cross

Gold, S&P 500, T-Bills, CPI and Oil from 1967

"benign neglect" is truely a meaningless phrase. Do you really wish to have no government reguation?
* Should the Federal government guarantee bank deposits (with the accompanied regulation that is implied?)
* Should county government regulate eating establishments? Why not just let the 'market place' do the the job for us (let's not eat there, honey, I heard several people got sick there last week). THAT would provide an efficient market.
Please, cut the anti-government rants if you can't provide solid reasons why the government shouldn't be involved in a particular activity. When people start with the "government can't do anything right" spiel, I know they've been watching too much fox entertainment and taking it seriously.


On Dec 11 02:36 PM tmosley wrote:

> How are the companies in the S&P 500 going to survive all the
> new and ever changing regulation being thrown at them?
>
> Get me a government that has a policy of benign neglect, and I'll
> invest in the S&P, but not a second before.

A Major Market Correction Is Inevitable

I find myself agreeing with your title and disagreeing with about everything contained in the underlying aritcle. The market was priced for something in March, '09 that simply did not happen: a meltdown of the financial sysytem. TARP has worked well. I don't know how you can claim that it did not. Aside from AIG (a huge money pit, I admit), the federal government looks not only likely to get all their principal back but also divs and int. and . . . THE FINANCIAL SYSTEM DID NOT MELT DOWN!!! The infusion of borrowed money from the federal government has been a positive as well (the economy shrinking at a rate of 5-6% for a couple of quarters and then reversing itself in the short time it did for a 3.5% growth rate. How do you think that happened, absent the "unstimulated" consumer?)
Also, I'm tired of these comments that suggest that "government is inefficient" or "can't do anything right". They assume agreement between writer and reader and lack the intellectual rigour that's necessary to prove the point.
And . . . I have to ask: Where would you have preferred to put your money over the last 30 years, in bank stocks with "safe" dividends or into the SSN trust fund (how many payments have they missed?)
There will be a correction and a pretty significant one. Too many people have made too much money in too short a time. I agree with the comment above that a correction by the S&P down 20% is very likely (900 area from 1100)
Back below the March lows? Ain't going to happen.

The Boating Industry Navigates Stormy Waters

I own Brunswick and have for many years. I am amazed at the comeback this stock has had over the last six months: from mid-2's up to above 13 at one point. I think the company has a future. I think the industry has a future, after all, the inexcapable fact is that "stuff gets old". Several years of depressed sales of any product (cars, boats, washing machines, clothing) is ultimately followed by a healthy rebound.
But . . . Givens BC's move and given the stock market's strong reach upward, I would not touch BC in the low teens; too much too fast.
Thanks for the interesting aritcle.

Dow: The Higher It Gets the Harder It Will Fall

Sometimes 'cash' can be a tremendous opportunity


On Oct 21 07:51 AM prairiedog555 wrote:

> What other opportunites are you refering to? Bonds? Gold?

15 Stocks That Are Having a Tough Quarter, But Are Still Worth a Look

I very much like FDO at this price and at this time. It is retail, counter-cylical, trading slightly above 30 at the March lows and now below 27. They raise their dividend in January, a further support to the price. They are having a great year with earnings up 35% in the last quarter (year over year).
How to play it? Sell the April 25's Puts. You can get about $2.40 for them now so one would effectively be buying the stock at $22.60 should exercise occur. That is @ 12 times TTM, a bargain IMO.

Newton's Third Law: DJIA Poised for Epic Rise?

This is not useful analysis. Indexes simply do not move in a mirror image fashion. It is useful to consider what we know to be true as of today:
* That there was extreme pessimism early in the year and that pessimism was reflected by index prices.
* That the markets have made an epic rise in an astoundingly short period of time (50-60% within a six month time frame)
* That there is a lot of money sitting in the market now, right now, with a substantial profit.
* That economic news, over the last several months, has been pretty good, or has been spun as being pretty good.

Now, I take from all this that if we start to hear bad news investors will want to take their profits and potential buyers will defer purchases creating a very small door that a very large pool of investors will want to walk through.
It is a recipe for a substantial sell-off.

