To quote a ditty from the fifties:
Intro:
There are days in my life when everything is dreary
I grow pessimistic, sad and world weary.
But when I'm tearful and fearfully upset
I always sing this merry little minuet:
They're rioting in Africa
They're starving in Spain
There's hurricanes in Florida
And Texas needs rain.
The whole world is festering
With unhappy souls
The French hate the Germans,
The Germans hate the Poles
Italians hate Yugoslavs
South Africans hate the Dutch
And I don't like anybody very much
But we can be grateful
And thankful and proud
That man's been endowed
With a mushroom shaped cloud
And we know for certain
That some happy day
Someone will set the spark off
And we will all be blown away
They're rioting in Africa
There's strife in Iran
What nature doesn't do to us
Will be done by our fellow man.
Our government is shut down. In a couple of weeks Congress may fail to lift the debt ceiling. This could bring upon the United States an unprecedented crisis where we don’t pay interest on our government debt and the world thinks we’re deadbeats. The price of our bonds could plummet, interest rates could spike and our slumbering recovery could be turned into a rout. Our stockmarket could crater.
Do I think this is likely to happen? Well… let’s look at the debt ceiling. It needs to be lifted because Congress has already approved the spending. It’s not as though lifting the debt ceiling will lift government spending one penny. Therefore why should some Congresspeople object to raising the ceiling? Having tried 43 times to kill Obamacare, some members of Congress are latching onto the debt ceiling as their bargaining chip to kill, or at the very least amputate Obamacare. Their hatred of Obamacare is so intense they’ve already shut down much of the Federal government, throwing hundreds of thousands of people out of work and severely hurting industries like those making things for our defense, and the airlines — many of whose passengers can no longer get a passport.
Are we dealing with rational people? The Tea Party. Do yourself a favor, read Wikipedia on Michele Bachmann, one of the leading Tea Party lights. She wants to shut down social security and Medicare, kill abortion, stop same sex marriages, etc.
Comments the New York Times, “The conservatives remain resolute against compromises, even some embraced by Republican leaders. Representative John Fleming, Republican of Louisiana, said he could not accept a repeal of the health law’s tax on medical devices as a concession to reopen the government. “That could be bad because it could improve a bad bill,” he said. “And while it’s a terrible tax, removing a tax to make what is really an atrocious bill to make the economy slightly better, I’m not sure that’s a good idea.” …
I don’t like most funds. Private equity funds. Distress hedge funds. Distress real estate funds. Funds are put together and sold to the likes of you and I simply because the promoters can sell them. With funds, promoters can’t lose. They typically take a management fee (typically 2%) every year — no matter how good the fund’s investments do. Which means they have a huge incentive to never end the fund, especially if it’s doing poorly — as most recently have.
The promoters will receive an incentive fee of the profits after return of your capital. But these days are not the halcyon days of the 1970s, 1980s and 1990s when there were few funds and oodles of great startup investments — like Staples, Home Depot, Pizza Hut — that were about the change the American economy’s landscape. These days these investments are few and far between — with the exception of a handful of great Internet companies — like Google, Amazon, Priceline, eBay, LinkedIn, etc.
Here’s a chart of one fund I’m in. Look at it. After all these years, this thing is up a miserable 36% — after six years. That used to be the annual appreciation you’d get in the 1980s.
The worst of funds are their management. The people who manage your money are typically ex-investment bankers who are not entrepreneurs or businesspeople. They are investment bankers and they believe every company business problem can be solved by merging the company with another company — using your money to throw your good money after what has now become your bad money. You can tell these investment banker/fund managers know absolutely nothing about business when they intone meaningless phrases likes “transformational events” and “strategic partners.” The worst thing about investment bankers as fund mangers is they never close their disasters. They prolong them in painful pricey ways and they do dumb things, like firing (and never listening to) the entrepreneurs who started the businesses they now are buying to shore up their disasters.
Beware of fake “Apple” products. Online companies are selling Apple earbuds and Apple cables — cheap. They look like Apple made products. But they often don’t work — especially the cables. In fact, your iPhone will give you a message that says, in essence, this cable is fake, won’t work and you just wasted a bucket-load of money. Tough. In short, buy the Apple stuff. It’s pricey, but it works.
Estate planning of the best kind:
Morris Schwartz is on his deathbed, knows the end is near, is with his nurse, his wife, his daughter and 2 sons. “So”, he says to them: “Bernie, I want you to take the Beverly Hills houses.”
“Sybil, take the apartments over in Los Angeles Plaza.”
“Hymie, I want you to take the offices over in City Center.”
“Sarah, my dear wife, please take all the residential buildings downtown.”
The nurse is just blown away by all this, and as Morris slips away, she says, “Mrs. Schwartz, your husband must have been such a hard working man to have accumulated all this property”.
Sarah replies, “Property? … the schmuck has a paper route!”
Harry Newton who offers sincere congratulations to my dear friend John S. This nice man recently retired, grew his hair, gave up ties, lost 30 lbs by giving up starch — bread, pasta, etc. and is the happiest he’s been in eons.
It’s not as though lifting the debt ceiling will lift government spending one penny.
That is simply untrue and a lie that has been repeated over and over by liberals. The debt ceiling ENABLES the govt to spend money it doesnt have. It is a final check and balance against out of control spending and puts in the public record those votes by Congress to spend money in excess of that received by taxes, and enables the Fed to create the credit to do just that.
