Friday, February 17, 2012

Keep your Big Government hands off my Medicare, Social Security...

I've long suspected that many of the people that rail the most against "big government" are often those that are most dependent upon that same government for benefits.  This past weekend there was an excellent piece in the NY Times that highlights the regions of the country most dependent on the government for benefits.  A Cornell study also highlights the confusion that many people have when it comes to government benefits.

It's worth clicking through to see where the highest ratio of federal dependents live and then visualize that map relative to the current breakdown of red vs. blue in the US.

You can see the full map and the detailed breakdown of each government program here.

"Finally, Cornell University’s Suzanne Mettler points out that many beneficiaries of government programs seem confused about their own place in the system. She tells us that 44 percent of Social Security recipients, 43 percent of those receiving unemployment benefits, and 40 percent of those on Medicare say that they “have not used a government program.”       

"The truth, of course, is that the vast bulk of entitlement spending goes to the elderly, the disabled, and working families, so any significant cuts would have to fall largely on people who believe that they don’t use any government program."       

Rumor=Rally

Sorry for the light posting as of late.  Hopefully, I'll have some news to share soon.

The market continues a slow and steady march higher - up an incredible 17% from the Thanksgiving lows - on rumors of more bailouts, etc.  It has been my contention for some time that the market is thriving on this uncertainty.  The market movers would rather see three rumors a week that Germany, the ECB, and/or China is going to save Europe than an actual deal.  The prospects of an actual deal to try and fix Europe are too difficult to ponder so we're left with hope, smoke and mirrors.

Corporations continue to excel in this environment (wait until you hear about Exxon's first quarter - I suspect it will be enormous) but individuals are not participating to the same degree in my opinion (see this weekend's rioting in Greece).

Thursday, February 02, 2012

Impacts of the Facebook IPO

Tomorrow we'll get distracted by the jobs report for about 13 seconds before the financial media return to talking Facebook 24/7.

So, what will be the impacts of the Facebook IPO?

1) Facebook should get a nice little bump in advertising because of the increase publicity.  Many advertisers small and large may have avoided this platform because they were uncomfortable with the concept.  I expect a big increase in users around all of the IPO publicity and a correlating increase in advertisers.

A small note on Facebook's value proposition.  I read a review today of someone that ran an ad campaign with Facebook. They didn't spend huge money (probably $100) but it was their contention that only 1 out of every 10,000 people that saw their ad clicked on it and these were highly targeted ads served by zip codes.  He also contended that because most of the people that clicked through were only on the site for 1 - 2 seconds it seemed plausible that most of the Facebook click thrus were slips of the mouse.  It's food for thought.

2) The coming bubble in angel investing.  EVERY one of these new Facebook millionaire's or billionaires has 3/4ths of a foot out of the door.  The second they can get liquid many of these people will "retire" to their new jobs looking to fund the next Facebook, Twitter or Google.

Along those lines today I love this quote from a respected investor "Congrats to everyone on the Facebook IPO filing but really I find Facebook is an IQ reducer".

3) I'm not trying to be secretive but I think I have an idea that could revolutionize an industry and resurrect the US in one fell swoop.  Facebook Millionaires feel free to fund me at will :)

Cheers!

Wednesday, February 01, 2012

Stop me if you've heard this one before...

For about the 1800th time we have rumor that a deal on Greece is imminent and that rumor is spiking global markets - particularly in Europe which are up 1-2%.  I half believe the theory that the market doesn't want a deal on Greece because it goes up 2% on every rumor and only falls 0.5% when reality hits.  Wash, rinse and repeat and stocks can continue to climb higher without a shred of real news.

Again, this could also be a resurgence of the best trade in 2011 which was to buy on the last day of the month and sell on the first day of the next.  You'd only have been in the market for a handful of days but you would have outperformed by a huge margin in 2011 if you followed that model.  Traders are creatures of habit and if 2/1/11 was a big up day they expect 2/1/12 to be a big up day regardless of what is or isn't happening in the world.

I sense that things are getting increasingly difficult for businesses around the globe but that fact is simply not showing up in the equity markets.  It has a very early 2008 feel - the market is overbought and we're heading into a Presidential election with hopes that we've turned a corner.  Many market indicators would seem to say we have not, but that won't matter today.  All we'll be talking about is Facebook's IPO.

Cheers.