Jolly_Rancher

Newsletter Writers Are Increasingly Bullish

The level of bullishness among newsletter writers isn't really as important as what the readers do with the advice. Measure that and you'll have something upon which to make a better judgment. I suspect that most individual investors aren't in the mood to heed bullish advice.

Investors Still Nervous, Despite Equity Rally

60% rally from the low, while not misleading, is definitely hype. What if you looked at the current S&P price as still 57% below it's all time high? True, it doesn't look like the rally has a whole lot further to go, but it also doesn't look like a huge drop is imminent. For the reasons you mention, and economic reasons.

Why are T-Bill Yields Again Approaching Zero?

Because the "buyers" are purchasing through mutual funds whose managers are obligated to buy the assets. That's their function.


On Nov 20 12:19 PM Russian wrote:

> Following the author's and previous commenter's logic, why would
> anyone park his cash in T-bills at a negative rate and lose on money
> on this trade? Why not just keep cash as cash with no prospects of
> losing anything at all?

Why are T-Bill Yields Again Approaching Zero?

Your chart shows that, after the crash in rates and a subsequent rise, T-bill rates have been declining since late Feb 2009. Mutual fund flows tell us that during 2009, about $278 billion has been plowed into debt funds while only a few billion has been earmarked for equity funds. Much of that $278 billion is probably sitting in short term maturity funds. Upshot?? Investors are STILL in panic mode. They have completely missed the stock rally since March 2009. I believe that many are looking to return to equities in 2010 on a pull back which is one reason why I think that big pull back isn't going to happen. Another reason why the big pull back isn't going to happen, is that inflation will be negligible over the next two years. Why? Interest rates aren't the be all and end all cause of price expectation. First, high energy (and other commodity) prices are dampening economic development. Second, there is no new investment in this country. The US is experiencing massive over-capacity in just about every industry. Businesses will not invest when expected risk adjusted return is negative, regardless of interest rates. Third, there is a massive over supply of labor, housing, commercial real estate, etc while at the same time consumer and government balance sheets are in dire shape. Businesses with manageable debt that can succeed in our "stasis" economy, either by cutting costs or exporting or growing or taking advantage of pricing power (energy complex), will do well, and that's a very large number of companies which comprise the indexes.

Why It's Actually Different This Time

I quit reading your article about 3/8 of the way through. Your statement that it's different this time is correct. Your argument that the difference will cause this to be worse than 1974 or 1932 (or 1870 for that matter) are wrong. For every present day negative there was at least one equivalent negative in the prior mentioned periods. There's no need to mention them. A brief study of those periods would quickly reveal them, but I suppose you're too busy for that.

To Reach Bottom, We Need More Good News

I'll buy when our cities have been leveled by rioting followed by mass starvation and disease and finally by a mass exodus to Costa Rica by the wealthy. Only then will prices and debt levels return to an acceptable level.

One Scary Unemployment Chart

Long term issues, many self-made, brought us to this point, and only a remedy of those long term problems will bring us out -- less debt, less consumerism, more investment, better and less government, more unity.

Worst Post-Election Day Returns Since at Least 1900

In my opinion, it's silly to base investing on arbitrary time frames and events, like post election or president's first year or president's second term. These time frames have nothing to do with reality. Ken Fisher maintained his bullishness through 2008 primarily because he strongly believed that election year stock market returns would be high as per the historical rule. He got burned big time. It's better to look at fundamentals and causes. While it is true that sometimes randomly generated rules can generate positive stock market returns over time, it is only because these rules force discipline upon the investor which is always better than whimsical flip-flopping. However, nothing is really learned and eventually the rule stops working at just the wrong time -- like 2008 and 2009 -- when fundamentals overwhelmingly cause all of the crud to come out in the wash. There's no substitute for strict adherence to the truth.

524,000 Jobs Lost in December; The Economy Is in a Depression

In past comments I've made several suggestions that would help bring us out of the depression: 1) open drilling in California, Florida and the Northeast; 2) Provide incentive and rational regulation of nuclear power; 3) increas CAFE standards to 25 minimum; 4) reduce income taxes while increasing energy usage taxes. These will take care of the energy trade deficit long term.

Now I'm adding a new suggestion: Every dollar of investment spent abroad by U.S. corporations does not reduce taxable corporate income. Every dollar invested within the United States reduces taxes by $1.25. This will help deal with the lack of domestic capital investment.

Smart Funds Appear to Be Surprisingly Defensive

Be patient. The bottom is near, like maybe in the next 6 months. Things could get ugly. No good news on the horizon. Stay defensive. Why healthcare? Obama won't have the funds to gut it. Looks like the best bet. Why consumer staples? Obama increases transfer payments to poor. Smart fund allocation in these areas may not be so much a comment on the direction of the stock market, but an indication of political winds.

Hope you're having a great middle of the night.
Jolly Rancher

2009 Economic Forecasts Ignore Demographic Shift

What if a few new developements spring up that increase the efficiency of consumers such that on balance incomes increase enough to add savings and economic efficiencies. What if California, Florida and the northeast suddenly adopt pro-drilling stance? What if the government begins to provide incentives for nuclear power? What if consumer interest rates continue to fall to the 2-3% range? What if gasoline price continues to fall to 1.00? What if we remove ouselves from Iraq? What if the government provides healthcare removing this economic nightmare burden from business? The list goes on. All of these will add real dollars to people's pockets. Some are more likely than others. But such is the history of the human race. Unfortunately, some of these solutions will require more pain before people realize the need to adopt.

