Don't Drink it's Poison!!!

21 Year Returns on the SP 500..."Dump it All in the S&P 500...you are a guaranteed winner in 25 years!!!"That's the advice one of the pundits gave viewers on Fox News Taking Stock... One investor calculated the return on an invesment if he would have Dollar Cost Averaged 1 share of the S&P 500 since 1987. "During that time, I would have purchased 251 "shares" of the S&P 500 and I would have spent a total of $215,301.93 purchasing those "shares." On November 20, 2008, the S&P 500 closed at $752.41. That means my 251 "shares" would have been worth $188,854.91. That equates to a net LOSS of $26,447.02. The return on my investment would have been a NEGATIVE 12.28% for the past 21 years."

If one did not get their fill of hemlock from the 21 year return, then look at what has happened over the last 10 years. That is when I was first approached by a "Fianancial Advisor" . After all, what the heck did I know? After a year of investing with American Funds, I shifted gears to another company that did even worse for me. Finally, I started investing in Vanguard Funds which are for the ivdividual investor. Still, I only received marginal gains. It was only after I started following the markets that I made a few well placed investments, which made my 403 B plan a winner. When I saw the looming market meltdown, that money was moved into T-Bills that are currently yielding approximately 1.3% interest... which sure as heck beats the DRUBBING most others have taken on their retirement accounts. As of the fist of the year, I am contemplating whether I should be putting any money into a 403B Plan. I am certain I can beat whatever their return is... plus that money is tied up FOR-EV-ER! Remember folks, no one will take care of your money like you will!

10 Year Returns on the SP 500
"If I would have started investing on the last trading day of November 1998, I would now own 120 S&P 500 "shares." I would have spent $147,544.63 for those 120 shares. The value of my portfolio on November 20, 2008 would have been $90,289.20 giving me a net LOSS of $57,255.43 and the return on my investment would be a NEGATIVE 38.81%."

DO YOU NEED MORE EVIDENCE?
I sent a letter to one of the fellows who were combing the halls looking for news 403B investors. I am certain he did not expect a series of questions that he got from me. I am positive that the response was just about as evasive as the high pressure salesmen on TV...

1.
Brian: How are your funds performing?

Advisor: I typically use the 403(b)7 mutual
fund accounts for my clients. Overall, the funds are down.

2.
Brian: Could you please indicate what your best performing fund is year to
date?

Advisor: U.S. Gov. security fund or Fixed accounts

3.
Brian: Do you believe that buy and hold strategies are a good decision?

Advisor: I believe it is a good idea if one is diversified. Most people buy and
sell at the wrong times which drives down long-term performance in ones
portfolio.

4.
Brian: Does dollar cost averaging always make sense?

Advisor: Depends on your time frame and what the money is needed for.

5.
Brian: If I would have invested $100,000.00 with you last January, would I
be up right now?

Advisor: Mutual funds, NO. Fixed strategy and some bonds, Yes

I've been handling my own investing for a while now... but I am always
open to solid financial advise!



My Strategy...
Look for trends, and follow them!!! Consider getting long on Gold... Find companies that are under stress in the current financial crisis... Last, bottom fishing could be hazzardous to your investment health... The only place I have lost this year has been on the call side of transactions... More to follow!!!

Sources Cited:
Tom Sesny Letter On 20 and 10 years Returns
Converation with Financial Advisor

Ken Lewis and Jerry Lewis... A Death of a Thousand Cuts... Staying Short...

Jerry Lewis or Ken Lewis... Is there a difference?

