The Farrell Chronicles: the last Weekly Economic Report??

So little time…so many thoughts…from the heart…

Last week I teased you with information that I perhaps was making a career move and this very report might in fact be my last.   Hence, with bittersweet news, I in fact will be reentering the world of advising…a passion which this weekly report has supplemented this past year.  But, my writings go back further than my first blog – which was St. Patrick’s Day in 2009 – I did write to many of you in a more limited format each week during my tenure as a Private Advisor with that large bank in America.  Additionally, for an even smaller number of you, I have been a weekly mainstay reporting on life-subject topics going back to the summer of 2001…just before one of the most changing historical events in our history.   Hence, writing is in my blood and therefore I hope to find a way to continue the financial muses…but we will see, for as much I love and appreciate my readers, job security is more important! 

However, as one person told me, I have a gift and I could write about virtually anything and still provide thoughtful reflection for my readers.   Therefore…. The Farrell Chronicles could live on…any theme suggestions?  Comment and let me know.

Now, onto the weekly report…

Last week I spent almost a whole report talking about cash…or the fact there might not be that much on the sidelines.  As I documented, there might not be that much…per se.  What I did not mention last week, but I did converse with readers over the past week, was there is cash out there…it’s just in an area not easily tracked.  The cash, which is hidden, is the cash presently invested at private equity firms.  Given the lack of credit available to finance deals, this cash is not working, and will not be working, until we get back (if ever) credit availability.  Hence another subject…credit.

If you listen to what the real economic gurus, the deans of industry, are saying these days, they will always be sure to identity that the true restriction to our expansion is the lack of financing available.   Cash is nice but leverage is better.  Sooner or later, but sooner is the preferred time frame, this recovery will need reliable, multi-source, credit.   Now, I’m not advocating a return to our recent past, with exotic, multi-tiered financing schemes, bundled together and resold as reliable long term investments (a.k.a. …derivates).  Those days hopefully are long gone (or at least until the general public forgets and these instruments resurface under a different name), but as someone who started his career in the credit field as an analyst, and then spent over 24 years administering and reviewing credit deals, prudence goes a very long way.   The challenge is the general business community doesn’t like prudence.  Prudence, as I had been told a few times in my career, is an anti-business practice.

Prudence, in recent times, has been re-phrased and commonly referred to as “Due Diligence”.  Due Diligence was supposed to be the fancy words to indicate that a buying firm (in a merger and acquisition – typically a private equity deal) looked at all the numbers behind the deal and made sure that everything was “clean”.   The challenge is we have come to learn that Due Diligence didn’t extend itself very cleanly to the investment world.  Hence, when all those securities were being bundled, the investors didn’t practice due diligence.  And when I refer to investors, I’m not referring to the general public.  I am talking about institutional investors, the huge insurance and banking conglomerates, the managers of corporate and public pension funds, all with very financially sophisticated, highly intelligent people working for them analyzing their investments; yet still these people lost their direction, and most importantly their underlying business principles, and well… you know the rest of the story. 

All the above are functions of easy credit, where no cash out of pocket rules the deal.  These days are limited in the future (hopefully) and prudence (or fear) will prevail for a long period.   

I take this theme, as this being perhaps my last report, as I cannot stress enough the challenge we have at hand to recreate trust.  Why aren’t the banks lending, why isn’t there ample alternative credit sources?  Simply, and very simply, trust isn’t there.  Trust in the “deal”; trust in the numbers supporting the deal, trust in the future.  

The same goes for you and your friends.  Where is your trust?  Take a field I know well, financial advisory.  Why are people hesitant to take input from their financial advisor without thinking twice – lack of trust.  This lack of trust has a lot to do with the reasons mentioned above but also could stem from the advisor’s ability, priorities and product steering which might be creating doubt…or lack of trust.

So, I leave you to re-start my career creating trust.  Hopefully over the time you have read these pearls of wisdom (I never said I was modest!) trust has leaked its way into your thinking.  Trust that your friend Greg wouldn’t steer you wrong, that he has reported what’s on his mind, sometimes not politically correct, but nonetheless, sincere and thought provoking.   I thank you for reading and I hope I can find a way to keep these lines open each week, in some format or another, but “trust me” they will come from the heart – for isn’t that really where trust dwells?

Be good.  Enjoy life.  And most importantly…. stay connected…for I have been and will be “connected” for you.   Greg

The Farrell Chronicles – Did we forget?

It’s almost off the radar screen….

Just about a year ago our markets were at rock bottom.  Ironically, in that stretch from Thursday, March 5, 2009 to Monday, March 9, 2009, my personal situation could have been described as rock bottom from a professional perceptive.  My last day of work at U.S. Trust was March 5, 2009.  It had been the first time in my professional career I was literally…out on the street.   Coincidence in timing? Heck no, reality of the times.

