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.

8/31/02 "It Was Very Difficult To Definitely Identify A Bubble Until After The Fact"

That's what Alan Greenspan said yesterday to a symposium of the Federal Reserve Bank of Kansas City in Jackson Hole, Wyoming. Maybe Greenspan might have inquired of the elk, moose, and buffalo wandering in Yellowstone. They might have had experience with bubbles in the many streams and rivers. In the end, markets characterized by supply and demand correct bubbles as well as recessions. The Fed reads the market's tea leaves. They make policy after the facts. The only certainty is the marketplace itself. The on-going bubble is the imagined halo formed around the Fed. I cannot say with certainty when that bubble will burst.

8/30/02 Posting #2 IT Spending

On a conference call last evening Sun Microsystems said the environment for technology spending may be worsening. The Sun executives are in the trenches and their orders are disappointing.

8/30/02 Housing

In prior blogs I have opined that the housing market has peaked at the bubble stage. There are many who disagree with me including the Fed's Greenspan. Clearly, corporate officials and board members of housing companies agree with me. In the latest quarter they were net sellers of about $260 million worth of stock in their own companies. It is the largest insider selling in housing stocks in 6 years. I consider the selling significant. These individuals should understand their business better than anyone. I wouldn't want to buck their selling. It reminds me of all the selling by insiders in the dotcom stocks at the height of that bubble. We must remember that policymakers like Greenspan aren't in the trenches.

8/29/02 The GDP Report

Inventories grew at a $7.3 billion annual rate, revised upward from the previous estimate of a $1.0 billion pace and contributing strongly to the quarter's overall growth rate. That growth rate of just over 1% should indicate how weak the economy really is. An inventory build up will only mean markdowns in the coming months and lower corporate margins.

It's most unfortunate that politicians and the media feel a need to talk up the economy in the hopes of improving confidence. The stock market has been declining for over 2 years and the economy has been following in the same direction for months and months. There isn't a double dip- just one extended dip. Rallies in bear markets are still part of a bear market. The same is true with the economy. Rallies take place at lower levels for both.

8/28/02 September

First I want to apologize for some postings which are duplicate and triplicate in nature. I stink at technology!

Now for the real stuff. SEPTEMBER IS THE WORST MONTH FOR THE STOCK MARKET. In the last 50 years or so the market has been down 80% of the time in September. My suggestion- do nuthing. If you think you're smarter than the percentages, I can find a nice plot for you at Forest Lawn.

8/27/02 Posting #3 Consumer Confidence

The August number was 93.5 and this was much lower than expected. It is at the lowest level since November 2001. The consumer confidence number is much more vital than that of durable goods.

8/27/02 Posting #2 Congressional Budget Office

Today the CBO forecast cumulative surpluses of $336 billion from 2002 thru 2011, down from $1.7 trillion only 5 months ago and $5.6 trillion last year. This is rather incredible for an economy supposedly ramping up. They also projected a deficit of $145 billion for 2003, and that the budget would not be balanced until 2006. At election time I am certain you will be hearing these forecasts over and over again. One should remember the CBO is non-partisan.

8/27/02 Durable Goods

For the month of July durable goods rose approximately 9%(ex transportation 3.7%) and this reverses a very disappointing June. One must remember how volatile durable goods are from month to month and they are almost impossible to predict with accuracy. Without question the big mover behind the numbers is the 0 % financing for autos. Yesterday the big Dow stock was GM. Some folks must have been enthusiastic about the durable goods numbers to be announced today. Still, there is basically no hiring in the manufacturing sector. If there were, I'd get more excited. Additionally, Intel was unable to give any clue about potential IT pick up, and that is troubling but not surprising.

8/27/02 Durable Goods

For the month of July durable goods rose approximately 9%(ex transportation 3.7%) and this reverses a very disappointing June. One must remember how volatile durable goods are from month to month and they are almost impossible to predict with accuracy. Without question the big mover behind the numbers is the 0 % financing for autos. Yesterday the big Dow stock was GM. Some folks must have been enthusiastic about the durable goods numbers to be announced today. Still, there is basically no hiring in the manufacturing sector. If there were, I'd get more excited. In addition, Intel was unable to give any clue about potential IT pick up, and that is troubling but not surprising.

8/27/02 Durable Goods

For the month of July durable goods rose approximately 9%(ex transportation 3.7%) and this reverses a very disappointing June. One must remember how volatile durable goods are from month to month and they are almost impossible to predict with accuracy. Without question the big mover behind the numbers is the 0 % financing for autos. Yesterday the big Dow stock was GM. Some folks must have been enthusiastic about the durable goods numbers to be announced today. Still, there is basically no hiring in the manufacturing sector. If there were, I'd get more excited. In addition, Intel was unable to give any clue about potential IT pick up, and that is troubling but not surprising.

8/26/02 A Pimple On An Elephant's Ass

This week the media will make a big deal that in July $50 billion, the largest monthly amount on record, was pulled out of stock funds. We have about 60 billion households owning stock and bond funds, and $50 billion represents only about 1 1/2% of their total fund holdings. As such, redemptions potentially have a long way to go. Over the past two years the smart money has been selling. I have confidence in the public, and they are a lot smarter than most "smart" money managers. The $50 billion will prove to be a drop in the bucket or even a pimple on an elephant's ass.

8/26/02 A Pimple On An Elephant's Ass

This week the media will make a big deal that in July $50 billion, the largest monthly amount on record, was pulled out of stock funds. We have about 60 billion households owning stock and bond funds, and $50 billion represents only about 1 1/2% of their total fund holdings. As such, redemptions potentially have a long way to go. Over the past two years the smart money has been selling. I have confidence in the public, and they are a lot smarter than most "smart" money managers. The $50 billion will prove to be a drop in the bucket or even a pimple on an elephant's ass.

8/25/02 Gram

My mother in law would have been 93 today. She died several years ago. Today will be a day of rest and remembrance
and reflection. It's difficult to lose and miss loved ones. Time is very precious and time is also an enemy that cannot be defeated.

8/24/02 Quotes For Saturday

In memory of Peter Martin, Senior Business Editor Financial Times: Lessons from the dotcom bubble-
"much internet technology does not work...most new business models do not work...nothing destroys
value like underpriced capital...financing start-ups in the public markets is a terrible idea...the web era has just begun...
there is at least as much interesting innovation ahead as that which lies behind."

Winston Churchill: "You may take the most gallant sailor, the most intrepid airman, or the most audacious
soldier, put them at a table together- what do you get? The sum total of their fears."

Kofi Annan, secretary-general of the United Nations: "Attempts to promote human development and reverse
environmental degradation have not, in general, been effective over the last decade."

Bob Semple, Deutsche Bank, "we have to concede that recent economic and corporate developments have been more
disappointing than we anticipated, with little prospect for improvement over the next month...at best, we believe
equities are likely to consolidate rather than make further progress in the short term."

8/23/02 Posting #2 Republicans and Democrats

In one of my blogs last month I mentioned that the White House budget office predicted a $444 billion budget surplus between 2002 and 2011. I provided commentary on this estimate. Now we have another voice from the peanut gallery, the Senate Budget Committee, who yesterday predicted a $475 billion budget deficit for the same period. They predicted deficits would continue thru 2008. They must believe George W. will be elected for a second term! The White House predicts a surplus in 2005. They must believe George W. will get elected for a second term!

For my money I want to see the revised numbers. Don't cheat me. I want revised monthly budget deficit numbers. The government revises most numbers. Let's set up a new committee just for revising government numbers. That would help the employment numbers.

8/23/02 The Nation's Secret Intelligence Court

The court said the F.B.I. and the Justice Department had made "erroneous statements" in eavesdropping applications about "the separation of the overlapping intelligence and criminal investigators and the unauthorized sharing of FISA information with F.B.I. criminal investigators and assistant U.S. attorneys."

It was also mentioned that an "alarming number of instances" of misleading justifications for electronic surveillance and wiretaps occurred during the Clinton administration. As citizens we each "own" a piece of the federal debt and we are each asked to work 4 1/2 months each year for free so that the monies earned during that time can go to pay taxes. It's fair to say the citizens own this country and not the federal beaurocracies. Isn't it time federal employees recognize who pays their salaries and that they should be held to a high standard of ethics- just like at Enron, Global Crossing, WorldCom and the like?

The people responsible for "erroneous statements" in these 75 cases cited by the Secret Intelligence Court should be prosecuted to the fullest extent.

8/22/02 Government Statistics

Once again the government has provided "moving target" numbers. This time it was the labor department, and they have just revised preliminary estimates for the latest weekly jobless claims and raised the number to 391,000. These are weekly not quarterly numbers. How difficult can it be to get a weekly number correct? GE is a massive company and gets daily numbers. I ran a company with a 1000 employees, not massive, and got daily numbers.

