July 30, 2009 How can I say this best? Stock market valuations are not low. If you are retired or saving in hopes of retiring, you must laser focus on having a consistent flow of cold cash to pay the tab for your weekly grass-fed-to-the-end beef, fresh-ground flax, coconut milk loaded with medium-chain fatty acids, and omega-3-loaded Country Hen organic eggs. In other words, you will want to rely on high-dividend yields for compound-interest power. The two most important words in investing are “compound interest.” Please don’t buy into the jive that trying to buy stocks cheap and then trying … [Read more...]
The Terror of Outliving Your Money
July 24, 2009 The terror of outliving your money has now taken hold for too many investors. It’s not hard to see why, given that discerning investors remember like yesterday the 1965-1981 16-year bear market, where the Dow ended up at 875, 10% lower than its 1965 peak of 969. A little closer to home, we all recall with concern the 1999-2008 nine-year bear market, which left the Dow down a frightening 24% from its 11,497 peak of 1999. For all retired and soon-to-be-retired investors, there is a fast and hard lesson to be learned here. Look to dividends and interest and the miracle of compound … [Read more...]
Savers are Terrified
July 17, 2009 Despite pockets of strength, the bear market in stocks staggers on, eyeing, with an increasing daily concern, the RPM’s (Radical Progressive Movement) sweeping program of socialism and quasi central government nationalization. The stock market hated the Bush-fronted neo-con disaster, and rightfully, is even more scared of the “Chicago Cabal.” At mid-year, the Dow Industrials are down 4.8%, the Transports are down 9.9%, and the Utilities are down 4.4%. It’s a negative clean sweep for the blue-chip industries despite misleading strength in the more speculative market sectors. … [Read more...]
Your Tax Dollars at Work
July 10, 2009 From 1995 through 2006, corn subsidies in the U.S. totaled $56.2 billion, and this spring farmers seeded the second largest amount of land with corn in more than 60 years. According to the WSJ, “The Obama administration is pushing a big expansion in ethanol, including a mandate to increase the share of the corn-based fuel required in gasoline from 10% to 15%. Apparently, no one in the administration has read a pair of new studies, one from its own EPA, that exposes ethanol as a bad deal for consumers with little environmental benefit.” Corn is a killer and darn few Americans … [Read more...]
A 0.01% Money Market Yield
July 3, 2009 I just checked the yield on my money market fund. How does 0.01% sound to you? Sounds to me like the mid term GPA average for the Delta House gang back at Dean Wormer’s fictional Faber College. You’re getting less than 0.5% from 3 and 6 month treasuries and bank CDs. And you know that it is my forecast that the U.S. dollar is going to crater versus the Swiss franc and the Canadian dollar. Moreover, the yield on the Dow is less than 3.5% isn’t it? Savers are in a darn tough spot. And conditions will worsen due to ongoing mismanagement at the White House, Treasury and Fed. And now … [Read more...]
The Blue-Chip Triad
June 25, 2009 The Dow Utilities are down 5.0% YTD. The Dow Industrials are down 5.4%. And the cherry on the cake of the 2009 bear market in blue chip stocks is the 11.7% decline in the Dow Transports. The blue-chip triad reflects a number of serious concerns: (1) complete and total incompetence in Washington; (2) the worst world wide economy since the 30’s depression; (3) North Korea, Iran, Afghanistan, Iraq; (4) the prelude to a nasty run up in U.S. interest rates and inflation; (5) at a 3.4% yield (Dow 30) blue chip stocks simply do not offer compelling value. Gold is up YTD, reflecting the … [Read more...]
A Saucer-Like Bottom in Housing
June 16, 2009 As an inference reading based futurist, my goal is to target unfolding trends and the catalysts to effect change. Areas of interest include terrorism, politics, currencies, government, world financial markets, and economies. Most immediately, I think the 17% jump in May housing construction in concert with May’s increase in building permits augers well for a saucer-like bottom in housing. Home builders were definitely less confident in June than they were in the spring. Mortgage rates have been rising and there remains a nasty overhang of unsold homes. As such, the U.S. has now … [Read more...]
One of the Best Leading Economic Indicators
June 12, 2009 The stock market is one of the best leading economic indicators. And investment grade U.S. stocks continue in a Bear market. (1) Dow Jones Industrials, down 0.1% (2) Dow Jones Transportations, down 5.6% (3) Dow Jones Utilities, down 7.6%. By contrast many International Indices are soaring (1) Brazil up 42% (2) Canada up 17% (3) Hong Kong up 26% (4) Japan up 11% and (5) Singapore up 32%. Moreover with a 25 p/e (based on 2009 estimates) and only a 3.3% yield the Blue Chip Dow Industrials simply do not offer compelling value. It is true that the speculative NASDAQ index is up 16% … [Read more...]
There Will Be Water
Roberts County is a neat square in a remote corner of the Texas Panhandle, a land of rolling hills, tall grass, oak trees, mesquite, and cattle. It has a desolate beauty, a striking sparseness. The county encompasses 924 square miles and is home to fewer than 900 people. One of them is T. Boone Pickens, the oilman and corporate raider, who first bought some property here in 1971 to hunt quail. He's now the largest landowner in the county: His Mesa Vista ranch sprawls across some 68,000 acres. Pickens has also bought up the rights to a considerable amount of water that lies below this part of … [Read more...]
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