But, as the market stopped it bleeding at the end of business on March 9th, my life too would go on.  And for the millions of other American’s in a similar position to me, their lives would also go on.   Granted, for most of us, life isn’t quite the same; adjustments were made, jobs hopefully were secured – most not at the level of prior employment – but life went on.   However, as we approach the anniversary of the abyss of the second worst financial crisis to hit this country, how many people have almost forgotten the day?  As is the American custom, memories have a limited time span.

That said, we still don’t have rampant investing, hence maybe the American investing public might have deviated from its Alzheimer’s trend and taken the latest memory enhancing drug.   Part of that lack of investing still gets credited to a statement I hear made by many a financial advisor of “there is still tons of cash on the sidelines…. and when it gets invested….look out.”  Well, let’s have a little reality check about that theory.  First off, where are these people getting their statistics?  Presumably they are getting their “logic” from various sound bites, financial soothsayers, and mad financial commentators.  But how much is true?  Well, read on and I’ll tell you!

In analyzing 50 years of Federal Reserve monthly money supply figures (that’s 600 numbers) would you be surprised to hear that the money supply (I’m using M2 which includes savings accounts) has increased virtually every month of those 600 measurements?  Well, in fact that is true; with approximately only 20 incidents where the supply retreated from the month before (but I’m talking fractional differences which are barely measureable).  When I took a broader look at the numbers and clumped together periods of 29-months to each other (which also historically cover a business cycle) the numbers are a bit more revealing in terms of flows.  For instance, from May 2007 to Sept 2009, M2 increased 16.5%.  Okay, perhaps argument for money on the sidelines when you look at the 29-month period prior of December 2004 to April 2007, whereas M2 only increased 12.53% during this period of flat to modest growth in the Dow. 

But before you start hitching the wagons to the horses for a runaway market, perhaps you might like to know about some of the other 29-month periods.   In the July ’02 – Nov. ’04 period, M2 went up 14.2%.  That market was terrible in the later months of 2002 but then bounced back through 2004.  Analyzing a bit deeper, during this period, the supply retreated for two months in the 3rd quarter of 2003; perhaps signaling money going back into the market.  But those retreats combined only accounted for one half of one percentage of the money supply.  In the two 29-month periods prior covering from Sept. 97 –Jan. 00 and then Feb. 00 to Jan. 02 the INCREASES in the money supply were 17.3% and 18.7% respectfully.  Therefore, I’m not seeing any concrete evidence pointing to historical cash hording and then opening the vault doors to invest in the equity markets.   So, don’t hang that hat to dry – or fly – if you think globs of cash will be flooding back into the market, because your hat might get a bit wet and it sure won’t be flying off the hook.

Just to put it in perceptive, if…and that’s a big if, we had 2% go back into the market, we are looking at approximately $200 billion dollars.  Big number generally, but considering the US equity markets are around $15 trillion….and that’s only the US…the cash (if it flowed into US equity markets) would only account for about 1% of total market capitalization.  Double the cash in from 2% to 4% – EXTREMELY unlikely and about zero percent of happening as our cash goes up historically and never has it retreated by anything more than 1 tenth of 1% –  then we are only still looking at about 2% of domestic market capitalization.  Long story short, our markets will gain only from market activity and growth of balance sheets; not from mystery dollars “on the sidelines”

So, back to short memories.  As I write this column I was just offered yesterday a position back in the world of investing as a Wealth Advisor.   This position came to me, as I have been happy, and very grateful to the University for their acceptance of me into their world of philanthropy.  But, like many of my fellow American’s mentioned above, our roads have been long and bumpy, and along the way you meet many people.  In my case (and many others I’m sure) you tend to have a long trail of interviews over that course of time.  For me, this position which presented itself is the product of months of incubation and fine tuning, as many firms accessed their business models over our tough economic climate and created new ways to address their marketplace.   For me, the firm knew when I interviewed with them 9 months ago that I would be a good addition to their firm; it was just a matter of time of creating the right role.  Thankfully they remembered my charming personality and gave me a call a full 9 months later- in a strange way I feel I like just gave birth!  In light of all the talent out there, I’m honored. 

Hence, when you read this column next week, I might have a formal announcement (trust me…I’m not crazy, the University knows of the offer hence I’m not spilling any beans).  However, if all the details are agreed upon, and I pass the bodily fluid tests, then this might be one of my last weekly economic reports as my potential new employer would prohibit me from gracing you with my pearls  – the reason being is fine print – and financial regulation….do we have that????  LET’S HOPE SO after all that mess! 

