Land of Opportunity: More Millionaires Now than Ever

According to this article published in the WSJ Online, there are more millionaires now than ever before (7.5 million). I think that's great news and a testament to the ability of our country and economy to encourage entrepreneurship and growth. I especially like this quote:

A separate study, also released yesterday, by Boston Consulting Group found that the U.S. continues to lead the world in creating new millionaires. The number of households in the U.S. with liquid assets of $20 million or more is increasing by 3,000 households a year.

Something else to ponder is the propensity of the wealthy to get that way by investing:

Households with net worth of $3 million or more garnered 34% of their wealth last year from investment gains, according to the Spectrem survey. Only 31% of their wealth last year came from compensation. The remainder came from privately owned businesses, inheritances and other sources.

Check it out.

Ima Crook... or I. Steele Dough.... or:

Federal Trade Commission member Orson Swindle, one of three Republicans on the panel, will resign at the end of June. Mr. Swindle has been with the agency for more than seven years. The White House hasn't yet picked a replacement.

I don't know anything about this guy, but I had to laugh at an FTC member with that last name.

Looks like the markets are a little friendlier today. I sold my stake in MCZ - wasn't going anywhere. Rather have the cash, with no risk, if MCZ isn't at least going to give me a little volatility! Everything else is pretty much steady, although NGPS is giving back some of yesterday's gains. I got in on the tail end of Toll Brothers' 6% gain (tail end being 2%) after they reported stellar earnings and raised their outlook this morning. I've lost $ on DNA since I bought it, but I think it will bounce into positive territory if the market continues to rally. CPN has been very good to me - almost 25% gain since WEDNESDAY MORNING! That's it - that's all I own right now. Looking for one or two more winners tomorrow and Tuesday to close this game out. Got any ideas? Post 'em here.

The current standings. I've added the S&P500 as a benchmark again. Somebody needs to knock AgentDisco down! :-) 

This was my worst day yet. If you read the Trump post from yesterday, you'll see that I've become Trump! AgentDisco on the other hand, is smokin'. 

May 25th Equity (Account) Standings from the Cashtalk Stockmarket Contest. I've added the S&P500 as a benchmark. On May 12th, if you would have invested $100,000 in an S&P500 mutual fund, today you'd have $102,472.  

The "Trade Deficit" Explained

A great article by Walter Williams talks about what a trade deficit is. What we see in the news about a trade deficit with China or other foreign countries does not make economic sense. We buy goods from a company, we exchange money for those goods. We don't expect that company to buy something back from us to give us our money back, do we? It's the same principle on a national scale. Understanding accounting helps, and Mr. Williams has excellent examples to clarify his points. Read the article and see if it changes your mind about trade deficits!

Trump University: You'll learn more watching paint peel

Donald Trump is opening a "university" to bestow his jewels of wisdom on unsuspecting people who may actually believe he is a good business man. This article at the Fool has the details.

I might be coming off as being anti-education. Nothing could be further from the truth. I contribute to this site so that I can learn more about economics, business, and finance. I hope that by reading the site and also contributing, others will learn the same. I believe that education about money is the first step to being released from poverty and is a beginning to building wealth and changing, not only your own life, but your family's wealth and position for generations to come.

It really is amazing that by understanding something as simple as saving and investing can enable a person to retire wealthy and pass that wealth on to anyone they want. Everybody is capable. All it takes is education and a will to apply that education to the real world.

Unfortunately though, the quality of your information may not always be the highest. Donald Trump, while being a charismatic entrepreneur and an arguably crafty marketer, is not a very successful business person. I think an alternative place to learn about business is to read books about successful business and successful people. I'm currently listening to a book on CD called "Good to Great" by Jim Collins. Mr. Collins and his research team looked at "Great" companies and tried to discover what made them stand out from their peers. This is a great book with some relevant insights into ways to distinguish your own business or business practices from "the crowd." I encourage you to look into it. And if you don't, find a good book to begin learning, or expand your knowledge of the financial and business world around you.

