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- Dow 30 Price Targets - Too Much Optimism? [view article]
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- More Big Pharma Layoffs: What This May Mean [view article]
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- Will Wal-Mart Heat Up Chile? Fast Money (6/17/08) [view article]
- Morgan Stanley Makes Lehmanade - Fast Money Recap (6/30/08) [view article]
- Don't Bank on Financials - Fast Money Recap (6/27/08) [view article]
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- Oil Rises, Dow Falls - Fast Money Recap (6/26/08) [view article]
- New Lows For the Dow [view article]
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- Dow 30 Earnings Reports
- UBS: Guarded Outlook for Merck's Gardasil
- Dow 30 Price Targets - Too Much Optimism?
- Morgan Stanley Makes Lehmanade - Fast Money Recap (6/30/08)
- Don't Bank on Financials - Fast Money Recap (6/27/08)
- Merck Rallies on New Migraine Drug
- Time To Start Buying Some Dogs?
- Credit Suisse Healthier 15: Investors Get the Skinny on Fat Fighters
- Oil Rises, Dow Falls - Fast Money Recap (6/26/08)
- New Lows For the Dow
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Industries to Avoid, Industries to Buy [view article]
You're going to be busy, if you insist on trying to respond to everybody. You should just stop and take your lumps for writing a weak piece.
"Response to Economics Teacher: For you to make such a rash ascertain [sic] tells me you are of the school of traditional economic thought in America – the same school of thought that advocates the Federal Reserve’s destruction of our currency; the same school of thought that believes that a 2-decade plus period of overconsumption is somehow good for the U.S. economy; the same school of thought that promised free trade would bring better jobs to Americans."
Tell me, which school do you think this is? The Monetarists? Neo-Keynesians? Neo-Classicists? Chicago? Friedman? Galbraith? Mankiw?
"America is mortgaging off its wealth to foreign nations. And the weakness of the dollar is a reflection of this reality."
Actually, it's closer to the other way around; the weak dollar makes all US assets less expensive and more attractive, so capital flows into the US to take advantage of higher expected returns.
But so what? Can you tell me what's bad about foreign investment in the U.S.?
"Finally, my investment track record speaks for itself..."
And is irrelevant.
"Finally, if..."
Wait, you already had a "finally." How many "finally"s do you think you can have?
"...if economists really understand the things that enable one to provide valuable investment advice, why is it that I have never heard of an economist who has become wealthy from investing?"
How about Warren Buffett? MS in Econ from Columbia. And, as I recall seeing somewhere, he's done pretty well.
"With due respect..."
You might want to can the attitude - it will bring you nothing but grief. Just a throught. Reply
Industries to Avoid, Industries to Buy [view article]
Well, you're a bit touchy for someone who hopes to make their way in the public eye, but OK - it's a free country (unless there's something you're not telling us).I'll limit this to two items - trade and cars. First, trade is good. Period. Even the msot dyed-in-the-wool 'managed trade' economists now accept their reduced role of advocating for more, vice less, assistance to the very few who suffer from trade, such as workers (and capital) employed in dying industries. Even they acknowledge that countries that trade benefit the vast majority of their citizens. The freer the trade, the greater the benefit. Think about this: If trade is so bad, then "un-trade" must be good, right? We shouldn't just ban international trade, we should outlaw interstate trade! That way, EVERY state would have a thriving aerospace industry, car industry, textile industry, black and white tv industry and buggy-whip industry, with jobs galore for all. No?
Cars: US carmakers in the 80s made a lousy product, not because they spent all their time fighting labor - quite the opposite; because they appeased labor's wage and benefit demands too readily. Why did they do this? Well, they figured they could pass on the costs to consumers because...car makers had no competition, especially no FOREIGN competition (see 'trade' above). So the industry went to the brink. When they returned they began to make a slightly better product and eventually turned all their attention to large-margin vehicles (when you have a lot of overhead, you need to increase your unit margins). Cheap gas helped. Their mistake was believing that gas would remain cheap, and that's hurting them now. But their competitive position is drastically better today than it was 30 years ago. They make a much better product. It costs too much, true, but they're working on that as well. In your vitriol you neglected to mention the health-care benefit swaps the car-makers have been negotiatiing with their unions. It's innovative and makes a lot of sense - not at all the sort of thing car executives of 30 years ago would have imagined, seeing as they were protected so effectively from foreign competition, i.e. trade.