Unemployment statistics are vital numbers. They have a bearing on many aspects of our way of life. The U.S. citizens are up in arms about Enron and Global Crossing and Worldcom and rightly so. Providing accurate and timely government statistics should be treated with at least the same seriousness. Should it come out that the statistics are being "manipulated", then proper actions should be taken and that too should be front page news.

Revising weekly numbers is akin to 3 card monte.

8/21/02 Management Lessons

Lesson Number One
>
> A crow was sitting in a tree, doing nothing all day. A small
rabbit saw
the > crow, and asked him, "Can I also sit like you and do nothing all
day
long?"

> The crow answered: "Sure, why not." So, the rabbit sat on the
ground
below
> the crow, and rested. All of a sudden, a fox appeared, jumped on
the
rabbit > and ate it.
>
> Management Lesson? To be sitting and doing nothing, you must be
sitting
> very, very high up.
>
> Lesson Number Two
>
> A turkey was chatting with a bull. "I would love to be able to get
to
the
> top of that tree," sighed the turkey, "but I haven't got the
energy."
"Well, > why don't you nibble on some of my droppings?" replied the
bull.
"They're > packed with nutrients." The turkey pecked at a lump of dung
and
found that > it actually gave him enough strength to reach the lowest
branch
of the tree.

> The next day, after eating some more dung, he reached the second
branch.
> Finally after a fourth night, there he was proudly
> perched at the top of the tree. Soon he was spotted by a farmer,
who
shot > the turkey out of the tree.
>
> Management Lesson? BullShit might get you to the top, but it won't
keep
you > there.
>
> Lesson Number Three
>
> A little bird was flying south for the winter. It was so cold the
bird

froze > and fell to the ground in a large field. While it was lying
there, a
cow > came by and dropped some dung on it. As the frozen bird lay there
in
the > pile of cow dung, it began to realize how warm it was. The dung
was
actually > thawing him out! He lay there all warm and happy, and soon
began
to sing for > joy. A passing cat heard the bird singing and came to
investigate.

Following > the sound, the cat discovered the bird under the pile of
cow
dung, promptly > dug him out and ate him.

>
> Management Lesson?
>
> 1) Not everyone who shits on you is your enemy.
> 2) Not everyone who gets you out of shit is your friend.
> 3) And when you're in deep shit, it's best to keep your mouth
shut!

8/20/02 The Trade Deficit

For the second month in a row our monthly trade deficit exceeded 37 billion dollars. On an annualized basis this approaches 450 billion dollars. With the budget deficit projected at 165 billion dollars this makes a total budget deficit exceeding 600 billion dollars. Such large deficits undermine the stability of the economy, the stability of the dollar and our independence. This course must be reversed before we hit a stonewall and crash out of control.

8/19/02 Posting #2 V Shaped

The Dow is now approaching 9000 and the Nasdaq 1400. At the same time the Index of Leading Economic Indicators came in at the lowest point since last September. The stock market reflects future profits and, in my view, the economic environment does not appear
poised to get rosy. Those buying on dips will regret their purchases. The recent bounce will not be V shaped as it was in December 1974. Even then, there was another significant buying opportunity in 1982.

In the past two years we have witnessed several dead cat bounces, and from declining price levels. Look at the charts. They tell me to body surf on a warm beach. I won't forget my sunscreen. For buyers of stocks maybe you can find some "price screen".

8/19/02 Continuous Replenishment

Sam Walton in 1987: "The way we do things is way too complicated. You (P&G) should automatically send me Pampers, and I should send you a check once a month. We ought to get rid of all the negotiation and invoicing." Sam Walton was ahead of his time, and one could argue that he made WalMart into the most successful business in the U.S. if not the world.
Invest in and with winners. Stay with the winners. Warren Buffet buys winning companies and lets the managements stay on and run the operations. You can do the same with your investments. It means buying a piece of the business. Keep it simple.

8/19/02 Continuous Replenishment

Sam Walton in 1987: "The way we do things is way too complicated. You (P&G) should automatically send me Pampers, and I should send you a check once a month. We ought to get rid of all the negotiation and invoicing." Sam Walton was ahead of his time, and one could argue that he made WalMart into the most successful business in the U.S. if not the world.
Invest in and with winners. Stay with the winners. Warren Buffet buys winning companies and lets the managements stay on and run the operations. You can do the same with your investments. It means buying a piece of the business. Keep it simple.

8/18/02 Certain Givens

Our population is aging, and along with that trend, healthcare will continue to become a larger portion of our GDP.
Too many people are out of work. There aren't enough good jobs for educated Americans.
Too many Americans work in low-paying service jobs.
Taxes are too high at all levels of gov't.
Congress spends too much money. For Congress economic stimulus means overspending. We have a coin operated gov't.
Tough decisions require a willingness to be vilified.
There is too much inner turmoil in families.
The U.S. consumer has good reasons not to be confident at this time.
Our forefathers never envisioned regulations strangling every day life.
Too many cooks spoil the broth, and gov't bloat is akin to botulism.
Random acts of kindness make the world a better place.

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.

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.

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.

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.

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.

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.

8/14/02 Posting #2 The Conference Board

Their chief economist stated that at the present time a double-dip recession for the U.S. is nearly impossible to occur. From their lips to God's ears.

8/14/02 Treasuries

10 year treasuries dipped below 4% for the first time since being issued in the 1960's. Mortgage refinancing will be the inital beneficiary. We nust remember that lower interest rates do not ensure an economic resurgence. We only have to look at Japan to see that lesson.

8/13/02 Posting #2
A Revelation From the Fed!!!!!!

"the risks are weighted mainly toward conditions that may generate economic weakness."

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.

8/12/02 Posting #4
About 20 percent of Americans have described current economic conditions as "poor," the highest level since early 1996, according to the Gallup Organization. About 50 percent say conditions are "only fair."

8/12/02 Posting #3
Merrill Lynch chief economist Bruce Steinberg feels the stock market is slowing the U.S. economy, which otherwise is fundamentally "fine." Now you know why I don't pay attention to the words and writings of economists.

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.

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.

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.

8/10/02 Not A Laughing Matter

"It is easy in the United States," said Robert J. Gordon, an economist at Northwestern University, "to get sharp and sudden declines in hours by laying off workers and eliminating overtime, and this contributes to healthy productivity growth in hard times."

8/10/02 A Chuckle For Saturday

WHY WE LOVE CHILDREN
A kindergarten pupil told his teacher he'd found a cat. She asked him
if it
was dead or alive. "Dead." She was informed. "How do you know?" she
asked
her pupil. "Because I pissed in its ear and it didn't move," answered
the
child innocently. "You did WHAT?!?" The teacher exclaimed in
surprise.
"You know," explained the boy, "I leaned over and went 'Psssst!' and it
didn't move."
_________________________________________________
A small boy is sent to bed by his father. Five minutes later.
"Daaa-ad...." "What? "I'm thirsty. Can you bring drink of water?"
"No.
You had your chance. Lights out." Five minutes later: "Da-aaaad....."
"WHAT?" "I'm THIRSTY. Can I have a drink of water??" "I told you NO!"
If
you ask again, I'll have to spank you!!" Five minutes later......
"Daaaa-aaaad....." "WHAT!" "When you come in to spank me, can you
bring a
drink of water?"
________________________________________________
An exasperated mother, whose son was always getting into mischief,
finally
asked him, "How do you expect to get into Heaven?" The boy thought it
over
and said, "Well, I'll run in and out and in and out and keep slamming
the
door until St. Peter says, 'For Heaven's sake, Dylan, come in or stay
out!"
_________________________________________________
One summer evening during a violent thunderstorm a mother was tucking
her
son into bed. She was about to turn off the light when he asked with a
tremor in his voice, "Mommy, will you sleep with me tonight?" The
mother
smiled and gave him a reassuring hug. "I can't dear," she said. "I
have to
sleep in Daddy's room." A long silence was broken at last by his shaky
little voice: "The big sissy."
_________________________________________________
It was that time, during the Sunday morning service, for the children's
sermon. All the children were invited to come forward. One little
girl was
wearing a particularly pretty dress and, as she sat down, the pastor
leaned
over and said, "That is a very pretty dress. Is it your Easter Dress?"
The
little girl replied, directly into the pastor's clip-on microphone,
"Yes and
my Mom say it's a bitch to iron."
_________________________________________________
When I was six months pregnant with my third child, my three year old
came
into the room when I was just getting ready to get into the shower.
She
said," Mommy, you are getting fat!" I replied, "Yes, honey, remember
Mommy
has a baby growing in her tummy" "I know," she replied, but what's
growing
in your butt?"
_________________________________________________
A little boy was doing his math homework. He said to himself, "Two
plus
five, that son of a bitch is seven. Three plus six, that son of a
bitch is
nine...." His mother heard what he was saying and gasped, "What are
you
doing?" The little boy answered, "I'm doing my math homework, Mom."
"And
this is how your teacher taught you to do it?" the mother asked.
"Yes," he
answered. Infuriated, the mother asked the teacher the next day, "What
are
you teaching my son in math?" The teacher replied, "Right now, we are
learning addition." The mother asked, "And are you teaching them to
say two
plus two, that son of a bitch is four?" After the teacher stopped
laughing,
she answered, "What I taught them was, two plus two, THE SUM OF WHICH,
is
four."
_________________________________________________
One day the first grade teacher was reading the story of Chicken Little
to
her class. She came to the part of the story where Chicken Little
tried to
warn the farmer. She read, ".... and so Chicken Little went up to the
farmer and said, "The sky is falling, the sky is falling!" The teacher
paused then asked the class, "And what do you think that farmer said?"
One
little girl raised her hand and said, "I think he said: 'Holy Shit! A
talking chicken!'" The teacher was unable to teach for the next 10
minutes.