Motor Homes (Winnebago) have a Good Year Despite Gas Prices

I decided to mention this because Winnebago is an Iowa product and a lot of people around here know about them. This is an interview with their CEO, Bruce Hertzke, on his own industry, how gas prices have affected them (not much) and their target market. Enjoy!

I can't believe the horrible mileage these things get, and how much they cost, brand new. Mr Hertzke does have a point, though, about the increasingly ageing baby boomers entering his target market.

Banks are Falling Over Themselves to Get You as a Customer

I just read this article at Smartmoney.com. Pretty interesting the extent to which these large banks are competing for customers. I think this is a great example of consumer power. When you have a large variety of competition, the consumer wins.

Personally, I don't care about weekend hours, free MP3 players, or "points." When I look for a bank, it's all about "Show me the money." Who has the highest savings and checking rates? That's right. I earn interest on all of my accounts. If my bank started doing this marketing stuff instead of paying interest rates, I'd leave in an instant.

That's the great thing about this, though. The banks are finding a customer they want to target, offering him/her something, and reeling them in. Ultimately, though, it's up to the customer to choose.

Should Americans Work Less Hours?

An interesting article from the Economist. It compares the working hours of Americans to their European counterparts and suggests that if everybody in America worked less, then we could be more productive or have better welfare? I'm skeptical. The article calls to attention the role of government intervention in these decisions. I myself would be highly skeptical of any moves the legislature might make to regulate a work week. I like the idea of employees and employers negotiating a work schedule based on their mutual interests. Read the article and let me know what you think.

(if you haven't subscribed to the Economist, check out the article in the comments section)

Here are the contest rankings as of May 20th. A lot of movement! 

These are the day-by-day percent gains and losses. The S&P500 is included as a reference. 

Here are the Equity standings as of close of business May 20th 

The Competition is Close!

It looks like the wide losses people were experiencing at the beginning of last week are beginning to narrow significantly. Tomorrow, I'll post some more graphs.

My strategy has changed significantly. I've sold most of the stocks that were not performing well and have begun to buy stocks that really show signs of moving. So far, it hasn't worked out great, but we'll see how this ends up on May 31st!

I'd love to hear how others are doing. Leave a comment!

A Vacationer's Tale

I'm heading out of town for a few days on vacation. It's been almost six months since my last vacation which, for me, seems like an extremely long time. I can't wait until "vacation" is what I do most of the time, and I have to work as infrequently as I currently rest. Until then, I will make the most of the next few days.

That means I won't have my eyes and ears glued to the market, although I may check in from time to time. With the unpredictable and volatile nature of the recent market, I don't want to risk coming home to find my portfolio in this game wiped out. I don't even want to drop a couple of percentage points, which can make the difference between top-of-the-pile and bottom-of-the-pile in this game. On the other hand, since 3 out of 4 stocks follow the general direction of the market, if yesterday's rally is the start of something - I don't want to miss out on some gains.

So, my "vacationer's strategy": put in sell stop orders for 1% below yesterday's closing price. If one of my holdings drops 1% from Tuesday's closing price, it sells automatically, thus limiting my downside exposure. But, if stocks rally, I get to take advantage of the upside gains. Not a perfect strategy (a stock could drop 1% in the morning and, after I automatically sell it, it gains 2-3% in the afternoon) - but better than crossing my fingers.

See ya Monday.

Stock Market Contest Rankings

These are the rankings since I began to keep track on May 12th. 

This is the daily Percentage gained or lost during each day. I've included the S&P 500 as a comparison. 

This graph shows the rankings based on how much equity each of the players has accumulated (or lost) since May 12. 

The Albatross Around My Neck is Gone and Now It's Working for Me

Yesterday I sold Ford. It is now somebody else's problem. I first sold 750 shares at a 3.20% loss and then another 250 at a 3.75% loss. I took advantage of its higher price yesterday and unloaded.

