unfaire

Large Caps Outperform While Small Caps Stumble

After the market crash of last year, the government rescue effort was concentrated in large cap companies. They let the small companies fall by the wayside. This is very clear from what happened to the banks. The large banks, even those which almost went belly up, got a large infusion of capital while the small banks were left to swim by its own. Before the crash, the conventional wisdom in the street was that the smaller companies have a greater possibility of leaping up their profits. But, now the conventional wisdom is that the smaller companies are more likely to fail under the present situation.

Stocks Soar, Unemployment Rises, Dollar Slumps

Ricard, yes, your are right.
Just look at what happened to Japan. I remember a time when it was 360 Japanese Yen to 1 US dollar. It is somewhere around 100 or less to 1 now. In the meantime, we 300 million or so of use raised the standard of living of 100 million or so of Japanese.
In other words, the US dollars develued to 1/3 relative to Japanese yen with a population ratio of 3/1.
Now, the Chinese population is about 1.3 billion or about 4 times ours. A simple math would tell us the US dollars would have to devalue 1/12 againist the Chinese RMB to reach some kind of balance. That would be about 0.6 RMB to a US dollar in the next decades or so.
I know things are not this simple. But, this is the direction where the US dollars are going.

Next Up: Dow 10,000? Does Anyone Care?

There are many market indexes, each representing a different aspect of the market. Whether a market index is "better" or "more important" for you, it depends on your purpose and how you are making sense out of it. If you are looking for a fast rising index after the 2008 crash or a wider coverage of certain type of stocks, S&P is of course the one, not DJIA. However, as the saying goes, what goes up must come down, there may be a down side to S&P. As another saying goes, it is not the size but how you use it.

Seeking the Fix That Will Finally Work

Hey, folks, wake up, the train has left the station already. As long as there are collateralized debts, the twins, mark-to-market and margin calls, will drive the train down the cliff. Stop mark-to-market and save whatever there is first, else all efforts will be in vain.

Seeking the Fix That Will Finally Work

Hey, folk, wake up, the train has left the station already. As long as there are collateralized debts, the twins, mark-to-market and margin calls, will drive the train down the cliff. Stop mark-to-market and save whatever there is first, else all efforts will be in vain.

Bailout Bill Passes; What Happens Now?

Mike, it is a great article.
Here is why what you are saying is very close to what is happening.
On average, we American are in debt (mortgage and credit cards combined) for $150,000 or so per family. The median income of American family is $50,000 before tax per year and out of that each pays about $15,000 of interest to various lenders.
Any bank, even you, would be out of their or your mind to lend any more money to this bunch of people. I believe this is the root cause of today’s problem. We American are simply not credit worthy. It is not that banks do not want to lend. It is that more than half of us or not fit for borrowing.
Until this situation is corrected, the Fed can print as much money as they want but no prudent banks or persons, including you and me, would be willing to lend a penny. There will be job losses and economy downturn. We need some good and cool heads to get us out of this mess.
By the way, those investment bankers are in a bigger hole than you and I are. This $700 billion is to rescue them, not us. At least Paulson was honest at the beginning. All he said was to buy up bad credits from themselves, I mean the investment bankers. But, after the defeat of the bill in the Congress, the Democrat controlled Congress had twisted the whole thing and said this was a rescue of us average American. That scared everyone including us the voting average American and their mindless representatives. Now, just wait, we will all soon see very clearly that our tax money (whatever the government spent will eventually come out of our taxes) will be used to rescue these investment bankers with scarcely a drop trickled down to the average American.

A Bad Day, Yes, But Enough with the Hyperbole

I have said a few days ago in a comment that historically DJI should be at about 10,000 at this time and, in some way, this is a correction of the excess in the Wall Street of the last few years. Given a historical deviation of about +/- 25% or so, DJI may move up and down around 10,000 +/- 3,000 for some times to come.
We know that our financial situation has been worsening for years but no serious fixes have been made. And it has gotten worse in the last few weeks. The trouble started when both Fed and Treasury tried to make a “bold” move without any clear direction and created a crisis situation. When the move did not get where, the market “crashed.” What we needed were cool heads to negotiate through this financial storm with some done-to-earth measures such as Federal intervention of the bad mortgages to make both the lenders and borrowers “half whole.” Such moves would have benefited both Wall Street and Main Street. Instead, the “bold” move had the appearance (and, may be the substance) of Main Street “bailing out” the Wall Street, making lenders “whole” and borrowers “empty,” and the whole thing ended up bankrupting both of them, leading to the liquidity problems. The move was hailed as also a bail out of Main Street only after it was failed. It was a mess.
The situation was brought to a crisis proportion by the wrong move of Fed and Treasury. Apparently the “bold” move, my guess, by the Treasury was a flop. The Congress did not help. The media were no help either. What we need now is some cool heads and cool hands to guide us through this storm. Hopefully, both the Fed and Treasury have realized that they have been “hot” headed. They should now come up with some concrete steps in the days to come. It is important that they come up with something really workable, even if it starts with a little step in the right direction. DJI may drop another 3,000 points in the mean time. However, as long as the nation as a whole is moving in the right direction, the market will recover and the nation will also recover.

The Calm Before the Storm?

If all American go to the voting booth today and vote yes or no on the Paulson plan, I bet the plan will be defeated. So, what our politicians are doing?

Comparing Clinton and Bush on Income Taxes

It is an unfaire comparison when you do not include AMT. If you do, you will find out the middle income people are paying comparatively more taxes than the both richer and poorer now than before. This is tentamont to weakening the backbone of the wellness of the American society. We have to pay taxes to keep our system running. What is important is not to waste it as well as taxing fairly.