Seriously. Do you expect the American public, let alone the rest of the world to fall for such BS?
"Oh, ummmm...lemme see. The planet has been cooling since 1998...that's not a good trend. And this schtick about how when it gets colder in certain areas means it's MORE proof of global warming is starting to wear thin even on the most brainwashed dolts in the western world. So now we have to shift gears and call it "climate change." And umm...since the temperatures have been going down we're going to have to come up with a new excuse to rationalize the government grant checks we get. So, uhhhh....yeah, there's this uhhh...."trend" that will temporarily "halt" global warming for ummmm...(lemme see, how many years of additional grant money do I need to buy myself that gas guzzling SUV) uh, 10, yeah, 10 years, that's the ticket! Yeah! 10 years of global cooling, but then it's going to heat right back up. (Whewwww! Almost had to work or produce something of worth there for a second!) Yeah, 10 years of global cooling, then, THEN we're back on track for global warming...which doesn't matter because as long as the climate changes, cooling, heating, drying, moisturizing, no matter what, that means it's global warming and Bush = Hitler=US=Bad=Tax People More=I Don't Have to Hold a Real Job Down."
Again, I call for a database to record all the scientists that fight tooth and nail that global warming is occurring so we can publish their names when it's snowing in April in Minnesota...OH WAIT, THAT'S ALREADY HAPPENING!
Has anybody bothered to point the hypocrisy of these global warming zealots that their beliefs are on par with those they mock most; ie-Christians. Seriously, they're not acting any different than the "religious right" they're so prone to mock;
You either believe in global warming or you're damned.
You either believe in Jesus or you're damned.
I think the majority of the country, frankly dear, just doesn't give a damn.
Wednesday, April 30, 2008
Interesting Chart on Club for Growth
With the new figures showing a positive GDP growth figure, the likelihood for recession has dropped on the markets (you have to click on the USRECESSION link in the quote and it will pull up the chart);
I'm still of the opinion we're heading for a recession. Or at least a lengthy period of no growth.
ht to Club for Growth
I'm still of the opinion we're heading for a recession. Or at least a lengthy period of no growth.
ht to Club for Growth
Tuesday, April 29, 2008
Delinquency Rates
Posts are going to be a bit short and sweet as I'm finishing up the final chapter in the book. Then comes the editing process and turning all the charts into a standardized format. In the meantime here's a chart I thought we might already be able to surmise. Delinquencies, a forebearer of defaults are growing exponentially;
My question is if delinquencies turn into defaults and reach levels seen back in 1990-1991, what will that do to bank's capital?
My question is if delinquencies turn into defaults and reach levels seen back in 1990-1991, what will that do to bank's capital?
Things Economists Don't Do
I'm getting enough guff from my friends so I've decided to make my case here.
Look, there are just some things that make no economic sense in doing and the rest of you are just going to have to admit that you do it out of anal retentive habit, ergo I'm not the one with the problem, you are.
Here are a list of things that economists don't do, because, well...it's just not economical.
1. Make our beds - please, seriously, do I have to explain this? There is no point in making a bed. Why make it, you will just unmake it once you sleep in it, which is a practical guarantee, unless you are like me and sleep most of the time on a couch despite there being a perfectly functional bed upstairs.
2. Folding clothes - UGH!!! You have got to be kidding me?! I can understand hanging up your suits or ironing your clothes if you have some important function. But folding a sweatshirt????? Come on (cough couch, CHICO!!!)!!! What is the point of folding clothes aside from purposely wasting precious moments of your finite lives? Just smoosh them into the dresser and pull them out as needed.
3. 1 fork, 1 spoon, 1 bowl, 1 cup, 1 martini glass. This is all I have for "dishes" and I don't care, if you're a bachelor that's all you need too. The reason why is that I found out when I had a lot of dishes, a lot of dirty dishes piled up. When you throw away all your dishes except for what you need, then you only have this token amount of dirty dishes to wash once every three months. Simply because you go out and eat most of the time. But be aware, women, notably of the mother and aunt persuasion will try to unload their excess dishes on you. Remember to say no and stick with the "one of each" rule.
4. "I have to clean." No you don't. You have to clean the bathroom. You have to clean the sinks. You have to clean places where bacteria and other biohazards may form, but you do not have to clean every aspect of every room of every house. Seriously, papers astrew about do not carry bacteria. Clothes hanging over the chairs do not carry ebola. You can leave the place as is and as long as you clean out places where the plague will grow you'll be alright. Putting everything in its place only means you'll have to disjar it from its place to use it. Best leave it out on the counter where it's easily accessible.
5. The car is a perfect place for storage. Especially during the winter months of Minnesota. Why I don't know how many times I've availed myself of a great deal on Healthy Choice entrees to the point there wasn't enough room in the freezer. Fortunately it's 20 below in Minnesota making the trunk or back seat of a car an excellent substitute for a freezer.