8/9/02 Gov't Revised Numbers #2

It has been brought to my attention that Senator Hollings from S. Carolina has just demanded that budget director Daniels attest to the gov't financial statements.

8/9/02 Gov't Revised Numbers

On Aug.14 company officials will need to validate their reported numbers. That's a wonderful idea. If Paul O'Neil were still running Alcoa, he'd be doing just that; however, he is ONLY Sec. of the Treasury, and therefore, GDP numbers can continue to be revised. When initially released, the press makes a big deal about the GDP number. Then a month later a revised GDP number is provided. This is absolute crap. What's good for the goose is good for the gander. Find someone who can provide the real number in a timely manner, and clear the deck with the others. It's time the public demanded the best from gov't officials. It's a privilege to vote and a privilege to be an American citizen. Many have died so we can have these privileges.

8/8/02 Posting #3
The Scoreboard

Since starting this blog, some have commented that I appear overly negative. Everyone is entitled to their opinion and that includes me. Often I have stated that I do not make recommendations on individual stocks. Rather I try to mention potential opportunities which each person might investigate.

Over the past few weeks I have mentioned the following stocks: Pfizer, Merck, Microsoft, GE, JP Morgan, and Citigroup. In order of mention they have risen from 26 to 33; from 39 1/2 to 50 1/2; 42 to 49; 26 to 32; 20 to 26; and 25 1/2 to 33 1/2. There have been opportunities in this market as there are in every market. Searching them out requires a good deal of work and study.

The market makes us humble and I shall look stupid and out of synch many times in the future. The idea, however, is not to be too proud, and therefore, admit mistakes and cut one's losses. Let the winners ride until proven otherwise. Give yourself a chance to hit a tape measure homerun. Maybe you won't hit 600 out of the park but you'll hit a few- that's more than most can probably say.

8/8/02 Posting #2
Deflation Is Not Tame Inflation

In July the PPI fell 0.2% and over the past 12 months 1.1%. This is the first year over year decline in the PPI since 1998.
One can expect profit margins to be continually squeezed at the producer level, and one result will be increased layoffs.
Someone reading this will state that the jobless numbers released today were quite positive. My answer is relative to what. The number of people out of work remains high, and in my view, will increase in the future.

The second result of the PPI falling will be the lowering of inventories being carried on the books. You are starting to see this at the retail level. If inventories are kept exceptionally lean, then economic activity will be reduced- especially at the manufacturing level. Retail same store sales were lower than expected for July and that was true even for WalMart and Target. I feel this weakness will carry forth into the near future. As I have pointed out previously, the common stocks for both companies topped out several months ago. In other words, the market was able to once again forecast accurately.

8/8/02 Gold

From 1981 gold was in a 20 year bear market, and then it reached $250 per ounce and just stopped going down in price. There wasn't any big news, and slowly it has risen to well over $300 an ounce. Given the size of the decline over the 20 years this rise is minimal at best. Recently, gold hit a 5 month low at $300 per ounce and bounced up from that level.

There are some good reasons for the rise in gold. Production of gold will be declining for the next several years. Secondly, some of the big producers, such as, Barrick have been hedging their production year in and year out and have now decided to go into the market and buy back some of those hedges. That appears to be a smart policy with gold in the early stages of a bull market.

In the end, supply and demand as well as psychology will determine the future price for gold. India is the largest purchaser of gold, and India's economy is very strong at the moment. That should provide a floor under the demand for gold.

8/7/02 Posting #4
The National Debt Clock, which ran from 1989 until late 2000 in Manhattan, was turned back on last week.

8/7/02 Posting #3
Nat'l Bureau of Economic Research

Reuter's reports The National Bureau of Economic Research said on Wednesday it was not yet ready to make a formal call that the U.S. recession has ended, saying it will first need to rule out the possibility of a ``hypothetical'' second leg to the economic downturn.

8/7/02 Posting #2
The West Nile Virus and Containing "The Enron"

The West Nile was first detected in the U.S. in 1999. No one knows for certain when Enron's wrongdoings were first uncovered. The West Nile has spread to 34 states, and hundreds have been impacted and close to two dozen have died. Many more have been touched by Enron; however, it is diffficult to attach a specific death to Enron. Heartache and financial ruin are much easier to delineate.

There is a vaccine for the West Nile but immunization to this point is only for horses and not for humans. Humans cannot contract the West Nile from horses. My suggestion is that we stay in close proximity to horse's asses, and that should alleviate some of our concerns. As for Enron, the jury is still out. It is doubtful that an inoculation program can assist those already "infected". The good news is there is an abundance of horses asses. Just stay upwind and away from the hot air.

8/7/02 Cisco's Quarterly Reporting

Cisco went public in 1990, and the company and the stock for many years produced a tape measure home run- we're talking out of the park and into the next county. The last few years have proven to be difficult for Cisco, and another side is peeking through the infrastructure carnage.

Each quarter Cisco steers the analysts to earnings estimates which the company is able to beat. Last evening the stock rallied a point after the release. They beat expectations thru cost cutting. Nothing wrong with that except the revenue figures did not meet expectations. Management discussed extending the stock repurchase program. The stock has dropped over 85% from its highs. How about management buying stock for their own account, and not using the $21 billion in cash in the corporate till for the repurchase.

Management discussed making acquisitions when the economy turns around. Warren Buffett buys companies in bad times, and in reality, bad economies should bring bargains to the fore.

What's really hurting the bottomline at Cisco? The bear market is the culprit. The company can no longer sell naked puts on Cisco stock, have the puts go unexercised, and take the premium money on the puts into income. The heavy cream has disappeared. How many hundreds and hundreds of millions went into net income over the decade of the 90s? It's not just Cisco but also the majority of the large tech so-called growth companies. It sure beat new product introductions. Just pocket the premium money and go to the bank. It's 100% legal from an operating standpoint. From a disclosure point of view did the stockholders get an accurate reading? So now Cisco must resort to cost cutting instead of naked put selling. While it lasted, the latter was a joy ride.

8/6/02 Posting #2
The Fed Revisited

We have touched on this subject in prior postings; however, given today's rally, let's discuss it again. The reason given for the rally is the opinion that the Fed will lower interest rates. The market has already lowered interest rates. Short term treasury bills yield less than Fed Funds. The Fed may discuss policy and provide liquidity in the marketplace but the latter sets the yields in real time. Economists at Lehman, Deutsche Bank, and Dresdner Bank today predicted the Fed would lower rates between now and the end of the year. It's a little late for this prediction. Rates have been coming down sharply- especially recently - as stocks have declined to new lows.

I have previously indicated the need to watch the Fed Funds futures and the directions of their sentiment. This is a very good indicator. The sentiment has been strongly leaning towards lower interest rates.

The question one might pose is why the lowering of rates. The answer lies in the weak economy and the lack of demand, and it should provide a clue as to the direction of corporate profits. If profits continue to be weak, then stocks should mirror profits. Low interest rates do not ensure higher stock prices. Look at Japan for the past dozen years or so. In addition, low interest rates do not ensure higher corporate profits. Demand must improve before cash flow starts to perk up. At this point demand looks flat at best.

We don't get paid to be investing superpeople. Rationality will provide a better foundation for your portfolio to grow.

8/6/02 The Prices For A Safe Haven

With the backdrop of the Fed Funds rate at 1.75% the Treasury's auction began yesterday when $16 billion in three month treasury bills sold at a discount rate of 1.6% and a similar amount of six month treasury bills sold at roughly the same yield. Today $22 billion in four week bills will be sold as well as $22 billion in 5 year notes at an approximate yield of 3.1%.

It is significant to mention that 2 year treasuries now yield 1.9%, and this is a clear indication that bond investors believe the Fed may lower interest rates in the near future.

On Wednesday the Treasury will sell $18 billion in 10 year notes at an approximate yield of 4.2%.