Key Variables to Watch for in Friday's Jobs Report

Let's take it one step further. I think the government should enact a law that gradually bans the import of energy. At the same time government should enact laws that open up drilling in all areas of the country, including under Alec Baldwin's house (I thought he was moving to a another country anyway). Once the private sector sees that coming, investment in nuclear, oil drilling, and alternative fuels will take off like you wouldn'tr believe. Just do it!


On Dec 04 07:20 PM B smith wrote:

> Its time for a dramatic 10 year plan, throwing out what has not worked
> and creating a balanced plan that deals with:
>
> 1). Energy. Tax oil imports (not domestic oil) $1.00 per barrel when
> the price rises above $75.00 for every dollar above $75.00. Half
> of the revenue should go to the treasury to reduce the deficit and
> half to alternative energy subsidy or research.
>
> Sell new drilling rights, and raise the per barrel share to the government
> on existing contracts when they renew. Create a counter force to
> opec with the oil consuming and importing countries OCIC. We have
> shown OPEC that the importing nations can or will shut down oil imports
> by raising interest rates and cutting demand.
>
> We need to be energy independent within the next 10 years and get
> our self determination back.
>
> 2) Manufacturing.
>
> a). Create a US sovereign fund to invest at low interest rates in
> expanding existing manufacturing or stimulating lost industries to
> come back to the US.
>
> b). Examine managed economies around the world for good ideas, and
> unbalanced conditions and balance the playing field as a condition
> for free trade imports.
>
> c). We should eliminate litigation against manufacturers or cap awards.
> Create a federal panel of judges to hear complaints and a set package
> of awards for legitimate claims. Create a 10 year package of environmental
> rules that will not change, and create a federal environmental board
> that makes citing decisions that are not subject to legal appeal
> or lawsuits. Put excellent knowledgeable people on these non partisan
> boards like we do with the federal reserve. They should be appointed
> and remain and not be political like current cabinet related posts.
> Rotate members in and out over time.
>
> d). In order for companies to qualify for being part of this plan,
> they would have to agree to conditions such as executive compensation
> limits, green environmental standards, workers bill or rights and
> agree to provide stock to employees as part of their pay.
>
>
> We need to do some radical changes to set America back on its feet
> and be self dependent.
>
> These things will not be very agreeable to the left or the right..
> which might mean they are good for the people.

Key Variables to Watch for in Friday's Jobs Report

On top of that, we need to allow oil drilling in CA, FLA, and the NE. And we need to streamline regulations related to refineries and nuclear power plants. We need to tax SUVs out of existence, raise CAFE standards through the roof and give tax breaks for small cars and motorcycles. Dramatic increases in efficiency is the ONLY way to bring us out of this. It's time to stop playing partisan politics and git er done.

Jolly Rancher


On Dec 04 12:24 PM Socialism cannot compete! wrote:

> Infrastructure stimulus package? Are you kidding me? The *last*
> think we need is a government spending bubble. In fact, what we
> REALLY need is a drastic downsizing of government and accompanying
> drastic TAX CUTS...across the board!! Business will pick up just
> fine, and jobs will be created en masse, when we do this -- it will
> bring back the momentum that has been shifting overseas.
>
> While we're at it...it's past time to abolish the income tax -- the
> code is unwieldy, rife for abuse, the source of almost uncountable
> loopholes and the object of much lobbying and corruption. Anyone
> who wants real government reform and a *stable* foundation for a
> rebuilt economy will look at ending this source of injustice and
> corruption, and restoring the American citizen's right to personal
> property and control over his own income as well as his control over
> government...by moving to the fair tax. That, with a Balanced Budget
> Amendment will go a *long* way towards reigning in out-of-control
> entitlement government, which is a BIG part of what has brought us
> to our economic knees!!
>
> fairtax.org

Long Term Fundamental Value of Stocks Smoother Than Prices

Sheople,

I appreciate your comment and share it. But I am beginning to see things a little differently. I am coming around to the idea that, though our country (the USA) is in deep trouble with no end in site, our corporations are not in nearly that kind of trouble. Corporate balance sheets are quite good. The "stock market" does not equal the USA. Further, the global market place does not depend totally on the USA. US companies that can export or move sales abroad will do well over the next 25 years. Companies that depend soley on US sales of low margin products will suffer. I'm not saying this is the bottom of this bear market. But buying big name exporters from this point will pay off. Over the next few years, look for many US corporations to recharter in foreign countries to avoid paying huge taxes. Right now Exxon pays more taxes than all US citizens combined. That can't continue.

Have a great evening.
Jolly Rancher


On Dec 01 06:00 PM sheople wrote:

> Without going to (still wallowing in my ignorance) his website, I
> would contend that never before has our nation faced such debt.
> During the Great Depression, the dollar was still worth money. We
> could very well be using the money that is being printed as I write
> this, to burn to keep warm. I don't see that anywhere on the charts.
> Long live the Federal Reserve.

U.S. Trade Deficit Up in September: Job Losses Mount

TRADE DEFICIT SOLUTION: EASY

A) Remove regulatory barriers, and the best two place to remove those barriers is drilling and nuclear. Open drilling in California, Florida and the Northeast. Streamline approval for construction of nuclear power. Just those two changes alone would directly create hundreds of thousands of jobs and lower fuel costs and lower the trade deficit and require no new government spending. How can you beat that?

B) Furthermore, the government should directly tax high pollution fuels and high pollution users. Coal has to go, unless the process is clean coal.

C) Also, the time is ripe for a government sponsored health care system for those who wish to participate. This would remove an enormously expensive burden on businesses, allowing them to be more competitive with foreign business.

D) Lastly, the government should restructure the EPA from a watch-dog agency to a service agency. The EPA should be responsible for hazardous waste disposal. This would remove another enormous burden from business.

Jolly Rancher