6. While we're talking about cars, "clean out the car."
WHY????
Unless I have a date the car substitutes as a great freezer during winter and a great aluminum collector during the rest of the year. I can just toss finished cans of Red Bull into the back and when necessary collect them convienently when I decide to cash them in for coin.
7. Pick up after yourself. What, am I a freaking kid??? You never, EVER pick up after yourself. That's the benefit of being an adult. You can live like a kid and not have a nagging parent over you. Only unless you host company, which if you're smart, you'll just rent the local American Legion, you can leave the place astrew with all your toys. You can leave your comic books on the floor, your video games in a pile, the suits you don't care to wear in the corner and the papers you have yet to organize spread out all over the place. And as long as you know roughly where you placed everything, then it's still considered "organized" and it isn't a mess. Only to the untrained, non-economist, conformist eye is it a mess.
I hope this has helped all you non-conformists in fighting the obvious communist plot to unnecessarily force us to make our beds.
Look, there are just some things that make no economic sense in doing and the rest of you are just going to have to admit that you do it out of anal retentive habit, ergo I'm not the one with the problem, you are.
Here are a list of things that economists don't do, because, well...it's just not economical.
1. Make our beds - please, seriously, do I have to explain this? There is no point in making a bed. Why make it, you will just unmake it once you sleep in it, which is a practical guarantee, unless you are like me and sleep most of the time on a couch despite there being a perfectly functional bed upstairs.
2. Folding clothes - UGH!!! You have got to be kidding me?! I can understand hanging up your suits or ironing your clothes if you have some important function. But folding a sweatshirt????? Come on (cough couch, CHICO!!!)!!! What is the point of folding clothes aside from purposely wasting precious moments of your finite lives? Just smoosh them into the dresser and pull them out as needed.
3. 1 fork, 1 spoon, 1 bowl, 1 cup, 1 martini glass. This is all I have for "dishes" and I don't care, if you're a bachelor that's all you need too. The reason why is that I found out when I had a lot of dishes, a lot of dirty dishes piled up. When you throw away all your dishes except for what you need, then you only have this token amount of dirty dishes to wash once every three months. Simply because you go out and eat most of the time. But be aware, women, notably of the mother and aunt persuasion will try to unload their excess dishes on you. Remember to say no and stick with the "one of each" rule.
4. "I have to clean." No you don't. You have to clean the bathroom. You have to clean the sinks. You have to clean places where bacteria and other biohazards may form, but you do not have to clean every aspect of every room of every house. Seriously, papers astrew about do not carry bacteria. Clothes hanging over the chairs do not carry ebola. You can leave the place as is and as long as you clean out places where the plague will grow you'll be alright. Putting everything in its place only means you'll have to disjar it from its place to use it. Best leave it out on the counter where it's easily accessible.
5. The car is a perfect place for storage. Especially during the winter months of Minnesota. Why I don't know how many times I've availed myself of a great deal on Healthy Choice entrees to the point there wasn't enough room in the freezer. Fortunately it's 20 below in Minnesota making the trunk or back seat of a car an excellent substitute for a freezer.
6. While we're talking about cars, "clean out the car."
WHY????
Unless I have a date the car substitutes as a great freezer during winter and a great aluminum collector during the rest of the year. I can just toss finished cans of Red Bull into the back and when necessary collect them convienently when I decide to cash them in for coin.
7. Pick up after yourself. What, am I a freaking kid??? You never, EVER pick up after yourself. That's the benefit of being an adult. You can live like a kid and not have a nagging parent over you. Only unless you host company, which if you're smart, you'll just rent the local American Legion, you can leave the place astrew with all your toys. You can leave your comic books on the floor, your video games in a pile, the suits you don't care to wear in the corner and the papers you have yet to organize spread out all over the place. And as long as you know roughly where you placed everything, then it's still considered "organized" and it isn't a mess. Only to the untrained, non-economist, conformist eye is it a mess.
I hope this has helped all you non-conformists in fighting the obvious communist plot to unnecessarily force us to make our beds.
Sunday, April 27, 2008
The Buyers Will Pay for Their Arrogance
Kudos to Cotty Lowry.
While no doubt there is a housing bubble and most certainly prices could go down more, I just had to photograph this and post it as it is pure genius.
My realtor and I were talking about how arrogant buyers have become. Cancelling their showings at the last minute, never showing up in the first place, making offers a full 50% below the market value of the property. He has also told me stories about how sellers have just given up and taken their homes off the market (thereby decreasing the supply). One seller is now even charging to show her place as her tenants are getting annoyed with the constant showings, but never a sale.
Though a buyers market and no doubt about it, I do think buyers risk waiting too long. Soon, inevitably on the sole fact people like to make babies, but there isn't any more land being produced, in the long term housing prices will inevitably stabalize and go up. The question is whether buyers will have gotten into the market by that time or were still under the impression you could buy property for a song.
