Sunday, January 24, 2010

10 Year Rolling Average Returns of Berkshire Hathaway

In doing my research to update the charts for my online classes (which you should take), I noticed that Warren Buffett never lost money until the two most recent stock market crashes; Dotcom and today's.

It then got me thinking, what has been the rolling average return of Berkshire Hathaway?


Pretty hard to make a buck when the whole country is tanking, isn't it Warren? Or perhaps a better question is;

"Precisely what assets do you buy or invest in while sitting on the decks of the Titanic?"

Dumb Americans

Yes, yes, I know you "need" your 401k values to go up.

I know you "need" stocks to go up in order for you to retire.

I know you "need" these things.

What you NEED first though BEFORE stock prices go up are dividends that give your stock a REASON to go up in value. Seriously? Does anybody ask the question;

"What gives a stock value?"

Or do we just blindly and ignorantly invest in indexed funds via our IRA plans?


I love the little blip up in the dividend yield in 2008 with the stock market crash, only to dive below 2% once again with this recent 50% rally in stock prices.

THE STOCK MARKET IS A BUBBLE PEOPLE. WAKE UP!

Friday, January 22, 2010

Vikings vs. the Saints

As you all know I believe a man who occasionally plays a game of pick up football, goes out golfing, or heck, just goes out for a walk once a year, is infinitely a better sportsman and just a better man that the millions of fat, slobbering blobs who get all excited about "their" team going to the playoffs or the World Bowl or the Super Series. The morons who actually pin their happiness and psychological health on whether a group of men, who have NOTHING to do with them, throw a ball real good. The piles of obese, genetic, fat-laden crap who drink beer, eat nachos and put the "Vikings" or the "Saints" above their wife.

To further point out how this IS a REAL problem in the US and how people in this country NEED SOMETHING BETTER TO DO, I'm not kidding, just heard it on the radio;

"The Vikings/Saints game starts at 5:40PM. We'll begin our coverage at 9AM."

My god people.

Get a freaking life.

Wednesday, January 20, 2010

Human Nature

I remember when I had my radio show, I did a show around Christmas time about how parents need to buy their children PRESENTS and TOYS for Christmas, NOT clothes. I then went on to tell them that the best gift PERIOD is cash.
NOTHING, I MEAN NOTHING is better than getting a thin envelope from grandpa and pulling out a crisp $10 (though with inflation it would be more like $20 today).

Seems times have not changed, because well...that's human nature.



It is also why socialism will always fail.

Tuesday, January 19, 2010

"Why I Didn't Buy You a Drink"

When I was teaching economics at the local community college I used "buying girls drinks at the bar" to display an asymmetric market. I also made the male students infinitely wiser and more austere in their personal finances.

Monday, January 18, 2010

Sunday, January 17, 2010

Monday, January 11, 2010

There is No Merit to GDP Unto Itself

In the video I posted below about China essentially building a city that nobody is living in, the reporter kept emphasizing the importance of GDP. That the government wanted to boost "GDP." However, given this "stimulus" plan of Ordos as well as the "stimulus plan" here in the US to boost GDP, I think it's high time we have a simple economics lesson in GDP.

Understand the goal of economics is NOT to increase GDP, but rather to increase standards of living. We simply USE GDP as a measure of all the goods and services produced within an economy, ASSUMING those goods and services when consumed help increase our standard of living. That by eating the grapes we produce and watching the movies we produce, we get utility from that, enjoyment from it, and therefore we enjoy our lives more, thus increased standards of living.

This is a logical assumption in that typically, TYPICALLY, we produce what we want to consume. We produce things that are only going to benefit us. Nobody produces ebola for consumption on account that why would we? Nobody produces styrafoam dogs. Nor do we make our roads out of cake. It not only would not benefit us, it just plain doesn't make sense.

However, this assumes an INCREDIBLY important assumption about how we go and produce things. We ASSUME that the free market is going to be in charge of what is produced. We assume that a free people, in control of their own money, is going to decide how many Big Macs we should make, how many I-Pods we should produce and how much sushi we should make. But what if this assumption is faulty?

The reason why it is faulty is the progressively less and less money is being spent by the people. A higher and higher percentage of our economy is being spent by the government. Going from essentially 3% of GDP in 1900 to 46% today.

Now the reason I bring this up is because our stimulus here in the US is much like it is in Ordos. The government is spending money to help boost the economy. And sure, yes, because of the formula;

GDP = Private Consumption + Government SPending + Investment +/-Trade Balance

it is a mathematical fact that these government spending plans will increase GDP, however they won't increase standards of living simply because NO UTILITY IS BEING DERIVED FROM IT.

For example, enroute to one of my many dance classes, I drive through a small town that had its entire main street redone with Obama's stimulus plan. Before the stimulus plan I drove through the town just fine. The street lights worked just fine. The parking was just fine. People were talking on the sidewalks just fine and the road was in fine shape.

However AFTER IT WAS REDONE WITH YOUR TAX MONEY, GUESS WHAT!!!

NO

DIFFERENCE

IN

MY

DRIVING

EXPERIENCE

WHATSOEVER

NOTHING HAD CHANGED. The ONLY thing that changed was the type of concrete used (oh, and there was a daily traffic jam for 4 months in this small town)

In otherwords the American tax payer paid millions of dollars for the "honor" of boosting GDP.