Long-time comedian Jerry Lewis must have a long-lost brother by the name of Ken! While Ken runs the Bank of America, it is obvious that he is working on a stand-up routine. Ken Lewis has continued to tickle the funny bone of people on Wall Street... and for some, this is just what they needed to hear... for others, it is what they wanted to hear. One thing is for certain. Ken Lewis does not have a reputation for being a straight shooter, but more along the lines of a snake oil salesman. Some of Ken Lewis' quotable quotes have been "We have no need to downgrade our earnings forecast." Bank of America downgraded earnings two months later. (1) Then there is the issue of dividends. "I see no need to cut the dividends." Months later Bank of America cut dividends. (2) Now Ken Lewis is tauting that the United States should "see an economic recovery by the second half of next year (2009). But, it may feel like a recession until then." That's just like saying it feels like it is raining, but you are not getting wet! (3)

A Death of a Thousand Cuts
The Big Three testimony on Capitol Hill this evening should be one for the history books. Senators grilled the auto giants for well over an hour. It has been a while since I have seen grand-standing like this take place. Here are some the questions I remember from the testimony.
"If business is so bad, why are you building plants in Russia?"
"If you are truly global companies why don't you use profits from divisions that are making money?"
"Is it true when you make a plant idol, 80% of the workers still show up for work...and get paid?"
I am certain that some type of arrangement will be worked out. They will get their money this time. And I will bet anyone that the Big Three will back at Congress with their hats in their hand once this money is hemmoraged!

Keep the Shorts...
As I recommended last post, commercial real estate could well represent the last bastion where prices could potentially tumble into nothing!!!! Retail is in for their worst Christmas in 30 years. Since a number of retail businesses are on their way to financial oblivion, it triggers issues in commercial real estate as well.
Tiger Coach likes Puts on the following:
1. Ryland -12.75 EPS is UGLY... Homebuilder, Mortgage Finance, and Home Design sets this play up as a loser!!!
2. Simon Property Group EPS 1.74 and FALLING! This lovely specializes in commercial real estate property. This company has the distinction of owning 168 regional malls, and premium outlet centers. To make matters worse, they also
have exposure to Europe...
3. VNO 4.07 EPS and shrinking... 30 million square feet of property in NYC... Short this stock and you short Toys R Us for FREE!!!

1. http://www.tradingmarkets.com/.site/news/TOP%20STORY/1903030/
2. http://www.dividends4life.com/2008/10/bac-cuts-dividend-by-50.html
3. http://www.marketwatch.com/news/story/bank-america-ceo-expects-us/story.aspx?
guid={84E5B4CC-9B10-4E26-B664-F7FF4F54B3E6}&dist=msr_1

The Difference Between Rally and Fally: A Closer Look at the PPT, A "Short" List of Retailers, Mr. Kucinich

You know it! I know it! They know it!!!
Over the last year, the government has become "over-involved" in market manipulation. We have come to accept little "fudges" on GDP, unemployment, etc. That was always done for the good of the market. After the 1987 Crash, Ronald Regan issued Executive Order 12631. The Working Group a.k.a. Plunge Protection Team (PPT)consists of:
1. The Secretary of the Treasury, or his designee (as Chairman of the Working Group)
2. The Chairman of the Board of Governors of the Federal Reserve System, or his
designee.
3. The Chairman of the Securities and 4.Exchange Commission, or his designee.
4. The Chairman of the Commodity Futures Trading Commission, or her designee.

So the next time you sit in wondered-amazement as to how the market could rally over 500 points like it did on Thursday, consider government manipulation. Rallies starting for no reason or for reasons that are already known. Rallies starting after chart support is broken with the market becoming vulnerable to a much bigger drop.
Rallies taking place at politically convenient times, can all be linked to the PPT. It is becoming more evident that the United States government in some cases is not on only the Lender of Last Resort, but also the TRADER of LAST RESORT. I wonder if the PPT can be linked to the $2 Trillion Dollars that is unaccounted for from the Federal Reserve. (3) This does not include the over $2 Trillion dollars that it will eventually cost the United States Treasury in this bailout. As UBS Analyst David Havens put it "You're in for the dime, you're in for the dollar." (4)

A "Short" List of Troubled Retailers...
I hope readers can appreciate a bit of humor. However, if you are in the fluff retail business this is not funny. One report suggests that retail is worried about survival, that they may not even hire seasonal workers. While it may be too late to nail a few of these "dandies" with put options, I would ask that readers consider commercial real estate as a the current play against the retail industry. I currently hold puts on VNO, SPG, and RYL. (5)

Linens ‘N’ Things – closing 120 of 589 stores. Filed for chapter 11 bankruptcy protection in May.

