Fed Department of Justice Investigating S&P, What?

In obvious retaliation for downgrading the US, the Department of Justice has decided to put together an investigation to hunt for a witch called Mortgage Ratings!  If this doesn’t make you laugh, you may need a clue!  Yes, it isn’t funny in one sense but it’s still laughable.  Do we need to “take a look” at what we already know?  Don’t we already know the problem with past mortgage ratings?  Don’t we already know the markets were manipulated, potentially by friends of Congress and Wall Street?  Don’t we know that S&P likely reported based on lies told to them, maybe even by Congress?  We can already answer these questions without taxpayer funds to cover a big worthless investigation designed to either create scapegoats or put S&P down.  Maybe S&P will have a Howard Hughes moment in front of Congress or the Department of Justice.

To reiterate, S&P is one of the very best rating agencies, and most people have not heard of the others.  S&P has done a great job for many, many years and through some very bad years of government.

This simply appears like a “gangland” style of attack by a government which may want to tell its citizens what to do and how to think.  If they had their act together, then they wouldn’t need to worry about their rating.  Should we just maintain a AAA rating without ever discovering excesses in government-run financial programs?  Who investigates them?

At the end of the day, all this action does is serve to reduce confidence in an already volatile market and economy.

Watch for Virus Style STARTNOW Toolbar Hack

I run Nortan 360 and several other security software programs, a strong firewall, and more to keep my system clean and running.  Even with a double firewall and some computer skills I couldn’t keep this irritating thing called “STARTNOW” from somehow loading into my Internet Explorer toolbar manager as well as Firefox!  I’m truly amazed it got in.  If it isn’t a hack, it sure acts like one.

Remove it like you would any toolbar but first you must go to your windows programs manager and remove the program called STARTNOW.  Once you run the uninstaller you can go into Internet Explorer and delete the toolbar.  If you don’t uninstall the program first you won’t be able to access a lot of the safety and management tools in the IE Tools dropdown.  It is less invasive in Firefox, just disable and remove the toolbar.

I hope someone goes after whoever did this.  They make appear as if it is part of Bing.  Maybe it’s a big hoax from MS.  Who knows?  Just get this garbage off the internet, please.

No Volume in the Dow

Volume in the Dow and other indexes has been falling for some time. For over a year I’ve been trying to get top economists to comment or discuss this issue and it remains ignored. Last week CNN finally produced an article on this.

Historically there is only one other time when volume diminished and of course that was in the 1930s. This is an ominous trend which took decades to overcome the last time.

I feel that so long as volume is tending lower it will be difficult to expect positive returns in “buy and hold” portfolios for at least an intermediate time period.

Ubuntu Wine Yahoo Sitebuilder

For Ubuntu Linux users.  Yahoo Sitebuilder with the latest version of Wine and the latest version of Java Runtime starts in Ubuntu 11.04.  Install the expanded version of Wine (Beta Release) from the Ubuntu Software Download Center.  Next download the latest Windows version of Java Runtime and install it using Wine.  Finally download and install Yahoo Sitebuilder 2.6 also using Wine and run it.  Be patient.  Most screen issue clear up quickly and it seems to work best if you maximize the window and don’t do anything but Sitebuilder until you finish working with your site.  There may be a few tweaks in Wine that could help.

Who Decides Your Next Phone Call?

What if your wireless provider decided your next call?  Since they have the information available to know exactly when to make a call and what time of day is the cheapest, and potentially when someone on your contact list might be available, then maybe they should be making your calls for you?  Sound stupid?  Of course it does, but what if it became like that?

Really, you could give full access and decision-making power to your phone company and let them decide when it’s best for you to talk to the next person.  They could keep track of your calls, how often you like to talk to someone, how often someone likes to be talked to, and much more.  They could use the tracking information to decide when you should contact someone because you happen to be in the same town, so hey, let the phone ring.

I know, it starts to get a little complex.  What if the person your carrier decides to call is your ex-boyfriend or ex-girlfriend?  What if you recently broke up and now you are on a date with the next person who you had really been hoping to go out with for some time?  There are many ways this can get messed up, become uncomfortable, or be a deal breaker.  How much information would the carrier need to know about you just to avoid making mistakes on your behalf?

What if you are driving?  Wouldn’t the carrier need to know if you are driving or in the middle of some other important activity, like brain surgery, so you are not distracted and have an accident?  They would really need to know much more information in order to maintain safety.  Maybe it would be important to know if you are eating, feeding the baby, taking a shower… because, after all, wouldn’t they need to know if the timing is right for a phone call?  Certainly!  And the more effective you want the carrier to be in managing this, the more you need to be willing to turn over as much information as possible.

What if you are sick but your carrier insists you make or take a call because the timing is right for your computerized communication schedule?  What if you are in the bathroom?  What if you are already on a call?  It seems that if you fail to comply, fail to answer when the system thinks you should, you may somehow be penalized and the next thing you know, some important person on your list is no longer called because the system now believes you won’t answer.  Possibly this level of service will incite you to turn the phone off, since the more people you know, the more it will ring, the more failures to answer will occur, and drive you nuts!  In the theatre, while flying, at your kid’s recital… what if you are a trapeze artist or human fly?  Okay, by now you get the picture.

