More Opinion by The Springboard

THE UPRISING OF THE AMERICAN PARTY "Clearly the voters are engaged right now, at least for sure on the republican side, and what they have concluded is that the republican party has not done their job. Thus, Donald Trump gets their vote."

Wednesday, November 19, 2008

COMPROMISE IN THE AUTO BAILOUT PLAN IS ESSENTIAL

Earlier, I voiced my opposition to the proposed $25 billion bailout of the auto industry. I still believe that an outright handing over of $25 billion worth of taxpayer money is not right for the country, nor is it right for the industry. But I will concede that something must occur here. A loan, I think, which is now being proposed, is more in line with what I think could be the best idea.

It is obvious, that for various reasons, America's auto industry is faced with catastrophic losses in volume and has seen revenue all but disappear. Hundreds of thousands of jobs have already been shed, product lines slashed, plants shuttered, and I suspect that even if a loan is extended to the Big Three auto companies, yet more will likely be coming.

This is, without a doubt, due in large part to a terrible failure on the part of these companies top level managements to foresee major shifts in consumer demand, and to have a plan in place to deal with it, such as looking at innovative ways to make plants more capable of producing more than just one type of vehicle. They literally ran their companies into the ground in this case by being too heavily focused on the big trucks and SUVs that have now severely fallen out of favor. The money they are seeking is primarily for the purpose of retooling existing plants to manufacture smaller, more fuel efficient vehicles, as well as increase focus and attention on the research and development of electric and other hybrid technology in cars.

There's a vast majority of people who keep saying to just let the auto companies fail. They've gotten themselves into this mess and they should therefore suffer the consequences.

The truth is, I think, that under normal economic conditions that might be something certainly to consider. It is largely their problem. The logic certainly sits well with my thoughts about free markets. But we are not experiencing normal economic conditions right now. And there's more going on than just simply bad decision making. There's tension and unease and there's still a massive amount of that uncertainty I keep talking about which is holding back any near term hope for even the slightest hint of a recovery. The markets continue to fall, and the credit markets are all but frozen solid. Under these circumstances, allowing the auto companies to outright fail would, in my opinion, have a devastating—and lasting— ripple effect on this economy. And I think, looking at it now, and looking at the sheer millions of jobs that could potentially be lost from not only the automakers, but their suppliers and dealers as well, that the possibility of a deep depression could be more real than I've ever believed it could be before.

We really do need to tread very carefully here. We're coming very close to testing that bottom we had on October 10th with yet another disgusting day in the stock market today. There's a piece of advice someone once gave me that I still find very profound today, and I think applies to this situation rather well. Don't fuck yourself, trying to fuck somebody else.

I think there are a number of people actually enjoying the pain and suffering of the big companies and the top dogs without realizing the real effect it ultimately has on us in the end.

Friday, November 14, 2008

IN JUDGE JUDY'S WORDS, YOU'RE AN IDIOT

...if you are selling stocks right now.

Okay, perhaps that's a bit harsh. Even unfair. But trust me when I say it's also the reality.

The fact is that if you have taken a recent look at your 401k balance, and if you have evaluated any portion of even your personal portfolio of late, you will have found there to be a stark and dismal contrast between what you had a year ago, compared to what you have now. It's a fantastically scary realization indeed.

It seems only logical to most people that when the money runs away, so should you. But not so fast.

Yes, I know. I've talked about this before. I'm beating a dead horse. Allow me to beat it deader.

Even Warren Buffet, the wizard of stock land, more commonly known as The Oracle of Omaha, is losing his behind grandly. If anyone ought to be sweating bullets it most certainly ought to be the richest man in the world.

But instead Warren's buying right now. In fact, he's been mainly cash in his personal holdings for years. The mere fact that he's exchanging his cash for securities in this of all markets, says quite a lot. Buffet is no dummy when it comes to making money. He knows that stocks are terribly cheap right now. He also knows that this dark and dreary market will not last forever. According to history, the best time to buy the market is directly after it reaches its bottom. We may have seen that bottom October 10th.

The consensus seems to be sell, sell, sell. Certainly the massive dips in the Dow attest to that. I strongly feel that if you take a contrarian approach and buy this market you stand to make a killing. In an earlier blog I wrote, "this, the great economic crisis of 2008, will have historically proven to have made the riches of those who dared to proceed contrary to the current sentiment." I stand by that logic.

Some stocks I like right now include Waterstone Financial (WSBF), JPMorgan Chase & Co. (JPM), McDonald's Corp. (MCD), Marcus Corporation (MCS), World Wrestling Entertainment (WWE), Marathon Oil Corp. (MRO), and Fomento Economico Mexicano SAB DE CV (FMX). Twelve months from now I think all of them will be up considerably. And in the interest of full disclosure, I own all of these stocks except for WWE, which I will be buying Monday or Tuesday depending on trading.

Wednesday, November 12, 2008

PRESIDENT-ELECT OBAMA IS BEATING THE MARKETS TO A PULP

It was yet another treacherous day on Wall Street today, with the Dow shedding a whopping 411 more points to settle at 8,282. Can it be any clearer a signal from the looks of things that the stock market apparently is not appreciative of the outcome of the presidential election? Granted, the economy's near future still looks terribly bleak, and certainly that's also playing a role. But come on. Barack Obama was supposed to be the beacon of hope. He would all but stop a speeding train, leap tall buildings, and herald in a new era of prosperity—okay, okay, I'll lay off. He's not the president officially yet.

