capgain

Mr. Market Has Spoken

I had to read this twice; who is this guy saying all the things I've been saying for months?? And if he can see things as clearly as so many of us, why is Washington so tone deaf? And how much longer are we going to abide these "solutions" that so obviously are much larger problems in the making? Why is the law of gravity being outlawed?

It is as inevitable as tomorrow's sunrise.....failure is a critical component of capitalism. Washington's efforts to deny this by shoveling newly-borrowed money into failing enterprises will only lead to.......larger and more expensive failures!

There are trillions of dollars of private capital wisely sitting out this futile exercise. And you could measure in hours the time it would take for this capital to become the solution to our economic morass, but only after the megalomaniac amateurs in DC park their egos at the curb and get the hell out of the way. And how simple is the answer? Let's try this..........

Reduce the long term capital gains tax to ZERO for five years. The holders of all this side-lined capital will flood into the market to make smart investments free of a tax penalty. There will be an immediate creation of a market for all the "toxic paper" for which there is no market now. The smart money will do their due diligence in a competitive environment and end up buying up this paper for fire-sale prices, perhaps 10 to 50 cents of face value, depending on the long term tax free profit potential. This same capital will look to taking out the govt's positions in the viable enterprises that took TARP money.

In short, capitalism will return to our markets. Investors who put their money to work wisely, free of a tax penalty, will be rewarded. Those who are less wise will experience failure. Balance will emerge, and we will again have the opportunity to make our own individual mistakes!!

Geithner Unable to Break with the Past

Geithner's "plan" was like kissing your sister.....nothing there. The wags and the pundits were quick to pin the 400 pt drop on this, but I think the cause was far more serious. I think people are realizing that they are on a ship sailing in troubled waters, and the captain just doesn't have the experience or the skills to navigate through safely. To wit, Monday evening Mr Obama stood before the country and, with his bare face hanging out, continued to insist that this bail-out bill was devoid of all pork and earmarks!!! Does he really think that we are all deaf, dumb and blind, and willing to follow him as he stumbles from mistake to mistake?

Of course the market pulled back, just as one rightfully jerks one's hand from a hot stove. What is really needed now is a lot more honesty, and a lot less polished rhetoric.

Where's the Bottom? Still Anybody's Guess

Very thoughtful effort. It is all too easy to get caught up in the "We have to do this $800 B rescue plan or the markets will collapse" fervor, but there ARE alternatives that deserve consideration. Right now there is roughly three trillion in "idle" capital just sitting on the sidelines waiting for the dust to settle. Some of that is mine and, like T Boone, I "have a plan."

With one easy move by our genius legislators in DC, we the investing public will be able to say to the Paulson posse, "Thanks, but no thanks!!" All they have to do is lower the capital gains tax to ZERO for ten years. You can almost see and hear that three trillion racing by!

A far-out idea, perhaps, but the unpalatable alternative is to have the govt control another hugely important aspect of our lives.

Dow: An Undervalued 5-Star Market

It's tough to argue with Mr. Johnson's assessment of these major players; most of them are in my portfolio and I am very willing for him to be right! However, AIG (my second largest holding) is problematic. This company is like an out-of-control freight train heading for almost certain disaster. Sullivan is so far over his head it is shameful. It's hard to believe but a good $80 billion has been vaporized to date and I don't see who/ what is going to step in to effect a change in course.

Your over-all take on the major players you mention is probably correct with this one exception.....it almost makes me gag to have to look at the reality of AIG; right now it is OVER-VALUED!!!

Analyzing Analysts on GE, GOOG, C Earnings

Bravo! Well said! The first two sentences of your piece are spot on. The added "value" that analysts provide is worth almost as much as an expired option. They come from the same gene pool as consultants, that over-compensated genre that takes your watch in order to tell you what time it is.