While no doubt there is a housing bubble and most certainly prices could go down more, I just had to photograph this and post it as it is pure genius.
My realtor and I were talking about how arrogant buyers have become. Cancelling their showings at the last minute, never showing up in the first place, making offers a full 50% below the market value of the property. He has also told me stories about how sellers have just given up and taken their homes off the market (thereby decreasing the supply). One seller is now even charging to show her place as her tenants are getting annoyed with the constant showings, but never a sale.
Though a buyers market and no doubt about it, I do think buyers risk waiting too long. Soon, inevitably on the sole fact people like to make babies, but there isn't any more land being produced, in the long term housing prices will inevitably stabalize and go up. The question is whether buyers will have gotten into the market by that time or were still under the impression you could buy property for a song.
I Don't Like Kids
Yet at the same time don't hate them either. Just glad I don't have any. Still this was forwarded to me. It originally struck me as funny, then got around to thinking about the kids that had to suffer through this made me actually kind of sick.
Regardless I will warn you it is very vulgar and grotesque. Cursing included.
Regardless I will warn you it is very vulgar and grotesque. Cursing included.
Friday, April 25, 2008
Thursday, April 24, 2008
You Will Drive Drunk
I knew they drank a lot here, but I didn't realize it was so boring in the Midwest all that we have to do is drink.
Though my friend Brian had an interesting observation;
"At our age, women have got to realize they aren't competing against other women. They're competing against a good bottle of scotch and a old school Bogart movie. A known quantity. At least when I have scotch and watch Boggie it's a guaranteed good time. Go out with a girl and the risk return trade off isn't worth it."
I surmise he'd agree with the new love of my life BioShock. Oh she's heavenly. And a cheap date too!
PS-Noticed that Massachusetts is just as drunk as we are. Didn't know if that was solely due to Ted Kenny or not. HAR!!!!!
Though my friend Brian had an interesting observation;
"At our age, women have got to realize they aren't competing against other women. They're competing against a good bottle of scotch and a old school Bogart movie. A known quantity. At least when I have scotch and watch Boggie it's a guaranteed good time. Go out with a girl and the risk return trade off isn't worth it."
I surmise he'd agree with the new love of my life BioShock. Oh she's heavenly. And a cheap date too!
PS-Noticed that Massachusetts is just as drunk as we are. Didn't know if that was solely due to Ted Kenny or not. HAR!!!!!
Goldilocks of Credit Risk Analysis
My entire point of contention with banks previously was that they applied no credit controls when making loans. That they lent money too loosely.
Now that the housing market is collapsing they're gone completely overboard and gone to the other extreme. Anecdotally I hear of friends and family who never missed a mortgage payment in their life, getting turned down because they're "too much of a credit risk." Forget it if you're self-employed, you'll never get a loan or a refi. Even if you were a savvy younger fellow thinking now would be the time to buy some rental property, such a smart move is impossible because you are too young to get a loan.
Sadly banks are shooting themselves in the foot. First the people that the easing of credit was intended for by the fed are not getting that help they needed. Two, banks are passing up on good loans that would actually be paid back. Third, in not refinancing the people who deserve it, they further risk prolonging a recession.
The banks must learn to strike a Goldilocks balance of credit. Not too stringent, yet not too loose. Of course, you're asking for competence on the part of banking executives.
Now that the housing market is collapsing they're gone completely overboard and gone to the other extreme. Anecdotally I hear of friends and family who never missed a mortgage payment in their life, getting turned down because they're "too much of a credit risk." Forget it if you're self-employed, you'll never get a loan or a refi. Even if you were a savvy younger fellow thinking now would be the time to buy some rental property, such a smart move is impossible because you are too young to get a loan.
Sadly banks are shooting themselves in the foot. First the people that the easing of credit was intended for by the fed are not getting that help they needed. Two, banks are passing up on good loans that would actually be paid back. Third, in not refinancing the people who deserve it, they further risk prolonging a recession.
The banks must learn to strike a Goldilocks balance of credit. Not too stringent, yet not too loose. Of course, you're asking for competence on the part of banking executives.
Tuesday, April 22, 2008
I'm Green, Therefore I'm Fake
Anybody else getting sick and tired of this mindless pursuit of businesses to "go green?" Yahoo did something similar but here's Google's latest (fully aware its Tree Day or Earth day or something like that).
But on a larger scale, I can't watch the news without some dumb corporation with "chick flick" music in the background and panoramic shots of rolling hills and kids and butterflies with some kind of emasculated guy sounding like Mr. Rogers saying;
"We know that the future is important to our children.
That the environment is all we can give them.
That's why we here at Jones' Hydrochloric Acid Company are doing our share to go green.
Using the latest technologies we ensure our hydrochloric acid burns safely, cleanly emitting less carbon dioxide than our competitors.
We do this not for profit, but because we care.
Because going green is what's best for the future.
And the future is our children. J
ones' Hydrochloric Acid Company. Hope for our children. Hope for our future."