Standards of living did not go up.

The utility derived from driving on this road did not go up.

We just inconvenienced everybody who drove through this town for 4 months AND indebted the American people several million dollars more.

This is the lesson that must be learned about economics. Economics has NOTHING to do with GDP. Sure, great, wonderful, GDP is positive according to the BEA. "Hurray, the recession is over!!! Warm fuzzies for everyone!!! Hurray!"

But your lives have not improved simply because the money was wasted.

This then behooves a very important question;

WHO SHOULD BE IN CHARGE OF SPENDING THE MONEY?

a. A government bureaucracy headed up by one president and 535 congressional members, the VAST majority of which have never had to work a day in their lives and have nothing in common with the average American

or

b. 300 million individuals who are acutely aware of their own personal financial situation

This is such a simple question, I'm actually pissed off I have to write about this, because apparently a majority of people in America can't answer this question correctly.

Obviously the individual, who is more in tuned with their own personal finances, is going to make better use of that money than a centralized government. This not only stands to reason, but history, with the collapse of the Soviety Union, the eastern bloc, Cuba and now Venezuela, provides us the emprical evidence as well.

Heck, I would even be willing to meet leftists half way on this one. Fine, go ahead and indebt the nation. Fine, go ahead and do this wealth transfer from future generations to today's generations. Just don't put the government in charge of spending the money. Instead, just take the $2 trillion in stimulus money an cut every worker in America a roughly $15,000 check. That money would then not just show up in GDP (thereby satiating bureaucrats' idiotic and pointless goal of boosting a now-meaningless number), but the money in each individual's hand would be better spent, thereby ALSO BOOSTING UTILITY AND STANDARDS OF LIVING!

But no, no. We have to send our money...well...not really "our" money...our children's money to the great Obama and Pelosi and Reid and have them fix roads that just don't need fixing. Repair bridges that don't need repairing. And buy art that doesn't need buying. Because, afterall, that will boost GDP!

Sunday, January 10, 2010

From Our Friends at API

Yes, the ones who make sure the whole economy has enough energy to run. A little lighthearted fun.

Saturday, January 09, 2010

Chinese Bubbles

"Chinese Bubbles"

Kind of like a 1950's pop song sung by Frank Sinatra;

"Tiny bubbles in the sea"

or

"Pennies from Heaven"

or

"American Rose"


Wednesday, January 06, 2010

Natasha Calendar and Other Stuff

Got a couple e-mails/posts about the Natasha Calendar and whether it is still available.

Yes, it is. Just shoot me an e-mail at;

CAPTcapitalism@yahoo.com

Also, should you miss your Captain, remember you can still get more of his wisdom by purchasing his book (guaran-freaking-teed to put your kid to sleep and educate you with charty-goodness about the housing market not to mention a heck of a lot of economic wisdom is imparted as well).

You can also take his two online courses (which benefit him immensely).

One in basic, personal finance (I CANNOT emphasize how important this class would be for a 15 or 16 year old. It is an INDISPENSIBLE piece of education necessary for all people).

The other is quite simply (and I'm not bragging) the best course/class you will ever take on how to analyze and research stocks.

Also, since it is free, I strongly recommend viewing the speech I put together on Capitalism vs. Socialism. What is sad is everybody watched the first you tube segment and failed to continue onto the other 13 which is WHERE ALL THE FREAKING DATA AND GOOD STUFF IS. I didn't put together that speech so you could watch the intro. Get your asses into gear and get educated. All you ever need to fight socialism is right there in 10 minute segments which I command you to enjoy while sipping a hefty scotch of your choice.

Oh, and you can always donate also. If I raise $25,000 in donations then I'll blog regularly. I figure between 3,000 regular readers that would come to....some puny amount per person. Regardless, it might be worth $5 per year in a subscription fee which might be mutually beneficial for both myself and the readers.

Sunday, January 03, 2010

Anecdotal Evidence of Cooling/Warming

A short observation and then I must go.

A common critique (which I actually agree with) that the left dishes out of "global warming deniers" is that they "foolishly" use examples of record cold temperatures in specific areas and ignore the overall macro-empirical evidence of global temperature trends. This is usually couched in a phrase such as;

"Those stupid right-wingers no doubt are going to use a snow storm in Spokane to prove that globally the planet is cooling. Those morons!"

However, by the same logic, and assuming they are adult enough to adhere to intellectual honesty, wouldn't every anecdotal bit of evidence that "proves" global warming be equally worthless?

Things like;

"Glaciers in this particular mountain range are eroding."

Or

"Polar bears in this particular area are less populous than they were before."

Or

"Global warming will kill this particular group of frogs."

I mean at least the "dumb-moronic right wingers" are talking about temperatures directly and therefore are at least speaking directly to global warming, not hypothesizing about the theoretical indirect, tangential effects, 6 times removed having some adverse effect on some endangered species according to a computer model that failed to pick up this recent trend of cooling.

Just a thought.

Saturday, January 02, 2010

New/Guest Bloggers Welcome

Well I received a lot of suggestions for having some of you guys co-author/write for Cappy Cap.

I am certainly up for that. Shoot me an e-mail at CAPTcapitalism@yahoo.com and we can discuss.

Cpt.