But the real picture is of socialism in government.  How much are you willing to allow the government to do the same thing through social programs like healthcare?  How much should the government know about you in order to interfere in your life and ability to make decisions?  How much should the government “ring your phone” and decide when you should do certain things because of convenience based on expense, failure of others, and even mortality?  How much socialism do you really want in place, since the more socialism controls the more it needs to know in order to make decisions for you?  How much of your money, land, and freedom should the government take in order to manage your life, even on behalof of others?  It’s just as stupid as the phone carrier making your next call.  Ironically, the government seems to be gathering the data to make your next call… already.

Gold, Dollar, S&P comparisons, does it matter?

There is a tendency to compare the merits of investing in Gold, Oil, the Dollar, and the Equity indexes like the S&P, Dow, and more.  There are multiple ways to approach this, and many have simply looked at the charts, long, short, and intermediate.  Many approaches have nothing to do with real investing.  From my point of view and experience, the definition of investing is: making a positive return from opportunities while managing risk in order to minimize losses.  It’s really that simple.  Approaching the markets from the perspective of “long-term investing”, “risk avoidance”, and “diversification” tend to be meaningless except to those who don’t understand what they are doing in the first place.

To make it simple, consider investing in just one stock for a moment.  Let’s assume the company is of course “XYZ Corporation”.   Why would someone invest in XYZ to begin with?  How will they know if there is potential for a positive investment return, and how will they “work” to maintain such a positive return?   It helps to pay attention to the company itself and the merits of being invested at any point in time.  Sometimes XYZ has great new products, new marketing, new management or something else we could identify as potentially raising business prospects in the future.  At other times XYZ has poor prospects.  If an investor is sharp, pays attention, and understands these trends, the investor could potentially own the stock at times of positive opportunity and at other times avoid ownership.

This is pretty basic stuff but it’s how it works, all the time, and for all time; it’s easy to forget the basics.  This simple truth is often obscured by those who want to over analyze, over emotionalize, and even over simplify with alternative investment ideas like Asset Allocation, Diversification, Alternative Investing, Private Placement, Bonds… and much, much more.  All the while, these complex views of investing still depend on the simple performance of the underlying instruments and their individual performance.  Stocks within the portfolio must go up for an equity mutual fund to increase in value, regardless of the “style” of the fund.  It’s a funny thing when people somehow fall prey to the idea that their Mutual Fund is an investment when it is a pool of underlying investments.  Sometimes they even think an IRA account is an “investment” when in reality it is only an account.

I have to ask: If the purpose of investing is to make money, to identify opportunity, and to avoid risk, then why does “long-term” have anything to do with it?  Gold has only been performing short-term.   Stocks and the dollar have only been underperforming Gold in the short-term.  In the shorter term a savvy investor has been able to outperform Gold with compound rates of return based on buying and selling.   If an investor does the work, then it is irrelevant as to whether a position is better long or short, since all instruments have their time, and usually only short to intermediate.

Instead of XYZ let’s use Apple.  No argument here, you could have made a great return in Apple, even compared to gold, since 2005.  Because AAPL has done so well compared to nearly anything, should we now forget that it is a stock and begin to see it only as a long-term investment vehicle and try to say that it should be compared to Oil, Gold, the S&P index, Currency, the Economy itself?  Or should we realize Apple is simply having a great run and it would have been nice to participate?  The Dollar performs at times and so does the S&P, but really, all investments should be compared based on their time of opportunity and whether or not you have the fortitude to participate at all.

It isn’t time that matters unless you are losing money anyway.  If you are making money time is on your side.  So why see everything as long-term?  There was a time when Apple really stunk and should have disappeared but somehow the company clung to its existance and, fortunately for those who either own shares or love the iPhone, it held a great revival!

Shall we say the U.S. is dead and cannot have a future?  Is the dollar dead?  Maybe we simply must invest more wisely.  Do you believe professional investors drop their earnings into mutual funds and forget about them or is it more likely they actively seek opportunity and trends, then move their money accordingly?

Job Report Statistically Irrelevant

The job report today came in at +117,000, creating an unemployment number of 9.1% vs. last reported 9.2%. The error margin is +/- 100,000. This means that the number is statistically irrelevant. Yet our news media and low-level talking heads in the financial industry choose to play it up as if it’s the beginning of economic recovery.  This won’t last long since the markets are already giving up the plus side.

In order for the number to be statistically relevant, new jobs created would need to be 4 times greater or more. To have any meaning at all we would need to see a monthly increase in the 300K plus range over an extended period of time. As it is, it would take decades for the current number to have any impact at all!

Other irrelevant numbers are the S&P 500 and DOW indexes, which have barely moved this year, yet the media has continued to hang on every 100 point move in either direction. They love to squeal about the VIX volatility index; why anyone would follow this redundant number which tells you only what is currently happening is beyond me.  I remember when 100 DOW points meant a 10% move, but today it’s just 1% or less and yet receives even more attention. There really must be no real news to report these days or they would completely ignore these things (um, sure).

All of this implies two important things: 1) you can’t invest according to the news headlines, and 2) this truly is a trader’s market, maybe the best ever. The first item is not a shocker, and if you have been watching the markets for any length of time you’ve even heard the culprits themselves (reporters) state that you can’t just follow the headlines. The second is the real revelation which any savvy investor should be taking note of.