They're like Obama speeches in 30 second commercial sound bites.
Just once I'd like to see a company say;
"(KMFDM in the background) Hey, how ya doing? Look, we'd like to claim we're going green, but you know something? We just can't lie to you. Costs too much. And besides, none of all these other companies that claim they're going green are.
We promise to dump as much toxic waste into waterways as legally possible.
We promise to cut corners where possible to make it more affordable to you.
And we do our best to make sure our engines emit the most CO2 possible, and if not, we burn a gallon of gasoline for every engine we sell just to make sure.
Why do we do this?
Because we are just too intellectually honest to try to feign like we give a damn or fall for this politically correct BS.
Besides,the future is going to be ran and dominated by China because we keep handicapping ourselves and majoring in cosmetology, and they don't give an ef about global warming.
So buy Bob's Toxic, Fuming Polar Bear Killing Engines.
They'll bring about global warming, but nowhere near as fast as the developing nations."
See, now I could buy that on account of truth. Whereas I still have yet to buy anything, ANYTHING on it with a gorilla on the packaging. Just don't trust a company that puts wild animals that would kill you on a package.
Regardless, to mindlessly get in line with the rest of the sheeple, I shall go "green" for the day.
PS-For every hit I get, the Captain will not cut down a tree.
But on a larger scale, I can't watch the news without some dumb corporation with "chick flick" music in the background and panoramic shots of rolling hills and kids and butterflies with some kind of emasculated guy sounding like Mr. Rogers saying;
"We know that the future is important to our children.
That the environment is all we can give them.
That's why we here at Jones' Hydrochloric Acid Company are doing our share to go green.
Using the latest technologies we ensure our hydrochloric acid burns safely, cleanly emitting less carbon dioxide than our competitors.
We do this not for profit, but because we care.
Because going green is what's best for the future.
And the future is our children. J
ones' Hydrochloric Acid Company. Hope for our children. Hope for our future."
They're like Obama speeches in 30 second commercial sound bites.
Just once I'd like to see a company say;
"(KMFDM in the background) Hey, how ya doing? Look, we'd like to claim we're going green, but you know something? We just can't lie to you. Costs too much. And besides, none of all these other companies that claim they're going green are.
We promise to dump as much toxic waste into waterways as legally possible.
We promise to cut corners where possible to make it more affordable to you.
And we do our best to make sure our engines emit the most CO2 possible, and if not, we burn a gallon of gasoline for every engine we sell just to make sure.
Why do we do this?
Because we are just too intellectually honest to try to feign like we give a damn or fall for this politically correct BS.
Besides,the future is going to be ran and dominated by China because we keep handicapping ourselves and majoring in cosmetology, and they don't give an ef about global warming.
So buy Bob's Toxic, Fuming Polar Bear Killing Engines.
They'll bring about global warming, but nowhere near as fast as the developing nations."
See, now I could buy that on account of truth. Whereas I still have yet to buy anything, ANYTHING on it with a gorilla on the packaging. Just don't trust a company that puts wild animals that would kill you on a package.
Regardless, to mindlessly get in line with the rest of the sheeple, I shall go "green" for the day.
PS-For every hit I get, the Captain will not cut down a tree.
Monday, April 21, 2008
If You Don't Work You Don't Eat
Ah, but how efficiently does one work?
Pha! "Work." That's such a 1940's concept. Stupid old fashioned Americans. What did they know! Them and their chivalry and Cary Grantishness and being warmongers fighting Hitler and all. If they just would have just let Hitler and the peaceful Germans be and held a candle light vigil everything would have worked out fine anyway. They probably thought working hard and only spending within their limits was some kind of "living" or lifestyle. Why waste time fighting nazism when there's American Teen Idol on and we can go get a HELOC to afford my trip to Paris and SUV?
(Seriously, I'm half tempted at times to just grab an assault rifle and go "prune" the population.)
Pha! "Work." That's such a 1940's concept. Stupid old fashioned Americans. What did they know! Them and their chivalry and Cary Grantishness and being warmongers fighting Hitler and all. If they just would have just let Hitler and the peaceful Germans be and held a candle light vigil everything would have worked out fine anyway. They probably thought working hard and only spending within their limits was some kind of "living" or lifestyle. Why waste time fighting nazism when there's American Teen Idol on and we can go get a HELOC to afford my trip to Paris and SUV?
(Seriously, I'm half tempted at times to just grab an assault rifle and go "prune" the population.)
Why McCain Will Win
Hillary or Obama, the fact remains both are extremists. McCain will appeal to the majority and the moderates and Hillary with her hypocrisy and Obama and his disdain for America will cost them the election.
I would like to further point out, I could be completely wrong. America voted for a pot-smoking philanderer over WWII vet with Clinton v. Bush Sr.
They may just vote for Obama the Soap Opera over a Vietnam veteran/hero, simply on account he's "cuter" or "hotter" than McCain.