Poor economic data may undermine the stock market but it sure provides a bull market for treasuries. The two year notes were first issued in 1972, and this is their lowest yield in 40 years. Considering the size of the U.S. deficit, one could argue the yields represent irrational exuberance for a safe haven.

8/5/02 Posting #3
Down Volume

With about 30 minutes left in the trading day it is clear that at least 1 billion shares will trade on both the New York Stock Exchange and the Nasdaq on down volume. The down/up volume ratio has expanded to between 6 and 7 to one on the downside.

We are seeing more comments about a double dip in profits and a double dip economy. Had you blinked it's possible you might have missed the upticks in profits and/or the economy.

8/5/02 Posting #2
Advance/Decline Volume

With 3 1/2 hours left in today's trading session there are twice as many stocks moving down as up; however, a closer look reveals that 5 times as much down volume has taken place as up volume. That ratio is obviously negative, and once again indicates the lack of buyers.
There are many pundits who continue to state that it is too late to sell. Clearly many investors don't agree.

8/05/02 The Fed

As always, the following represents my view, and in this case, many may disagree. Next Tuesday the Fed has their meeting relating to the economy and interest rates. Most believe that the Fed moves the markets. Rather, I feel the markets anticipate events and the Fed therefore is a follower. As such, I prefer to watch fed funds contracts and see what thew market in real time is telling us. I believe you have an advantage in doing so and I urge everyone to become familiar with these contracts.

8/04/02 The Market Decline

CNN recently took a poll concerning the 2 year market decline, and 46% responding said that this bear market would impact their ability to retire and the same 46% stated they would need to stay longer in their jobs prior to retiring. The poll did not inquire as to whether the 2 year decline had impacted their views on investing.

I would hope that this decline has made a change in people's investing behavior. Many Americans had never been thru a bear market. They hadn't invested in 1974 or 1981-82. I think this period has taught the vast majority of the investing public that they really didn't know the companies in which they had invested. A successful approach is to study a company prior to investing with the same view as if you were purchasing the whole company. This exercise will sharply reduce your errors in investing judgment and provide for more successful results.

Few people have the ability to look out 10 years and forecast cash flow over that period of time; however, it is wise to try to look down the "field" with a 2 to 3 year time horizon. That is doable with hard analysis, and to make money consistently in the stock market requires that discipline.

8/3/02 Looking Down The Field

It's worthwhile to keep a journal which describes your reasons for buying, holding, and selling a stock. These notes can be revisited and will, hopefully, reduce the chance for future misjudgments.

While assessing the present, it's important to look down the "field" and to be on guard for pitfalls coming your way. You are the quarterback. You're in charge of calling the plays, as it were. If something appears ominous, audible and change your plan immediately. Listen to your instincts and do not second guess. In the journal write down the reasons for your decisions.

It's helpful to keep an eye on the Wilshire Associates Equity Index because it represents the combined market value of all N.Y. Stock Exchange, American Stock Exchange, and Nasdaq stocks. A year ago at this time the index value was $11 1/4 trillion and now it's $8.2 trillion, a drop of 27%. By comparison, the assets in money market funds amount to $2.2 trillion. Given the latest GDP numbers as well as the current jobless rate, it is certainly possible for more assets to be transferred from the Wilshire Index into money market accounts. When looking down the "field", that's one alternative scenario.

8/2/02 The Sun Is Rising Today But There Are Few Bright Spots

The headlines state that the economic recovery is sluggish and losing steam. Possibly the "recovery" was illusory. There was a rebuilding of inventories. Did that rebuilding translate into positive cash flow? We can examine the zero percent financing for the auto companies. With their latest labor contract the industry can no longer save money by closing factories. Why? If a factory is closed, the workers receive 90% of their wages and benefits.

After 9/11 billions were spent towards the war on terrorism. Hopefully this is a one time event. As I have stated previously, the gov't cannot spend us out of a recession. We need industry and small businesses to add workers, and an improving confidence level is required to accomplish this feat. In the latest July job numbers there was essentially no job creation, and, in fact, the number of hours worked in each week for each individual went down.

I am not an economist, and maybe that gives me an advantage in assessing the landscape. I want the country's economic picture to improve; however, the downward trend in confidence creates a growing skepticism on my part. Interest rates are at extremely low levels but Japan has discovered that 0 interest rates do not ensure economic recovery.

Lastly, corporate numbers will continue to be viewed with question marks. Yesterday's CFO Magazine reported that about one in six CFOs were pressured to misrepresent financial results. That doesn't leave the investing public with warm and fuzzy feelings.

8/1/02 Posting #3
Fed Funds Futures

Federal funds futures looked for about a 45% chance of a 25-basis-point Federal Reserve ease in short-term interest rates by September ahead of Friday's June payrolls and personal income data.

8/1/02 Posting #2
Merrill Lynch's Bernstein

Merrill Lynch & Co .'s chief U.S. investment strategist, Richard Bernstein, lowered his 12-month target on the Standard & Poor's 500 Index to 960 from 1050, he said during a CNBC interview Thursday.

8/1/02 Posting #2
Institute for Supply Management

The ISM index fell to 50.5% from 56.2% in June. New orders dropped to 50.4% from 60.8%. Production sank to 55.7% from 61.4%. Employment eased to 45.0% from 49.7. ISM said the drop in new orders could be a pause in inventory replenishment.

8/1/02
The Senate August Recess

This recess begins tomorrow- none too soon in my view. Yesterday by a vote of 49 to 50 the Senate failed to pass Medicare coverage and benefits for drugs taken to combat heart disease, strokes, arthritis, and other illnesses.
The House had previously passed a plan to provide Medicare drug benefits via private insurance companies.

I feel comfortable in stating that each political party will blame the other for failure to pass this bill. That is besides the point. Both parties had promised to provide seasoned citizens with prescription drug benefits. At some point I hope the American public will hold their elected officials accountable just as CEOs are being asked on August 14 to be accountable for the financial and income statements reported for their respective companies. Maybe I am mixing apples and oranges; however, the spirit of accountability holds the same- what's good for the goose is good for the gander.

7/31/02 Posting #3
Money Market Assets

These assets, despite yielding only about 1%, now total in excess of $2.2 trillion. That is trillion and not billion. This huge number indicates the disenchantment of investors with the stock market and its current uncertain climate. Washington can give all its pep talks, but obviously the vast majority isn't buying it. With this kind of money on the sidelines a sustained rally becomes even more suspect.

7/31/02 Posting #2
GDP

The first quarter results were revised downwards from 6.1% to 5%. More importantly, the second quarter came in at only plus 1.1% down from estimates of 2.1% or about 50% less than expected. With consumer confidence dropping I believe that the second half GDP numbers will be much less than others expect. In fact, I wouldn't be surprised to see no growth in the third quarter. Unless the "rules" should change, stock prices still follow corporate profits, and I don't hear the cash register making too much noise.

7/31/02 Our Counterproductive Taxation Policy

Chief Justice Marshall said it best: "The power to tax is the power to destroy." Our present income tax policy creates discord as well as inequities for the vast majority of our 130 million taxpayers.

Political pundits lay blame on the stock market 2 year decline for the looming budget deficit. How about creating a level playing field for our millions of stockholders. Why should the taxpayers not have the same "privileges" as corporate America who, when receiving, for example, dividends on preferred stock, are only taxed on 15% of the dividends. Possibly they end up paying 5% on each dividend dollar received. Additionally, why should dividends be taxed twice? Congress and the Administration complain about corporate wrongdoing; however, how about helping the taxpayer and change the laws on dividends.

To add insult to injury the Administration has suggested "individual personal accounts" under social security. We can double our "fun"- pay taxes on dividends at inequitable rates and then pay money management fees while we depend on the vagaries of the stock market for our retirement money.

Where is Chief Justice Marshall when the American people need him?

[7/30/2002 9:26:45 AM | michael buchsbaum]
7/30/02 Posting #3
Consumer Confidence

Consumer confidence plunged in July to a five-month low, the Conference Board said Tuesday. Its monthly index of confidence dropped to 97.1 in July from 106.3 in June. The present situation index fell to 99.2 from 104.9 while the expectations index sank to 95.7 from 107.2 in June. "The continued declines in the value of stock market portfolios, coupled with ongoing reports of corporate scandals, have taken a toll on consumer confidence," said Lynn Franco, head of the board's consumer research. "A continued slide could very well jeopardize the economic recovery."

7/30/02 Posting #3
Consumer Confidence

Consumer confidence plunged in July to a five-month low, the Conference Board said Tuesday. Its monthly index of confidence dropped to 97.1 in July from 106.3 in June. The present situation index fell to 99.2 from 104.9 while the expectations index sank to 95.7 from 107.2 in June. "The continued declines in the value of stock market portfolios, coupled with ongoing reports of corporate scandals, have taken a toll on consumer confidence," said Lynn Franco, head of the board's consumer research. "A continued slide could very well jeopardize the economic recovery."

