9/7/02 I Would Like To Wish Everyone A Very Happy New Year!

9/6/02 Posting #3 Voodoo Unemployment Rate

There is no way the unemployment rate dropped. A survey of 60,000 households was taken. How about looking at the overall available data. There are still 1.5 million people out of work for 27 weeks; the 4 week moving average for first time unemployment claims is the highest in about 3 months; only 162,000 non-farm payroll jobs have been added in the past 4 months and that includes 39,000 in the latest period, or 2000 below the 4 month average. The private sector lost jobs in the latest period. Do the math.

9/6/02 Posting #2 Spur Consumer Spending

Here's my plan. The goverment should issue credit cards to all consumers. They would come with 0% interest and no monthly payments until 2005. Let the consumer spend our way out of the present economic malaise instead of the Congress running up the budget deficits on favorite pork programs and overstaffing.

Right now 40% of credit cards are held by sub-par borrowers. Extending credit cards to everyone wouldn't be such a leap of faith. Maybe the government could carry the debt as an off balance sheet item. They can hire some folks from Enron to show them the way.

9/6/06 The Employer Of Last Resort

Great news!!!! Payrolls increased 39,000 for August. Now the bad news. The entire increase was new hiring by the government. Nothing has changed. With enormous deficits the government just spends and spends with money they don't have. If this were a business, the doors would have been closed a long time ago.

9/5/02 Posting #2 The United States

The latest ISM employment index fell to 47.3, and this reflects the 18th consecutive month of job losses. The four week moving average of first time unemployment claims rose to its highest level since June 8. For anyone dismissing these facts, WalMart certainly is paying attention as their latest sales numbers rose only 3.8%

9/5/02 Germany

Their unemployment rate rose to 9.9% and manufacturing orders dipped. If large developed economies are weak, who is going to purchase our exports? It's pretty predictable our unemployment rate will rise in the near future. When it does, consumer confidence will weaken some more. You can bet earnings estimates will continue to drop. Winter will soon be upon us. One might consider investment hibernation.

9/4/02 Posting #2 Thoughts For The Afternoon

I love all the talk from pundits who say stocks are cheap. What's cheap is their talk. Wake me up when one pundit says he or she is purchasing stocks for his/her own account and is unhedged.
In a prior blog I gave my thoughts on Hershey as a risk arbitrage investment. Now to add some spice a judge issued a TRO against a possible sale. Going into court should be avoided at all costs. As I said, buying some Reese's in a store is the best idea.
A German newspaper reports that UBS has thoughts of making an offer for Merrill Lynch. UBS denied the story. At some time I believe Merrill Lynch will be acquired.

9/4/02 The Nikkei 225

With a closing low just above 9000 the Nikkei made a 19 year low. You're possibly thinking 9000 isn't so bad because the Dow is at 8300. The difference is a drop of 30,000 points rather than 4000. What's a few points between friends.
You might be thinking Japan is Japan and we're the U.S. As long as men put their pants on one leg at a time and women need to snap their bras closed, there are similarities to cultures. Countries are not run by robots. When the good times roll, most everyone believes they'll roll on for ever. It gets infectious and then the next thing you know there is an infection caused by overindulgence and it is necessary for the patient to rest and get stronger. Japan has been in that state for 19 years. The U.S. has just begun the process. If you rush out too soon, you'll just have a worse relapse.

9/3/02 Posting #3 It's Just Business

As I mentioned at the beginning of my Aug. 19 blog, 9000 on the Dow and 1400 on the Nasdaq were good spots to sell into the then rally in this 28 month bear market. No one enjoys losing money. The idea is to preserve capital by limiting losses and letting the gains in great companies run. That's the way to come out a winner. We cannot be right on all of our investments. When wrong, swallow the red ink and don't take it personally. The market doesn't know your name or recognize your face. Learn from the loss and don't repeat the same mistake. Don't make excuses. It's your money and it's your decision to buy or sell a stock. If you've given power of attorney to someone else, that too is your decision. Do not lose more than you can afford- under any circumstances. Use stop losses when necessary. Bear markets can be ugly. They don't take any prisoners.

9/03/02 Posting #2 August ISM Index

It remained the same at 50.5% and new orders fell to 49.7% from 50.4%. Most importantly, purchasing managers "lack confidence" in their forecasts going forward. On the other hand, the A's "have so much confidence". Different venue but very telling.

9/3/02 Winning Creates Believers

The current bear market has lasted 28 months, extinguished $7 trillion in value, and is the longest bear market since the 1930's. Along the way it has created more and more non-believers in the stock market and corporate America.

Yesterday the A's won their 19th straight thereby tying an American League record with the 1906 Chicago White Sox and the 1947 New York Yankees, the latter possibly the greatest team ever. When Jason Giambi was signed by the Yankees, no one gave Oakland much of a chance to succeed. As their first baseman says, "we've come so far and it's going to end sometime, but we have so much confidence." They believe in themselves and their growing fans believe in them. It's fun to watch a winner.

As we can see, every once in a while a streak will start and build on itself. Confidence and believing are often the keys to keeping it alive. In the case of the stock market it's the exact opposite- lack of confidence and non-believing- that keep the bear market streak alive.

9/2/02 Labor Day

I am wondering. Do the unemployed celebrate labor day? When your employer goes out of business, and then the only job you can get is behind the counter at Starbucks, do you feel joyous about celebrating labor day? If you are unemployed, do you want to march in the labor day parade?

The Economy Policy Institute recently issued a report on the job situation and stated "with the boom gone bust, American workers are headed back to an economy marred by slow wage growth and no job growth, with wage and income disparities widening again."
Over the past two years unemployment has risen by almost 3 million. Of course, that doesn't include millions of service workers receiving $7 per hour and making ends meet.

Then the Institute described hidden unemployment of another 1 million with "a weak labor market in which potential job seekers avoid even attempting to enter the workforce because they are pessimistic about their employment prospects."

Then I turned to all the upbeat comments on productivity. With higher job uncertainty and greater income inequality it's no wonder there is greater productivity. So many jobs are tenuous the worker is afraid to say "take this job and shove it."

Facts For A Sunday

Statistics show that less than 29% of women have orgasms during intercourse.
Statistics show that less than 29% of mutual fund money managers beat the averages year in and year out.
In 2000 AOL settled a prior SEC inquiry by paying a fine and promising not to break securities laws again.
InDuring the first 6 months of 2002 the number of millionaire households dropped by 17%.
The A's win their 17th straight, the major's longest winning streak in 49 years.
Although interest rates have dropped in 2002, most corporate bond fund returns have declined this year.
Cocoa hit a 15 year high in N.Y. and London trading.
Opec meets Sept. 19 in Osaka.
Citigroup sold their 399 Park Ave. Manhattan headquarters building with 1.68m sq ft for $1.06 billion.
Arthur Andersen had 2500 public companies for clients.
Siebel to buy up to $32 million of worthless share options(exercise prices at $40 & up) from its employees.