Sadly, I wish I wasn't being sarcastic.
I would like to further point out, I could be completely wrong. America voted for a pot-smoking philanderer over WWII vet with Clinton v. Bush Sr.
They may just vote for Obama the Soap Opera over a Vietnam veteran/hero, simply on account he's "cuter" or "hotter" than McCain.
Sadly, I wish I wasn't being sarcastic.
Sunday, April 20, 2008
Percent of Asking Price Received
I have good news, I'm about two chapters away from finishing the book (out of what will inevitably be 20). Then there is editing and some revising and tweaking and tucking. Regardless, and I mean this sincerely, arrogance and hubris aside, it is some damn fine writing.
Allow me to whet your appetite with a excerpt;
"It was one of those moments where you start to wonder if life isn’t real and God is just toying with you. That this is nothing but a big, elaborate video game and you’re the one on the big screen. That it was already as bad of a situation as it could get and it was statistically impossible to get any worse. Therefore if it did, it must have been divine intervention on God’s part, yielding not only proof God existed, but that he was a sick and twisted sadist/bastard."
I don't know if I'm going with "sadist" or "bastard." Any preferences?
In any case, the final two chapters are obviously conclusionary in nature, however, they're also quite data intensive and so I've happened upon some great charts, but this one in particular showing what the average person in the Twin Cities area is receiving as a % of their asking price for their homes;
Which means, if banks are in repossession of these fine assets they're going to be getting a lot less than what they lent out on it.
Allow me to whet your appetite with a excerpt;
"It was one of those moments where you start to wonder if life isn’t real and God is just toying with you. That this is nothing but a big, elaborate video game and you’re the one on the big screen. That it was already as bad of a situation as it could get and it was statistically impossible to get any worse. Therefore if it did, it must have been divine intervention on God’s part, yielding not only proof God existed, but that he was a sick and twisted sadist/bastard."
I don't know if I'm going with "sadist" or "bastard." Any preferences?
In any case, the final two chapters are obviously conclusionary in nature, however, they're also quite data intensive and so I've happened upon some great charts, but this one in particular showing what the average person in the Twin Cities area is receiving as a % of their asking price for their homes;
Which means, if banks are in repossession of these fine assets they're going to be getting a lot less than what they lent out on it.
Friday, April 18, 2008
Protest Big Rice
Once again, to show the idiocy of people's utter lack of understanding of economics, let alone commodity markets, and let alone the forces of supply and demand, I post this chart showing that in addition to;
Big Oil
Big Wheat
Big Corn
Big Tobacco
Big Pharmaceuticals
Big Copper
Big Tungsten
Big Palladium
we have...
BIG RICE!!!!!
It's that damn George Bush trying to screw us over as much as possible before he leaves.
Sadly, some people really do think that.
Big Oil
Big Wheat
Big Corn
Big Tobacco
Big Pharmaceuticals
Big Copper
Big Tungsten
Big Palladium
we have...
BIG RICE!!!!!
It's that damn George Bush trying to screw us over as much as possible before he leaves.
Sadly, some people really do think that.
Wednesday, April 16, 2008
Those Icky, Gross, Yucky Dividends
My buddy Brian is an aspiring economist, and he made quite the astute analogy;
"I'm seeing people treating stocks like baseball cards. They're buying pack after pack of baseball cards trying to find the Mickey Mantle rookie year card, and there's this annoying piece of gum that they throw away. When in reality the only thing of value in that pack of baseball cards is the piece of gum. And people are completely disregarding dividends in the same matter."
He was right, and probably more so than he realizes. For when it gets down to it, the only thing that drives the value of a stock, the only thing that gives a stock its value is dividends, not earnings.
The reason why is that the shareholder never sees all the earnings, only the dividends. The corporation may reinvest profits and only pay out a fraction of that in dividends, but that still doesn't change the fact the only cash flow is dividends.
Now some will argue, "Yeah, but when I sell the stock, I get a capital gains, it's worth more than what I bought it for."
True, but that doesn't change the fact dividends are still what's driving the value of that stock. Whoever buys it from you, is not buying it now in hopes of selling it for more later, they're buying a future string of dividends. In other words, if you held onto the stock, in truth the only thing giving it value is its future dividends.
The only time there is a "genuine" capital gain is when the company is bought out by another. Otherwise the firm either dissolves or goes bankrupt and you have no capital gain. Thus, the entire history and value of a stock is not what profits it made, but what dividends it meted out to its shareholders.
Sadly though, and perhaps through the goggles of retirement planning and 401k's we look at stocks as purely capital gain investments. We rarely care about dividends and presume we'll be able to sell stocks for more when we retire.
There's just one minor problem. The true driver of value for stocks is going down, relative to the price you have to pay. In other words, you have to pay more in stock price to get the same paltry amount of dividends. This is measured by what's called the "dividend yield."