A last point, you can fault Detroit for making (some) bad cars; but it's laughable to criticize them for going into the financing business. I ask you, investment guru, if you owned a company that identified a fast-growing, highly-profitable business that complimented your core business perfectly and put your retained earnings to work at an above-market rate of return, would YOU be angry at management? I don't think I would, but then again, I'm not an investment advisor. Reply
Industries to Avoid, Industries to Buy [view article]
Wow, what a rant full of nonsense - I couldn't even get through it all. Just a few nuggets:"President Clinton signed NAFTA, which all but ensured the beginning of the end of American manufacturing."
Nonsense. NAFTA was enacted at the beginning of 1994. Between 1993 and 2007, U.S. motor vehicle and parts manufacturing output increased by 50%. For comparison, in the 14 years ending in 1993, motor vehicle and parts manufacturing increased 27%. Overall US manufacturing profits rose by 154% between '93 and '06, while from '77-'93 they rose only 46% (Economic Report of the President, Tables B-53 and B-92).
"Soon, styling and reliability combined with the toxic effects of unfair trade drew a larger market share."
Unfair trade? You mean how certain foreign manufacturers were able to produce cars much more efficiently than others? Or do you mean like the ridiculous import duties assessed on light trucks that punished consumers and protected the auto industry?
"...it's a poor consumer decision to buy a hybrid given the poultry benefit..."
I think your analysis of this is fowl.
"The MPG listed on U.S. autos has been proven to significantly underestimate the actual MPG for a variety of reasons. This has fooled consumers into thinking that their truck or SUV gets better gas mileage than in reality."
You make this sound like US cars were given a marketing advantage here. ALL car manufacturers have been overstating their mileage for years, which is why a new standard is coming out this year.
"How many of you drive only 12,000 miles per year? [T]he average annual mileage driven in the U.S. is about 25,000 miles..."
Nonsense - I know very few people who drive 68.5 miles per day, and know lots who drive much less; cite some sort of evidence. Here are a few that put it at much closer to 12k than 25k: www.eia.doe.gov/emeu/r..., www.epa.gov/oms/climat..., msl1.mit.edu/Mar2Lectu....
"How is it possible that oil companies are recording record profits under record oil prices? The only way it's possible is if they're keeping the same profit margins amidst the oil crisis."
First: nonsense. It's certainly possible for profits to increase as margins decrease. Ever hear of Wal-Mart? But even so, how could they NOT have record profits in such a market? Those companies are in business to MAKE MONEY; this is called capitalism. If management is not maximizing returns for its owners (shareholders), management should be replaced.
"Since oil is absolutely needed for consumers and businesses, doesn't [it] seem as if during a crisis, oil companies should absorb some of the pain and reduce profit margins? Why should oil companies be permitted to earn record profits while the rest of the economy gets abused?"
"Permitted"? Seriously? Why stop at oil companies - what about grocery stores? What about drugstores? What about banks? Why not control ALL industries with a product that's "absolutely needed"?
"The distribution of basic necessities should be controlled by the government or at least highly regulated to minimize consumer exploitation."
Nonsense. The marketplace for such things should have the smallest degree of regulation necessary to foster efficiency and competition. This is a far cry from government control. Much as I hate it when folks throw this phrase around, yours is the socialist path, and it ALWAYS results in a less efficient, more expensive marketplace.
"We already saw what happened to the utilities industry when Washington let the free markets take control – Enron."
And we already saw what happened when the government broke up AT&T - WorldCom. Oh yeah, and that pesky Internet thing.
"If you permit for-profit companies control the distribution and sale of a basic necessity, should you allow these companies to hoard profits during the most severe oil crisis in the history of the U.S.?"
So just let me understand this - we need to add "petroleum distillates" to food, water, clothing, and shelter in the "basic necessities" category? Funny, in my history books, there seem to be a lot more years leading up to the internal combustion engine than following it. Are automobiles on the "basic necessities" list as well, so the government should be controlling that industry? It's a slippery slope, isn't it - where do you draw the line?
