Let’s see . . . you expect full retirement benefits at age 55 and one of the best health care systems in Europe as well.  Oh, and paying taxes is only for chumps.  You are renowned across Europe for not filing your income tax returns, and the government barely tries to collect them.  For the 20% … Continue reading The Indignation of Crybabies

Last week, Europe developed their template to resolve their financial crisis.  Stock markets around the world rallied and rallied strongly on the breakthrough.  I knew it wouldn’t last, as markets cannot go straight up without falling back for consolidation.  Plus, there had to be lots of details in the template that would concern the market. … Continue reading Yucky Muddy Water

Clients frequently ask me about making investments in businesses or real estate outside the stock market.  I am required to tell them that I have a conflict of interest, because my fee income could decrease if they reduce the funds under my management in order to make the outside investment.  In other words, it is theoretically … Continue reading Goose and Gander

When I turned on Bloomberg at 4 AM, I expected to see something about the European financial crisis, as usual.  Instead, it was a discussion about the earnings of some company.  After breathless 24/7 coverage of the crisis for months, I found this discussion of earnings to be refreshing.  (Maybe, we’ll get back to economics as well?  I miss … Continue reading So Far, So Good

It took a slow 18 months and a long 10 hour marathon negotiation last night, ending at 4AM, but Europe has done it!  Of course, they have not solved all their problems, but they have taken a huge step toward fiscal integration.  The hook is set, and there is no getting away. Basically, the banks … Continue reading The Hook Is Set!

Did you ever hold a cat over the water?  It explodes with energy, with all four paws in frantic motion and all claws ready to hang on to anything. That’s how the market is behaving today, swinging from 150 point gains to 50 point losses within minutes.  The production of so much adrenalin is caused by … Continue reading Cat on a Hot Tin Stock Exchange

The good news is that national leaders in Europe have finally realized the grave condition of their financial system and are committed to saving it.  The bad news is that they don’t know how! In July, they agreed to set up a European Financial Stability Fund (EFSF), with about 440 billion euros or $600 billion.  Now, … Continue reading Pick a Bunny Trail

I was not expecting much action in the market yesterday; expecting low volume in anticipation of the important EU meeting of finance ministers today, and that’s how the day started.  The market had been promised by Merkel that Wednesday’s meeting would produce the final comprehensive plan to end the European crisis.  Then, there was a … Continue reading Then, Somebody Yanked on the Carpet !?!

I attended the dinner meeting at the World Affair Council last night, where Senator Mark Warner was the speaker.  Normally, our speaker discusses some international issue.  Senator Warner spoke more about domestic issues. He talked about his experience on the Gang of Six moderate senators who tried to build on the Simpson-Bowles work to break … Continue reading The Radical Centrist

I know I have done this before, but it is really important to remember this website: http://www.usdebtclock.org/  The market is discounting the problem of Europe and will soon face the challenges of our SuperCommittee.

At 4AM this morning, futures indicated the Dow would open up about 40 points.  Then, it dropped down to negative 6 points.  At 7AM, futures are flat.  The market is slowly twisting in the wind, waiting for the G-20 in general and Sarkozy & Merkel in particular to announce their “bazooka plan” to save the European … Continue reading The Sarko & Merko Show

This weekend, I was fortunate to have my daughter visit from Texas.  I had to promise to participate with her on Saturday in the Virginia Touch Mudder, which I knew nothing about.  For info, click here:  www.toughmudder.com/virginia In the middle of 15 thousand screaming lunatics, one gets a different view of the economy.  These enthusiastic participants spent on … Continue reading Lessons From Lunatics

While world stock markets are being whip-sawed by every announcement out of Europe, it is easy to miss what is happening in the Chinese stock market.  Take a look at this:  If China is the growth engine of the world, the world could be stalling badly! Of course, we don’t know how much to … Continue reading On the Other Side of the World

Earnings season is almost half over.  Generally, the earnings reports have been slightly better-than-expected.  Normally, when  a company’s quarterly earnings disappoint, that stock gets hurt, but that doesn’t drive the overall market down a hundred points.  Yet, the market remains painfully volatile.  Something else is causing that! Yesterday, economics actually mattered briefly, when the “Beige Book” … Continue reading e & e & E

While listening to a Republican candidate for President on Fox News, he stated that the top 5% of the taxpayers pay 80% of the taxes.  While directionally correct, that didn’t sound close enough to make good policy.  So, I did some research on Kiplinger and found this. To be in the top 5%, you only need an … Continue reading Just Another Sophie’s Choice

I feel guilty kicking a sick dog, but I have this love/hate perspective of Goldman Sachs.  Their earnings came out yesterday, and they are definitely sick.  Fortunately, I don’t buy stock in any company that I don’t trust and do NOT have their stock in any portfolio I manage.  And, I certainly would never permit my … Continue reading Kicking the Dog . . .