Disney Stores – closing 98

Foot Locker – closing 140 of the 3,785 stores in addition to the 274 stores it closed last year.

Wilson’s Leather – closing 160 stores.

Home Depot – closing 15 stores.

Ann Taylor – closing 117 stores.

PacSun ‘Demo’ Stores – closing 154 stores in addition to the 74 stores it closed last May.

Lonestar Steakhouse – closing 27 locations.

Zales – closing 105 stores. Will have 2,145 locations open.

Pier 1 Imports – closing 25 stores. Closed 79 in 2007.

Friedman’s Jewelers – closing 120. Closing stores and laying off employees as it goes through bankruptcy proceedings.

Dell – closing 140 stores.

84 Lumber – closing 140 stores. Directly impacting by the nation’s housing market. Closed 12 stores in December.

Sharper Image – closing 90 stores. Filed for bankruptcy protection.

Pep Boys – closed 31 stores in November.

Ethan Allen – closing 12 of 300+ stores.

Rite Aid – closing 28 stores.

Sprint/Nextel Corp – closing 125 stores.

Movie Gallery – closing 400 of 3,500 stores.

Saks – closing 1 store.

CompUSA – 103 stores will be shut down or sold.

Kirkland’s – closing 30 to 130 stores.

Fashion Bug, Lane Bryant and Catherine’s – closing 150 stores.
Market moves down... Comparison...

Mr. Kucinich v. Mr. Kashkari...
Dennis Kucinich is a cult-hero of epic proportions on the West Side of Cleveland. His brash and pointed aproach to politics has gained his stature as a champion of the down-trodden. Yesterday, Dennis Kucinich had his chance to tweak the nose of Neel Kashkari (Asst. Treasury) on the PNC buyout of NCC. Kashkari's Capitol Hill testimony to the House subcommittee claimed that NCC never had a chance of securing Federal TARP funds due to its weakened state. According to Kashkari "he claimed that "Congressman, we only review applications that regulators submit with their recommendations." According to Kucinich, "National City Bank was pushed off a cliff." Do not be suprised if the House Banking and Finance Committee will redress this issue before it is all said and done! (6)

Sources Cited
1. http://en.wikipedia.org/wiki/Plunge_Protection_Team
2. http://nyinvestingmeetup.blogspot.com/2008/11/
market-rally-and-finger-prints-of-ppt.html
3. http://nationalexpositor.com/News/1484.html
4. http://www.bloomberg.com/apps/news?pid=20601109&sid=anUDEEEP1_M0&refer=home
5. http://www.whas11.com/news/consumer/stories/whas11_consumer_
080522_retailstoresclosing.1c05f1f8.html
6. Cleveland Plain Dealer, Saturday November 15, 2008

Conscience Doth Make Cowards of Us All? How Much is Enough? Obama's Priorities

Conscience Doth Make Cowards of Us All Hamlet Act III Scene I
Conscience is supposed to be the little voice in our head that tell us when we have done something wrong... Our conscience beckons us to return to the ways of honesty... Yet it seems as though a good portion of people in government have lost their conscience, or at the bare minimum have forgotten the difference between right and wrong. Bailouts for instance... sure, a parent may bailout one of their kids when they get behind the eight ball... But we really have to scratch our head when the government bails out businesses like banks, then other organizations like the Big three line up like hogs at the through. Anyone who has a mortgage with Fannie and Freddie now have the option of repaying their adjusted loan. Thirty-eight percent... no current mortgage holder will exceed 38% of their take-home pay. Not too shabby of a deal especially for those who were hit with a balloon payment coming off the 3-5 year ARM.

