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Market Thoughts - Week Ending 10/04/2012

I spent last week in New York, the city that never sleeps. And while it is true the hustle and bustle of the city is still there, at the same time there is a somberness that seems to hang in the air everywhere you go.

While I was there, I tried to pay particular attention to what people were buying. Not in the sense of shopping, but in the course of the day to day necessities. That is one thing about living in New York, folks simply just don't go to the grocery store and stock up, they go to the neighborhood markets almost every day.

My thought was that if I hung around several of these neighborhood markets, I would be able to get a micro economic gage for that particular area.

So there I am, just sort of hanging out and watching, when it occurred to me, finally, that people might think I was some sort of perv, or at the very least some sort of weirdo.

Finally, my little brain woke up and I decided to simply talk to the market owners. While I love being stealthy, there is something to be said for the direct approach.

What I found so strange was regardless of the location of the market, the market owners all said the same thing. People are spending less. Higher end items are not being purchased and the costs the market owners are paying for their inventory is increasing.

When I asked if they had a banking relationship, all but one laughed and told me that banks, supposedly with lots of money to loan, won't even talk to them.

This if course lead to conversations about their brother who owns a beauty salon, their brother-in-law who owns an auto repair business, as well as the jobs numerous aunts, uncles, and cousins have. It also led to conversation about gasoline prices which was why their families couldn't go to the Jersey shore last summer, and about how bad allergies have become.

As I say, this micro-economic observation seemed to hold true regardless of the area of the city I was in, Manhattan, Brooklyn, or Queens.

Certainly this is not a scientific survey conducted by a large research company with lots letters in their company name and a disclaimer that runs several pages, it's just an informal look at what the economy of the largest city in the United States is like as seen through the eyes of a piss ant.

For a long time I have been sharing my thoughts on the economy, the lack of jobs, and the generally poor economic conditions going forward, all of which seemed to me to be reinforced basis my visit to New York City.

From a macro-economic perspective, much of what happens in world economics is simply bullcrap used by some Wall Street type to sell a product or a service.

These firms make their money by coming out after the fact with all sorts of "sound" investment information. What a load! These cats know as much about investing as a hog knows about the hereafter.

Watch the financial web. What is going to start happening is going to be the need to rebalance portfolios to take advantage of QE3, or to hedge against the upcoming Presidential election, or because Spain can't get a funding commitment, or because pigs can't fly, or fat babies fart, or the Pope is actually catholic.

All of this fodder is simply intended to separate you from your money. In other words, it is simply intended to get you to believe that the dog crap you stepped in really doesn't stink.

Wake up folks! Forget all of that stupidity. If your broker or investment advisor starts sending out crap with lots of graphs and charts then just know they aren't interested in your investment future, they are simply interested in being on MSNBC or CNN or CNBC or Fox Business. In other words they are simply mouthpieces for their own agenda.

Don't get me wrong, I'm not saying all brokers and investment advisors are that way, I'm just saying that after almost 30 years of managing money, the vast majority of which belongs to me, this is what I have found to be true more times than not.

Curious about your financial wizard? Here's a small test.

Pick an equity they have you invested in. If they don't have you invested in individual equities why do you need them? You can buy your own mutual fund for a lot less money.

Anyway pick an equity and then send them an e-mail and ask them two questions. Ask them what the intrinsic value of that stock is and was their valuation based on the company's latest quarterly financial information.

Assuming they even respond to your questions, the vast number of replies, probably 95%, will tell you what their current price target is, which is not what you asked, and they will tell you that they based their information on the latest quarterly financial data.

Realize that quarterly data is not audited, nor is it complete, it is simply a snapshot of the prior 90 days of business activity for that company, which may or may not include the companies strongest business quarter.

Are you getting the warm fuzzies about your investments now Gilligan?

The point here is that I am already seeing investment commentary related to QE3 which cannot have had time to start to work, just as I am seeing investment commentary about the recent presidential debate, the one in which the President kept thinking about poking Michele instead of the fact that Mr. Romney was poking him in front of millions viewers.

So pay attention America. Remember price determines return. The more you pay they less you are going to make, assuming that after all of the "I'm bent over so shove it in" fees are factored in, you have actually made anything at all.


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