The dividend yield is dividends divided by price. In other words what percent return will you realize from investing in a stock given its price and the dividends it pays.
Roughly the dividend yield has averaged around 5%, meaning you could expect to receive a 5% return in the form of a dividend. Not terribly much, but it was a little more than inflation. But with stock prices being driven by retirement money and less by earnings and even less by dividends, the dividend yield has been driven down below 2% and has been there for the past decade. Even with the stock market crash in 2000 and even with our significant correct today, it's still below 2%.
The reason again is not that dividends have gone down, but prices have gone up so much driving the ratio down. Sadly this little tidbit of data is making me ever more convinced that stocks are going to be coming down like housing once the boomers retire.
"I'm seeing people treating stocks like baseball cards. They're buying pack after pack of baseball cards trying to find the Mickey Mantle rookie year card, and there's this annoying piece of gum that they throw away. When in reality the only thing of value in that pack of baseball cards is the piece of gum. And people are completely disregarding dividends in the same matter."
He was right, and probably more so than he realizes. For when it gets down to it, the only thing that drives the value of a stock, the only thing that gives a stock its value is dividends, not earnings.
The reason why is that the shareholder never sees all the earnings, only the dividends. The corporation may reinvest profits and only pay out a fraction of that in dividends, but that still doesn't change the fact the only cash flow is dividends.
Now some will argue, "Yeah, but when I sell the stock, I get a capital gains, it's worth more than what I bought it for."
True, but that doesn't change the fact dividends are still what's driving the value of that stock. Whoever buys it from you, is not buying it now in hopes of selling it for more later, they're buying a future string of dividends. In other words, if you held onto the stock, in truth the only thing giving it value is its future dividends.
The only time there is a "genuine" capital gain is when the company is bought out by another. Otherwise the firm either dissolves or goes bankrupt and you have no capital gain. Thus, the entire history and value of a stock is not what profits it made, but what dividends it meted out to its shareholders.
Sadly though, and perhaps through the goggles of retirement planning and 401k's we look at stocks as purely capital gain investments. We rarely care about dividends and presume we'll be able to sell stocks for more when we retire.
There's just one minor problem. The true driver of value for stocks is going down, relative to the price you have to pay. In other words, you have to pay more in stock price to get the same paltry amount of dividends. This is measured by what's called the "dividend yield."
The dividend yield is dividends divided by price. In other words what percent return will you realize from investing in a stock given its price and the dividends it pays.
Roughly the dividend yield has averaged around 5%, meaning you could expect to receive a 5% return in the form of a dividend. Not terribly much, but it was a little more than inflation. But with stock prices being driven by retirement money and less by earnings and even less by dividends, the dividend yield has been driven down below 2% and has been there for the past decade. Even with the stock market crash in 2000 and even with our significant correct today, it's still below 2%.
The reason again is not that dividends have gone down, but prices have gone up so much driving the ratio down. Sadly this little tidbit of data is making me ever more convinced that stocks are going to be coming down like housing once the boomers retire.
Tuesday, April 15, 2008
Tax the "Like" Girls
I'm here at the coffee store. And I swear to Christ this book would have been done three months ago if it wasn't for the "like" girls.
Two high school girls have just come in.
"Like, I don't know this girl, but she like, came up to my boyfriend and was like, "wait, what are you like doing with him?"
And "like" this and "like" that.
And like, I'm sure, like you'll kindof, you know, ummm, like find something to do.
Edgar Allen Poe couldn't have even written in such an environment.
Thus, I propose we treat the "like" girls as a negative externality.
Who knows how much production, creativity and innovation has been destroyed as great minds try to do great things and are then abruptly interrupted with some nonsensical blathering teen telling pointless stories where akin to Chinese water torture every time you hear the word "like" your pain and suffering trebles.
LIKE LIKE LIKE LIKE
LIKE LIKE LIKE LIKE
So, "like" negative externalities, we should tax the "like" girls.
I propose a $5 per/like tax
Every time a girl (or boy) says an unnecessary "like" during conversation, they are taxed $5.
So for example the following sentence;
"So, like, I was like, trying to you know, like, write a book. Then like these two ditzy, like, high school girls came in and started like, saying "like" before every sentence. It was like, totally annoying."
You would be charged $35 for the abuse of the word like.
I think this tax would not only improve the younger generation's English skills, but given the frequency of abuse and the deep pockets of daddy, we could shore up social security and fund the Iraq war.
Time to go find a quiet library...wow, that's the first real use I've seen for a library in years. Silence.
Two high school girls have just come in.
"Like, I don't know this girl, but she like, came up to my boyfriend and was like, "wait, what are you like doing with him?"
And "like" this and "like" that.
And like, I'm sure, like you'll kindof, you know, ummm, like find something to do.
Edgar Allen Poe couldn't have even written in such an environment.
Thus, I propose we treat the "like" girls as a negative externality.
