We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
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Saturday, March 22. 2008
Bob Brinker says the equities market "looks very, very attractive right now, if you can handle some short-term risk." He says these sorts of buying opportunities do not pass by often. Bob, like Bogle, does not believe in buying individual stocks. "We'll be out of this eventually."
He likes the munis too. I have never gone wrong following his advice. Now back to yard chores to mourn my CIT.
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So BD where's your money going? Small Cap,Large Cap, yogurt based foods, retirement concentration camps for the aging boomers? Where man where?
Not much loose cash, due to tuitions.
Vanguard S&P, probably, or total market.
Well good luck. Bob is right. There are some very good companies out there that are cheap right now. Just remember the cardinal rule. Stay diversified and roughly within the guidelines of asset allocation models for your time horizon.
Have a reflective day tomorrow and give thanks.
I think this is a meme on the rise right now. The market looks to bottom out quickly (or it may have already, one never knows till later).
But I believe in individual stocks IF you are very familiar (I mean VERY familiar) and confident with the company's story, and the marketplace sandbox that company plays in.
I have one such company in mind. I probably waited too long to buy already, but as this is one of those stories that should play out for a long time, I don't feel too badly about it.
I think it is a good thing, actually, if you see a stock situation as "a story" and frame it in those terms. In fact, I think I will go off and write a post about it.
BTW - are you referring to Bob Bogle? Isn't he the stochastic ("money-flow") trader who used to appear on an internet stock-trading radio show back in the '90's, who called the "worst money flows he'd ever seen" in the market just before the big dotcom crash? 'Cause if that's who you are referring to, I sure would like to know what happened to him. He really was a prophet, and I made a bunch of money listeneing to him. He disappeared shortly after the big crash - the game had gotten tired for him and all that. And of course, no one wanted to be in the market for a long spell.
Or maybe Bogle wasn't his name... maybe it just sounded a lot like that. I can't quite recall. Nuts. Wonder if anyone does.
Let's take a look at the FDIC, that relic from the recovery from the Great Depression.
The FDIC provides insurance for conventional forms of banking deposits, (checking accts, CD's ,savings accts) but most of this group already knows that. But what is it we don't know that we might want to know given the precarious state of banks at the moment. So questions?
Yes , you in the back row.
Thanks. Does the FDIC have enough cash to cover a "run" on the 65 banks they have on their "problem "list. You know the ones that are expected to fold?
Good question..the answer is NO. When the S&L crisis hit in 1989 it took down the FSLIC immediately because it couldn't handle the load. The FSLIC was performing a similar function to that of the FDIC.
The FDIC holds reserves as a provision against potential losses of member banks. Right now they hold about 52 billion in reserves ...not a lot when you consider the amount of money the FED has already pumped into the system in attempting to support a collapse of banks. That $200 billion the FED pumped in was in addition to creating new "windows" for banks to go to at the FED to get rescue money.. "Bank XYZ you reprieve money is waiting at window #3"
But here's the catch. The FDIC "reserves" aren't in the form of cash...only about 7.3% is cash ...the remainder is in US Treasury Securities (oooh , let's just print more money if there's a bank run, thus devaluing each dollar printed and already in circulation).
So what you're saying is that the FDIC has about 3.8 billion in cash on hand to cover a run?
Yes that is correct, but then the Treasury, as I said, will simply print more money. Your dollar will end up worth about 15 cents by weeks end. But wait there's more.
Excluding the Treasuries which are useless in a run (like who's gonna buy them, right, China..not now) and counting only the cash the insurance fund ratio is more like .08% or
*for every $100 deposited the FDIC has 8 cents in cash to cover it*.
What is the FDIC doing to prepare for bank failures?
Well their now luring out of retirement specialists in closing down banks according to a Wall Street Journal story dated Feb 26, 2008 ...pay'in 180,000 a pop to get 'em...they figure it's gonna get nasty...Bank of America keeps upping their write offs which are now approaching 20 billion for the first quarter.
So what should I do pull my money out of the bank?
Well, only if you want to keep it.
I'm sorry we missed a question here in the front row, please go ahead.
Thank you. My question is won't the government send out a smooth talking person to calm our fears?
Yes, of course.
I have another question.
Yes go right ahead
Will the smooth talk solve the problem?
No. First off it won't be the truth and secondly if it were the truth it wouldn't matter anyway...it won't solve the problem.
Well sir if it won't solve the problem then why don't they just tell the truth from the start?
Sir, you need psychiatric help. Banks, Wall Street and the US Government, as well as most large corporations don't know how to tell the truth. Like man where have you been the last ten years?
yeah me too.
If you have big cojones of brass...call your commodities broker and short Gold, Grains, oil. Sell euros and buy dollars. When equities are poised to go up, the market managers will be yanking money out of the aforementioned and pouring it into the Dollar and stocks. I personally think that last week was a market 'sea change'. I don't have tons to risk, but I followed my own advice as far as possible by cleaning out the safe deposit box and selling my meager hoard of gold Thursday. When/if Gold gets back down to $400 I'll replenish the hoard.
Any advice for the elder set who have cajones similar to raisins?
agreed carl h! there is nothing like gold just ask anyone who has lived through a world war in Europe. My mother in law was a firm believer in it and never had debt just gold and lots of it. I am planning to sell and then buy,buy, and buy more when it goes back down. Only wish it would bottom out at 260 but dont think we will ever see that again. I am sure the Venezuelans are wishing they had done the same.
if the two taxers continue to slash & burn each other, and McCain continues to rise in the polls, it will be reeeaaaal goooood for stocks in general. The perception of a Dem sweep in November has been a bid-evaporator the last few months.
As my dad always says, the first thing Republicans do after getting elected to the presidency is cut the capital gains tax rate. Of course the opposite is also true of Democrats. You can bet that either Hillary or Obama will increase the capital gains rate, especially with a Democrat majority in the House and Senate.
I have a tax client that "saved" over $15000 on capital gains this year.