But then an idea struck me. Why can't I make Ford's poor performance work for me? The stock market has many options for trading, not just buying and selling. What I decided to do was "Short Sell" Ford. What this means is I borrowed money from the broker by "selling" Ford at yesterday's price. Ideally, for this strategy to work, Ford would drop in price (and if you've been reading my other posts, you know it has been), and then I would "buy" or cover the loan by buying the stock back at a lower price. Currently, using this strategy, I'm making a 1.69% profit. As long as Ford keeps dropping, I'll continue to make money, until I decide to repay the loan.

In the meantime, with the money I was loaned by shorting Ford, I bought Adobe Systems, Inc. and Target. As of today, both are doing well.

In other news, the Electronic Entertainment Expo begins today. If you own gaming, entertainment, or electronic hardware stocks, the odds are your stocks are going to rise today. Sony announced their new PS3 system and Microsoft has announced the next generation of the Xbox. Any company that does business with these two, will likely see a jump in their expected returns and hence their stock price.

I'd love to hear from others in the stock market contest. Instructions for initiating a post can be found here.

Later today, I'll post the standings of the Cashtalk stockmarket contest. Keep checking back!

PART II - The Future Value (FV) of money and Discounted Cash Flows

Last week, we talked about the Present Value of money and worked a very simple problem to determine how much a single cash flow from the future would be worth today. If you missed that simple review, you can find it here.

Today we are going to learn how to calculate the value of money you have today and find out how much it would be worth in the future if you saved it or invested it. This value is called the Future Value (FV) of money.

This is actually a very simple equation. You take the money you have today (PV or C0) and multiply it by the interest rate ( r ) and add 1:

FV = PV * ( 1 + r )

This equation gives you the Future Value of an amount of money for some period of time. Let’s plug in some numbers and see what we get. Let’s say we have $1,000 and would like to put it in a bank that offers an annual 3.25% interest rate. How much will it be worth in a year?

FV = $1,000 * ( 1 + .0325) = $1,032.50

If you saved $1,000 in a bank, in a year it would be worth $1,032.50. This is fairly simple. Where this simple equation, in addition to the PV equation, becomes quite useful is when you are trying to determine the values of a number of different cash flows.

This leads us to a discussion on finding the Present Value (PV) and Future Values (FV) of multiple cash flows. Let’s return to the PV equation:

PV = C1 / (1 + r )

This equation tells us how much a cash flow one period from now (from now on we’ll assume a period = a year for simplicity sake, but really C1 stands for a cash flow in period 1) will be worth today. Suppose we want to know the value of a cash flow 2 years from now? We would have to discount the interest rate ( r ) by the additional year. So you would get this equation, where C2 is the Year 2 cash flow and the exponent “2” represents the annual interest rate invested over two years:

PV = C2 / (1 + r )^2

Let’s use some real numbers to see how this plays out. If I were to receive $22,000 two years from now, and I could invest that amount in a mutual fund today that has traditionally earned 10% (the opportunity cost of not having the money today), what is that $22,000 worth today?

PV = $22,000 / (1.1)2 = $18,181.82

Now let’s figure out how much a string of cash flows would be worth. Let’s say someone is giving you a business that for 4 years will pay you $3,000 in profits (if only we were all so lucky) every year. How could you find out how much that is worth? Well you can figure out how much each of the cash flows would be worth in its specific year and then add them together. We’ll assume that we could put the money in the bank today and get 3.25% interest. The equation for this example would look like this:

PV = [$3,000 / (1.0325)] + [$3,000 / (1.0325)^2] + [$3,000 / (1.0325)^3] + [$3,000 / (1.0325)^4] = $11,084.95

The value of the business today is $11,084.95. Pretty simple right? Well, there is actually a short cut equation that you can use to find the PV of a string of cash flows which are the same. The equation looks like this:

PV = (C / r ) * [ 1 – 1 / (1 + r)^n]

Or for FV it looks like this:

FV = (C / r ) * [{(1 + r)^n} – 1]

These are called annuities. By using algebra, you can solve for parts of the equations to answer questions about money. Let’s use them to figure out how much money I need to save to retire. If I wanted to have a million dollars when I retire (in 30 years) and I knew I could get 10% in a mutual fund starting today, how much money should I contribute a year?