If their was a degree of conscience on Wall Street or Capitol Hill, I would expect the credit card bailout to lose traction immediately. As I write, there is an uncanny alliance forming between credit card companies and consumer advocacy groups. According to the latest Federal Reserve statistics, there is an estimated $900 billion in consumer credit card debt. According to June Shelby, who had filed bankruptcy several years ago, she believes that all debts should be repaid. There should be no such thing as a free ride! And most of us would tend to agree!!! (1)

How Much is Enough?
I heard John F. Kennedy's speech where he posed "Ask not what your country can do for you, But what you can do for your country! Evidently, the help me and help me now attitude has always existed. In a recent letter to Congress LaTourette, I expressed my concern about the lack of Congressional recourse on the Treasury TARP. AIG has already tapped the table requesting additional operating funds. Housing will undoubtedly look for more monies before it is all said and done. The question becomes "When do you draw a line?" Bloomberg has filed suit against the Federal government so it will disclose where $2 Trillion dollars have gone! The real story here is the continued weakening of the U.S. dollar, and accountability. Congress must get answers, and the responses must be made public. After all, every single person who does business in dollars is at risk. From retirement accounts, pension plans, and your little kid's piggy bank! (2)

President Obama's Top 10 Priorities

1. Continue fighting the War on Terror...albeit different means to an end.
2. Develop a plan to remedy the housing crisis while not punishing responsible homeowners.
3. Address government transparency, that all aspects of Treasury and The Fed have accountability.
4. Energy Independence... Electric, Solar, Natural Gas, and Coal
5. Health Care...
6. Education (Maintaining the best parts of No Child Left Behind...and scrapping the rest. Concentration on Math and Science... directed toward energy independence.
7. Restore America's role as the world leader of Democratic Ideals.
8. Keep China and Russia in check as both will seek to expand power and increase their spheres of influence.
9. Figure out who is going to purchase Treasury Bills as it is increasingly apparent that China, Saudi Arabia, and Russia will be "less interested."
10. Keep the U.S. Dollar the "World's" currency.

Shorts CNK, FXI, BBW, VNO, SPR, RYL, WYNN...
Long Looking for exit points on GE and BAC... preserve remaining capital before it is too late!

Look for other options to the U.S. Dollar.. and consider shorting the dollar as the big spenders are in charge, and they can print all the money they need!!!

1. http://www.thenewstribune.com/news/nationworld/story/524213.html
2. http://www.huffingtonpost.com/2008/11/10/fed-refuses-to-identify-r_n_142784.html

The Future of U.S. Auto-Makers...

I'll be frank with readers... I do not like to see these companies whithering on the vine, and asking the government for more monies to restructure. We've all heard the stories of plant shenanigans and workers milking the Big Three dry... But I have not heard of those stories for years! I would officially lay the fault of this one at the feet of management. These companies are failing... Now what? Pragmatic thinking is essential. One might ask... when did it become the job of government to ensure the success or failure of these institutions? Are these institutions too big to fail? Is it necessary for these companies to fail? I am curious to see how the Barack Administration will handle this one. Union support was a key element to his victory... The Bush Administration thus far has balked at further "Bailout" monies, as those are reserved for the financial and housing crisis. Please share your comments and ideas!!!

Pros of Bankruptcy=No Bailout Money
A. They need major... major restructuring...
B. Benefit obligations have impacted the possibility of these companies ever becoming profitable.
C. The Unions are becoming leaner...and meaner... getting rid of the dead weight... yet there are a lot of safe-guards protecting those who would have been fired from any other job!
D. There would be an option to sell of profitable divisions...
E. Certain parts will always be part of our National Defense structure... i.e. jeeps...hummers...
F. Allow the companies to rise from the ashes like a Phoenix

Cons of Bankruptcy=Bailout Money
A. Failing means the loss of anywhere between 1-3 million jobs.
B. Workers will lose benefits...
C. Stock and bond holders will take a bath!
D. Will more than likely have a ripple effect through the markets and economy... secondary suppliers... steel industry... etc.
E. Allow foreign competition to become more embedded into the U.S. market...
F. Human cost of workers... families... etc.
G. Effect on municipalities tax revenues...
H. Good paying jobs in the economy will be reduced if not eliminated.