"In conclusion, America's oil industry resembles a monopoly."
Nonsense. The "oil industry" is quote varied, with many kinds of businesses from exploration to refining to transport to wholesale and retail. NONE of them behaves like a monopoly. Oligopolies, perhaps. But there is not a single segment of the industry with a single dominant player.
"Before government deregulation in the late '80s, there were over 200 U.S. airlines... That was at a time when you had a lot of competition."
Nonsense. If there had been "a lot of competition," there would not have been such a significant drop in airfares following deregulation. The one source I researched places the savings to customers due to deregulation at between 10-18% (www.econlib.org/librar...).
"Friends, you won't find a person that embraces the free markets more than me."
Nonsense.
From what you've written here, I'd place you to the left of Obama and Clinton.
Do you get paid for this? How do I get one of these gigs? Reply
Industries to Avoid, Industries to Buy [view article]
"I'm actually surprised no one has created an Iraq-related ETF consisting of these and other companies."great idea. it could be called the "iraqi freedom fund." Reply
Industries to Avoid, Industries to Buy [view article]
Response to Bhakta: I agree – Washington is responsible for the current problems. I could also argue that our badly damaged free market system is responsible for many of our economic problems, but that does not mean that we should scrap it. Accountability is key, and right now very little exists. The government has a role in resolving many of the problems if voters demand it. They must be held accountable for their actions. But as it stands today, most Americans are kept in the dark with the help of the media so they really do not understand what is going on. All they see are higher prices and lower quality jobs. And when they listen to the radio or watch TV, they are told these problems are due to the democrats or republicans. In reality, the problems are due to both parties. Like it or not, the government will always be involved. We must accept this fact and focus on making sure their involvement is beneficial to Americans. That is their responsibility.Response to Cicero: If you think I am advocating socialism then you have misinterpreted my article. Government involvement does not necessarily imply socialism. It’s not about WHETHER the government is or should be involved because they are. What is more important is to define their role and make sure they do what they are supposed, no more, no less. I agree that corruption is part of human nature. But that does not mean we cannot strive to minimize it. Arguably, the level of corruption seen today is unprecedented in U.S. history.
For those of you who have concluded that I am a socialist or liberal, you are way off base. I can only conclude that those who would label me as such do not understand the complexity of the problems in America. Once again, my work experience celebrates capitalism at its highest reach. I am an entrepreneur at heart and I have always been compensated via merit-based performance, which is consistent with capitalism at it purest form. Capitalism is the best system, but only if it is functional. That said, I urge you to reconsider my views because they come from someone who supports capitalism as the only path for America. But it has many problems that must be fixed.
Reply
Industries to Avoid, Industries to Buy [view article]
Response to keltorttruth: Actually, I am very far from being a liberal. All I want is for more equity in America. We have given the oil industry many chances to deliver. And all it has managed to do is deliver record profits. Meanwhile, OPEC nations now enjoy enormous trade surpluses due to oil export revenues. What are they doing with all of this cash lying around? They are buying up U.S. assets, mainly hard assets – real estate, factories, and banks. Combined with the effects of free trade, America is selling off its most vital assets in exchange for oil and consumer goods which used to be made in America. The current system isn’t getting the job done. There is a much better way. I am not so naïve as to think that blanket regulation would solve the problems. The government needs to be held more accountable. Clearly, we need to commit to a formidable alternative energy policy. Why is that you think Exxon refuses to invest a single penny into alternative energy? Because they have a monopoly. If you want to play the “liberal vs. republican” game that tells me you have let the media brainwash you. The fact is that both parties are essentially the same. America’s economic problems are not party-centric, they are Washington-centric. This is why Washington makes it extremely difficult for a third party candidate to run. They don't want anyone to spoil their party. It’s all about big money. And unless you are part of that boys club, you stand to suffer, along with the rest of us. ReplyIndustries to Avoid, Industries to Buy [view article]