7/30/02 Posting #2
"Infectious fraud not infectious greed"

Those are the words of Ernest Hollings, Democratic Senator from South Carolina and most senior member of the Senate budget committee. He is describing the fraud of the Bush Administration in not properly describing the true deficit this country is running. He cites the gov't budget deficit estimate of $165 billion when he says the true estimate is $412 billion. Actually, in a posting from several days ago, I discussed this issue and estimated the deficit at about $450 billion. I never suggested fraud, and never for a second believe it is. This is commonplace Washington disclosure.

What's needed is not the opinion of Senator Hollings nor my opinion. The facts are simple. The gov't is spending much more than it receives in tax revenues. The gov't estimates that this deficit will go on for several more years. It's been proven you cannot spend your way out of hard times. We can all do the math. Can your elected officials do the math? More importantly- do they want to do the math? In November you can answer this question for them.

7/30/02
Yesterday's Rally and the Yield Curve

The rally was the first one this year I found impressive. First, 90% of the trading volume was up volume. People were buying in earnest. Second, the breath had 5 stocks up for every one down. Now we'll wait to see whether the market can repeat that performance. Once is not enough to make an enduring difference.

Yesterday the yield curve in the gov't bond market was the steepest in 10 years. There was over a 300 basis point difference between the yield on 2 year and 30 year bonds- 2.23% vs 5.38%. This spread is meaningful and raises some issues. It may mean the Fed is not going to raise rates or it might indicate they are going to lower rates. It can tell us there are better economic times ahead and it can mean a flight to quality. Historically, it has indicated that the economy will be improving. That seems to be the general consensus.
There have been times when the spread has gone to 400 basis points and once to 500 basis points; however, that differential proved to be unsustainable.

I believe the wide difference in the gov't bond spread is one reason the market rallied yesterday. People believe better times are around the corner. Maybe they're correct. I hope so. I don't invest via hope. I don't believe the current yield difference between the 2 and 30 year is sustainable. Why? I believe the consumer will save more and spend less- a new trend to begin this century. Less consumer spending will place a heavy drag on the economy and countries exporting into the U.S. will see less demand and the cash flow for those countries will lessen and therefore their appetite to purchase our gov't bonds will not be so great, and thus yields will increase. These factors will weigh on the stock market and corporate profits-maybe not in that order.

7/29/02
Professor Sharpe

In today's Financial Times there is an interview with Bill Sharpe, a Nobel laurete. I would like to provide one of his quotes:
"The interesting thing is to find out what kinds of decisions people make under conditions of uncertainty if they know what they are doing." That is a $64,000 question, and maybe even a billion dollar question.

7/29/02 Posting#2
Social Security and Pension Funds

We need to root harder for the stock market to go up. President Bush's Commission on Social Security reform assumes a long term 6 1/2% return on an annual basis for stocks. Maybe that will prove correct; however, at this point in the world economic cycle, it might be wise to re-think that number and adjust it downward somewhat. Isn't that what corporate America has been doing on their quarterly earnings projections? They lower the guidance and then come in with numbers at or slightly above the guidance.

It would be wise to also address the unfunded pension liabilities. Clearly the corporate pensions are underwater by at least $130 billion. If 45 million Americans are covered under the pension plans, we can do the math for each individual.

With the population aging we don't need additional problems in social security and pension funds. The stock market cannot be viewed as the ultimate bailout savior.

7/29/02
Strictly Business

Investing is a business. Making money is fun; however, the market does not accomodate winners on a daily basis or even a monthly basis or sometimes on a yearly basis. Japan has been in a bear market for 13 years. Not much fun there. You have a choice- to make the trend your friend or the media but not both.

The media would have you believe the latest Michigan consumer confidence numbers weren't that bad. The trend shows a decline for that index of 4 1/2% both in June and July. The news could always be worse. More people could have been killed in the 9/11 tragedy. Tell that to the families of the victims. You too can be victim. Ignore the trend and make the media your friend. The two year bear market trend doesn't know from voters or race or religion. If, however, you buck the trend, there will be a stretcher and an ambulance waiting for you.

Our accounting scandals continue. On Sunday Qwest Communications admitted that they had incorrectly accounted for over $1 billion in revenue over the past 3 years. When they say incorrectly, does that mean the second cash register didn't correspond with the first or were both registers a figment of their imagination? I need clarification here. But the news is better, Ttheir $1 billion error is less than Worldcom's $3.8 billion. See how easy it is to make the world seem a better place for you and for me.

Now I'm waiting for the news out of Europe. Bertelsmann abruptly kicked out its CEO. That followed Messier leaving Vivendi. The latter and Bertelsmann are both in the media business. Maybe the industry is starting a new trend. Let's make the trend our friend.

7/28/02
Controlling Expectations

In every market there are opportunities to make money; however, those opportunities maybe less rewarding than at other times and in different markets. At this time we have historically low mortgage rates. That enables families to breathe a bit easier and cope with unemployment problems, low-paying service jobs, and rising healthcare costs(it certainly doesn't pay to get sick). While many are fortunate to refinance their mortgages and receive lower monthly interest payments, many struggle with high interest credit card debt.

It is unrealistic to expect the stock market to solve our problems. We got very lucky for a period of time. With the stock market experiences over the past two years, yearly returns of 5% would look good. Historically, the returns have been closer to 9%. However, with companies finding it difficult to raise prices, and with that increase their cash flow, it might be wise to control our present and future expectations about stock market returns and live accordingly. Saving more and spending less maybe right for these times, and hopefully lessening pressures will make it easier to sleep better at night. If our savings rate improves, the Japanese might want to adopt the United States as their sister country. Maybe then we could merge the yen and the dollar and make it one currency. Even Austin Powers would think that cool. Yeah baby!

7/27/02 Posting #2
Margin Calls

This is a very short note. Unless you are extremely comfortable owning stocks on margin, please think twice about it. As stocks drop, others on margin are forced to put up more equity to meet their calls. As such, the stock you own on margin maybe at the mercy of another holder who does not have more equity to put up, and that individual's stock will be sold to meet the call. That's one way stocks can gap down- due to margin selling and liquidation.

7/27/02
Reese's Peanut Butter Cups

On Thursday the lead article in the WSJ concerned the possible sale of Hershey Foods. That got my attention in a quick hurry. I specialize in risk arbitrage. My mind though focused on Reese's and not on what Kraft, Nestle, Wrigley, Mars, or Cadbury Schweppes might pay for the business. In trading that day Hershey stock rose 14 points, and it was obvious to me the market thought Hershey could be sold for as much as $11 billion. I don't care about Hershey chocolate bars or the kisses or the cocoa or the syrup or the Almond Joy. York's peppermint patties or Twizzler's don't send me. But the Reese's that's another story. Then I thought why would I spend $11 billion on this company(that's presuming my piggy bank had the jack). Hershey's, at that price, would be valued at over 2 times annual sales and over 50 times earnings. That's a lot of Reese's. Milton Hershey would be laughing all the way to the bank- if he could. He died a very long time ago. Then I got to thinking. Milton and I have two things in common. We both love chocolate and we both come from a German immigrant heritage. Maybe I should try to keep the company in the family, so to speak. Then I thought. Am I for real? This is not a value. So I went to the Grocery Outlet and bought 4 Reese's Peanut Butter Cups for a $1. I savored every bite and realized this was the way to go. Putting $11 billion on my American Express Card makes absolutely no sense. I had come to my senses! My Mother would be proud of me.

7/26/02 Posting #2
Mutual Fund Outflow

For the most recent weekly July reporting period investors pulled out over $30 billion from mutual funds. That amount exceeds the outflow figure just after 9/11. Contrarians would consider this event significant in that it shows overwhelming bearish sentiment. That is an accurate appraisal of the sentiment. On the other hand, the individual investor, believe it or not, has quite frequently outperformed mutual fund money managers over the past several years. I don't believe one should shortchange the individual investor. The so-called experts clearly have been underperforming the S&P for many reporting periods.

7/26/02
"Confidence Comes Not From The Talking Heads On TV But From The Fundamentals"

This was a statement made yesterday by Treasury secretary Paul O'Neill before the National Association of Manufacturers in Washington. Yesterday the Commerce Department released information that factory orders dropped for the first time since March and was the sharpest drop since December.
Mr. O'Neil opined that he was optimistic about the rebound in investment. I suggest he look at the fundamentals rather than be a "talking head". The fact is business investment fell at the sharpest pace since 9/11. That comprises all non-military investment. If business is shying away from investing in business, then what does that tell you about the confidence going forward? Based on this lack of confidence, why should someone invest in business? This is telling, and will have an impact on future stock prices. Decreasing investment will directly impact the profits of corporations. Just look at IT spending and the telecom industry or what's left of it. Additionally, this lack of confidence will continue to weigh on the dollar.