Who knows how much production, creativity and innovation has been destroyed as great minds try to do great things and are then abruptly interrupted with some nonsensical blathering teen telling pointless stories where akin to Chinese water torture every time you hear the word "like" your pain and suffering trebles.
LIKE LIKE LIKE LIKE
LIKE LIKE LIKE LIKE
So, "like" negative externalities, we should tax the "like" girls.
I propose a $5 per/like tax
Every time a girl (or boy) says an unnecessary "like" during conversation, they are taxed $5.
So for example the following sentence;
"So, like, I was like, trying to you know, like, write a book. Then like these two ditzy, like, high school girls came in and started like, saying "like" before every sentence. It was like, totally annoying."
You would be charged $35 for the abuse of the word like.
I think this tax would not only improve the younger generation's English skills, but given the frequency of abuse and the deep pockets of daddy, we could shore up social security and fund the Iraq war.
Time to go find a quiet library...wow, that's the first real use I've seen for a library in years. Silence.
Global Warming in Minnesota
Today is the first day in Minnesota it's been above 60 degrees.
Just 48 hours ago it was about 22 degrees.
And given this was a record low winter (not just in Minnesota, but if I recall correctly, the entire planet) this about sums up my philosophy on global warming.
ht to Kate
Just 48 hours ago it was about 22 degrees.
And given this was a record low winter (not just in Minnesota, but if I recall correctly, the entire planet) this about sums up my philosophy on global warming.
ht to Kate
Saturday, April 12, 2008
Don't Bank on Your 401k
I like the term Michael Savage uses to describe an ever increasing percentage of Americans that don't think and just do;
"Sheeple."
People who just do what they're told and never think about it.
And while normally this would apply to college students that just regurgitate what their professors told them, when it comes to the financial markets a scarier instance of "sheeple-ism" is retirement plans.
Specifically your 401k's, 403b's, IRA's, etc. And the reason it's sheeple-ish is that nobody thinks about the ramifications of suddenly ordaining stocks, bond and other liquid securities as the defacto retirement mechanism. We just do what we're told and invest.
I made a more analytical post about this taking a look at how much cash flows into mutual funds drove the price of stocks versus corporate profits and found that it is indeed cash flows driving the price and not necessarily profits. This is particularly scary when you look at the American economy and see us about to enter a recession and looking at jacking up taxes by 10-15% GDP to pay for social security and medicare. Where are the profits going to come from in that environment to give stocks their value, let alone give them the rationale to keep increasing in price by 12% a year?
Thus I was not surprised when I saw this chart;
Without a proportionate increase in GDP or profits we are all of the sudden applying 3 times more value to stocks, bonds and other financial assets. Now some of this can be explained away by increases in liquidity where more people are allowed to invest due to online trading, lower trading costs and so forth. But it mimics what my previous research showed me. That we are valuing stocks and other securities more highly, but for no reason, other than the market has been flooded with retirement dollars.
This is a scary prospect to the sheeple who just invested in their 401k religiously because that's what they were told to do. And while I am no advocating NEVER contributing to a 401k or retirement plan, nor saying this couldn't be resolved by investing overseas and diversifying your portfolio, don't be surprised if your 401k is worth considerably less than you thought it might be.
"Sheeple."
People who just do what they're told and never think about it.
And while normally this would apply to college students that just regurgitate what their professors told them, when it comes to the financial markets a scarier instance of "sheeple-ism" is retirement plans.
Specifically your 401k's, 403b's, IRA's, etc. And the reason it's sheeple-ish is that nobody thinks about the ramifications of suddenly ordaining stocks, bond and other liquid securities as the defacto retirement mechanism. We just do what we're told and invest.
I made a more analytical post about this taking a look at how much cash flows into mutual funds drove the price of stocks versus corporate profits and found that it is indeed cash flows driving the price and not necessarily profits. This is particularly scary when you look at the American economy and see us about to enter a recession and looking at jacking up taxes by 10-15% GDP to pay for social security and medicare. Where are the profits going to come from in that environment to give stocks their value, let alone give them the rationale to keep increasing in price by 12% a year?
Thus I was not surprised when I saw this chart;
Without a proportionate increase in GDP or profits we are all of the sudden applying 3 times more value to stocks, bonds and other financial assets. Now some of this can be explained away by increases in liquidity where more people are allowed to invest due to online trading, lower trading costs and so forth. But it mimics what my previous research showed me. That we are valuing stocks and other securities more highly, but for no reason, other than the market has been flooded with retirement dollars.
This is a scary prospect to the sheeple who just invested in their 401k religiously because that's what they were told to do. And while I am no advocating NEVER contributing to a 401k or retirement plan, nor saying this couldn't be resolved by investing overseas and diversifying your portfolio, don't be surprised if your 401k is worth considerably less than you thought it might be.
Friday, April 11, 2008
Susan Casey-Lefkowitz > You
Again, I shall be short.