After Two Consecutive Strong Momentum Days, What Next?

Since May 4th, I've shorted the QQQQ's eight times, through buying puts, and have made of profit on seven of the trades for a small net profit. This is during a time span that the index rose @ 20%! Each of the trades was made after the QQQQ's made a 3-4 day run to the upside and then contracted, taking back part of the gain. The key to making money doing this is not to be greedy. When the puts have that 15-20% gain grab it and walk away. This morning seems to be a time to be putting on some puts after the indexes have enjoyed a nice four-day run.
Informative article. It clarifies my thinking on buying protective puts.

Due for a Correction? Market Is Already Priced for Grim Future

What the author is arguing makes some sense. The low posted on March 9th reflected the fears of those days: uncertainty about Obama, the stability of the banking system, the effectiveness of the stimulus package just passed and the utter collapse in the consumer sector. The market was 'fear priced' .
This amplified the percentage gain achieved in the following six months. What was the proper price for, say, the S&P, that reflected reality? I don't know, but it was probably considerably higher than the 666 mark reached in March.
A second factor that lends support to prices today is that the stimulus has been a relative success: The federal government making some profits in their investments in the financial industry, the success of the "cash for clunkers" program and some signs (admittedly feeble) that the rate of decline in the economy is slowing. This has created some understandable confidence.
Having said this, I think there will be a correction, but not a dramatic one. I would not be investing new cash in this market. I would be building it. If I wanted to sell some puts to raise cash, the strike prices would be a bit further below actual, I would be looking to buy some index puts. I like the four Q's, slightly in the money, out to October or so..

4 Dividend Stocks to Hedge Against Social Security Failure

specguy: First you suggest that Social Security is a Ponzi scheme, then you read my comments and say that it's not a Ponzi scheme but it would be if . . . . .
I guess that's progress.
I just look at all the shit (I'm sorry, there really is not a nice word for it) that has gone on over the last decade; all the reputable businesses gone under, run by disreputable people: Worldcom, Enron, Citi, Lehman, Bear, Merrill and a dozen other big firms and then I consider all the promises that have been kept by Social Security, hundreds of millions of checks to tens of million recipients, like clock work, never missing a beat and then finally I read comments like yours, after all this history, implying that Social Security is some sort of scam.
It's really a bit much don't you think?

4 Dividend Stocks to Hedge Against Social Security Failure

I find the "ponzi scheme" analogy to be a poor one. Just as it's not useful to call people names, it really doesn't serve the discussion to call institutions names either. "Ponzi's" are crimes, people who engage in it conceal the crime by taking new money and passing a little bit of it back to the older investors to conceal the crime. The simple fact is that the SS trust fund has a couple of big, well-known (no Ponzi-style concealments) problems: Demographics and increased longevity of people receiving benefits. At it worst, that is, if no adjustments are made, SS will still be able to pay 70% of promised benefits in the year 2040. That is not "failure" as the author suggests. I am 58. My retirement date for full benefits has been pushed back from 65 to 66. I have no problem with this. I would have no problem if it was pushed back another year. Would we prefer to go back to the good old days when the average recipient lived 18 months after commencement of benefits vs the 12-15 years we enjoy now? (thank Medicare, in large part, for that).
Maybe you deeply regret that w's scheme for privatizing part of SS was thwarted. You could have tucked that extra money into a little Bear or Citi. How about Lehman? ("dick" Fuld could have taken your money back to his Montana ranch with him! : ) (if you have no idea what I am talking about, then you need to do a little reading)


On Aug 27 04:46 AM specguy wrote:

