It's a moot point now, but here was Dave Ramsey's proposed plan:
http://www.daveramsey.com/common_sense_fix.txt
I mention it only because it recommends eliminating the capital gains tax entirely. His rationale is that rich people will use their own money to invest in the market--rather than risk not beating inflation by staying in cash or 2% money market funds--and the market will rise again on the backs of the upper class's investments, not general taxpayers. You have to admit, it's an interesting idea.
"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
Friday, October 3, 2008
Stocks Update, October 3, 2008
What a crazy day. After the House passed the bailout bill, the stock market actually went down. I made several trades and managed to do reasonably well, except I re-bought STT too soon after selling. I am currently experiencing a loss on STT and hope to sell within two weeks.
Also, the percentages for EMC and Yahoo are slightly off, because I dipped into my non-retirement accounts to buy some shares. I am losing a few hundred dollars on the trades in my non-retirement funds, but nothing that significantly impacts the percentages below.
I added MGM to my open positions at about 2,000 dollars' worth. Vegas relies on now-nervous California citizens for much of its income, but I am willing to bet a small amount that Vegas has some more tricks up its sleeve. I also wouldn't be surprised to see Dubai provide the 500 billion dollars needed to complete the latest MGM project. I still don't like MGM's CEO, J. Terrence Lanni, so I probably won't add to my MGM position.
My major positions are now STT, YHOO, SWZ, and GXC. Yahoo stock seems priced far too low.
Open Positions
CCT = -7.95
EMC = -13.58
EZU = -16.73
GXC = -12.15
MGM = -3.45
IF = -33.37
STT = -8.45 (afterhours price)
SWZ = -12.62
VPL = -13.80
YHOO = -16.09
[Average of "Open Positions": losing/negative average 13.82%]
[138.19/10]
Closed Positions:
Held more than seven days but less than one year (from May 30, 2008):
CNB = +10.0
EQ = -8.83
EWM =-11.61 [sold 9/22/08]
EWS = -12.98 [sold 9/22/08]
GE = -6.4
GLD = +8.61 [sold 9/22/08]
INTC = 0.0 (excluded from average; insignificant movement)
KOL = -10.36
PFE = -5.5
PNK = -16.7
PPS = -2.8
VNQ = +2.37 [sold 8/7/08]
WFR = +0.9 (approx; based on partial sales week of 8/4/08 in two separate accounts)
WYE = +2.4
[Overall Record for 7 days+ trades: lost an average of 3.92%]
[-50.90 / 13 trades]
Held less than 7 days:
DUK = (0%, excluded from avg) [8/07/08 - 8/14/08]; GE (1.0%); GOOG (0.8%) [7/28/08 - 7/29/08]; GOOG (5.4) [9/29 - 9/30]; GRMN (-6.2%) [Sold 8/5/08]; ICE (2.0%), MMM (0.5%), MRK (0.1%), KOL (13.2%) [9/17/08 to 9/19/08]; MOS (10.4%) [10/6/08 to 10/8/08]; NVDA (8.0%) [8/12 to 8/13/08]; PFE (1.3%), SCUR (15%); SO (-0.3%) [Sold 8/5/08]; STT (2.68%) [10/1/08 to 10/3/08]; STT (0.4%) [10/3/08 to 10/7/08]; TTWO (4.3%) [partial sales on 8/5/08, 8/7/08, and 8/8/08]; TTWO (2.2%) [9/9/08 to 9/12/08]
[Overall Record for ultra short-term 2 to 7 days trades: gained an avg of 3.57%]
[60.78 / 17 trades; as of 10/8/08]
Daytrades:
C = +11.49 (09/01/08)
PFE = +0.5%
GE = +0.5% (Updated on July 14, 2008; bought at 27.15, sold at 27.30)
STT = +0.3
XLF = +4.3% (Updated on July 15, 2008)
[Overall Record for daytrades: Gained an average of 3.35%]
16.79/5
Compare to S&P 500: losing/negative 20.67%
[from May 30, 2008 (1385.67) to October 3, 2008 (1099.23)]
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
Also, the percentages for EMC and Yahoo are slightly off, because I dipped into my non-retirement accounts to buy some shares. I am losing a few hundred dollars on the trades in my non-retirement funds, but nothing that significantly impacts the percentages below.
I added MGM to my open positions at about 2,000 dollars' worth. Vegas relies on now-nervous California citizens for much of its income, but I am willing to bet a small amount that Vegas has some more tricks up its sleeve. I also wouldn't be surprised to see Dubai provide the 500 billion dollars needed to complete the latest MGM project. I still don't like MGM's CEO, J. Terrence Lanni, so I probably won't add to my MGM position.
