dsrtwriter

Nominal vs. Real Gains

Many years ago, a very successful Canadian investor, in his book "Anyone can make a million" (ok, the title is a bit much), said that when it comes to the future valuation of a currency, you "just need to read today's newspapers". Everyone reads the news but few really think about what it means.

The Obama Administration and its Democratic congressional majority are making it clear in news story after news story: they are not in favor of entrepreneurship, they believe government is the answer, and their various support groups believe it is now their time to "take back America" from working taxpayers, by taxing them more and devaluing their dollar assets through massive debt.

They do not believe that the United States should be an economically or militarily strong country; in fact they feel that we are the source of most of the world's problems (the apology tours).

So read the papers. They are telling you what to do. And placing a portion of one's assets in gold and other currencies is probably not a bad idea, in addition to some multinational firms

Jim Rogers on the Next 10 Years

It is indeed remarkable that Mr. Rogers cheers a country which has developed most of its technology through stealing and reverse engineering. Our situation is much our own fault for buying into the economists' mantra of the benefits of "free trade". Americans loved cheap Chinese goods as long as they still had the jobs in their own companies, as long as they did not work for slave wages and hours like Chinese children.

Now we see the economic consequences. The greatest tragedy is that as we assault the very character of our founding fathers, as the courts reinterpret a Constitution which was unique in the world in preserving individual freedom, people like Mr. Rogers glorify the economic success of a country which still sells the organs of political prisoners on the black market, and crushes freedom of expression as in Tiennamin Square.

Even the uber liberal Google founder Sergei Brin turns a blind eye when it comes to doing business in China; freedom of information, the mantra of Google, is "relative" when the temptation of the Chinese market beckons. Hypocrisy reigns rampant.

This may not end well for the West; just look at the growth of the Chinese military. If China decided to seize Australia for its resources, would we come to the defense of the Aussies?

Really, you think we would?

Oh, I forgot, we have the U.N., and our President just won the Nobel Peace Prize.

I feel much better now.

Want a Pension Over $100,000? Be a Government Worker in California

I have to agree with Mark. First, with all due respect to police, fire, paramedics, etc., the fact is that they have a union and do get decent salaries while they are working. As far as the "putting their life on the line", I would say that our soldiers in the Middle East are at far greater risk, for much less reward.

The problem is that over the years, as we have lost so much of our manufacturing to overseas competition,private sector wages and benefits have plummeted. Don't talk to me about the investment bankers; they are a minority of the work force.

In addition, people working in the private sector put money away largely in 401K plans which were defined contribution, not defined benefit. The government workers still have defined benefit plans; that is, their pension benefits will last as long as they live.They cannot go down, and they are guaranteed by the very taxpayers who themselves have lost much of their 401k plans to downsizing or the market collapse.

Yes, the reality is that the new elite in this country are the unionized government workers and university workers.Why do we hear so much about rises in the cost of a college education? Because it is a given that university faculty and staff will automatically get raises and their great pensions, and the students' families have to cough up more tuition in addition to government tax revenue subsidies.

You may not believe it, but if a straight A student attends four years of college, gets into medical school does four more years, then gets into a surgery residency and does another four or five years, he or she emerges into a world with a 100K + debt load of loans,
is in his/her thirties, just starting out, and now battles managed care or government to get paid. Meanwhile that firefighter or cop has already got over ten years of seniority towards that dream twenty year retirement.

Do the math: you will find that over a lifetime,today's firefighter or cop will come out better than a surgeon, if you include all the benefits.I admire our police and firefighters, but the benefits are now way out of proportion to other workers.

Cramer's Mad Money - Hitting Bottom (4/16/09)

let's see .. "Cramer suggested looking for three things that indicate a bottom: bad market sentiment, mutual funds pulling out and creating a “crescendo selloff,” and catalysts such as the subprime crisis or Fed rate hikes. "Understand, the market hates nothing more than uncertainty,” said Cramer."

