No Moss

When the Economy Hands You Lemons, Consider Dividend ETFs

Oops, sorry, wrong thread on that Intel posting. Need my coffee. Let me add that I owned ADVDX and found that the generous dividend had a hard time keeping up with the drop in NAV. There's no such thing as a free lunch.

When the Economy Hands You Lemons, Consider Dividend ETFs

I encourage everyone to look at a five year chart of Intel and notice the month of April. Nuff said.

The End of U.S. Investing as We Know It?

Well, as far as I know, recessions follow a familiar pattern:

1) There is no recessioin.
2) We might have a recession.
3) We are definitely in a recession.
4) This is the worst recession we've ever had.
5) Gee, that wasn't so bad.

We are deleveraging. What the investment banks had on their books, the money center banks had but didn't show. We had leverage in excess of 13:1, which is about what you'd have with 8% tier one capital.

The disdained source of most of this leverage is the CDO, mainly mortgage-backed (CMO), which has been written down far in excess of the anticipated loss on the investment. If everyone walks away from his house, that paper is in trouble. If they don't, there'll be some recovery on the writedowns of that paper.

Housing prices are down. The people who got screwed are the people who bought at bubble prices. The people who bought their homes 5 or more years ago made a fortune before the fairly modest 10% fall we've seen to date. Don't you remember how many people were bragging about "how much money I've made on my home"?

People who mail in the keys won't be able to buy a home again. How many people are willing to put themselves in that position? I'm betting that it will be surprisingly few, since there are incredible tax benefits to owning a home. And where will they live when they leave their homes? They'll have to rent. Forever.

Someone said, probably Hank Paulson, that we need to eliminate investments that are too complex to understand. There are people who use the financial system to enrich themselves, which is great. Then there are people who abuse the financial system to enrich themselves. And we have allowed that to happen by failing to rein in the institutions that allow them to do that.

As the Big Thinker wrote above, we have abused the trust that people around the world had in our financial system. Shame on us for allowing our parasites to infect the rest of the world.