Here is an article where we find that there is the potential for some significant oil drilling here in the US. This additional supply, according to kindergarten-level economics, would naturally alleviate price pressures of $5 a gallon gasoline. Of course, it can't be 1947 where we celebrate this find and can assume we will develop this field and help advance America and society. Somebody has to get in the way.
Enter Ms. Lefkowitz who is the token environmentalist you knew would inevitably show up to spoil the fun.
Now, understand this has nothing to do with Ms. Lefkowitz, specifically. It could just as well be her as any other environmentalist protestor with a Masters in Puppies and Unicorns. But before you google her name or find out things about her, I want you to watch this episode, and after watching this episode see if you can guess her profile;
I'm going to guess;
1. Never worked a day in the private sector.
2. Has a worthless undergrad and probably some grad school. I would say lawyer or some kind of professor type thing in environmental science or women's studies (note the hyphenated name). 3. Is largely unemployable and is therefore part of some kind of "save the tar pits" organization.
Now, why do I bring this up?
Because, you must realize that crusaders, such as Ms. Lefkowitz, are a genuine threat to society in that they lack the intellectual honesty to put the interests of society ahead of their own selfish interests. They are more than willing to put themselves ahead of society even if that means foisting higher gas prices, lower standards of living, 9% unemployment, etc. etc. upon us, because they and their little crusades are more important than you, your children or your futures. But what's scary is we're not talking putting their financial interests ahead of other people's, we're talking psychological interests.
Understand the reason I link worthless degrees to crusaderism or continue my tirade against worthless degrees is because it is the preliminary indicator of somebody who is;
1. Too lazy to work hard at something and produce something of real value
2. Too arrogant to just accept a welfare check and must feign some kind of "profession" to make themselves feel better.
They need to "do something" (as long as it doesn't involve calculus) so their psychology does not suffer a devastating blow from reality that they are indeed worthless people. Not worthless as a person, but worthless as an economic entity. They produce nothing. The cannot support themselves. They by default rely on charitable donations or tax dollars confiscated from the taxpayer or a trust fund or a rich spouse. They offer nothing to society and are the classic definition of economic "dead weight."
Since they have no skills, no talents and nothing to offer society, they instead find crusades. And (this is the important part) are so hell-bent on "doing something" they will stop at nothing, including making others suffer, so they can get their psychological fix.
So, how close am I?
Am I in the ballpark?
Or am I on the pitcher's mound throwing deadly accurate 102 MPH fastball strikes?
Here is an article where we find that there is the potential for some significant oil drilling here in the US. This additional supply, according to kindergarten-level economics, would naturally alleviate price pressures of $5 a gallon gasoline. Of course, it can't be 1947 where we celebrate this find and can assume we will develop this field and help advance America and society. Somebody has to get in the way.
Enter Ms. Lefkowitz who is the token environmentalist you knew would inevitably show up to spoil the fun.
Now, understand this has nothing to do with Ms. Lefkowitz, specifically. It could just as well be her as any other environmentalist protestor with a Masters in Puppies and Unicorns. But before you google her name or find out things about her, I want you to watch this episode, and after watching this episode see if you can guess her profile;
I'm going to guess;
1. Never worked a day in the private sector.
2. Has a worthless undergrad and probably some grad school. I would say lawyer or some kind of professor type thing in environmental science or women's studies (note the hyphenated name). 3. Is largely unemployable and is therefore part of some kind of "save the tar pits" organization.
Now, why do I bring this up?
Because, you must realize that crusaders, such as Ms. Lefkowitz, are a genuine threat to society in that they lack the intellectual honesty to put the interests of society ahead of their own selfish interests. They are more than willing to put themselves ahead of society even if that means foisting higher gas prices, lower standards of living, 9% unemployment, etc. etc. upon us, because they and their little crusades are more important than you, your children or your futures. But what's scary is we're not talking putting their financial interests ahead of other people's, we're talking psychological interests.
Understand the reason I link worthless degrees to crusaderism or continue my tirade against worthless degrees is because it is the preliminary indicator of somebody who is;
1. Too lazy to work hard at something and produce something of real value
2. Too arrogant to just accept a welfare check and must feign some kind of "profession" to make themselves feel better.
They need to "do something" (as long as it doesn't involve calculus) so their psychology does not suffer a devastating blow from reality that they are indeed worthless people. Not worthless as a person, but worthless as an economic entity. They produce nothing. The cannot support themselves. They by default rely on charitable donations or tax dollars confiscated from the taxpayer or a trust fund or a rich spouse. They offer nothing to society and are the classic definition of economic "dead weight."
Since they have no skills, no talents and nothing to offer society, they instead find crusades. And (this is the important part) are so hell-bent on "doing something" they will stop at nothing, including making others suffer, so they can get their psychological fix.
So, how close am I?
Am I in the ballpark?
Or am I on the pitcher's mound throwing deadly accurate 102 MPH fastball strikes?
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