7/25/2002 Posting#2
Advance/Decline

As we move into the last 40 minutes of trading today, the Dow is off about 100 points and the Nasdaq is off about 50 points. Irrespective of the final numbers the last couple of days should have illustrated a point. A market's direction is ultimately determined by its internal strength and or weaknesses, and one of those internals is the advance/decline line. This line has been negative for some time, and even a large Dow upsurge yesterday was not confirmed by a change in the advance/decline strengthening very much. That's why the rally was suspect. Additionally, the new low list has kept expanding and expanding while the new high list was reduced to single digits.
The one bright spot is Hershey Foods as it skyrockets in price. The company is putting itself up for sale.

[7/25/2002 7:14:45 AM | michael buchsbaum]
7/25/02
Arresting Reporting

God help us all. Yesterday many in the media suggested, while the markets were rallying, that the strength could be the result of the arrests made at Adelphia Communications. When handcuffs and not profits make stocks move, then we are in deep deep trouble. I for one would like to see some real growth in homeland free cash flow. I am an optimist. I see something really positive coming out of Adelphia Communications. It's possible that handcuffs might become the restraining unit of choice and replace handguns. If that did occur, we might research the number one manufacturer of handcuffs, and possibly buy their stock at value levels. Until that happens, show me the real net income per share. Green is my color of choice, and I hope yours as well.

Yesterday my early morning blog did not get posted for over 8 hours. I am at a loss of words to explain this happening. Someone suggested that a great many people in Northern California were fixed to their tv screens watching the Adelphia execs being carted off. I believe it was just a technology glitch but not the same one that has hit the Nasdaq for the past two years.

7/25/02
Arresting Reporting

God help us all. Yesterday many in the media suggested, while the markets were rallying, that the strength could be the result of the arrests made at Adelphia Communications. When handcuffs and not profits make stocks move, then we are in deep deep trouble. I for one would like to see some real growth in homeland free cash flow. I am an optimist. I see something really positive coming out of Adelphia Communications. It's possible that handcuffs might become the restraining unit of choice and replace handguns. If that did occur, we might research the number one manufacturer of handcuffs, and possibly buy their stock at value levels. Until that happens, show me the real net income per share. Green is my color of choice, and I hope yours as well.

Yesterday my early morning blog did not get posted for over 8 hours. I am at a loss of words to explain this happening. Someone suggested that a great many people in Northern California were fixed to their tv screens watching the Adelphia execs being carted off. I believe it was just a technology glitch but not the same one that has hit the Nasdaq for the past two years.

7/24/02 Posting #2
Fools Rush in Where Others Fear to Tread!

The Dow up 488. The Nasdaq up 61. Merck, JP Morgan Chase, Citicorp, Microsoft, and GE lead the way. They look similar to the stocks mentioned in my pre-opening blog of today. The rally has bad breath! On the New York Stock Exchange the advance/decline was 20 stocks up for every 13 down and on the Nasdaq 20 up for every 15 down. Those ratios don't make for lasting reversals.

7/24/02
Bad Breath and New Lows

You probably think I am referring to this weekend's Gilroy garlic festival. Actually, I am talking about yesterday's trading when, on the New York Stock Exchange, there were 28 stocks down for every 5 that were up. Certainly that would indicate a market much worse than the Dow 30 stocks.
Yesterday the two companies with the highest market caps, GE and Microsoft, made new lows. Both market caps approximate $280 billion. At one time both had market caps of well over $500 billion or much larger than the GDP for most countries!
In the financial sector Citicorp and JP Morgan Chase traded down to levels not seen in some time. Their charts look like both stocks dropped off a cliff.
Talking about drops, Merck fell to a new low of 39 1/2. The board of directors announced a $10 billion buyback of shares. Since 2000, under a previously announced buyback, Merck had already spent $7.7 billion on buying their own shares. Maybe they should have increased the R&D budget for discovering new drugs. I would prefer to see corporate officers and directors reach into their own pockets and purchase shares- not by exercising options- but by making market purchases. That would be more meaningful, and something that you don't see too frequently these days. Maybe insiders are nervous about the market. If they aren't buying, why should the investing public buy? They should know more about their own company.

7/23/2002
Bear Market Rallies

Overnight the dollar staged its largest rally against the euro since last September. With the dollar strength U.S. stocks in foreign markets rallied sharply as well. That's the natural course of events. Stocks don't go up or down in a straight line. Just look at historical charts and that will be plain to see.

Focus on the current trends and don't be misled by day to day fluctuations. Again, looking at a chart will give you a picture of the trend. There should not be any doubt that the stock markets and the dollar are in bear markets and that the bond market has been in a bull market. Trends can last a very long time. When a long trend is broken, it stays broken for some period. That period can last 10-20 years and not 10-20 days. Rallies in bear markets give a respite to those investors needing to calm their nerves, and to raise the question as to whether a bottom has been reached. No one rings a bell at market bottoms. Only in hindsight do we know a market has reversed itself.

Yesterday I asked what is the rush. Today I am suggesting to keep your eye on the ball, and particularly the trend provided in charts. As the old saying goes, make the trend your friend. Daily fluctuations are the norm. That's what makes markets.

7/22/2002
What's the Rush?

The media spends too much time talking and writing about searching for a market bottom. It makes for bad press and fruitless airtime.
Let's be productive and rational. Most bottoms are comprised of consolidation after consolidation. True bottoms can take place over long periods. On rare occasions there will be a V bottom marked by a long downturn and a sharp reversal. This happened in December 1974. Values were so extraordinary at that time. That is not true today.

I dislike shopping. I look at a sale and see an item marked 50% off. I'm rarely impressed by the markdown. Even going out of business sales aren't great as far as I'm concerned. So many company stocks were marked up to ridiculous prices that 50-60% price reductions aren't that exciting. I can do without almost all of the items on sale. But that's just me.

Please don't think you are going to outsmart a treacherous bear market. It's not going to happen. As they say, when they raid the whorehouse they take all the girls. (That is not meant as a male chauvenist remark. It's an old saying on Wall St.) Your "sister" or "cousin" maybe the prettiest of the bunch, but she's going too. That's the reality of bear markets.

Please take your time prior to investing more money. Do your homework. Invest a little at a time. Do not commit all the funds at one time. You are not about to pick the bottom. Hope may spring eternal but we're not in the hope business. What's the rush?

7/21/2002
Worth Remembering

The stock market is not like baking a cake from a mix. The ingredients are never the same. It is wise to remember that the market accomodates the fewest number of investors at any one time. As such, there will be times when the risks overwhelm any chance for rewards. Pundits put too much stock in assigning the "proper" P/E for the S&P and the Nasdaq. Obviously, the lower the P/E the lower the risk factor.

When do you commit funds? When it feels right for you; when values jump out at you like in 1974 when I could buy really good companies at a 5 P/E and yielding 10%. We are a long way from that now; however, those times may not return. Microsoft was not in existence in 1974. Very few people had heard of the internet. I hadn't. Times in 1974 were different from today. To be a successful investor you need to remember the past but truly concentrate on the present and anticipate the future. Suppose in 1974 you weighed 160 pounds and 38 years later you tipped the scales at 210. You are the same individual getting on the scale but your well-being is different.

Today the country's balance sheet is laden with debt and that is true of most households. That makes us different from 20-30 years ago. We are not as agile financially. That alone limits our abilities. We can become a two job family but we still work 4 1/2 months for the IRS and the second job pays for credit card and mortgage debt. The gov't can only tax you so much. Their revenue capabilities are limited, and tax receipts from stock market bubbles may only occur once in 50-70 years. The debts keep piling up for the gov't and more bonds need to be issued- almost like a ponzi scheme. Conditions today are different and therefore reading the stock market becomes more challenging. Don't rush your learning curve. Invest at your pace and acknowldege the risks before looking for rewards.

