Wednesday, October 31, 2007

The FED lowers rates...perhaps acknowledging the slowing economy...oil hits $94.50 a barrel.....but stock prices rise!?!?

Ok, so I'm going a little overboard with the graphic to the left....but it really does feel like a bubble economy we are in once again.

My only experience with bubbles was the 2001 Stock Market crash.....and guess what, I remember the issue being all these .COM companies gaining stock price and having absolutely no chance of making a profit. (some of their business plans just never showed a profit....or perhaps they would say "And then the magic happens")

The Federal Reserve has cut rates again.....I guess they see the economy sliding.

Then oil prices hit a new high of $94.50 a barrel, on their way to $100 per barrel.

So that's just plain slipping economy...wheres the bubble in that?

Not exactly there...because I think those things are the result of a general slide we are on. But the bubble isn't far away from all that.

So, IMHO the housing market is where our bubble resides today....we have a housing market that seems like a similar place to the stock market of early 2001.....except the slide isn't perhaps as quick as of yet.

Housing foreclosures have gone up big time, but they are still a small piece of the total market....but then housing sales are way down too, along with prices.

But the big problem I see is that I know of people who are upside down on their house, and don't even know it......and they "think" they have retirement money sitting between those four walls.

They might not see their problem until they do to retire.....then they will get hit square between the eyes. Then what?

But what of the people who have saved.....what about them?

Maybe that poster above isn't so far fetched.....we might be in for a massive push to "redistribute the wealth"......and we will probably do it at the ballot box.

It might not have made any sense to be a saver after all.....we are a consumer society.....and now we are consuming ourselves.

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Monday, October 29, 2007

Slow and Steady wins the race? (didn't I post about this before?? :-)

I was reading through by list of finance BLOGS when I came across this one....and I have to day I was very pleased to read it.

First of all. most people are doom and gloomers....and I guess I'm also not at the top of the heap of positive people when you start talking about our economy...the exporting of jobs....and the value of our currency......but there are bright spots all around that we should be able to point to.

I was shocked to see this article suggest that 1 out of 3 people in the USA are Millionaires....that is, they have a net worth above $1,000,000. That's outstanding....and it is even more interesting to see that these people did it "the old fashioned way"....they "SAVED" it.

No venture capital gambling in leveraged stock buys......just spend less than you make and invest the surplus "for a rainy day".

This actually makes perfect sense when you consider another statistic......did you know that the great depression of 1929 only had unemployment rates of about 25%. Now that's high for sure, but given what you read about times back then and all the rationing and shortages that were in existance.....a full 75% of the families were working. (Though I am not sure that tracked "underemployment" as they might today.)

But then if you read other BLOGS like this one and then this one that describe the workings of the 1929 depression, you will note that they talk about the great disparity of income and net worth that further caused problems. Apparently wages increased 9% in the 10 years after 1929, but that incease was not across the board, but heavily skewed toward those making more. (the top 1% wage earner made a 75% increase while the average factory worker only 8% while their productivity increased 32% for the same period)

So what to do you ask? I guess the first thing......stay out of the debt snare. What to do with savings....this is the $64,000 question, isn't it.

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Friday, October 19, 2007

Hmmm...people are starting to report: "Living Paycheck to Paycheck Gets Harder"

I'm a bit perplexed about what exactly is going on because as I see it, the stock market has been going up over the last 9 months or so (until the last week or so that is), yet I feel the economy slowing down.

Slowing down in terms of prices rising, dollar devaluating and people worried about their jobs. (people I know)

Then I read this article on how pay checks are not going as far as they used to, and I say....Hmmm, this is how I thought things were going.

So how can the Investment Community feel so comfortable with business to the point where they drive the cost of stocks up?

Well, it wasn't all that long ago when I remember this .COM bust we had.....and as I recall, I remember wondering how these stocks could be valued the way they were when the underlying companies seemed to have ZERO chance of making a profit.

I was told "Oh, this is a new economy"....

Well, what did we really wasn't any different, but the people boosting the stocks were probably smoking something and could not see the forest from the trees.

Is this what we have now? Was todays 360 point market drop just the start of a long series of "corrections" we said back in 2001?


Thursday, October 18, 2007

Roll the Dice?

So here we are looking into an uncertain world of least as I see it.

I have to admit that I am NOT a investment guru, and not even good enough to consider being a day-trader. So how is it that I can sit here and even ask the question about "rolling the dice"?

Well, talk is cheap....and typing is not much more expensive.

I'm just thinking that even though I am not much of a gambler, I like the idea of putting my buck into the lottery when the rewards get over say $150 can't win unless you play!

So my musings here are simply that.....but who knows.....given my life changes in the last year, I might just go for broke with a little chunk of change.

But what would I invest in? I'm not sure.....I guess I might take risks and try to short things.....given my thoughts that things will eventally pull back.