FV = $1,000,000
r = 10%
n = 30

$1,000,000 = (C / 0.1)*[{(1.1)^30} – 1] =

I would have to contribute $6,079.25 a year to have $1,000,000 in 30 years at 10% interest.

Plug your own numbers in. Need to know how much interest you’re paying on your car loan? Plug it in:

You make $375 monthly payments (C) on a $15,000 (PV) car for the next 4 years (n/12). Just solve for r:

$15,000 = ($375/r)*[1 – 1/(1+r)^48]

In this particular problem, you’re monthly interest rate would be 0.77015%. This would compound to an APR of about 9.242%. There you have it. This is the power of the time value of money. If you have any questions, please leave a comment. There will more to come!

C'mon, Big Money

Thought I would post a bit about my current strategy for our 3-week game.

First of all, let me say that I would not pursue this line of thinking in "real life" because A) small percentage point gains get eaten up quickly by commissions with a few thousand bucks invested, as opposed to the hundred thousand I have in this game, and B) it's pretty stupid.

But it appears to be working - today, at least. I want to be in no more than 4-7 stocks at a time. I made my initial purchases based on recently strong relative price performance and leadership within their respective industries.

Whole Foods was dragging me down for a few days, so I sold it at a 3% loss and split the money between Orthofix Intl. (OFIX) and Pantry Inc. (PTRY). So far today, OFIX is dragging and PTRY is cooking. I also used margin to buy American Healthways (AMHC) and Par Technologies (PTC). Both are up.

So why did I do what I did, and why is it stupid? I'm basically chasing volume. Stocks that are moving up on high volume? I buy 'em. If they produce 2-5% gains within a day, I'm happy. If not, I dump 'em and move on to other stocks trading higher on higher-than-average volume. The logic is basic supply-and-demand. Higher-than-average volume (and I mean significantly higher volume - several hundred %) implies that a large number of buyers (probably institutional) are chasing after a relatively few number of shares. This drives the price up. If I can get in on this before all these large buyers-and-sellers are satisfied, there's likely some cash in it for me.

But again, 2-5% on $100K is worth the $19.95 commission. Making $20 to $50 on a $1000, and having a big chunk of that eaten up in commissions? Why bother. Also, note I am blatantly chasing these returns. The cat is already well out of the bag by the time I buy, so I am missing out on the biggest gains - and setting myself up for a scenario where there's an early morning runup, then I buy, then people start selling and I lose my dough. Not a plan for long-term success.

But for 3 weeks? We'll see. NVDA and OFIX better shape up, or on the chopping block they go by the end of the day.

James' Portolio Update

Today is a strange day in the market. The markets started down today, but are recovering. But, if you look at the rankings of the stockmarket simulation, you'll notice that those participants who haven't bought any stocks are doing better than those who did!

I thought I'd let you know what's happening with my portfolio. Yesterday, Altair Nanotechnologies in Reno, NV, released their quarterly earnings report. They had significantly higher earnings than they had predicted. Before yesterday the stock was hovering around $3.08 a share. I had bought it originally at $3.13. The report caused the stock to shoot up to $3.70. For some reason I sensed that this must be an anomaly and after a few hours of mulling it over, I put a stop-loss sell order for ALTI at $3.20 - meaning if the stock dropped down to $3.20, the "broker" would automatically sell it. Well, this morning, it opened at $3.24 and kept sinking. Fortunately, I'm out at $3.20 (a small gain). Right now, the stock is trading at $3.08 again. This article from the Motley Fool shed some light on these fluctuations.

