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.

Obama's Donut Economics

Morici is an anomaly in academia. He challenges the statist, elitist effete view of economics.
A realist in academia! No Keynesian so he will never get hired at the WH or in a self-acclaimed "prestigious" degree mill.

You won't find any "greet shoots" until we clear away the "dead leaves". (I haven't copyrighted that, yet.)

Higher Bond Yields: Are We Making Progress?

"Sterilization" is transferring bad bonds for bad currency in circulation and is a Fed scam that a lot of people don't quite get.

Sounds sophisticate so is probable important to academic economists.

Bank Stress Tests: Tangible Common Equity a Critical Metric

I look for the so-called "Stress Test", constructed by political lackeys for political purposes, to be rigged. The strong Regional Banks will be put into a non-competitive position so the statists can nationalize the whole system and finally completing their goal of ending Free Enterprise as we have historically know it.

The cost of this silent overthrow of the Free Enterprise System will inexorably be paid for by generations to come. Who else will? Shame on us!

We are seeing that salaries, loans and competition is being directed by closet Socialists so no one should be surprised when loans are made upon political preferences and priorities and not meritocracy, which the statists abhor.

We also saw the Tea Parties, a populist movement to stop government intrusion in the private sector and our lives, being denigrated by the media. Why? Isn't dissent an integral ingredient of Freedom? The same media that supported the Students for Democratic Society (SDS), the violent Communist supported, murderous Weathermen and the Black Panthers do not want the people who support Free Enterprise to have their say. This is not accidental but show how far back the movement to destroy the Free Enterprise System dates.

Where is the anger by the media with the intrusion of government in the financial sector last year has exploding into of government controlled Industrial Policy?

With the foregoing in mind and considering that Tim Geithner, as President of the NY Fed had a major part last year in this intrusion, does any serious observer of markets, economics and politics believe the "Stress Test" will be anything by self-serving the statists agenda? BHO, his Administration and the current Congress makes the timing perfect and the investment is showing fruit of its labors.

Banks No Longer in Crisis Mode

It would be the first time in history that an economy returned to equilibrium by printing money and issuing debt. We don't even know where equilibrium is.

Where Bernanke made his mistake is going along with the Goldman Sach's lackeys, Paulson, Geithner, Rubin, et al, who gave the Congress the momentum to steal all of the money they can and fund every campaign contributor piggy bank they can because the Administration just wants the economic control to kill the Free Enterprise System.

Anyone who believes this economy is going to return to where it was a few years ago wasn't around in the seventies when the U.S. was a much more important economic power and not nearly in as much debt as now per capita. It took nearly ten years and the best president we have had in my life time, of which there have been 13.

PPIP Killed the 2008 Bear

PPIP is just rewarding the same Crony Capitalists who gave us the credit crisis, with the Administration rewarding those on the basis of political contributions.

Unfortunately, the more things change the more they stay the same. Consequently, we may be economically of life support which can keep us above the water short-term.

Watch the Treasury auctions for the next "Black Swan".

Is the War Against Systemic Risk Being Lost?

The "System" didn't fail the regulations put in place to prevent the failure has been ignored for over ten years.

The Free Enterprise System was taken over by greedy Capitalists (never met one that didn't want to own a monopoly) and power hungry, irresponsible politicians who should have been kicked out years ago by Congressional Term Limits.

Restore the Free Enterprise System, with the safeguard in place to keep it Free from monopolies and oligopolies, and our economy will grow and be self-correcting of excesses.

Bad Bank Bailout Triggers Financial Stock Rally

We have a "Bad Bank" that has worked: The FDIC. I guess those geniuses on Wall Street never heard of it and what it did in the eighties, a tougher economy than we see now.

We don't need another super bureaucracy when we have an operation already in place unless the Congress and Administration want jobs for their political hacks.

I am trouble with that so-called bastion of Capitalism rallying on every move our government makes to Socialism. Maybe just bear traps.

Financials Bring Down the Market, Again; Hoping for an Obama Bounce

Obama got elected in Nov. There was a one day bounce. Is his ascending to the throne a surprise.? The market has gotten slammed since then or is this admission that the market is a poor discounter?

I, personally, am not impressed with Obama's record, or shall I say, lack thereof. Especially since he is an admitted Socialist and we know how great Socialism is for investors. He does use an Teleprompter well. But, he is slow on his feet. The Left Media never asked him any questions on economics, defense, terrorism, socials security while spending their time assassinating the character of Sarah Palin. Biden who?

I see Obama attempting to install "Industrial Policy" whereby the politicians will be picking the winners and losers and the taxpayers and consumers will be the losers. I hope this goes the same way the Clinton Administration's attempt, at the direction of Robert Reich, and was slammed by Congress, one of the few things they got right.