But I admit that I have no crystal ball and have no idea as to when, never mind IF things will slip.

How about realestate? No way....not for me. I might consider buying something for possible rental income, but I would never consider the value of the realestate itself will do anything but go down.

But again.....I never owned a crystal ball, and my magic 8-ball is at home right now....sorry....I guess I'm not much of a gambler.

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Tuesday, October 16, 2007

Simple Investment Ideas and Concepts for Friends

A friend of mine and I were talking about investing of retirement money this weekend, and they asked me for some advice.

They wondered if I could look at their investment portfolio and give them some an assessment of their mutual fund choices.

My first reaction was:
"Gee...I might have a few bucks in my retirement account, but I don't think I'm an expert."

Well, I still agree with not bring an expert, but I have to say that I might be selling myself short with regard to not knowing something about investing.....yes, my knowledge is simple, but I think it is always useful. (I didn't make it up, so don't let me make you think I created a special set of investment rules)

No, I thought about what I might suggest, and my first rule of thumb would be to diversified.

Simple enough.....

The my second rule of thumb.....set it and forget it. (sort least try to do your homework and pick long term investments and only monkey with those investments once a year, or should the bottom fall out. Oh, if things crash, certainly then it is time to GET OUT ahead of the others while there is still a "bottom" to the market)

My friend told me they initially put their money into a socially responsible fund....and I noted that this actually might not be such a bad just have to do a bit of homework to see what that particular set of funds is doing and if it invests in good growth areas, or things that are under stess. (and of course, past performance is no indication of future performance....but you have to look at something if you don't have a crystal least try to look at and assess its more long term potential.)

So I suppose I will look at their portfolio and see if anything "pops out at me".

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Will there be an Economic Tipping Point?

I read in Warren Brussees BLOG that he thinks is theory about a depression in 2007 is coming closer into view. He admits that he might be as much as a year off, but he is still seeing his prediction from his book unfolding.

His BLOG seems to imply a sort of economic "tipping point"....a point in time where one characteristic of the economy changes past a sort of inflection point whereby any further change in that parameter causes a much larger change (an avalanch of sorts) in another response.

He sees the credit crisis, and crashing cost of the housing market as the catalyst for a fast decline in consumer spending, which kills our GDP quite quickly (since it accounts for 70% of it) and sets off a series of chain reactions which further closes down credit....etc....etc.....we have a closed loop cycle that now feedsback on itself.

Is he right?

Who knows....all I know is that it seems to me that the death of an economy is probably much like that of a human, and I hope you don't get grossed out by this, but I witnessed someone very close to me pass away, and they did not go easily.

No, they obviously loved life, and wanted so much to keep it....and their struggle was very long and hard. They eventually were overcome and passed on, but thei very last breaths were not easy and I could sense their final struggle to stay with us.

I see the economy in the same isn't going to go easily. It is going to try every way it can to survive and grow healthy again. It is probabably not as dynamic or resourcefull as the human body, but it surely isn't any more willing to roll over and die either.

But I'm thinking that the death throws of an economy will be no less violent than that of a human holding on to their last breath.....for our economy is after all still driven by humans. There are enough of us who don't give up I expect any downturn to be perhaps fast.

Like the depression in 1929....or even some of the other market crashes and panics before and after.

Let's hope Warren is wrong....let's hope he is WAY OFF and in his assesment.

And if he is right....let's hope all of us have the common sense to know that money doesn't make the world go around, and that there is still so much more to live for. Many people didn't know that around 1929....I'd like to think we can learn from the past.

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Monday, October 01, 2007

Stocks hit an all time high......but what's up with our economy?

I see evidence of the housing crunch....foreclosures still on the rise.....prices going up....the dollar getting weaker. Then, the news below that our country is being bought up by foreign interests who find their strong currency is making "bargain deals" out of our technology and companies that we have for sale.

guess this might be the reason a market will rise (supply and demand), but it can't be good for our country....can it? (everything seems "soft", and there is constant talk of recession)

So why does the stock market continue to rise? Are we looking at another 2000 market bubble ready to go bust? (Is that the pessimist in me talking, or the guy who rode out the 2000 stock market free-fall?)

I'm a buy and hold guy for sure.....but this worries me.

Foreign buyouts raise US fears as weaker dollar drives deals

Weakened dollar has investors pouncing

Foreign firms are taking advantage of the weaker dollar to buy US companies at a record pace that is boosting investment here but also raising fears about a potential loss of jobs and autonomy.

In New England alone, 69 companies have been sold to foreign buyers in the first nine months of 2007 for a total of $30.8 billion, more than in any full year since 2000, the height of the high-tech boom, according to New York research firm Thomson Financial.

"We could be looking at the world's largest tag sale if we continue to see declines in the dollar," said Donald Klepper-Smith, chief economist for the New Haven firm DataCore Partners.