Tuesday, March 04, 2014

One stat sums it all up...

The last time the Russell 2000 went up 3% AND set an all-time high - as it did today - was March 1, 2000 which was about 2 weeks before the dotcom bubble began its decline.

As a respected trader said today, "Buyer Beware."

The global surge in stocks was driven by a sudden relief that Putin was not going to start WWIII.  There was never any real risk of this, but the computer driven buyers can't be bothered dealing with facts (more on this below).  I believe that this issue is behind us for now, but at some point the market is going to have to focus on the fact that the US is poised to grow at about 1.7% this quarter.

This series of data for January/February car sales sums up our country better than any political pundit could....
  • *FERRARI POSTS RECORD SALES IN U.S. AND U.K. IN 2013
  • *MASERATI GLOBAL SALES MORE THAN DOUBLE IN JAN
  • *PORSCHE REPORTS RECORD FEB. SALES (UP 15%)
  • *MERCEDES REPORTS HIGHEST JAN SALES IN HISTORY
  • *LAMBORGHINI SEES 2014 HURACAN DELIVERIES EXCEEDING 1,800
  • *FORD FEB U.S. LIGHT-VEHICLE SALES FALL 6.1%
  • *GM FEBRUARY U.S. SALES FALL 1%
  • *TOYOTA U.S. FEB SALES DOWN 4.3%
  • *VOLKSWAGEN OF AMERICA FEB. VEHICLE SALES DOWN 13.8%
  • *HONDA FEB. U.S. VEHICLE SALES FELL 7%
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If you've been reading for awhile you know that I'm concerned with the growing student debt burden that is weighing on our young people.  The old model from my generation - work hard, get good grades, go to a good school, get a good job - is broken and I don't know if it is ever coming back.

On the flip side we have more and more what I would call "subprime students" borrowing massive sums of money to fund their education and in some cases fund other activities unrelated to their education.

I'll include some of the most interesting pieces of this Wall Street Journal report but your really should read the whole article.  It highlights the fact that a growing portion of "student loan debt" is going to finance anything but education.

Take Ray Selent, a 30-year-old former retail clerk in Fort Lauderdale, Fla. He was unemployed in 2012 when he enrolled as a part-time student at Broward County's community college. That allowed him to borrow thousands of dollars to pay rent to his mother, cover his cellphone bill and catch the occasional movie.

The Education Department's inspector general warned last month that the rise of online education has led more students to borrow excessively for personal expenses. Its report said that among online programs at eight universities and colleges, non-education expenses such as rent, transportation and "miscellaneous" items made up more than half the costs covered by student aid.

He uses roughly $2,000 in student loans each year to stock his fridge and catch up on bills. His wife is a stay-at-home mother who also gets loans to take online courses.

"We've been taking whatever we can for student loans every year, taking whatever we have left over and using it to stock up the freezer just so we have a couple extra months where we don't have to worry about food," says Mr. Matherne, who owes $51,600 in federal loans.

Early last year, when Denna Merritt lost her long-term unemployment benefits, the 49-year-old Indianapolis woman enrolled part-time at the Art Institute of Pittsburgh's online program, aiming for a degree in graphic design. She took out $15,000 in federal loans, $2,800 of which went to catch up on unpaid bills, including utilities, health-insurance premiums and cable."

I wish someone would point these people the plethora of online tools that are available for FREE that would enable them to learn a hard skill.  People would be knocking down their doors, but there's no money in a system like that for the schools, the cell phone companies and the cable providers so we don't encourage that behavior.  Instead we encourage people with a bachelors to go to community college to study acting so they can gain access to more student loans.  :(
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Finally, this is perhaps the most interesting (if depressing) quote I've read in awhile.  A study was conducted which has determined that in the US public health campaigns aimed at increasing public awareness of vaccines and debunking myths about the risks of vaccinations appear to be having the OPPOSITE effect and might be leading some parents to skip vaccines.  Here's the quote of the day and I think you could apply this to many things in our fact-challenged society - "The best response to false beliefs is not necessarily providing correct information."

Cheers!

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