Sources Referenced
1. http://www.clusterstock.com/2008/11/don-t-do-it-obama-
don-t-save-ford-f-and-general-motors-gm-
2. http://forums.vindy.com/read.php?1,226376,page=1

Our New Export, The New Brenton Woods... Mr. President...

Our New Export...
In a recent conversation with a dear friend, we discussed what America's number one export was. We discussed industries such as as defense, technology, and even infrastructure materials. Other ideas were foods, medical devices, and banking. Jobs seem to be one of the most popular export items. With unemployment erupting to a near 7% mark, there is a reasonable case here. However, after the recent agreement between the Fed and Korea, Singapore, Brazil, and Mexico, it appears that the U.S. dollar is our best export. The Fed has gone to great lengths to insure credit markets in those countries. Could the dollar be as "good as gold?" How easy it is to control other governments and policies when you run the printing presses. The only other export that compares to this Treasury's efforts is U.S. debt. And that could well be the biggest of the exports. (1) The real concern should be who is holding the debt. He who prints the money makes the rules. Yet, he who holds the debt will have their say!

The New Brenton Woods...
If you are looking for a few extra bucks, there's always the jewelry party. Invite your friends over to your house. Remind them that they are supposed to bring all of their leftover or unwanted gold. Sell the gold, get some cash, and everyone is happy! According to one representative, "People love the idea of coming to a party and making money," said Janine Cosek, from the The Gold Refinery.com. Janine averages approximately $5,000 per party of which, she kicks back approximately 10% to the hostess of the party. Sounds like a great way to fleece and lose your friends! (2)
Maybe these folks know something. Great Britain's Prime Minister called for a "new" Bretton Woods Conference. The original Brenton Woods Conference established the U.S. dollar as the world's currency. All other world currencies are pegged to the value of a dollar. If the dollar gets too high, or too low then central banks would step in to deliver the respective medicine. Gold was supposed to back the U.S. dollar. There was supposed to be stability, and everyone would be happy. However, it appears that there is increasing discomfort with the status and future erosion of the U.S. dollar. In essence, the U.S. has thus far avoided economic disaster by exporting devalued dollars all over the world. But this trend will not let continue.
If the dollar is replaced by the Euro, or some other currency, gold will take off like the space shuttle. It's been said that is increasingly difficult to find gold bullion, and coins in local retail type shops. The U.S. Mint has "temporarily" discontinued selling gold coins. Yet, central banks have kept pressure on the price of gold. Today, its spot price closed at 741.00. Yet, an ounce of gold is selling close to $1,000.00 on EBay. Something is not right!

The New President...
Congratulations President Obama!!! The people have spoken. It is time to get behind the new President of the United States. I believe Obama will bring an upbeat and pragmatic administration to D.C.. Obama's attitude and vision for America deserve our support. Obama is a reformer and will have a welcome opportunity to challenge the status quo. More than ever, we need fiscal responsibility and reform. Most of all, we need leadership. Let us pray for him and his administration!!!

1. http://www.bloomberg.com/apps/news?pid=20601080&sid=a7r4BwvoXaBU&refer=asia
2. http://www.marketwatch.com/news/story/Gold-parties-let-consumers-trade/
story.aspx?guid=%7BAEAFCA8A%2DCEA6%2D49C7%2D839C%2DFDDBF4E7E6D2%7D

Mr. President.. Irrational Exuberance... Living and Learning...

Mr. President...
Most Americans are excited to get this Presidential Election over with. Both candidates pose as change agents. Barack symbolizes a combination of angst and pragmatism. Voters with a high degree of angst see Obama as a genuine break from the Bush administration. But beyond the "NO more Bush attitude", American voters see Obama as someone who actually seems to care for the underdog. The people like an upbeat attitude and a sense of self-confidence that seems to permeate Obama. At the bare minimum, he appears to fit the "image" of a President.