7/20/2002
The Third Bubble and Smoke and Mirrors

Before reading this posting I can state that it will upset most readers. As such, in advance of this upset, I proclaim a strong belief in capitalism, the U.S.A., God, and motherhood as well as a strong liking for apple pie. In June 2000 I warned of the coming bursting of the bubble in the stock market. Just last month I warned of the bubble soon to burst in the housing market. Is it true bubbles run in threes? If so, I can describe the third bubble- the gov't bond market. When the stock market is declining, funds pour into the gov't bond market, the so called safe haven. There is only one reason to find this market comforting and that's what appears on the dollar bill: "In God We Trust." Interest on the debt and repayment of the debt are made in dollars. It stands to reason that the "best borrowers" pay the lowest interest rate. Two year gov't bonds are now trading near their all-time lowest rate of 2.31%. This is as ridiculous as the Nasdaq index trading at 5000. The Administration has just announced we can expect federal budget deficits for years to come. Those deficits accompany huge monthly account deficits. The latest, $37 billion, was just announced. To nullify these deficits we need to attract foreign capital and inflows amounting to $1.7 billion per day- even on Sundays, a normal day of rest. Monthly statistics show that it is increasingly difficult to attract this capital. Our rates are too low and confidence in our accounting systems etc. has waned. The first sign of trouble has been the dollar falling in value. With that fall money managers are moving more funds into the eurozone market. The Administration has tried to calm the nerves of the investing public as well as foreign investors. From this week's stock market I would say nerves appear at their wit's end. Foreign investors will be the next to jump ship. When that happens, rates will begin to rise on gov't and corporate bonds and with that increase mortgage rates will move higher. The bottomline is the gov't must raise increasing amounts of money to fund our growing deficits. Supply and demand rule the markets. The gov't bond market will suffer the consequences. Hopefully corporations will not be crowded out of the bond arena. I strongly suggest the Administration cut spending by at least 20% and immediately. In addition, it's time to clean house. We need smart businessmen manning the gov't checkbook. It's nothing personal- just a business decision. I'd like to see a Ross Perot become Secretary of Treasury and a non-consultant or economist become Fed chairman. Preferably a person with a long successful business career of creating yearly positive cash flow. We need doers and not talkers. We will not talk our way out of deficits. The government's only source of revenue is our tax dollars. It's not like the gov't makes the money. If they did, do you think they'd spend it irrationally? The irony is that Mr. Greenspan has been overseeing the gov't bond market's irrational exuberance with smoke and mirrors. The American people will be the ones to pay the consequences. Isn't that always the way?

7/19/2002
Flow of Funds

In recent blogs I have discussed gov't budget deficits. I would like to touch on an additional deficit, and that is the difference between this country's exports and its imports. Until about six months ago the dollar was very strong against the yen and the euro. That fact made it cheaper to pay for imports. As such, the U.S. has been running a recent annual deficit(importing more than exporting) of close to $450 billion. This figure takes into account our annual trade with all countries, such as, China and Japan. In sum, this $450 billion is considered a negative flow of funds. The funds leave this country to pay for the imports. In order to make up this deficit we must attract capital into the U.S. It requires an enormous inflow on a daily basis. Up to this point we have been pretty successful attracting foreign funds. The U.S. has been viewed as a safe haven. After 9/11 that viewpoint has changed somewhat. In order to make the U.S. a more attractive location for investment it has been necessary to reduce the value of the dollar and make our exports more affordable. In addition, inflows into our bond market have lessened for two reasons. One is the loss of confidence with the continuing corporate scandals. The other is that our bonds provide less income than they do elsewhere. Fixed income investors can achieve 1 1/4% higher interest in short term German gov't bonds than they can with short term U.S. gov't bonds. That's a wide differential, and one more reason I believe our interest rates will begin to move higher.

Posting #2 7/18/2002

I would be terribly remiss without mentioning what Andrew Grove, Intel's Chairman, had to say yesterday. Mr. Grove, in his youth, fled Communist Hungary to this country. Yesterday he compared today's anti-business atmosphere to the Communist Hungary he remembers so vividly. With all humility I believe the problem goes even further. Investors are being criticized for their greed in the late 1990's. The gov't didn't have a problem taking the capital gains taxes from the investors. In fact, those tax revenues produced large gov't surpluses. Now, with stock prices declining, tax revenues have dropped significantly, and we are faced with a $160 billion budget deficit. So we are led to believe the stock market and the investor are the culprits. Were they also the saviors? How about the anti-individual sentiment. An ordinary person works 4 1/2 months each year for nothing- all the money goes to the IRS. On top of that Mr. Greenspan denounces capitalist greed. Is it anti-American to make money in the stock market? Is it anti-American to take the side of the multi-national corporation over the consumer? That's what happens when one accepts a weak dollar. The consumer pays more for imported goods and our exports become more attractive. The consumer represents 2/3 of this economy and overwhelms the significance of Coke or MMM. I agree with Mr. Grove about the anti-business sentiment; however, that anti sentiment is much more far-reaching. I suggest it's unwise to bite the hand that feeds you.

7/18/2002
Covert Operations

The Administration has given the go-ahead for the CIA to conduct covert operations in Iran. Maybe a coup will work. It hasn't in the past, and there isn't any reason to expect it will now. If a coup fails, then the alternative would be a large military effort.
There is tried and true, and then tried and failed. No individual or group can talk the stock market up. Profits and confidence are the movers and shakers. Both Mr. Greenspan and Glenn Hubbard, chairman of the White House economic council of advisors, seem to believe the main risk to the economic turnaround is the stock market. Isn't it possible that an influential covert group is attempting to talk up the stock market when it appears to be reeling? It's a little like CNBC. They took a poll of analysts asking where the Dow would be by the end of 2002. Five respondents said between 1120 and 1150. No publicity was given to those not sharing that viewpoint. A few days before Mr. Greenspan spoke a new consumer poll showed a sharp drop in consumer confidence. Mr. Greenspan acknowledged the poll but said there wasn't any evidence of the lack of confidence being translated into lower spending. Are we all considered morons? How could a poll taken five days ago instanteously be translated into lower spending? I suggest a little less covert and a bit more get real.

Posting for 7/17/2002
Interest Rates: It was fun while it lasted!

IThe Bond Market Association's Economic Advisory Committee recently predicted large federal budget deficits well into the decade with some believing annual deficits could approach $200 billion. In fact, they mentioned that deficits can raise interest rates and discourage investment. Over the next five quarters the committee is forecasting an increase in both short and long term interest rates. I agree with this scenario. I also believe that Wall Street is convinced the Fed will hold the line on interest rates and assist in an economic turnaround. Thus, the market may not be factoring higher interest rates into future business conditions. The market anticipates future events, and therefore, a smart investor must also anticipate- at least 9 months in advance. Looking at WalMart's recent stock performance one can witness a future anticipated decline in consumer spending. The same is true with Home Depot and Lowe's in home renovation and do-it-yourselfers. These are the market leaders in their respective fields. Higher interest rates mean higher mortgage rates, and the latter will lead to less home building, less home buying, and reduced demand will bring forth lower home prices. So, in sum, we should be looking for weaker economic conditions, weak consumer spending, higher unemployment, higher interest rates, reduced real estate prices, a weaker dollar, and a global deflationary trend. That's my mid-year economic viewpoint.

7/16/2002
Pfizer to buy Pharmacia
They will issue 1.4 shares for each Pharmacia. At last night's Pfizer 28 3/4 close the worth would be a bit over 40 per share and Pharmacia closed at a point discount to that level. The rationale for the merger is: close to a dozen drugs with annual revenue exceeding $1 billion are protected by patents between 2010 and 2015; Pfizer's core and global pharmaceuticals business will be expanded; and there will be inroads into endocrinology, oncology, and opthalmology. The anticipated net income yearly growth rate will be 14% and achieve earnings of $1.84 in 2002 and $2.12 in 2004. With that growth rate my view it is unlikely the P/E for Pfizer would drop below 14 or a bit over $25 per share, a drop of some 10%. Pharmacia shares would drop in line with those of Pfizer's. This merger will place pressure on other companies, such as, Novartis, Glaxo, and Merck to make acquisitions. Two possible candidates could be Schering Plough, selling at 21 1/2 with a 16P/E and yielding 3% or Bristol Myers Squibb at 23 with a P/E of about 10 and yielding 4.9%. Should the dividends in each be safe the yield would cushion any price decline from these levels. Each company has problems but some bright spots like Schering's new drug Zedia which fights cholestrol.

7/15/2002
Mr. Greenspan

Tomorrow the Fed chairman provides his semi-annual testimony to Congress. The world will be watching; however, it is doubtful that the financial markets will be hanging on his every word. How much more can the Fed lower interest rates? In recent weeks the dollar has fallen rapidly against the yen and the euro. That fact prevents the Fed from printing too many dollars in an attempt to increase liquidity in the market place. Mr. Greenspan will touch on the corporate and accounting scandals and explain their negative impact on business investment and consumer spending. (When a corporation buys a PC it's an investment. When Mr. and Mrs. Smith purchase the same item, it is spending. Maybe the difference has to do with depreciation, an interesting accounting item.) Sentiment indicates the growing reluctance on the part of business to spend and hire. This alone will impact the economy in the future. Mr. Greenspan will attempt to soothe the nerves of consumers, investors, corporate leaders, and the nations responsible for buying our debt. So, the bottom line is for him to reject irrational gloom and project an economy which has recovered slowly in this year's second quarter, and to provide an emotional pathway for calm leading to economic resiliency. That is a difficult chore. I wish him well in his Greenspan speak.