And I keep thinking back to that statement that my co-worker said to me, who I'll let on now also happens to be the union president at my plant, on the morning of the 5th after it was clear who our new president would be.

10,000 points.

With only one up day on the Dow to speak of since the election, that being last week Friday when we jumped 248 points, the Dow is down over 1300 points. I suppose the good news is that we're still higher than October 10th when the Dow was at 7,882. But it does suggest that perhaps what we thought was the bottom of this market may not have been. We have two more trading days left in the week, and while I think we may have perhaps a small rally, it won't be enough to give back what was lost for the week. And it doesn't seem that farfetched to me that we could very likely start off next week back in the 7,000s.

And then there's this auto industry bailout floating around.

I wrote disdainly, at my other blogsite (which often mirrors this one) http://blog.myspace.com/jimbauer601, that I thought it would be against our better interests to bail out the auto industry, despite my thinking also that I do feel it is an important jobs issue. But it's not the entire financial system that's at stake, so in my opinion it defies that free market capitalism idea I feel did not apply in the other case.

That said, I think if the auto industry bailout does happen, and I think it will because there seems to be much support for the idea amongst the democrats in Congress, it may bode well for the markets. But let's face it, the results of the $25 billion "bailout" to retool American automaker plants to be able to make smaller, more fuel efficient cars and thereby save American jobs that may otherwise be lost, won't really have an effect in the real economy for years.

Oh, for the love of God!

It's a guessing game right now, and while no one can tell the direction of the market, one can usually get a gut feeling. But I have to admit I don't know what in the hell the direction is. Maybe a little rally tomorrow? But another pullback on Friday to end the week dismally? Those would be my "guesses."

But I'm still buying the market right now however. And I'm also watching that 7,882 number. I'm looking to see if we are still past the worst of our troubles.

Wednesday, November 5, 2008

IT WAS THE ECONOMY, STUPID

Really. Since when is a democratic victory something that is truly perceived 'good for the economy?' Yeah, we all know that it was the economy, stupid that cost John McCain the presidency, and all but tossed republicans on their asses in the House and Senate, holding majorities and actually gaining seats. Of course #43 had quite a lot to do with it as well. I'm man enough to own up to that. He's had a pretty rough go of it for the last couple of years. And yes, I'm going to say it; George W. Bush has done more to divide the republican party in 8 years than anyone perhaps in the history of the GOP. We now have our work ahead of us. A lot of work. We have to rebuild this thing. It isn't going to be easy.

Back to the economy.

A guy at work today who is a staunch Obama supporter swore up and down we'd see the Dow Jones Industrial Average hit 10,000 points today as a result of the Obama victory.

What?

I laughed. I entertained the idea. But I laughed. I then softly explained to him that the stock market is about business. It's about capitalism. It's not about socialism. It's not about higher corporate taxes. It's not about redistribution of wealth. It's not about big government and lots and lots of regulation. It's never historically been about democrats.

Today the Dow shed a whopping 486 points to settle at around 9,139. That's right in line with what the market should have done in the event democrats would be in power. The truth is that in order for us to have seen the Dow reach the 10,000 plus point number, we'd have had to have seen John McCain headed for the White House. That obviously did not happen, and neither did the huge rally we would have seen today on Wall Street if it had. If we would have seen a small rally today, it would have been more about certainty in the markets than about any strides the democrats might make with regard to resurrecting the economy.

This is not to say that the economy will, however, not see a rebound. In fact, it's very highly likely that we'll see this happen during president Barack Obama's historic first term in office. The fact is that if all predictions come true, we'll see the end of this bear market in 2010 or 2011. That's not Barack Obama policy working the markets and the economy. That's just the order of business. That's how the cycle works.

Of course Barack will get the credit for the whole thing. He'll be hailed and honored. He'll probably even see himself enter into a second term in office. It's almost inevitable. He doesn't really need to do a whole lot. The cycles will work in his favor. Plus, with control of both the House and the Senate, he won't have much difficulty getting things passed, though his nationalized health care idea is still a huge pipe-dream. We won't see it happen in our lifetimes.

The Dow will be at 10,000 or better soon enough. It didn't happen today. It won't happen tomorrow. In fact, I'd venture to say we won't see 10,000 until mid 2009 at the very earliest. Again, I'm no expert, but I can make observations. Here's why I think so.

We know who the president is going to be. That takes out that important question. That's that certainty I was talking about. But there's much we don't really know yet. The market now has to be concerned about what President Obama is actually going to do now that he is the president. That piece of uncertainty, in my opinion, will hold back any major surge in the Dow for the short term.

In January when he actually takes office we'll get our first real glimpse. We'll see the future through his first 90 days in office. Once we have that better picture, then its off to better times. Then we can start pricing in Obama policy in our stock valuations. And then we can begin the healing process.

Yes, we can.

Let's just not get ahead of ourselves.

BARACK HUSSEIN OBAMA WINS THE PRESIDENCY

Last night history was made, and I must admit some gratitude for being witness to it. It's a once in a lifetime deal. We now have the first black president in our America's history, the 44th president, Barack Hussein Obama. That, despite my clear leanings toward the John McCain camp, and the vote I cast in the polls yesterday for his potential presidency that would never be.

Whoever is in office, I of course, will support. After all, this is still indeed the United States of America, and clearly the American people have spoken. Whether or not I agree with the result, that's our system at work and one cannot be angry at that. Now we have only the task of moving forward and getting down to business. There's a big job ahead for this new president.