I'm taking the money I made on ALTI and putting it into Amgen. Their stock has been the only one in my portfolio that has maintained a positive upward trend. I've put a buy-limit of $61.90 on the stock - meaning the "broker" will buy it when it reaches that price. It's currently trading at $62.02.

Not everything is coming up roses. Ford is destroying most of my portfolio. I bought it at $9.95 and it is currently trading at $9.33. That's over a 6% loss! I've put a stop-loss sell order on ford of $9.17. When it reaches that level, I'll take the loss of 8% and buy something else. I'm hoping it doesn't get to that.

I'd love to hear other people's ideas on this simulation. Make a quick post and let us all know how you are doing. Or post a comment here and let me know what the next great stock is!

Is your job your calling?

Every year about this time, articles are written about how college kids are going out into the world to find a job. This article caught my eye because it deals specifically with M.B.A.s. There's really nothing new here. M.B.A.s are going for the highest pay. You couldn't get any more obvious than that, could you?

That's why I like this piece by Marvin Olasky about doing something you're called to do. Something that will use your gifts and that will satisfy you. Not just doing something because it gives you the most money or prestige.

Check it out and let me know what you think.

The Time Value of Money: Part I - The Present Value (PV) of money

This is the first of a multi-part series exploring the time value of money. I will attempt to answer how much a dollar is worth today and tomorrow based on the opportunity cost available to you. This is called the Time Value of Money (TVM). The power behind the equations you’ll learn (if you haven’t already) is the basis for much of modern finance theory and the decisions based on that theory. Getting a firm grasp on this subject will allow you to make sound financial decisions, not just in the stock market, but in your daily life.

First, we’ll go over some basics. On April 16th, I posted the “5 forces of Finance.” These primary ideas are what form the background behind TVM and more specifically the Present Value (PV) of Money, especially point 2.

The Present Value of Money is actually fairly intuitive. If you have $100,000 today, how much is it worth? Obviously the answer is $100,000. But if you were to receive $100,000 a year from now, how much would it be worth? The answer to that is based on what you could do with the same money if you had it today. This “Discount Factor” is the same as the opportunity cost. If we had that $100,000 today, we could invest it at a certain rate. If I put it in the bank, and earned 3% annual interest, at the end of a year, I would have $103,000. This is actually called the Future Value (FV) of Money.

Because of the opportunity cost or the income I would lose, $100,000 a year from now is not worth $100,000 today. To figure out how much it would be worth, you use the Discount Factor or Discount Rate ( r ) in the following equation where r is the opportunity to make money on another investment and C1 is the expected cash flow in the first period:

PV = ( 1 / 1 + r ) x C1 or PV = C1 / 1 + r

If we solve the above problem with this equation, assuming that we could get 3% annually, it looks like this:

PV = ( 1 / 1 + .03 ) x $100,000 = $97,087.38

$100,000 a year from now is actually worth $97,087.38 today. Why is this valuable? Let’s apply it to a realistic problem. Let’s say you have a business project that you know will result in $60,000 income in 6 months. Right now, investors could get an annual return of 3.19% by buying a no-risk, 6-month treasury bill (we’ll talk about risk another time). If you wanted to sell that project today, how much would you ask for it or what is the fair value (a.k.a. PV)? Let’s plug it into the equation:

PV = $60,000 / 1 + [half the annual return is 0.01595] = $59,058.24

So there you have it. A fair price for the project would be $59,058.24.

Now you can tell how much something is worth today based on the opportunity cost of investing the money elsewhere. In the next part we’ll explore some more practical applications of PV and cover Net Present Value. If you have any questions, please post a comment and I'll try and answer it quickly. Keep checking back!

People should be paid what their work is worth

There are some sound economic principles in this op-ed piece by Thomas Sowell. He talks about a recent New York Times article that reviews an upcoming book that calls for Wal-Mart to pay more to its employees. Not for any other reason than that they are "obliged."

He raises these interesting questions:

Should people be paid according to what they "need" instead of according to what their work is worth?