> tsk, tsk, all you name-callers. Didn't your mom tell you it wasn't
> nice to do that? As adults, we should be able to understand that
> telling other adults they are "morons" or "wingnuts" or any other
> derisive label is counterproductive and a waste of time. Argue persuasively,
> if you can, with facts, history, tested hypotheses and conclusions...heck,
> use humor appropriately to get the conversation going.
> re: Social Security
> You may believe that big government social programs are well-conceived,
> managed and executed. Alas, the record suggests otherwise. The various
> writers who opine about the 'Ponzi' characteristics of SS are onto
> something. The Peterson Foundation underwrote a well-produced film
> (seekingalpha.com/symbo...) that addressed the fiscal
> problems our nation faces but it was poorly attended and disappeared
> from the movie theater system almost immediately...too much for our
> electorate to process. The founder of the institute, eponymously
> named, Pete Peterson, is an American icon of business and philanthropy.
> He also wrote a book on this subject (US fiscal problems) titled,
> "Running on Empty ", a worthy read. Yes, we as a nation committed
> to personal responsibility, can solve our fiscal problems. The real
> problem arises from the misperception that big government has an
> infinite source of money to throw at every social injustice.
>
> Just one near-retired taxpaying citizen opening the dialog.

4 Dividend Stocks to Hedge Against Social Security Failure

I'm curious as to why nothing much is said about the POST BABY-BOOM era. For example, the trust fund for SS will start running a deficit (that is, it will only be able to pay @ 70% of promised benefits) between 2040 and 2045 (correct me if i'm wrong on these dates) Well, if that year IS 2041, I, who was born around the middle of the baby boom era, will be about 90 years old. I don't know about you people but I fully expect to be dead by that time! After 1964 the birth rates plummeted for a couple of decades and then was followed by a mini-baby boom. Won't the fund be replenished after the boomers are gone?
Once again, the fund can be preserved and its life extended through some simple adjustments. Reagan was able to work it out with the Dems, why is that not possible today?

4 Dividend Stocks to Hedge Against Social Security Failure

Social Security cannot continue to pay out benefits at its current rate, with accompanying COLA adjustments. I may not have said that directly in my above comments but I did suggest that adjustments could and should be made. Small changes in the COLA, raising the age that full benefits can begin and raising the caps on the top tier earners can extend the life of SS.
Given the fact that SS has never, ever failed in its obligation to issue the promised check, billions of times to hundreds of millions people and given the realities of the last year: Bear Sterns, Lehman, Citi, Stanford, Madoff, BofA, CIT,GM, Fannie, Freddie, I'm just surprised that an article would appear with the headline "stocks to insure against Social Security failure".
I'm very happy that you can add, subtract, multiply and divide. I just wonder, given the news of the last two years, if you have had time to read?


On Aug 26 08:45 AM sewells wrote:

> Well, I've done some analysis on the SS issue. If you look at:<br/>www.socialsecurity.gov...
>
>
> You will find that by SS own findings it will need to start redeeming
> the trust fund in 2016. The amount that will need to be redeemed
> between then and 2036 when the trust fund runs out will be north
> of 7 trillion dollars. Do the math. Add it up yourself. If you
> assume an average population of approx. 350 million people over the
> 21 years (add census bureau projections for 2010 and 2040 and divide
> by two to get the average) it works out to around 350 million people
> in the US average over that time frame. That works out to $995 per
> person per year every year from 2016 to 2036 that will be need to
> be raised in taxes JUST FOR REDEEMING THE TRUST FUND and IN EXCESS
> OF ALL OTHER GOVERNMENT SPENDING NEEDS FOR THOSE YEARS.
>
> About 46% (from wikipedia based on IRS data) of the populace are
> taxpayers. That means that for every year from 2016 to 2036 each
> taxpayer will need to come up with, on average, an additional $2200
> in taxes in order to redeem the trust fund.
>
> These figures are based on the Intermediate cost projections of the
> SS governors themselves.
>
> Like I said, do the math for yourself using SS's own projections
> and then tell me you honestly think that every taxpayer in the country
> is going to be able to come up with an additional $2200 per year
> for 21 years JUST TO PAY BACK TAXES AND INTEREST THAT HAS ALREADY
> BEEN SPENT FROM THE TRUST FUND.
>
> That doesn't include the rest of the deficits, etc.
>
> Some here may be sanguine about the prospects for SS. Since I can
> add, subtract, divide and multiply and have done so, I am not.<br/>