7/14/2002
The D Word

Sunday is suppose to be a day of rest. As such, I apologize in advance for this posting which may prove unsettling for many. Over the past year I have had a growing sense that there was a chance our economy could take a turn into a depression. A year ago I thought there was a 10% chance and that feeling has recently grown to 30%. Normally I would only discuss this subject with family; however, yesterday I read the most recent Barron's and in it was an interview with Seth Glickenhaus, a successful investor for well over 50 years. Like me, he thinks for himself and is a contrarian. Barron's asked him whether he thinks a depression could be coming. Seth's reply was: "not only could be, it will be." His opinion was based on many facts. Interestingly, based on history, he stated that the stock market would need to consolidate for 16 years. I remember the period from 1966 to 1982, and that's just what the market did as it moved back and forth and back and forth. In every market there will be opportunities to make money. One has to be patient and assess the risk/reward ratio until it is clearly in your favor. This market is unforgiving. There is very little room for error. Invest when the time is right for you and not when a pundit proclaims the time is now. It's your money. The pundit has an axe to grind. Don't let your hard earned savings get pulverized.

7/13/2002
Consumer confidence and the budget deficit


It was only two days ago that my blog focused on the consumer and my expecting consumer spending to decline in the near term.
Yesterday the University of Michigan consumer sentiment index fell to its lowest level since last November. The sentiment indicates a forward look at what the consumer's habits will be. The fact that U.S. consumer spending grew at an annual rate of about 3% in the second quarter is a backwards look at what has taken place.
The other day I made a reference to the weakness in the dollar and the fact that our budget deficit would be $100 billion+ this year, a number which the administration had forecast a few months ago. Yesterday the administration proclaimed that the budget deficit would be 50% higher than this projection, and would rise to $165 billion. The difference was blamed on the declining stock market. Precisely, the OMB said: "the stock market and the capital gains receipts it generates have become more important than ever to the federal budget outlook." I have but two comments. If, within a few months, a CEO had been off in corporate forecasts by 50%, the company's stock would be taken to the cleaners and the stockholders would be screaming for new management amid the class action lawsuits which would be filed. Second, if the stock market is so important to OMB forecasts on gov't receipts, then it might be prudent to create a new post called stock market prognosticator. With unemployment rising and the Silicon Valley jobless rate at 7.6% there should be a great many candidates available. While we're cutting down on corporate abuses, let's take the time to cut down on gov't ineptness.

7/12/2002
Zipinvestor

This word is a take off from Zipcar, which is a service only accessible to members. They offer corporate, individual, and household memberships. They make a car available when the member wants it without the cost of ownership- no gas, insurance, maintenance, or parking costs. You get a membership card and just return the car where you picked it up. Wouldn't it be great if the service were available to investors and called zipinvestor? You could pick up(buy) a stock when you wanted it and return it (sell) when you wished. As in Zipcar you'd need to reserve your desired choice a minimum of one hour in advance. There would not be a need for research, commissions, no paperwork. Everything is accomplished online as a member. You'd be free of everyday stock ownership responsibility. Naturally this would not be for the long term investor. The service would be intended to provide quality of service and accessibility and convenience. Until this day arrives the investor is responsible for the hassle of stock ownership. It should be treated as investing in a business and not just a stock. When your decision-making is based on knowledge and not the advice of others, you can have a just beginning. Until zipinvestor comes along, please invest wisely and with knowledge. Don't follow the road to instant riches. Investing is not a crap game.

7/11/2002
The Consumer

It is well documented that two thirds of the U.S. economy is dependent on consumer spending. Forty per cent or more of annual retail sales is registered during the Christmas season. As we move further into the year, I hope stores are not anticipating a rosy Christmas or even a good Fall. This bear market has cut sharply into consumer optimism, 401K plans, and net worths. The consumer has fallen back on mortgage re-financing, equity lines of credit, and soaring home prices, which is our first 21st century bubble waiting to happen. Our nation's population is aging, and there are a growing number of retirees. Should net worths continue to drop, the ability to retire lessens. It's tough to stay in the workplace at 55 or 60 or 65 when your employer is trying to push you out thru forced retirement. There aren't many jobs available for the 55-65 group. It's difficult to start a business at that age, and credit certainly is tough to acquire.
Statistically, a greater percentage of consumers is the 50 and over group. As such, with the stock market malaise and a difficult job environment, it is reasonable to expect consumer spending to hit a brick wall just like the stock market did a little over two years ago. I hope I'm wrong- selfishly- I'm aging too. I've been trying to cut down on carbohydrates. Bread lines would be disastrous to our diets.

7/10/2002
The dollar and a swat team to balance the budget

The value of the dollar has once again declined to the trading levels on 9/11. Much like the stock market there is little hope the dollar will hold here.Why? Simple really. We have gone from significant budget surpluses to once again 100+ billion deficits. Budget deficits are the enemy of the dollar as well as to foreign investors. The latter are necessary for making up the shortfall between revenues and spending. A strong dollar is a symbol of a vibrant and solvent economy. A weak dollar provides the opposite picture. President Bush appears very adept at creating taskforces. We have a homeland security taskforce-quite necessary. Yesterday he proposed a corporate fraud taskforce which "will function as a financial crime Swat team." How about a government bloat taskforce which will oversee a balance between revenues and spending, and then possibly the dollar will regain some stability and we as a country will be less dependent on foreign investment to fund our shortfalls. In describing this new taskforce we might consider eliminating the need to include the word fraud and self-dealing. Let's focus on the positive.

7/9/2002
Warren Buffett

Over the past couple of weeks I have used Buffett as an example for successful investing. That makes sense since he has demonstrated over the past 40 years that he is in a class by himself. That doesn't mean one can blindly follow his doings. In May his company, Berkshire Hathaway, issued $400 million in convertible bonds. They carried a negative interest rate. In other words Buffett paid you 3% interest on the bonds; however, the bonds carried a warrant attached to the bonds. The warrant enables the holder to purchase Berkshire Hathaway stock at a premium over the then market price. The holder of the warrants has to pay Buffett 3 3/4% interest. In order to make any money Berkshire Hathaway needs to rise a good deal in price. Mr. Buffett has stated several times recently that he is negative on the stock market for the near and intermediate term and is concentrating his purchases on privately owned companies. I have stated in prior postings that it is necessary to buy right if one is to make money. If one has a negative yield, as in the aforementioned example, then that is not buying right. If you are going to pay a premium for premium investing talent, make certain the deal is rational for all concerned. We owe it to ourselves to show that a sucker is not born every day.

7/8/2002
Semi-annual sales

I feel certain that most of my readers have been at semi-annual store sales. Some, such as, Nordstrom's do a big advertising campaign to get the consumer into the store and look at the 50% merchandise values. As such, a $120 dress shirt is now a screaming buy at $60. Make no mistake. There are takers at $60 and they leave believing a bargain has been achieved. I'm happy for them. Different strokes for different folks. Well a semi-annual sale is going on Wall Street right about now. Prices have been marked down 50% and in some cases 95%. When you take a real good look, some of these bargains don't look like they'll hold up all that well. There are exceptions, and that's the job for us to find the ones which will last and wear well in a portfolio. Some manufacturers have a reputation for providing lasting fabrics, such as, Ralph Lauren. He has a good eye for quality. We need to have a good eye for quality and not buy schlock or crap. Start with the companies where management and directors have a large stock ownership interest. That management will have a much larger incentive to deliver the goods. Microsoft and Berkshire Hathaway are good examples of large management ownership. Let's begin at this semi-annual sale to make a list of the bargains we see. Let's investigate those bargains for lasting value, and let's do our homework. Wall Street doesn't have a return policy. It's buyer beware.

7/7/2002
What your broker doesn't tell you

Do you spend time thinking about picking the bottom on your favorite stock? Are there days you dream you bought Microsoft when it went public in 1986 or Berkshire Hathaway in the 1960's at $20? There are precious few who did and still hold on to those positions. Let's understand that picking the absolute bottom is at best an educated guess or most likely just plain lucky. Therefore, should you, for example, purchase Microsoft at 53, the chances are excellent that the stock will NOT immediately go up after your purchase. At best it will remain the same, and in this bear market, will most likely go down. As such, when you make a stock purchase be realistic. There isn't instant gratification. You may be facing an instant paper loss. That's why it is so important to do your homework and know what you purchased. You will need to live with that purchase for awhile before you can realize a return on your investment. Don't dream about the homeruns you see on TV or in the magazines or in newspapers. The chances of you being another Babe Ruth or Hank Aaron are slim. You have as good a chance as getting a drug approved thru the FDA- about one in 5000.
I'm not beeing negative. On the contrary, I want to help you see the light. Success in the stockmarket comes thru hard work and not by dreaming.