John McCain does have the battle scars to prove that he is a change agent as well. I do believe that he could have... and should have been the President of the United States instead of George W. Bush. But soft money donations took care of that... And big money ruled the day, McCain was left out in the cold. McCain a bit older, and now a bit wiser. He lacks the Presidential image or grace of Barack. Yet, more Americans will agree with McCain's platform as opposed to Obama's. A survey was conducted on Friday, where a test group of 150 individuals voted for the President. On appearance Obama won hands down. However, the same 150 individuals completed a survey based on political platforms, and most found that they agreed with McCain. Truly interesting!!!

Both candidates bring innovative ideas to the voter. While a number of polls suggest the election is already over, I am anticipating a dog-fight on Election Day. Regardless of the out-come, I believe that both of these candidates can move this country forward. Barack could well find himself in the same position that Bush had in his first term. Ownership of the House and Senate. This could well move his agenda along. By the same token, McCain who has a track-record of working across the aisle could position himself as a champion of bi-partisan change. Whoever it is, they will have their work cut out for them. On a side note, Representative Steve LaTourette is visiting schools in Solon and Twinsburg, Ohio. The fact that he is taking time out of his busy schedule to deliver speeches on Democracy and the Importance of Voting to kids who can't vote yet tells you what kind of a guy he is! I only wish I knew where to get his sign for my front yard!!!

Irrational Exuberance...
Former Fed Chairman Alan Greenspan coined the phrase "Irrational Exuberance" during the 1990's Bull Market, explaining why companies who had negative earnings but, had a .com attached to them, doubled and tripled in value. I wanted to remind readers that companies like Bamboo.com, Sunrise Technologies, Microvision, and Iomega are a few companies where the following epitaph might read: "Easy Come, Easy Go... Where the earnings came from, We did not know... They gave us money, for our stock. And we watched it drop, just like a rock." Yet, investors and speculators piled into stocks with no real reason, with the exception that stocks kept going up. The last time investors had piled into useless stocks was during the wireless radio revolution of the 1920's-30's!

Earnings drive companies, and companies that cannot demonstrate clear revenue now, or in the near to medium future should be punished. For instance, LVS is the ticker symbol of Las Vegas Sands Casinos. As we speak, they have no earnings... none! The EPS of LVS stands at a negative .08 cents per share. While the market cap reflects $5.04 Billion, companies are only worth what people are willing to pay for them. This week, analysts rewarded companies that require discretionary spending from a beleaguered consumer. The general belief on Wall Street must be that people will attempt to gamble themselves out of debt... or at least, win back their depleted retirement savings!

Cinnemark (CNK)is another loser. Not that I don't mind catching a movie. But when it comes to buying stock on this dead horse.. forget-about-it! While we are sure to see a new salvo a Christmas time movies (or if you prefer the term Holiday movies), expect box office numbers that are well-below expectations. With earnings of -.53 cents a share, and a high likeliness of global recession, this one should be avoided like the Bubonic Plague!!! Companies like WMT and D make much more sense!

On a positive note, reduced gas prices could well keep consumers in their houses... and hopefully service a portion of debt... but in terms of additional spending, it is just not going to happen. Moreover, I do not think that GM will actively pursue the next generation of Hummers until new gas mileage standards are developed. San Francisco Fed Chief Robert Parry suggested additional "downside risks" even after the .50 rate cut announced earlier this week. The bottom line is that a triple whammy of rising unemployment, tightening credit, and shrinking wealth are at work as major de-levereging forces. From the peak of housing boom, national housing prices have dropped -17%.

Living and Learning...
The realm of trading options is new to me. While I have had stunning success (profits of over 40%), I am living and learning. As a rule of thumb, when stocks hit a 100-200% profit, I believe a prudent strategy might be to purchase a covering position to lock in a higher degree of profits. Technical rallies have cut deep into profit margins that would be otherwise OUT OF THIS WORLD!!! The covering could well be a contract that is only a month out... and cheap. While I was a big winner of COF, XLI, and XLY, I have learned that covering positions could well be a reasonable strategy. A reminder should always be that profit is never a dirty word. I am currently holding calls on BAC, GE, and AU. Put positions include WYNN, FXI, VNO, SPG, BBW, and CNK.

Sources...Varied