Prudent Man CFA

Despite Its Recent Run-Up, The DJIA Isn't Expensive

Optimism is good. The question is what is the market discounting, if anything but momentum?

I am naive enough to want the market to try to measure value. This is difficult when earnings are continuing to decline year over year, especially when the analysts estimates are close to being criminal and what earnings gains there are appear to be coming from cutting costs and, thus, increasing unemployment.

Later earning comparison should improve which should give us a better view on how companies adjust to the new economic realities. Then we have the imperative of decreasing the bloated money supply and federal debt and interest rates become "real" accordingly. Hopefully, Fed subsidizing debtors at the expense of savers stops.

In summary, confidence is increasing but is the move in prices increasing risks? Are we looking at "real" economic growth or the result of the printing of money? Top line growth and free cash flow have been deteriorating and they are two financial metrics that are difficult to manipulate and are indicative of increasing or decreasing value.

I would be careful of analysts over-adjusting their earnings for the next quarter. That is why I continue to lighten my equity risks during these rallies. I rather be late than broke. I have been both and it is a expensive education.

Wall Street Breakfast: Must-Know News

Little talk about the Chinese students laughing at Geithner on his strong dollar statements. Wish our students were that perceptive.

I don't think we will have stability in this economy until the Administration understands that the more they continue to change the rules of the game the more animosity they will get from what has been a passive business response to Socialism.

This Rally May Have Legs - Bespoke

Would it be a wonderful world economy if every time we got into financial difficulty we just borrowed more money? Now if this isn't sophomoric policy that could only be learned at one of our prestigious universities, nothing is.

What will it take for our younger generation learn what the Greatest Generation learned from the Great Depression - debt is a dirty four letter word?

Preview from Europe: Market Up Again Despite Data

Consumer confidence, granted a fluid measure, is up in So. Korea and Germany - not insignificant economic players.

Wall Street Breakfast: Must-Know News

Sophistry of lost jobs in the auto industry.

Consumers will buy cars and they need workers to build them. The company's name makes no difference as the quality and cost of the product is most important factor to the consumers.

The jobs lost by one company will be picked up by another. Like the makers of buggy whips getting jobs in the auto industry. This is the natural dynamics of the Free Enterprise System. Any government intervention tends to pervert this natural process.

President Bush asked congress for programs to retrain workers. Like the oil legislation he proposed in 2001 they not only ignored him but vilified him. Time for Congressional Term Limits as Barney Frank and Chris Dodd have overstayed their welcome and though they are good at providing "pork" to their constituents their continuance in office are detrimental to the economy of the U.S.

If Congress treated Medicare and Social Security like they treat Wall Street mismanagement and greed, those programs would have been solvent twenty years ago.