smurphny

Wall Street Breakfast: Must-Know News

So the "BIG THREE" need to shut down??? So what? Sounds like good business policy, maybe the best idea they've had in decades. We need to ignore the scare tactics that are stampeding Americans like sheep into giving these failed businesses our hard earned tax dollars. Let them find other ways like this to survive or let them go under. Maybe they can sell their assets to someone responsible who will be able to produce a decent American vehicle.

Great Depression Not Imminent, But Inevitable

The idea that failure of institutions who took unclear and extraordinary risks will cause a depression is questionable. The "bubble" has obviously been the level of risk, the assessments of which became pure fiction. Sound financial basics were ignored and no one from government (SEC) was even trying to watch. We are all waiting to hear just WHO was involved in the neglect of duty in this organization which is funded by tax dollars to do, well...nothing. If government should be involved at all right now, it should be to regulate the orderly dissolution of both sides of this CDS folly. Debt needs to be permanently lowered across the board, in all sectors of the financial world, from credit cards, corporate paper, to interbank loans. Debt needs to be strictly regulated by very clear rules and issued only with minimal risk, collateralized with sound assets. We need to go back to this old, sound mentality of debt and remove highly speculative bets from the debt world. Our government should be arranging the transitions/bankruptci... of the AIGs, FNMs, and future insolvent financial companies, complete with the firing of ALL persons involved in the policy-making decisions, not their refunding with my tax dollars. Entities like Moody's, Fitch, and S&P should be closed down immediately for malfeasance (since no credit is being issued at present anyway), cleaned of all people who willingly went along with or actively promoted fraud, and executive offices filled with some of the people who quit these companies because they saw the fraud going on. WHY ARE THE EXECS. OF THESE COMPANIES STILL WALKING THE STREETS??? Confidence is the issue right now and no confidence will be restored until the rot is thoroughly removed from the wood, perp walks highlighted during prime time, and a clear new direction adopted. This is NOT happening at present and if it does not happen, as more shoes start to drop, the BEST outcome may be a depression.

Can the Dow and S&P Last 15 Rounds?

Those high dividend rates look tempting but there is also considerable danger. I have traded these things for years. First of all, the stock value WILL float up and down with the tide which is most certainly going out. There is little evidence that the dividend rate will positively affect the stock price.

Second, in this extremely volatile and fickle commodities market, it is impossible to count on the dividend rate staying high. The dividends will fluctuate along with the price of crude. When dividend cuts occur, as they must, investors will run like lemmings off the cliff and drastically cut the share price.

Third, no one knows what will happen as we get closer to the Can. tax gouge that is scheduled for 2011. It is impossible to tell when investors will start pulling out (if this is not already happening).

There are many uncertainties and it makes no sense to get a hefty dividend if it is all lost in share prices. Maybe when this very erratic and confused market stabilizes it will be possible to trust the trusts will provide a decent overall return. There is an old and mostly forgotten investing principle which still holds true for high yields like these: RISK=REWARD.