8/17/02 Posting #3 Unsustainable
From mid-1999 to mid-2000 stock price gains were frequently outpacing household incomes for the 50% of the population owning stocks. It reached a point where stocks became unaffordable, as it were. The value wasn't there and the prices unsustainable.
From mid-2001 to mid-2002 house price gains were, for many of the 75% of the population owning homes, outpacing their household
incomes. Clearly the home prices are unsustainable. To accomplish ownership the Mortgage Bankers Association anticipates about $1 trillion in mortages will be placed this year. That is on top of the $873 billion in mortages taken down in 2001.
A significant worry is the mortage debt level relative to the disposable income of the homeowner. In my view, this is an accident waiting to happen. The debris will have far-flung ramifications.
Saturday, August 17, 2002
8/17/02 Posting #2 A Proxy Fight
Lawrence Lindsey: ``We need tax simplification and we need lower taxation of capital on all fronts.'' If the gov't wants to encourage investing and promote savings, incentives would clearly be helpful. For the most part, our federal, state, and local governments have clogged our citizenry's cash flow pipeline thru a myriad of taxation roadblocks, and the culprits should be ousted by each eligible American's proxy- VOTING.
Lawrence Lindsey: ``We need tax simplification and we need lower taxation of capital on all fronts.'' If the gov't wants to encourage investing and promote savings, incentives would clearly be helpful. For the most part, our federal, state, and local governments have clogged our citizenry's cash flow pipeline thru a myriad of taxation roadblocks, and the culprits should be ousted by each eligible American's proxy- VOTING.
8/17/02 What Comes Around Goes Around
One day a poor boy who was selling goods from door to door to pay his way through school found he had only one thin dime left, and he was hungry. He decided he would ask for a meal at the next house. However, he lost his nerve when a lovely young woman opened the door. Instead of a meal he asked for a drink of water.
She thought he looked hungry so brought him a large glass of milk. He drank it slowly, and then asked, "How much do I owe you?"
"You don't owe me anything," she replied. "Mother has taught us never to accept pay for a kindness."
He replied, "Then I thank you from my heart." As Howard Kelly left that house, he not only felt stronger physically, but his faith in God and man was strong also. He had been ready to give up and quit.
Years later that young woman became critically ill. The local doctors were baffled. They finally sent her to the big city, where they called in specialists to study her rare disease. Dr. Howard Kelly was called in for the consultation. When he heard the name of the town she came from, a strange light filled his eyes. Immediately he rose and went down the hall of the hospital to her room.
Dressed in his doctor's gown he went in to see her. He recognized her at once. He went back to the consultation room determined to do his best to save her life. From that day he gave special attention to the case.
After a long struggle, the battle was won. Dr. Kelly requested the business office to pass the final bill to him for approval.
He looked at it, then wrote something on the edge and the bill was sent to her room. She feared to open it, for she was sure it would take the rest of her life to pay for it all. Finally she looked, and something caught her attention on the side of the bill.
She read these words...
"Paid in full with one glass of milk"
(Signed) Dr. Howard Kelly.
Tears of joy flooded her eyes as her happy heart prayed: "Thank You, God, that Your love has spread abroad through human hearts and hands."
Life is as simple or as difficult as we make it. Investing is no different. How one manages every day life or how a CEO manages a company will go a long way towards determining the end results.
One day a poor boy who was selling goods from door to door to pay his way through school found he had only one thin dime left, and he was hungry. He decided he would ask for a meal at the next house. However, he lost his nerve when a lovely young woman opened the door. Instead of a meal he asked for a drink of water.
She thought he looked hungry so brought him a large glass of milk. He drank it slowly, and then asked, "How much do I owe you?"
"You don't owe me anything," she replied. "Mother has taught us never to accept pay for a kindness."
He replied, "Then I thank you from my heart." As Howard Kelly left that house, he not only felt stronger physically, but his faith in God and man was strong also. He had been ready to give up and quit.
Years later that young woman became critically ill. The local doctors were baffled. They finally sent her to the big city, where they called in specialists to study her rare disease. Dr. Howard Kelly was called in for the consultation. When he heard the name of the town she came from, a strange light filled his eyes. Immediately he rose and went down the hall of the hospital to her room.
Dressed in his doctor's gown he went in to see her. He recognized her at once. He went back to the consultation room determined to do his best to save her life. From that day he gave special attention to the case.
After a long struggle, the battle was won. Dr. Kelly requested the business office to pass the final bill to him for approval.
He looked at it, then wrote something on the edge and the bill was sent to her room. She feared to open it, for she was sure it would take the rest of her life to pay for it all. Finally she looked, and something caught her attention on the side of the bill.
She read these words...
"Paid in full with one glass of milk"
(Signed) Dr. Howard Kelly.
Tears of joy flooded her eyes as her happy heart prayed: "Thank You, God, that Your love has spread abroad through human hearts and hands."
Life is as simple or as difficult as we make it. Investing is no different. How one manages every day life or how a CEO manages a company will go a long way towards determining the end results.
Friday, August 16, 2002
8/16/02 The King And The Market
We remember Elvis and the former bull market with fondness. It's been 25 years since Elvis left us, and he performed brilliantly for so many years. The bull market began in December 1974 and lasted almost 26 years, and for most of those years performed brilliantly and created trillions in wealth. We mourn for both. The King's songs still give us immense pleasure but the former bull market leaves us with lessons and mixed emotions. At some point it will return. It always stops raining but they don't ring a bell in advance.