But until I take my last breath in blog heaven, comment freely and look for some cash!  Have a great week.  Connected to you for you.  Greg

The Farrell Chronicles: A Dollar short…

Can’t win for losing…. 

Last evening I was doing currency exchange 101 with a daughter who is going aboard to the “homeland” to study in a matter of a week.   We were having a crash course on Euro to Dollar quick conversion ratios.   In getting some quick data about current FX rates, I found out that Tuesday’s down market was triggered by poor consumer confidence ratings….and a strong dollar! 

So, good news for the youngster…she might benefit from a stronger dollar, hence those pub purchases won’t dent the purse as much and maybe there might be some souvenir money.   Bad news for the economy…the dollar is up.

So what’s the beef?  Shouldn’t we be jumping with joy that our dollar is increasing, showing the world we are a power to be reckoned with again?  The world order is restored. 

But ironically our market is down a hundred points for the Dow when America is King of the World with Gold, Silver and Bronze.  But, other commodities of steel and cooper today decided to take 4th and 5th place in the race and not place for a medal…or is that metal?  It just doesn’t make sense. 

About a year ago, cries were heard from near and far about the weakness of the dollar.  The headlines all read ‘strengthen the dollar; strength the economy’.   Now we have an improving dollar and the market is crying.  We can’t have it both ways!  While every politician will never admit in public, they all secretly want a lower dollar as it helps tremendously with exports, improving the trade imbalances, and creates jobs domestically through as a result of higher production levels.  However the flip side is a stronger dollar improves profit margins as a result of cheaper raw goods acquired globally and hence earnings improve for American companies.  So, the question begs…what do you want?  

I’ll tell you what I want – not much…relatively speaking.  How about a few dollars in my pocket (weak or strong, I’m not picky),  a decent stock market to grow a retirement, quality yet affordable health coverage (no endorsement of any plans here, just wishes), good health (so I don’t have to worry about the aforementioned), peace of mind that my children don’t face hardships,  good friendships.  I’m sure there are a few other things but how different am I than my neighbor…anywhere in America?

We find ourselves, virtually a year later from the abyss, a bit more conservative financially and still wondering which way this “recovery” is headed.  We reflect upon the year and ponder our moves.  Did we get the right advice, making timely portfolio adjustments to prevent loss while enhancing gain at the appropriate times?  Did we, or do we, trust the advise (if any) from our advisors? Maybe it’s time to use those dollars….and make some decisions.

For those who are faithful readers, I’m sure you know by now, but I write this column for you.  With all the noise out there in the financial reporting world, I strive to make this weekly report a realistic dose of common sense, giving you current market information in hopefully an easier digestible method.   Call it the acid reliever of financial journals which are filled with insider jargon.   In any regard, I do enjoy the therapeutic relief it extends to me…regardless of the fact no dollars are earned…hence…I frankly don’t care whether they are strong or weak for now (except I do expect a nice Guinness souvenir, therefore I better say I want a strong dollar for now!).  

Have a great week.  Comment freely.  Connected to you for you.  Greg

The Farrell Chronicles: Click Clack

So the other day I was driving down the road and looked in the rear view mirror.  You know the feeling, the feeling you get when you see those ‘special lights’ behind you.  Your heart beats fast and sinks with gut-wrenching fear.  You ease up on the gas pedal and pull out of the fast lane, hoping you will survive the situation.  Well, it happened to me yesterday; a Toyota was behind me!   Ba-Da-Bing.

Now that the humor session is over, what do you think about Toyota?  Do you think the Grim Reaper has got his hook in them?  If there ever was a ‘perfect storm’ of issues, this company seems to have sailed right into the heart of the storm (or in their case – accelerated – Ba-Da-Bing).   But, as time goes on, this perfect storm will be the business school case example for years to come.   How did a foreign company, which overtook every domestic automaker and became the #1 auto brand in America, fall from grace?  Was it the American labor pool building cars here on domestic soil which brought down the foreign giant?  You know, there was the day, when they shipped all those Corolla’s over on freight boats and stacked them in ports of call in California, NY and Miami.  But, as they got the taste of American dollars, and their currency devalued itself from a decade-plus long recession, it was necessary to build cars in the U.S. to keep their margins in check (and of course some marketing shrewdness to understand the advantage of diffusing the political hot potato by employing American workers, in American plants, to gain market share and pretend this was a U.S. company – now perhaps disguised in sheep’s clothing.)

