The Exodus
Where is Moses when you need him? While Moses led the Hebrews out of bondage, it appears that salesmen and Wall Street analysts could well be leading their followers into years of financial slavery. After seven losing days in a row, and reports of additional capitulation in the Asian markets, this may well be only an end of the beginning, with more to follow! For the stock market, there is no leadership nor immediate counter-measurers in place to stop the massive Exodus that is taking place. There was a Promised Land in the world of stocks, but it seems the followers of the great Wall Street Oracles could well spend the next 40 years wandering in search of their portfolio values. Some people are opening their 401K statements and finding out that they have lost over 25% of their hard-earned money. Values that have taken years to earn are being wiped out in hours. In the last hour of trading alone, the market lost over 300 points in value. It crossed below the psychological mark of 9,000 and settled at 8,579. I have heard testimonial after testimonial of "What should we do Brian?" As a former banker, a historian, and amature economist I have recommended a few ideas:
1. Preserve Capital at all Costs...
2. Don't listen to salesman and analysts say now is the time to buy...
3. Pay down debt... a house running at 6.5% should be paid instead of chasing negative returns in the stock market...
4. The notion of investing for the long-term and just forgetting about the money may well be a cliche of the past.
Today, the stock meltdown was even on the Dr. Phil Show. Two of the guest panelists were Ben "Ride it Out" Stein... and the one and only Jimmy "The Jinx" Cramer. While I did not watch much of the show, a couple of quotes came to mind...
"The notion of retirement was only a passing ideal in civilization. People will no longer enjoy the same type of retirement their parents did." -Ben Stein
"I have a 17 year old son who is starting college next year. I pulled enough out of his account to cover the first couple years of school. As for my 13 year old daughter, I am letting it all ride." -Jim Cramer
I always liked Stein every since he played the Principal in Ferris Bueller's
Day Off... "Bueller... Bueller..." As an economist in the Nixon Administration, I have always appreciated Ben Stein's conservative straight-talk. He too was part of the dollar cost averaging crew who proclaimed that it is all going to workout in the end when we retire barring government interference... Little did Stein know that a repeal of Glass-Stegal would spell the credit market's doom.
As for Cramer, I am certain there is a group of people looking to string him up as of now. It was only three weeks ago that Cramer pounded the table on Goldman Sachs, Bank of America, and Wachovia. It is his absolutely trust in Bank of America CEO Ken Lewis that deserves particular scrutiny. Lewis told everyone back in July that B of A was not cutting dividends, that the Countrywide deal was going to add income directly to next quarter's report, and they were well leveraged. Heck, in several of my Seeking Alpha articles, I was strongly criticized for smelling a rat on B of America's ship... Maybe the audience will hang them both (Cramer and Lewis) with the same length of rope!
The End of the Age of Excess
Maybe it is times like these that we should re-evaluate the important stuff:
1. Good Health
2. Family
3. Friends
4. Faith... Of the four points mentioned, faith is the only thing that lasts. As a matter of fact, we may well be on the verge of another "Spiritual Awakening" in the United States... Isn't it kind of funny how everyone looks for God when things are a bit rough?
One thing is for certain, GDP's that are 80% consumer driven have come to a screeching halt. People had the opportunity to live large for a long time... many took advantage of easy credit and now they are going to pay for it. Others, only treated debt as a tool... These are the ones who will craft their way through this financial mess. It's all about survival skills now! If anyone tells you differently, they are lying!!! Iceland was declared insolvent in part due to the ASTRONOMICAL Debt they are carrying, with out the means to service it... It doesn't take a rocket scientist to figure this one out!
I Want My Son to be President
Monday's Presidential Debate was a real yawner... I hate to say it, but there was not a lot of spit fire that the public is looking for. I wondered to myself, are these the best that this country has to offer? And after seeing the way we treat these people who are running for President, it is apparent that other qualified individuals who could run...don't. WE beat on these public servants, the media crucifies them, and then we are disappointed with the choices we have. To be quite frank, I don't know why anyone in their right mind would subject themselves nor their family to the ridicule, dirt, and lies. We are going to have a new President in January. We better start looking for the good in both of these men...and just quite ragging on them. This is a time where the next President needs our prayers much more than our criticism. After all, I want to be able to tell my son that I want him to be President one day!
Stock Talk
FXI 5/16s... China's market has a heck of a lot further to fall that the U.S..
CMG... I love Chipoltte but they have some fundamental issues that could well turn this one into a $5.00 stock.
I am still trying bids on WYNN, ZION, DID, SKS, GLD (calls), CLF and WSM.
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