I wish Obama the best, being a war veteran who actually did serve his country, but preparing for the worse.

Psychology of the Bailouts

What does the Fed produce? They print money! That is exactly what Hitler did in the thirties. It didn't work so let's invade Poland. That did bailout FDR's counterproductive polices that made a recession a ten year Great Depression.

Is FDR Bernanke's model?

'The Change We Need' Is in Economic Direction

The "new way" is the old way: Free Enterprise not Capitalistic monopolies and large Central Government. The socialistic bail out just freezes contracts, as Barney Frank stated "the law is what Congress says it is". and no one wants to take any risk because the politicians change the rules for their own political purposes and expediency. They don't care about the damage they cause to Free Enterprise because, basically, they don't believe in it.

We have an avowed socialist as president and Barney Frank and Chris Dodd running the Congress' top financial committees. Now that is encouraging for one to take risk and build a business. A business that the Congress wants to rule but not take the risks.

The Obama Inauguration Rally Begins

How does an admitted Socialist as president help a Free Economy? I hope he succeeds but don't bet the ranch.

Of course, Obama is a politician first, so he will try to anything he can to stimulate the economy. But, will his basic socialistic philosophy get in the way? I hope not but will be very cautious.

Not having to explain his economic policies during the campaign while the mainstream media gave him a pass won't carry water now. Speeches are nice but what is the man's record? Now is the time for Obama to walk-the-walk, not talk-the-talk. the media will give him a pass, as it is in our nature not to admit our mistakes until it is too late. But expectations are high and the man's history is not good.

I'll hope for the best but prepare for the worst. Something I have learned to do since the Great Depression. I assure you it works.

Wall Street Breakfast: Must-Know News

Consumer Confidence? Why would anyone be confident in the economy, which is only our fifth worst since the end of WWII, when the, Fed Administration, Congress and especially Obama all tell everyone it is going to get worse? In the previous recessions the government pretty much kept their mouths shut and did their job instead of being much too vocal

Why are all the Fed members talking so much. In my fifty years as a professional investor I never heard so much said by people who proved they know so little. If all these rear-mirror economists, who are behind the curve, would spend their time doing some analysis instead of brushing up their resumes they may have seen the problem with credit years ago. Because the non-discounting stock markets kept going up all these people were just Pollyandas.

Whey is Obama and Congress so vocal? These Socialists see and opportunity in the false "worse receission since the Great Depression, and I lived in that time that was exacerbated to unnecessarily last ten years, they can make the greatest theft of taxpayer money in history. As we all know, those who have the money have the control.

If the Fed Congress and the Administration would have said that the Free Market will work things out so property will revert to their rightful owner this recession would be over. The promise of bailing out loser at the cost of winners is very far from Free Market Capitalism as it is Socialist Capitalism. Are problems started decades ago and the Fed and Congress could very easily have reighned it in with the laws on the books.

I think this is the best time for rational investors support and end encourage Congressional Term Limits.

As Bank Industry Analysts Lose Jobs, Serious Blogs Take the Forefront

Does anyone really need an investment banker? The whole industry is a con and make work job for Ivy League Frat boys who were taught they are never wrong.

Google went public alone and it looks as thought they did quite well. As a CFA who has been on both the buy and sell sides, I never found in house sell-side security analysts anything more than pimps for the Investment Banking peddlers.

What an immoral industry that adds absolutely no value to our economy. Do markets really have to revalue companies on every tick? Its can be fun (if you win) but is nothing more than an overrated casino game.

It is amazing that some believe the stock market is a discounter. Makes for silly academics but no real investor believes that. What were we discounting in 2007 when we were entering a recession in February and market took off?

Wall Street Breakfast: Must-Know News

In my fifty years of professional investment experience, my intuition is that governments should be minimal and usually are part of the problem instead of the solution. It is obvious in this "crisis", which is actually not as serious as the economic situation of the seventies when the people of Kansas had to bail out New York City, calls for less government intrusion rather than more.

When people are told that any government agency is going to solve their problems those people have a lack of a sense of reality. In the case of derivatives and leverage the government could have easily ameliorated the risks by raising rates and Congress should have given the SEC the tools they need though I believe they already have those tools but, for political reasons, failed to take away the punch bowl. After all, the member of the House of Representatives run for reelection every two years and they like bull markets and never ever want to decrease the money supply.

If the Administration would have announced in 2007 that the Free Market would have to clean up any messes it got itself into the markets would have corrected accordingly and quickly. Now everyone who made a stupid, greedy or both mistake is waiting for some government organization to bail them out. The line continues to lengthen and the G-20, beings a political organization, is clueless as to the ability of markets to correct their own mistakes.