment community and its surrogate spokespeople and cheerleaders (as in some of the CNBC commentators) use a different definition of "recovery" -- a definition that equates "recovery" to something (including a major dose of wishful thinking) other than actual improvement. That may be a leading indicator at best, but it is hardly a "recovery." Nevertheless, observe how often that word is used by observers and the news media -- if it is used often enough will that make it true?
    Feb 22 09:02 AM | 5 Likes Like |Link to Comment
  • Wealth Disparities in U.S. Approaching 1920s Levels [View article]
    The mirror image difference between Obama and Reagan: Reagan coalesced and won support from the middle class by saying "Look at the wealthy, how well they live ... you can live like that too ... we are going to institute policies so that when they prosper, they will bring you along with them and you will taste a big bite of the good life too;" Obama coalesced and won support from the middle class by saying "Look at the poor, how badly they live ... you are at risk of living like them too ... we are going to institute policies that will protect you from falling further toward poverty ... you may not have a taste of the good life, but not having a taste of the good life is better than having to live the poor life." So, what is really more likely: seeing the middle become wealthy, or seeing the middle slip closer to poverty?
    Feb 22 08:35 AM | 18 Likes Like |Link to Comment