Everybody sees the world thru their own prism.  Often, that prism can be mass-produced by the media. Watching the Republican Debates last night, I saw agreement that the “Occupy Wall Street”  (OWS) crowd was just a bunch of left-wing extremists.  My Democratic friends see the Tea Party as just a bunch of right-wing extremists. Rather than … Continue reading Thru the Looking Glass

Today’s Producer Price Index was worse-than-expected, 0.8% vs 0.2% in September.  Also this morning, England announed their consumer inflation was running 5.2%, which is worse-than-expected.  In addition, China announced their GDP growth rate dropped from an incredible 9.5% to a worse-than-expected but still incredible 9.1% . . . because they are fighting inflation. Inflation is good!  For a country … Continue reading Embracing the Enemy

Long-suffering readers of this blog know that I also write a quarterly column for Inside Business:  The Hampton Roads Business Journal.  The newspapers are being mailed today, but you can read it here:  http://www.insidebiz.com/news/investing-q3-when-politics-trumped-economics-q3-when-politics-trumped-economics

Any recovery is better than not, but only some recoveries are sustainable.  The ideal recovery would gain only 20-30 points on a daily basis for a long time, with heavy volume.  (Heavy volume means lots of shares were traded, which usually means lots of people are buying and is very bullish.) The Dow has moved … Continue reading Is It Real . . . or Is It Memorex?

The G-20 is the international organization of the twenty largest economies that meets periodically to coordinate primarily trade policies and secondarily fiscal policies.  Each meeting gets lots of media attention, as twenty chiefs-of-state deserve.  The next meeting is in two weeks. Before each meeting, the finance chiefs get together to actually work out deals to make … Continue reading Under the Radar . . .

I had a long conversation with my favorite bull yesterday.  He is a long-time friend and client, who is anxiously looking forward to celebrating at his 90th birthday party in the near future.  The reason he called me was that he was curious why I was removing risk from his portfolio, when the market was going … Continue reading The Wisdom of Thinking Long-Term

There are numerous investment theories, with Modern Portfolio Theory being the most common.  Advisors often advertise that their individual investment theory is better than everybody else’s.  Almost all were developed in the United States. The Battle of Thermopylae was fought in 480 BC, when legend tells us that a mere 300 Spartan soldiers withstood the one-million … Continue reading The Battle of Thermopylae: Act Two

Harry Markopolos is the tenacious whistle-blower that tracked Bernie Madoff and tried unsuccessfully for many years to get the SEC to investigate Madoff.  Unfortunately, the SEC had more important things to do, and Madoff was exposed by the market crash of 2008, not by Markopolos.  Tonight, we went to see the worth-seeing movie Chasing Madoff, … Continue reading Should Have Worn My Love Beads

Yesterday, Slovakia decided to kill the EFSF, which would be a huge setback to ending the European crisis.  One would expect markets to tank worldwide, but one would be wrong.  Asia was up.  Europe is up.  Futures indicate our Dow will open up about 75 points. Most experts assure us that Slovakia will replace their … Continue reading The Love of Blinders

The SEC requires public companies to file financial reports on a quarterly basis, so that shareholders can have needed information about their investments.  September 30th was a quarter end for the vast majority of companies.  During the month of September, companies that expected to post results different from their earlier guidance usually guide those earnings … Continue reading Market Rhythm

I’m proud that the Nobel prize for economics was awarded to two Americans yesterday and salute Thomas Sargent & Christopher Sims on their accomplishment. For decades, I have watched the profession of economics sink into the black hole of econometrics, which is an almost religious belief that everything can be quantified.  If only we could get … Continue reading U.S.A. . . . U.S.A . . .

Yesterday, on the promise of Merkel and Sarkozy to resolve the European Crisis this month, the Dow was up 330 points.  Overnight, Asia also rallied on that good news.  Then, the European markets opened with a rumor that Slovakia would not approve the July agreement to create the EFSF (European Financial Stability Fund), which would … Continue reading Where . . . Who??

I remember watching two existential “philosophers” discussing the importance of absurdity.  One said the only thing more commonplace than air . . . was absurdity.  That crossed my mind this morning as I watched CNBC discussing the “Occupy Wall Street” movement, that does seem to be growing.  When the Tea Party movement was born during … Continue reading Love It or Hate It

In the 24/7 investment world, every Monday is a new beginning, a time when everything is possible.  The weekend provides time for almost anything to incubate and begin anew on Monday morning.  Overnight, Asia was up almost 1%.  Europe is also up.  Futures indicate our market will be up about 150 points at the open. … Continue reading New Beginnings

There is a raging debate inside the investment industry between the fiduciary standard and the suitability standard.  Under a fiduciary standard, an investment advisor must always act in the best interest of the client and must always disclose any potential conflicts of interest beforehand.  Under a suitability standard, an investment advisor must not make any … Continue reading Too Simple To Do?

Last night, my Rotary Club was given a private, behind-the-scene tour of the Virginia Beach Jail.  It was a sobering and provocative experience.  We saw the “in-take” area, where police turn over custody to the jailers.  There were tiny, barren cells with a seat and toilet only.  We saw the three different types of cells, i.e., linear, … Continue reading Jail -Time

When the Dow futures change from a negative 45 to a positive 100 points within ten minutes, it is a safe bet that the monthly Jobs Report was better than expected.  That was certainly the case this morning! A survey of economists indicated job growth in September would be about 63 thousand, which would be better than the … Continue reading Celebrate!

Years ago, I was asked to write a quarterly column on the economy and the stock market for Inside Business.  It is that time again, and my deadline is Monday.  Subject to change, I’m thinking the theme will be the triumph of politics over economics. Yesterday was a good example.  Even though the ISM data … Continue reading When Politics Trumps Economics

Historically, September and October are the worst months of the year.  Further, either the first or fourth quarters are usually the best quarters each year.  Today, the world started the fourth quarter on a weak note, with both Asia and Europe down about 2%.  At this hour, futures indicate the U.S. markets will open down … Continue reading A New Quarter . . . Same Old Problems