My major positions are now STT, YHOO, SWZ, and GXC. Yahoo stock seems priced far too low.
Open Positions
CCT = -7.95
EMC = -13.58
EZU = -16.73
GXC = -12.15
MGM = -3.45
IF = -33.37
STT = -8.45 (afterhours price)
SWZ = -12.62
VPL = -13.80
YHOO = -16.09
[Average of "Open Positions": losing/negative average 13.82%]
[138.19/10]
Closed Positions:
Held more than seven days but less than one year (from May 30, 2008):
CNB = +10.0
EQ = -8.83
EWM =-11.61 [sold 9/22/08]
EWS = -12.98 [sold 9/22/08]
GE = -6.4
GLD = +8.61 [sold 9/22/08]
INTC = 0.0 (excluded from average; insignificant movement)
KOL = -10.36
PFE = -5.5
PNK = -16.7
PPS = -2.8
VNQ = +2.37 [sold 8/7/08]
WFR = +0.9 (approx; based on partial sales week of 8/4/08 in two separate accounts)
WYE = +2.4
[Overall Record for 7 days+ trades: lost an average of 3.92%]
[-50.90 / 13 trades]
Held less than 7 days:
DUK = (0%, excluded from avg) [8/07/08 - 8/14/08]; GE (1.0%); GOOG (0.8%) [7/28/08 - 7/29/08]; GOOG (5.4) [9/29 - 9/30]; GRMN (-6.2%) [Sold 8/5/08]; ICE (2.0%), MMM (0.5%), MRK (0.1%), KOL (13.2%) [9/17/08 to 9/19/08]; MOS (10.4%) [10/6/08 to 10/8/08]; NVDA (8.0%) [8/12 to 8/13/08]; PFE (1.3%), SCUR (15%); SO (-0.3%) [Sold 8/5/08]; STT (2.68%) [10/1/08 to 10/3/08]; STT (0.4%) [10/3/08 to 10/7/08]; TTWO (4.3%) [partial sales on 8/5/08, 8/7/08, and 8/8/08]; TTWO (2.2%) [9/9/08 to 9/12/08]
[Overall Record for ultra short-term 2 to 7 days trades: gained an avg of 3.57%]
[60.78 / 17 trades; as of 10/8/08]
Daytrades:
C = +11.49 (09/01/08)
PFE = +0.5%
GE = +0.5% (Updated on July 14, 2008; bought at 27.15, sold at 27.30)
STT = +0.3
XLF = +4.3% (Updated on July 15, 2008)
[Overall Record for daytrades: Gained an average of 3.35%]
16.79/5
Compare to S&P 500: losing/negative 20.67%
[from May 30, 2008 (1385.67) to October 3, 2008 (1099.23)]
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
California Out of Money?
According to Reuters, California Treasurer Bill Lockyer said the most populous U.S. state's cash reserves may be exhausted near the end of October, and various state-funded services are at risk of grinding to a halt.
Governor Schwarzenegger is apparently going to ask the federal government for 7 billion dollars. Good timing--after 700 billion, 7 billion is going to seem eminently reasonable.
When Californians vote on their various propositions, they should remember California's budget problems (i.e., no money). Almost every Proposition requires more money. When in doubt, vote "no." The only Proposition I will be voting for is Prop 11. Everything else seems to require money Californians don't have.
Governor Schwarzenegger is apparently going to ask the federal government for 7 billion dollars. Good timing--after 700 billion, 7 billion is going to seem eminently reasonable.
When Californians vote on their various propositions, they should remember California's budget problems (i.e., no money). Almost every Proposition requires more money. When in doubt, vote "no." The only Proposition I will be voting for is Prop 11. Everything else seems to require money Californians don't have.
Thursday, October 2, 2008
Wisdom: Father Theodore Hesburgh
From Father Theodore Hesburgh, courtesy of the WSJ (9/30/08, A15):
People are tough on people, but I love people, and the great, great, great majority of people are very good. We have our share of sinners, even in all the great religions of the world, but I think the fact that people keep trying is the most important thing of all, and I'd like to be one of those who keep trying.
People are tough on people, but I love people, and the great, great, great majority of people are very good. We have our share of sinners, even in all the great religions of the world, but I think the fact that people keep trying is the most important thing of all, and I'd like to be one of those who keep trying.
Tom Toles on the Bailout
In honor of the bailout, I give you Tom Toles. The man is an absolute genius.
http://www.washingtonpost.com/wp-srv/opinions/cartoonsandvideos/toles_main.html?name=Toles&date=09242008&type=c
(September 24, 2008, Washington Post)
http://www.washingtonpost.com/wp-srv/opinions/cartoonsandvideos/toles_main.html?name=Toles&date=09242008&type=c
(September 24, 2008, Washington Post)
Wednesday, October 1, 2008
More Short Term Mania
I was successful in completing a two day Google (GOOG) roundtrip yesterday. This morning, I bought some State Street (STT) and Citigroup (C). I am hoping to sell today or by this Friday.