If their (the employees) work is not worth enough to pay for what they want, is it up to others to make up the difference, rather than up to them to upgrade their skills in order to earn what they want?

Are they supposed to be subsidized by Wal-Mart's (or any other company's) customers through higher prices or subsidized by Wal-Mart's stockholders through lower earnings?

I tend to agree with his perspective in the article. Wal-Mart seems to be a whipping boy for anyone that wants to take shots at a large coporation. I think most of these types of attacks come as the result of a general distrust of all corporations and without the consideration of the benefits that comapanies like Wal-Mart provide. I'd love to hear your own opinions so leave a comment.

Ford and GM's Bonds downgraded to "Junk"

This actually happened a few days ago, but looking at my portolio in the contest, it explains quite a bit. I've lost 2.21% on Ford since yesterday. That could easily change and move back up, but according to this article from the Economist, that may not be likely.

From the looks of it, I probably should have bought GM. At least they have a major institutional investor backing them up and have recently brought on new management. The article does not mention anything Ford has done to turn the tide of pessism regarding American motor companies.

Why I chose the stocks I did

I have entered this contest from the perspective that no matter how hard you try, you cannot do better than the market in general. This stance is based on the Efficient Market Theory. This essentially means that the stock price already incorporates all known information about the company. There are no surprises.

Obviously, this is just a theory, but what better way to test it than through a game?

My strategy for picking stocks is based solely on places I have happened to live and companies I either happen to recognize based on my living there, or have found by searching Google and Yahoo.

I tried to diversify where possible. My portfolio contains stocks in entertainment to Biotech. I tried to spend about $7,000 to $11,000 on each stock. I have a total of 13 companies. Becasue of the effects of Covariance, I believe that my portfolio should do pretty much what the S&P500 is doing.

Below is a list of the companies in my portfolio. I only have a little money left, so I don't think I'll be adding any to this list.

Los Angeles (Birthplace)
Northrop Grunman - Aerospace
Time Warner - Entertainment (They're actually based in New York, but I was thinking Warner Bros. Pictures when I bought)
Disney - Entertainment

Philedelphia
Wyeth - Health Care (They're actually in NJ, but I thought that was close enough.)

Mt. Clemens/Dearborn/Detroit
Ford Motor Co. - Automobiles (We'll see how this bear effects the portfolio.)

Bremerton/Seattle
Microsoft - Computer Software/Services
Amazon.com - Internet Commerce

Ventura, CA
Amgen - Health Care

Grand Rapids, MI
Herman Miller - Furniture

I'm skipping China, as there aren't too many Chinese companies traded in North America

Iowa City, IA
Rockwell Collins - Aerospace

Reno (I never lived here, but my parents do!)
Altair Nanotechnologies - Chemical Engineering

I also chose two other companies: Electronic Arts and Google. EA because I wouldn't mind working for them in the future and Google because Cashtalk is hosted by Blogger.com, which is owned by Google!

There you have it. Those are my picks. Fairly diversified for having only 13 stocks. As of this posting, I'm already up 0.23%. We'll see what happens in the next few weeks.

If you have any questions, or would like to tell me what you bought and why, please post a comment!

The Contest Has Begun!

Today is May 9th, 2005 and the Cashtalk stock portfolio contest has started. If you want to view the standings, you can click here. I will try and post a weekly summary of the standings and call attention to any highlights.

If you haven't joined yet, you can still get on board and learn about the stock market by clicking here. The more the merrier!

Good luck everyone!

Stocks & Social Security Will BOTH Fail - Nothing Can Save You Now!

Get ready for a retirement spent working the drive-thru window - at least if you believe this article in today's Journal by famed economist and author Jeremy Siegel.

Although Siegel's views are disputed by other knowledgable folks, I have to admit I had never considered what he is suggesting will happen to the stock markets once baby boomers start selling their stock for income. Whether you agree or not, it's a point of view you don't hear about too often - yet.

Posted in the comments.