We remember Elvis and the former bull market with fondness. It's been 25 years since Elvis left us, and he performed brilliantly for so many years. The bull market began in December 1974 and lasted almost 26 years, and for most of those years performed brilliantly and created trillions in wealth. We mourn for both. The King's songs still give us immense pleasure but the former bull market leaves us with lessons and mixed emotions. At some point it will return. It always stops raining but they don't ring a bell in advance.
8/16/02 The King And The Market
We remember Elvis and the former bull market with fondness. It's been 25 years since Elvis left us, and he performed brilliantly for so many years. The bull market began in December 1974 and lasted almost 26 years, and for most of those years performed brilliantly and created trillions in wealth. We mourn for both. The King's songs still give us immense pleasure but the former bull market leaves us with lessons and mixed emotions. At some point it will return. It always stops raining but they don't ring a bell in advance.
We remember Elvis and the former bull market with fondness. It's been 25 years since Elvis left us, and he performed brilliantly for so many years. The bull market began in December 1974 and lasted almost 26 years, and for most of those years performed brilliantly and created trillions in wealth. We mourn for both. The King's songs still give us immense pleasure but the former bull market leaves us with lessons and mixed emotions. At some point it will return. It always stops raining but they don't ring a bell in advance.
Thursday, August 15, 2002
8/15/02 Restoring Confidence
You thought I might be writing about the CEOs signing off on their financial statements. What restored my confidence was Kmart. They requested to have their loan covenants changed and that change would provide for Kmart to report a larger than anticipated loss- $400 million instead of $100 million. The reason given said their CFO:
"I don't need people to worry. I need their confidence." The larger loss sure made me feel better.
You thought I might be writing about the CEOs signing off on their financial statements. What restored my confidence was Kmart. They requested to have their loan covenants changed and that change would provide for Kmart to report a larger than anticipated loss- $400 million instead of $100 million. The reason given said their CFO:
"I don't need people to worry. I need their confidence." The larger loss sure made me feel better.
Wednesday, August 14, 2002
Tuesday, August 13, 2002
8/13/02 The Parking Lot
We might have a money maker. With all of the planes being mothballed the idea is to open a very large parking lot for the planes. We might need a bit of security but other than that this should be a cash machine. We need to lease some space in the Mojave desert and then place ads. We should get a great deal of repeat business and I feel the business has excellent growth potential. There are too many airlines and too many planes. I will look for additional space in other locations. I shall keep you posted on developments.
We might have a money maker. With all of the planes being mothballed the idea is to open a very large parking lot for the planes. We might need a bit of security but other than that this should be a cash machine. We need to lease some space in the Mojave desert and then place ads. We should get a great deal of repeat business and I feel the business has excellent growth potential. There are too many airlines and too many planes. I will look for additional space in other locations. I shall keep you posted on developments.
Monday, August 12, 2002
8/12/02 Posting #2
Morgan Stanley lowered its 2002 real gross domestic product forecast for the U.S. to 2.3 percent from 2.9 percent, and its 2003 forecast to 3.1 percent from 3.8 percent, with further risks to the downside. Maybe they'll be proven correct; however, their reading of the tea leaves looks rosy to me. I wonder whether Morgan Stanley would put their money where their mouth is.
Morgan Stanley lowered its 2002 real gross domestic product forecast for the U.S. to 2.3 percent from 2.9 percent, and its 2003 forecast to 3.1 percent from 3.8 percent, with further risks to the downside. Maybe they'll be proven correct; however, their reading of the tea leaves looks rosy to me. I wonder whether Morgan Stanley would put their money where their mouth is.
8/12/02 US Airways
Yesterday they filed for Chapter 11, and at the same time, their pilots voted to accept a proposal that will reduce their wages and benefits by an average of 26 percent through 2008, helping the financially strapped airline dramatically reduce its costs. In exchange the pilots will receive a 19.3 percent stake in the company. Another 38% ownership stake will go to Texas Pacific, a group that will buy $200 million worth of stock when the airline emerges from bankruptcy.
Texas Pacific invested in two other airlines which had filed for bankruptcy- Continental and American West. Hopefully, for all concerned, US Airways will be another successful rescue effort.
Yesterday they filed for Chapter 11, and at the same time, their pilots voted to accept a proposal that will reduce their wages and benefits by an average of 26 percent through 2008, helping the financially strapped airline dramatically reduce its costs. In exchange the pilots will receive a 19.3 percent stake in the company. Another 38% ownership stake will go to Texas Pacific, a group that will buy $200 million worth of stock when the airline emerges from bankruptcy.
Texas Pacific invested in two other airlines which had filed for bankruptcy- Continental and American West. Hopefully, for all concerned, US Airways will be another successful rescue effort.
Sunday, August 11, 2002
8/11/01 Next Week's Non-Event Fed Meeting
Out of 21 dealers recently polled by Reuters, 17 expect no change in rates for the rest of the year. The chances of an Aug. 13 easing are less than one in five, according to federal funds futures.
As for me, I have often said I don't spend time listening to economists; however, I have pointed out the importance of tracking fed funds futures. Based on the latter, the Fed meeting will be a non-event. Let's continue to monitor the fed funds futures after the meeting has been completed. It will provide an indication of future interest rate direction.
Out of 21 dealers recently polled by Reuters, 17 expect no change in rates for the rest of the year. The chances of an Aug. 13 easing are less than one in five, according to federal funds futures.
As for me, I have often said I don't spend time listening to economists; however, I have pointed out the importance of tracking fed funds futures. Based on the latter, the Fed meeting will be a non-event. Let's continue to monitor the fed funds futures after the meeting has been completed. It will provide an indication of future interest rate direction.
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