From a technical standpoint, the risks of trading have increased, despite the higher chance that a revised bailout bill will pass. Most financial stocks hit all-time lows this week or last week, so the smart money has already been made. On the other hand, I just saw a headline, "Dow 7000 in the Cards?" so perhaps there is still enough fear for a decent-sized bounce when the bailout bill passes.
One note: the "revised" bailout bill doesn't seem much different from the original. Apparently, the key change was raising federal deposit insurance to $250,000. Some reports indicate the revised bill contains AMT relief, but Congress already passed a tax plan last week with AMT relief.
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
Update on October 2, 2008: sold my C, still have my STT, but hope to sell soon.
Update on October 3, 2008: sold my STT. Both trades were profitable.
From a technical standpoint, the risks of trading have increased, despite the higher chance that a revised bailout bill will pass. Most financial stocks hit all-time lows this week or last week, so the smart money has already been made. On the other hand, I just saw a headline, "Dow 7000 in the Cards?" so perhaps there is still enough fear for a decent-sized bounce when the bailout bill passes.
One note: the "revised" bailout bill doesn't seem much different from the original. Apparently, the key change was raising federal deposit insurance to $250,000. Some reports indicate the revised bill contains AMT relief, but Congress already passed a tax plan last week with AMT relief.
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
Update on October 2, 2008: sold my C, still have my STT, but hope to sell soon.
Update on October 3, 2008: sold my STT. Both trades were profitable.
Tuesday, September 30, 2008
Bailout = Monetarism in Action
I wanted to make another note about the bailout package, and why Wall Street wants it so badly. The overriding principle behind the proposed bailout reflects Wall Street's blind belief in the economic theory of "monetarism." This theory calls for pumping money into the economy to make it better during bad times. There is a joke that explains monetarism. It refers to Ben Bernanke in a helicopter dropping bags of money to random people. Unfortunately, this joke falls into the "funny because it's true" category.
Richard Duncan, in Chapter 3 of his book, The Dollar Crisis: Causes, Consequences, Cures , Revised and Updated, says that monetarism is like pouring water over a drowning child. He states,
The failure of those [liquidity calibration] attempts will be the death of monetarism, which claims that any economic difficulty can be overcome simply by adjusting the money supply up or down depending on the circumstances. It will be death through drowning.
To continue the analogy, pouring money into a shallow pool to attract more people doesn't mean people will suddenly learn how to swim--some people will drown as the pool becomes more dangerous.
I am surprised more news stories haven't mentioned the term, "monetarism." The absence of the term in new stories shows either the mainstream media don't know much about economics, or they think their audience can't understand economic theory.
Update: In The Predator State, James Galbraith has a prescient line about America's "unlimited privilege of issuing never-to-be-paid chits" coming to an end. The book also contains a scathing rebuke of monetarism (surprisingly, all the book reviews I've read never once mention "monetarism"). Galbraith also writes that managing interest rates, not the money supply (M1, M2, etc.), stimulates the economy. In other words, even if the government hands down a billion dollars, it doesn't ensure that the money is spent; in contrast, if the government lowers interest rates, it makes it easier for money to be lent and spent and used optimally within the economy.
Richard Duncan, in Chapter 3 of his book, The Dollar Crisis: Causes, Consequences, Cures , Revised and Updated, says that monetarism is like pouring water over a drowning child. He states,
The failure of those [liquidity calibration] attempts will be the death of monetarism, which claims that any economic difficulty can be overcome simply by adjusting the money supply up or down depending on the circumstances. It will be death through drowning.
To continue the analogy, pouring money into a shallow pool to attract more people doesn't mean people will suddenly learn how to swim--some people will drown as the pool becomes more dangerous.
I am surprised more news stories haven't mentioned the term, "monetarism." The absence of the term in new stories shows either the mainstream media don't know much about economics, or they think their audience can't understand economic theory.
Update: In The Predator State, James Galbraith has a prescient line about America's "unlimited privilege of issuing never-to-be-paid chits" coming to an end. The book also contains a scathing rebuke of monetarism (surprisingly, all the book reviews I've read never once mention "monetarism"). Galbraith also writes that managing interest rates, not the money supply (M1, M2, etc.), stimulates the economy. In other words, even if the government hands down a billion dollars, it doesn't ensure that the money is spent; in contrast, if the government lowers interest rates, it makes it easier for money to be lent and spent and used optimally within the economy.
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