We;l; we had all of this at Dow 12,000,then "bottomed" to 11,000, still had it, so a new "bottom" at 10,000, then a new "bottom " at 9000, and on to an apparent "bottom" at 6500 area, at which time Cramer said (about a month or so ago) that we could go to around 5300.

So if I get this right, the "bottom" is the "bottom" until it is not the "bottom. Thanks,Cramer.

Cramer's Call: Another Rally Top Indicator?

Cramer has led many people to significant losses with his erratic shifting of positions.Maybe things are improving; he would be better to just say he is not sure.But he is always "sure", until he is wrong and says "I hurt people, I apologize".

I use him as perhaps not a contrarian indicator but at least as an amber traffic light, but the reality is that I stopped watching his show a year ago. I do better watching Turner Classics.

Trying to Catch a Falling Dollar

very well written analysis without hype. Sensible advice.For those of us not versed in options, a further explanation of the puts and their cost/benefit by an example would be helpful.But I agree that at this point some dollar cost averaging into dividend stocks makes sense. I would also add NOV as a company which has seen its share price savaged by hedge selling, despite great fundamentals. Also FWLT.
Fine, let them drift down more, they won't go to zero, and with dollar cost averaging of existing positions it can pay to go against the crowd.

June '08: A Stock Picker's Environment

the market is usually right. When you have that much money parked at three percent, the concern is not the 6 percent inflation but the potential of a 10-20 percent drop in the price of equities.Sure,POT and other favorites which are now totally discovered are buys at some price, but at what price? That is the question so difficult to assess.

The market is parking money for a reason; it is telling us that the future may not be so rosy for some time, and ready cash for purchasing discounted equities beats riding the hot names downward.

Why I'm Not Worried About the Market

I agree with the comments about the Ag sector, although it is probably becoming overpriced.The irony of the whole ethanol fad is that it is simply transferring the increased cost of petroleum fuels in the form of increased food prices. I bought a five pound bag of flour this week for $4.41.The same brand was $2.25 at the same store last Fall.No free lunch in alternative fuels,that is for sure.

The tragedy of government's love affair with alternative fuels is that it ignores the reality that petroleum products are actually more cost effective, when all costs are taken into account, and also pretty darn clean burning with current technology. But I would not want to confuse the global warming people with the facts.

Fertilizer is booming as farmers dump phospates on the land to grow crops for ethanol, and the "dead zone" in the ocean off the Mississippi delta grows.So just a transfer from theoretically less greenhouse gases to phosphate destruction of sea life.

Regarding the declining dollar, and its supposed advantage for us in terms of exports, I have to lump that in with the theoretical advantages of free trade (which has not helped our trade deficit with China) as two of the favorite chesnuts of economists. As a top student in Economics years ago, I parroted back this stuff to the professors, since it was "obviously" correct.

Thirty years of experience later, it is more clear to me that a declining currency is more reflective of a country heading for second or third world status. Exports from Bangladesh have also been cheap for years, as their wage rates and currency were cheap.

We have lost our industrial base to China as we "graduated" to a more "sophisticated" service economy, and our dollar has dropped. All good things according to economists. I guess we were supposed to retrain fired manufacturing workers to become rocket scientists, but too late, since the Chinese can do that also , thank you very much.

Sorry for the rant, but the truisms of the advantage of a cheap currency and no trade barriers have not proved out over time. Free trade has made goods cheap for "the consumer", at least until that American consumer's own job finally evaporates and goes overseas or to Mexico.Sure, tariffs were bad in the old days, protecting "inefficient" industries. But when we have free trade we have just exported intolerable working conditions and toxic waste issues to our trading "partners" as we all wait for our pink slips at work.

Oh, but I forgot, Barak Obama is going to give us all jobs rebuilding the roads and infrastructure,finance... by the government from some fictional tax base.

I feel much better now.