"Buy oil and healthcare! Sell airlines and autos!" Bold calls! Tell us something we don't know from watching Jim Cramer ReplyIndustries to Avoid, Industries to Buy [view article]
Response to Economics Teacher: For you to make such a rash ascertain tells me you are of the school of traditional economic thought in America – the same school of thought that advocates the Federal Reserve’s destruction of our currency; the same school of thought that believes that a 2-decade plus period of overconsumption is somehow good for the U.S. economy; the same school of thought that promised free trade would bring better jobs to Americans. Look at the effects of this reckless economic policy. America is mortgaging off its wealth to foreign nations. And the weakness of the dollar is a reflection of this reality. Finally, my investment track record speaks for itself. Back in 2006, when virtually every U.S. economist glamorized the strength of the economy, I uncovered the realities of the illusion created by Greenspan and predicted the events we see today. I also provided numerous investment ideas such as shorting the mortgage, homebuilder, bank stocks, buying gold, oil, etc. I suppose you think GDP, inflation, and employment numbers, as reported, are not manipulated. Finally, if economists really understand the things that enable one to provide valuable investment advice, why is it that I have never heard of an economist who has become wealthy from investing? With all due respect, if in fact you possess a superior understanding of the topics you mention that are critical for investments, perhaps you should exchange your teaching career for an advisory role with a hedge fund.Reply
Goldseth
Industries to Avoid, Industries to Buy [view article]
Wow...the author initially seems to lament market interference in the auto industry, but then quickly changes direction...seemingly prescribing government regulatory benevolence upon an evil, greedy, ruthless and hopelessly inefficient private industry.Aside from trimming the pretentious fat from the actual substantive points, I would recommend considering the underlying philosophy responsible such confusing and contradictory viewpoints...basic economics has obviously been cast aside for some populist view of reality.
Looks like the Keynesian faith, alive and well in secondary universities, continues to infect real world policy. Reply
Industries to Avoid, Industries to Buy [view article]
The war profiteering and lobby money are both examples of how a bloated, unconstitutional fedgov attracts corruption. Both are reasons to return to the Constitution and minimize the size, scope, and power of the fedgov, which would minimize the damage the fedgov could do. The corruption won't go away - it's embeded in human nature. Keep gov't as local as possible. It's hard enough to watch our towns and city councils, much less the theives in D.C.. ReplyIndustries to Avoid, Industries to Buy [view article]
Glad to see from the responses that intelligence is alive and well outside of D.C.. Socialism is much more the problem than solution. Enron was the antithesis of the free market run amuck. They had cronies on the inside writing laws and lawyers whose full time jobs were to take advantage of the maze of regulations. Enron was one of the first big corporations promoting the Global Warming, "problem" and hyping the fedgov "solution" because they planned once again to take advantage of the ensuing gov't regulations. ReplyIndustries to Avoid, Industries to Buy [view article]
Hey, IMHO the GOVT is the cause of all the troubles and LESS govt is better govt. I agree on the trusts, PGH, HTE, PWE, PMT.To, AAV, etc. ReplyIndustries to Avoid, Industries to Buy [view article]
Wow. They let communits post stories on this site? This guy actually believes that letting the gov't regulate something, anything, is a good idea? If you want to talk about increased dependance on foreign oil, just let the gov't step in. What people fail to realize is that exploring for oil is extremely risky business; the moment you take some of the potential reward away is the moment that many projects fall off the table, from a risk/reward scenario. Wake up liberal wacko! We don't need the gov't to do everything for us, let the market decide. If it was such a good, low risk business that required no specialized skills and anyone could do it and reap massive rewards, everyone would. At some point, if the price rises too high, that will happen and we will be flush w/ oil, until then, we take what we can get, but artificially constraining the price through regulation will only lead to less oil and thus higher prices. ReplyIndustries to Avoid, Industries to Buy [view article]
For someone who dispenses investment advice for a living, the author exhibits little understanding of economics, business practices, government policy, international trade and foreign affairs. Remarkable. ReplyIndustries to Avoid, Industries to Buy [view article]
[It seems to me that a real solution would be to regulate the profit margins of the oil industry.]I stopped reading here. Brush up on your history, and get back to us. Reply