Cashtalk Stock Market Contest!

Agent Disco and I have decided to have a stock trading contest. The contest starts on May 9th and ends on May 31st.

We would like all of our readers and members to parcticipate and Investopedia.com makes it quite easy to do so.

The way the "Game" works is you start with $100k and are able to buy and sell, stocks, options and bonds that are listed in any North American exchange. I will be able to keep track of how people are doing and will occasionally post results here at Cashtalk.

Trades work as if you traded through a company like Scottrade or Ameritrade. You pay a commission for each purchase or sale. It will be up to you to decide when and what to buy or sell.

The person with the highest portfolio value wins the recognition of his or her peers and will be lauded on this blog until we run out of breath or find something else to do.

We would love for you to play, not just so you can achieve fame and recognition by your peers, but so you can take this opportunity to learn more about stocks and the market.

Personally, my strategy will be to buy one or two stocks from each of the places I've lived in my life. I'll have more info about those stocks on Monday. I'll probably hold on to them after the initial purchase. You can do whatever you want. Choose your own style and learn from the experience.

If you don't know much about stocks, want to do research, or want to know the ticker symbol of a company, I recommend these two sites:

MSN Money Central

and

Yahoo! Finance

Each of these sites have excellent "look-up" tools and a lot of statistics (if you're the type of person that finds that interesting and useful).

Ideally, over the next 3 weeks, we can discuss our picks and talk about why we made the decisions we did. This can be a great learning experience for everyone involved.

We'd love for you to play. To join, you just need to click "here"

Only in America: Hard work can pay off

I have to admit, I really like reading Walter Williams. He is a very practical economist who teaches at George Mason University. Today he wrote an article about the dynamics of the rich in America. Most people who are rich have become rich through their hard work and good ideas.

People in America who start out poor statistically move up the tax brackets until they land on the highest. He also cites "The Millionaire Next Door" by Thomas Stanley. I'm going to have to pick this book up, as it has been mentioned by a number of people I respect as a good book analyzing the practices of the rich in America.

The American Economy: Two Perspectives

I saw these two articles and, at first, thought that they were totally different in their perspectives on the American economy. One of them is decidedly optimitistic and the other is more pessimistic.

But when I began to read each of them, they essentially say the same thing: that, based on recent economic indicators, Americans are doing fairly well. At least we are no where near "Stagflation," or recession.

Have a read and then leave a note.

Stagflation Nonsense by Larry Kudrow


The Global Locomotive Loses Steam (The Economist)

The skinny on CAN SLIM

So I've been doing a bit of reading lately of books by William O'Neil, the founder of Investors Business Daily newspaper. He claims his method of picking winning stocks - CAN SLIM - if followed consistently and absolutely to the letter of the law, will yield substantial gains more often than not. Now, the other side of the room says that this (or any) kind of technical analysis is a joke - that the market cannot, on average, be beaten.

Here's some info on CAN SLIM from Investopedia. Take a look for yourself, let me know what you think. If any of you have used this or another strategy, post your thoughts.

Steve "Lenin" Jobs

Here are some pointed remarks in today's Journal about Steve Jobs' personality traits. The article raises the question of what would have happened to Mr. Jobs had he been born in Russia or China.

Posted in the comments for those without subscriptions, although you really should subscribe.

Portfolio Survey

Just thought it might be interesting to post what major fund managers are holding in their portfolios.

Portfolio Poll

Nervous Stockmarket = Nervous CEOs

An Economist article here talks about the recent ups and downs of the S&P500. An interesting point it makes is that companies (at least large ones) are not reinvesting their money into high Net Present Value projects. In order to sustain growth, a company must continue to reinvest their revenues into projects that provide a significant return. The article points out that companies are keeping large stocks of cash or paying it out to investors rather than looking for a great product or service that might increase its longterm revenues. This has the effect of causing companies to rise and fall with the large-scale economy rather than let them be the masters of their own destinies. Unfortunately, this also stifles innovation.