4 Dividend Stocks to Hedge Against Social Security Failure

Obama's USA? Obama has been president for six months. The economy of this "ship of state" did not turn in a different direction on inauguration day.
I'm surprised at all of the concern being expressed by conservatives about federal deficits that are occurring during a sharp economic contraction while dismissing the deficits that occurred under w's watch (an economy, by the way, that was described by same as one of the greatest expansions in the modern era) I believe the talking point of that day was: "as a percentage of GNP the deficit is manageable". Federal deficit spending during the economic expansion that occurred between 2001 and 2007 masked the now-known facts that the expansion wasn't really that robust and that the two tax cuts pushed and passed by the republicans were largely ineffective as stimulants to the economy.
What to do now? Raise/initiate taxes on the "bads" (ciggies, booze, crappie, low nutritional value foods (soft drinks?), fuel-inefficient transportation) and lower Federal spending everywhere as the economy emerges from recession.
If everyone gave a little it would go a long way to resolving budget gaps.


On Aug 25 01:08 PM jack kreg wrote:

> Where are we now that economy has gone into the tank, as far as Social
> security is concerned? Author is making a good point that cash flow
> will soon go negative with declining incomes caused by this prolonged
> recession. Obama will not bring this up in a NY minute, cause he
> wants to lock in his programs requiring massive new US debts, before
> he breaks the news that SS has gone negative cash flow.
> What does SS negative cash flow really mean, simply that we must
> borrow or print the deficit.
> As to the integrity of US borrowing, eg Cross, true, we have paid
> all debts, however after Obama increases our debt over the coming
> decade, our US$'s will be worth far less to the lender's. So, as
> to the integrity of Obama's USA?? pretty thin integrity, in my opinion!!

4 Dividend Stocks to Hedge Against Social Security Failure

On the plus side I appreciate your comments regarding Abbot Labs as I have a position in this company. It's a great long-term hold.
As criticism, your comments regarding the solvency of Social Security are so far off the mark I really don't know where to begin. First of all, the bonds held by the fund were not issued by the govenments of Kosovo or Somalia, they were issued by the United States, an entity that has never defaulted on either its principal or interest obligations. (I'll simplify this for you: Real time, banks are not rescuing the Federal Government; the Federal Government is rescuing banks. Do you own a bank stock? Where did the dividend go?? I've heard, over the years that BAC was a rock-solid, take-it-to-your-grave investment) To suggest that the Feds will default on their obligations is just speculation on your part. Secondly, it is not a fund that needs to be permanently fixed. It just needs an occasional tweaking: raising the cap, raising the age, adjusting the COLA. All these things will need to be done, and indeed, have been done. It just takes political will. Third, it is not a static fund, it will receive 10's of trillions of dollars over the next thirty years of new money that will be used to partially fund benefits.
What is the solution? Raise taxes, limit benefits.
P.s. Gold??? At $900 + an ounce? I don't think so.

All Bubbles Must Break

Interesting comments and information, particularly the S&P P/E chart. It is too easy, however, to look at a 50%+ run-up in the indexes and call for a correction. There is some evidence that when a pull-back comes it may not be as brutal as predicted:
* Equities in March, '09 were priced for something that has not occurred: a depression, with the attendant deflation and a loss of confidence in the financial system.
* The federal government is injecting enormous stimulus into the economy that is providing support
* The savings rate is rising to mid-single digits. Consumers are pulling back their spending not only because of a decrease in discretionary dollars but also because they are scared and saving the money.
* There is a lot of money on the sidelines that potentially could be invested.
* Inventories are low. Production is increasing because of that. (G.M. calling back workers and increasing production by 60,000 units a year as an example.)
Finally, there is the unassailable truth that 'Stuff gets old". Consumers are going to start replacing durables because, at some point, it just all wears out. At present production rates, using the auto industry again as an example, it would take 27 years to replace the U.S. auto fleet. Obviously, more cars are going to be produced.
My take on all this: yes, there will be a pull-back in the near term, maybe even 12-15% or so (S&P down to high 800's) but . . . financial Armageddon part 11?
I don't think so.