8/17/02 Posting #3 Unsustainable
From mid-1999 to mid-2000 stock price gains were frequently outpacing household incomes for the 50% of the population owning stocks. It reached a point where stocks became unaffordable, as it were. The value wasn't there and the prices unsustainable.
From mid-2001 to mid-2002 house price gains were, for many of the 75% of the population owning homes, outpacing their household
incomes. Clearly the home prices are unsustainable. To accomplish ownership the Mortgage Bankers Association anticipates about $1 trillion in mortages will be placed this year. That is on top of the $873 billion in mortages taken down in 2001.
A significant worry is the mortage debt level relative to the disposable income of the homeowner. In my view, this is an accident waiting to happen. The debris will have far-flung ramifications.
Saturday, August 17, 2002
8/17/02 Posting #2 A Proxy Fight
Lawrence Lindsey: ``We need tax simplification and we need lower taxation of capital on all fronts.'' If the gov't wants to encourage investing and promote savings, incentives would clearly be helpful. For the most part, our federal, state, and local governments have clogged our citizenry's cash flow pipeline thru a myriad of taxation roadblocks, and the culprits should be ousted by each eligible American's proxy- VOTING.
Lawrence Lindsey: ``We need tax simplification and we need lower taxation of capital on all fronts.'' If the gov't wants to encourage investing and promote savings, incentives would clearly be helpful. For the most part, our federal, state, and local governments have clogged our citizenry's cash flow pipeline thru a myriad of taxation roadblocks, and the culprits should be ousted by each eligible American's proxy- VOTING.
8/17/02 What Comes Around Goes Around
One day a poor boy who was selling goods from door to door to pay his way through school found he had only one thin dime left, and he was hungry. He decided he would ask for a meal at the next house. However, he lost his nerve when a lovely young woman opened the door. Instead of a meal he asked for a drink of water.
She thought he looked hungry so brought him a large glass of milk. He drank it slowly, and then asked, "How much do I owe you?"
"You don't owe me anything," she replied. "Mother has taught us never to accept pay for a kindness."
He replied, "Then I thank you from my heart." As Howard Kelly left that house, he not only felt stronger physically, but his faith in God and man was strong also. He had been ready to give up and quit.
Years later that young woman became critically ill. The local doctors were baffled. They finally sent her to the big city, where they called in specialists to study her rare disease. Dr. Howard Kelly was called in for the consultation. When he heard the name of the town she came from, a strange light filled his eyes. Immediately he rose and went down the hall of the hospital to her room.
Dressed in his doctor's gown he went in to see her. He recognized her at once. He went back to the consultation room determined to do his best to save her life. From that day he gave special attention to the case.
After a long struggle, the battle was won. Dr. Kelly requested the business office to pass the final bill to him for approval.
He looked at it, then wrote something on the edge and the bill was sent to her room. She feared to open it, for she was sure it would take the rest of her life to pay for it all. Finally she looked, and something caught her attention on the side of the bill.
She read these words...
"Paid in full with one glass of milk"
(Signed) Dr. Howard Kelly.
Tears of joy flooded her eyes as her happy heart prayed: "Thank You, God, that Your love has spread abroad through human hearts and hands."
Life is as simple or as difficult as we make it. Investing is no different. How one manages every day life or how a CEO manages a company will go a long way towards determining the end results.
One day a poor boy who was selling goods from door to door to pay his way through school found he had only one thin dime left, and he was hungry. He decided he would ask for a meal at the next house. However, he lost his nerve when a lovely young woman opened the door. Instead of a meal he asked for a drink of water.
She thought he looked hungry so brought him a large glass of milk. He drank it slowly, and then asked, "How much do I owe you?"
"You don't owe me anything," she replied. "Mother has taught us never to accept pay for a kindness."
He replied, "Then I thank you from my heart." As Howard Kelly left that house, he not only felt stronger physically, but his faith in God and man was strong also. He had been ready to give up and quit.
Years later that young woman became critically ill. The local doctors were baffled. They finally sent her to the big city, where they called in specialists to study her rare disease. Dr. Howard Kelly was called in for the consultation. When he heard the name of the town she came from, a strange light filled his eyes. Immediately he rose and went down the hall of the hospital to her room.
Dressed in his doctor's gown he went in to see her. He recognized her at once. He went back to the consultation room determined to do his best to save her life. From that day he gave special attention to the case.
After a long struggle, the battle was won. Dr. Kelly requested the business office to pass the final bill to him for approval.
He looked at it, then wrote something on the edge and the bill was sent to her room. She feared to open it, for she was sure it would take the rest of her life to pay for it all. Finally she looked, and something caught her attention on the side of the bill.
She read these words...
"Paid in full with one glass of milk"
(Signed) Dr. Howard Kelly.
Tears of joy flooded her eyes as her happy heart prayed: "Thank You, God, that Your love has spread abroad through human hearts and hands."
Life is as simple or as difficult as we make it. Investing is no different. How one manages every day life or how a CEO manages a company will go a long way towards determining the end results.
Friday, August 16, 2002
8/16/02 The King And The Market
We remember Elvis and the former bull market with fondness. It's been 25 years since Elvis left us, and he performed brilliantly for so many years. The bull market began in December 1974 and lasted almost 26 years, and for most of those years performed brilliantly and created trillions in wealth. We mourn for both. The King's songs still give us immense pleasure but the former bull market leaves us with lessons and mixed emotions. At some point it will return. It always stops raining but they don't ring a bell in advance.
