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HomeLet’s Get a First Down
Posted by Larry Doyle on February 21st, 2009 9:10 AM |
Football fans know that ball control and time management are two very critical factors in determining outcome. While a coach may at times “go deep” in order to catch the opponent off guard, victory is determined by the hard work in the trenches and grinding out first downs. I know of no team that has ever established a winning discipline by “throwing Hail Mary’s.” The same can be said of investing. In the midst of these challenging markets, do not lose sight of your long range goals and the disciplines necessary to achieve them. Leave the “Hail Mary’s” for the gridiron entertainment.
The Wall Street Journal provides us with an excellent piece on this topic:
Desperate investors do desperate things.
A few months ago, most people were too terrified to do much more than wring their hands while sitting on them. But now, as the stock market takes another bullet every day and the yields on cash dwindle away, some investors seem to be flinging caution to the winds.
You can read the rest of the article at your leisure. Enjoy your weekend. – LD –
As Stock Losses Loom, Don’t Throw a ‘Hail Mary’
by Jason Zweig
illustration by Heath Hinegardner
The Wall Street Journal; February 20, 2009
The Securitization Model
Posted by Larry Doyle on February 20th, 2009 8:49 AM |
In today’s NY Times, there is a front page article, U.S. Tries a Trillion-Dollar Key for Locked Lending, enlightening readers on the breakdown of the Wall Street securitization model.
Or you could review my piece from November 12th, “The Wall Street Model is Broken….and Won’t Soon Be Fixed,” for an even more in depth review of the development of the securitization model and resulting breakdown.
Trying to stay ahead of the curve for you here at Sense on Cents!!
Review of Unemployment Report Jan 9, 2009
Posted by Larry Doyle on January 9th, 2009 10:04 AM |
***Meredith Whitney is indicating that despite the fact that banks raised $805 billion in capital in 2008 and had $125 billion injected via the TARP, the banking system will need to raise more capital in 2009. This is a clear signal that losses have not yet been recognized along with the likelihood that new losses are being incurred. A regional investment bank, Friedman Billings, believes the banking system needs $1.2 trillion in FRESH capital.
***It’s purely my speculation, but I would be willing to bet funds from “How Bernie ‘Madoff’ with $50 Billion” may have actually been directed to other hedge funds. If that is, in fact, the case the Ponzi scheme that started at Madoff may in turn spread. The fact that so many funds “put up the gates” which prevented investors from withdrawing funds is a very telling indication that this may have occurred. Some funds may have very legitimately utilized that approach and some may have not.
The widely anticipated employment report was released this morning at 8:30AM. Let’s dive right into the numbers and then decipher them:
Unemployment Rate: increased from 6.7% to 7.2% versus a consensus estimate increase to 7%. One must understand, though, that the actual unemployment rate ONLY tracks people out of work who are looking for work. If we were to incorporate discouraged workers, those out of work who have given up looking, then one of every ten workers in our country are currently unemployed. With a total workforce of approximately 175 million people and projections that the unemployment rate will move up another 1-3%, our economy is likely to lose another 3 million jobs!!
Non-Farm Payroll: (for those who do not traditionally track these stats, the NFP tracks the actual number of jobs gained or lost in the economy): for the month of December 2008, the economy lost 524k jobs versus consensus estimate of 525k. One may think the soothsayers had it right with their estimated call. However, both October’s and November’s NFP numbers were revised downward by 103k and 51k respectively. Thus, over the last three months of 2008 the U.S economy lost a total of 1.431 million jobs!!!