Congress has to vote to lift the ceiling publicly because they can easily hide their votes for increased spending in CRs and other opaque appropriations(since there isnt a budget anymore and even when there was there were many ways to hide voting for higher spending).
I wish you would just freaking tell the truth once in awhile. But being a liberal, I know its hard for you..
Another old song for you, with a similar message: http://www.youtube.com/watch?v=dUwbZ9AlSPI
Harry, the only mandated obligation of the government, per Section 4 of the 14th Amendment to the Constitution, is to pay the interest on the national debt, and there’s plenty of tax revenue to do that.
Treasury (part of the executive branch) legally cannot choose to not make interest payments. To do so would be an impeachable offense by the Treasure Secretary and by the President (being his boss).
2 quick observations:
(1) many congress members have little incentive to reach a fiscal compromise. although approval ratings for congress as a whole are extremely low, many individual members actually enjoy satisfactory approval ratings due to gerrymandering.
(2) re selling equities today: dont think we’re there yet… bond and credit markets still relatively tame. i prefer buffets approach (buy low, sell never) .. ill use it as an oppty to buy more of great companies
Would like to thank AMC for suppling free popcorn while we watch this most entertaining show out of Washington.
yes there is a huge downside to selling everything you ownl!!! (I know you were half kidding but please indulge me)
Let’s say something wonderful happens tomorrow, like a midnight resolution to this mess … you just missed out on a big rally.
Or, let’s say something catastrophic happens tomorrow – you are entirely in cash “backed by the full faith and credit” of a totally dysfunctional govt … put another way, you are broke!
The point is, you never know what tomorrow will bring.
So the question is, how can you possibly position yourself for any future?
The answer IMO is definitely NOT hedging-by-shorting. Heavy fees and the “illogical optimism” of humans make shorting a loser more times than not – at least it’s burned the heck out of me!
IMO its all about disciplined diversification – and I’m not talking about “60-40” ratios or a larger basket of mutual funds.
I suggest you google the permanent portfolio concept. It’s not for everyone but it makes sense to me. (This is the best overview I personally have found : http://www.crawlingroad.com/blog/2008/12/18/the-permanent-portfolio-allocation/ )
(FWIW being relatively young I chose not to rebalance regularly as suggested – that’s more for retirees. Instead I just “feed the laggard” with my contributions . W Buffet calls that “buy low, sell never”.
I’m not a huge Obama fan nor a fan of most politicians in general. That said, it amazes me how he seems to fire people up so much. People love to hate him. I would argue that Bush Jr was a much worse president but I don’t think he riled people as much as Obama. Furthermore, the country doesn’t seem to be falling apart under his watch, rather it seems to be mending. Mending from the disaster of 2 very costly wars and a financial collapse that was handed to him when he got into office.
Bush didnt give us Obamacare. Obama continues in the wars he promised to end that Bush wrongfully started(there are thousands of mercs in Iraq after troops were withdrawn). People know he got americans killed by F and F, Benghazi and knows he continually lies about every policy he has made. The govt shutdown is totally his fault.
Obama is the nurturer of the police state, of punitive taxes on the middle class.
Bush was bad yes but he is a choirboy compared to Obama, the modern father of the american stazi. He should be in jail with Bubba. But he would like that im afraid.
You commented a couple weeks ago about investing in a small business…that the leadership is critical in your decision. I couldn’t agree more…that is why we have problems in Washington…poor leadership on both sides of the aisle…but the most critical leader is the president…and he is woefully incompetent…god bless America….
Harry, in yesterday’s Journal an editorial pointed out that we the people have one representative (B. Obama). Whether you voted for him or not, he is your president and when two gatherings of idiots (otherwise known as Congress) elect to toy with our nation it is then the responsibility of our representative (B. Obama) to step in and fix the situation. In my lifetime every president (except Carter) has had to do this but Mr. Obama thinks that attacking one side over and over will take care of negotiations. He does not lead, he inflames and passes the buck. Biden has solved the biggest problems domestically for our representative and pointing to Bachmann is about as smart as pointing to DiBlasio… they’re irrelevant just like our leader.
We are living in strange times indeed – when everything appears to me to be upside down… The Tea Party is villified as extremists and terrorists when they advocate is fiscal responsibility and adherance to the constitution (thats pretty dangerous stuff …). Then look at our president….cavorted with known terrorist Bill Ayers….sat in the church of Reverend Wright for 20+ years, and was a teacher/advocate of the principles of Saul Alinsky…Hmmmm…
Americans need to get off the Prozac and wake up…..
Adam Brandon, a spokesman for the conservative non-profit organization FreedomWorks, one of several groups involved in organizing Tea Party protests, says the group gives Alinsky’s Rules for Radicals to its top leadership members. A shortened guide called Rules for Patriots is distributed to its entire network. In a January 2012 story that appeared in The Wall Street Journal, citing the organization’s tactic of sending activists to town-hall meetings, Brandon explained, “his [Alinsky’s] tactics when it comes to grass-roots organizing are incredibly effective.” Former Republican House Majority Leader Dick Armey also gives copies of Alinsky’s book Rules for Radicals to Tea Party leaders.
Hmmmm…
Fighting fire with fire….just sayin…
Meh, both sides are foolish… The left always wants to increase spending with no plan to pay for it.
The right always wants to cut spending with no understanding of how dependent this house of cards has become upon govt expenditures.
The simple answer is of course to freeze spending.
But that would require compromise and an eye on the future generations, not future election cycles.
Spot on.