We remember Elvis and the former bull market with fondness. It's been 25 years since Elvis left us, and he performed brilliantly for so many years. The bull market began in December 1974 and lasted almost 26 years, and for most of those years performed brilliantly and created trillions in wealth. We mourn for both. The King's songs still give us immense pleasure but the former bull market leaves us with lessons and mixed emotions. At some point it will return. It always stops raining but they don't ring a bell in advance.
8/16/02 The King And The Market
We remember Elvis and the former bull market with fondness. It's been 25 years since Elvis left us, and he performed brilliantly for so many years. The bull market began in December 1974 and lasted almost 26 years, and for most of those years performed brilliantly and created trillions in wealth. We mourn for both. The King's songs still give us immense pleasure but the former bull market leaves us with lessons and mixed emotions. At some point it will return. It always stops raining but they don't ring a bell in advance.
We remember Elvis and the former bull market with fondness. It's been 25 years since Elvis left us, and he performed brilliantly for so many years. The bull market began in December 1974 and lasted almost 26 years, and for most of those years performed brilliantly and created trillions in wealth. We mourn for both. The King's songs still give us immense pleasure but the former bull market leaves us with lessons and mixed emotions. At some point it will return. It always stops raining but they don't ring a bell in advance.
Thursday, August 15, 2002
8/15/02 Restoring Confidence
You thought I might be writing about the CEOs signing off on their financial statements. What restored my confidence was Kmart. They requested to have their loan covenants changed and that change would provide for Kmart to report a larger than anticipated loss- $400 million instead of $100 million. The reason given said their CFO:
"I don't need people to worry. I need their confidence." The larger loss sure made me feel better.
You thought I might be writing about the CEOs signing off on their financial statements. What restored my confidence was Kmart. They requested to have their loan covenants changed and that change would provide for Kmart to report a larger than anticipated loss- $400 million instead of $100 million. The reason given said their CFO:
"I don't need people to worry. I need their confidence." The larger loss sure made me feel better.
Wednesday, August 14, 2002
Tuesday, August 13, 2002
8/13/02 The Parking Lot
We might have a money maker. With all of the planes being mothballed the idea is to open a very large parking lot for the planes. We might need a bit of security but other than that this should be a cash machine. We need to lease some space in the Mojave desert and then place ads. We should get a great deal of repeat business and I feel the business has excellent growth potential. There are too many airlines and too many planes. I will look for additional space in other locations. I shall keep you posted on developments.
We might have a money maker. With all of the planes being mothballed the idea is to open a very large parking lot for the planes. We might need a bit of security but other than that this should be a cash machine. We need to lease some space in the Mojave desert and then place ads. We should get a great deal of repeat business and I feel the business has excellent growth potential. There are too many airlines and too many planes. I will look for additional space in other locations. I shall keep you posted on developments.
Monday, August 12, 2002
8/12/02 Posting #2
Morgan Stanley lowered its 2002 real gross domestic product forecast for the U.S. to 2.3 percent from 2.9 percent, and its 2003 forecast to 3.1 percent from 3.8 percent, with further risks to the downside. Maybe they'll be proven correct; however, their reading of the tea leaves looks rosy to me. I wonder whether Morgan Stanley would put their money where their mouth is.
Morgan Stanley lowered its 2002 real gross domestic product forecast for the U.S. to 2.3 percent from 2.9 percent, and its 2003 forecast to 3.1 percent from 3.8 percent, with further risks to the downside. Maybe they'll be proven correct; however, their reading of the tea leaves looks rosy to me. I wonder whether Morgan Stanley would put their money where their mouth is.
8/12/02 US Airways
Yesterday they filed for Chapter 11, and at the same time, their pilots voted to accept a proposal that will reduce their wages and benefits by an average of 26 percent through 2008, helping the financially strapped airline dramatically reduce its costs. In exchange the pilots will receive a 19.3 percent stake in the company. Another 38% ownership stake will go to Texas Pacific, a group that will buy $200 million worth of stock when the airline emerges from bankruptcy.
Texas Pacific invested in two other airlines which had filed for bankruptcy- Continental and American West. Hopefully, for all concerned, US Airways will be another successful rescue effort.
Yesterday they filed for Chapter 11, and at the same time, their pilots voted to accept a proposal that will reduce their wages and benefits by an average of 26 percent through 2008, helping the financially strapped airline dramatically reduce its costs. In exchange the pilots will receive a 19.3 percent stake in the company. Another 38% ownership stake will go to Texas Pacific, a group that will buy $200 million worth of stock when the airline emerges from bankruptcy.
Texas Pacific invested in two other airlines which had filed for bankruptcy- Continental and American West. Hopefully, for all concerned, US Airways will be another successful rescue effort.
Sunday, August 11, 2002
8/11/01 Next Week's Non-Event Fed Meeting
Out of 21 dealers recently polled by Reuters, 17 expect no change in rates for the rest of the year. The chances of an Aug. 13 easing are less than one in five, according to federal funds futures.
As for me, I have often said I don't spend time listening to economists; however, I have pointed out the importance of tracking fed funds futures. Based on the latter, the Fed meeting will be a non-event. Let's continue to monitor the fed funds futures after the meeting has been completed. It will provide an indication of future interest rate direction.
Out of 21 dealers recently polled by Reuters, 17 expect no change in rates for the rest of the year. The chances of an Aug. 13 easing are less than one in five, according to federal funds futures.
As for me, I have often said I don't spend time listening to economists; however, I have pointed out the importance of tracking fed funds futures. Based on the latter, the Fed meeting will be a non-event. Let's continue to monitor the fed funds futures after the meeting has been completed. It will provide an indication of future interest rate direction.
Saturday, August 10, 2002
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.
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.
Friday, August 09, 2002
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.
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.
Thursday, August 08, 2002
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.
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.
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