Sunday, November 15, 2009

Investing 101

I've long echoed the thoughts of other fundamental analysts that argue that the market has become detached from reality. However, over the past year, the technicians could always be counted on to move the market because their tarot cards, sorry bollinger bands and Elliot wave theories told them to buy or sell.

Recently though the markets have got the chart readers talking to themselves. For all the analysis being done on Wall Street, my 6 year old could trade the market as well as anyone at Fidelity right now.

Step 1) Check the direction of the US Dollar.
Step 2) Understand that stocks are going to do the opposite.
Step 3) Trade accordingly.

Every signal that the market is sending keeps getting lost in US $ trade. We'll see how long this trend continues, but right now, it's all about the $.

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The Poughkeepsie Journal has an interesting piece from the director of the Manhattan Institute that is indicating that NY needs to declare a financial emergency.

"McMahon said the state must declare a financial emergency and enact a statutory freeze on public-sector wages for at least three years. State law allows this and enables contracts to be voided, he said. It would save at the rate of $2 billion a year for state, local and school taxpayers.

McMahon also called for shutting down the state's pension systems to new entrants and giving them instead a plan similar to one of the alternatives for the State University system, in which a stable amount is contributed by the state and employees can add their own.

New York state's fiscal troubles stem from too much reliance on tax revenues generated by the Wall Street financial industry and from a chronic tendency to raise spending even when revenues are collapsing, McMahon said.


The high earners who form the top 1 percent paid 41 percent of New York income tax in 2007, he said."

This seems a little drastic, particularly in light of the fact that Wall Street looks to be headed for a great year in 2009 which should help boost state tax receipts this year. I'd agree however, that we need to have a serious conversation about our addressing our pension liabilities at some point. I suspect that since 2010 is an election year, politicians won't be in the mood for making any hard choices.

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Uplifting story of the day... Triumph of a Dreamer

* I'll note that this is about the third story I've seen recently that equated all of the "good that could be done with money that might otherwise be spent in Afghanistan". I think there are plenty of good arguments for not expanding our presence in Afghanistan -- principally, the fact that Al Qaeda isn't there anymore -- but I suspect someone is building a case through the media for the "we can't afford it" argument.

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Video of the day... Caution for language used by the stoner videotaping this...

Here's the backstory: Apparently, a 34 yr old owner of an exotic car repair company drove his $1.6 million Bugatti Veyron into a lake at 60mph and initially blamed it on a pelican. Inquiring minds are now "stunned" by the emergence of video of the accident. I smell insurance scam or marketing promotion. Either way, it's fun to watch an idiot drive a car worth 8 homes (or one redesigned missile silo in the Adirondacks) into a lake.



Cheers!

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