But the story here isn’t so much the perfect storm of manufacturing malfunctions, but more of the blatant cover up, or better put, the refusal to take action (action which obviously would cost billions).   These recent problems are anything but recent to Toyota.  They have known of the floor mat and accelerator problem for years.  The problem is they choose to sweep it under the mat, so to speak, and instead hope the problem would go away or was ‘contained’.   It wasn’t until serious intervention by the National Transportation Secretary, and his department, put “extreme pressure” on Toyota did they buckle under and now have the largest recall…of multiple lines and models…of any auto manufacturer (the Ford Edsel probably would have rivaled Toyota but there weren’t enough made).

All that said, they will come back, just like Audi did with a similar issue (however, in the case of Audi, it was not that big of a mechanical problem and recall, but the press got a hold of it and almost put the manufacturer out of business as a result of water cooler chat which suppressed sales for years.  Ironically, they now are the fastest growing luxury car).    However, on the other hand, FIAT never did truly come back in the US, and I still recall the humorous acronym for the automaker…Fix It Again Tony.   Now that truly deserves a   Ba-Da-Bing…and no disrespect intended for my Italian friends in the above FIAT reference or the urban slang.   But FIAT’s story isn’t all that much different from Toyota.  They grew too fast here in the US, chasing profits, and couldn’t service their lines; hence they gained the reputation as a manufacturer with unreliable workmanship.  Even their CEO, who took the reins in 2004, knew of the laughing stock reputation and pledged to recreate the brand.  Now, they are returning to favor in their homeland, and actually might have some models for the U.S. soon.  But it was a long, long, period of digging out of the trenches and one has to wonder if Toyota is going down the same path?

Now to switch gears (lame auto reference pun….Ba-Da-Bing), my avid readers might recall last week when I was beating my chest saying that a month ago I was on target predicting our next Dow downturn.  In last week’s report I stated (from memory) that I thought the market would retreat to 9200.  Well, in reviewing the facts this week, I found that I actually stated in my January 20th report that the Dow would retreat to 9600.  That said, predicting is a sure way to failure, akin to predicting you have the best built cars in America, hence you seldom see any business reporters or analysts step out into traffic and make a prediction.  However, I’m still considering this a successful predication, as I made my predication during the day of the recent period high of 10763 and the market did fall  to a low of 9882 last week (February 8th, 2010); a decline of (8.2%) over the course of 3 weeks.  I’m here to tell you, that’s not too bad of a prediction.

And, to follow up on that predication, I’m fairly convinced we have now covered our peak to low and therefore I believe it’s time to call off the bears and take a ride up, at least for a period time (exact ride length to be determined later).  But…as my email invitation says in fine print each week…All views expressed herewith in, and linked, are solely the views of the author and are not intended as investment advice.   Ba-Da-Bing.

Just to give you some insight into my on- the- spot literary genius,  my intentions for this week’s report were to talk about some creative marketing successes, derived from people (and companies) challenged and responding in these hard economic times, but I will save that for next week (if nothing else pops into this crazy mind of mine).  Have a great week.  Comment freely.  Advancing Tomorrow Today.  Greg

The Farrell Chronicles: Going Down??

First order of business: Happy Birthday Mom (when I’m writing this)

I don’t know about the rest of you, but Mother’s birthdays supersede all others, including spouses (sorry honey), children and Spot the dog.  Don’t ask me why, it’s just the order of the universe.

So, I have tons to report upon and several observations to be made this week.  First, how about that Super Bowl?  It turned out to be a great game which was wonderful for viewership.  Apparently it was the second largest television audience every – M*A*S*H final show is still the all-time first.  The two million dollar, 30 second investment, made by many firms probably seemed like a good idea.  So, let’s talk commercials.  First off – the Snicker’s Betty White and Abe Vigoda spot – sweet.   Already there have been protestors against cruelty to seniors… I’m serious.  I’m betting the 88 year old Betty and 88 year old Abe aren’t protesting as they wheel their cash to the bank.  If it was so offensive, then I’m sure they would have turned down the role.  Hence, give me a break.

Plus, the Doritos’ owner/dog collar commercial.  How good was that?  It actually was produced by a viewer in entirety.   Originally it was going to be $100K to the winner.  I’ve heard they raised it to $600K.  They should pay him a million as it was so good. 

All my Super Bowl fun came this past Sunday in the City of Brotherly Love.  I arrived in Philly mid-morning on Super Bowl, just hours after their 2nd biggest snow storm ever.  I left mid-day on Tuesday as they were bracing for another 18 inches.  My departure was planned at that time, but I was going to Metro NYC for appointments the next few days.    Well, those folks were calling and emailing me suggesting they would probably be working from home on Wednesday as the city area was calling for 10-20 inches.  Two observations:   First, working from home. This economy (or lack thereof presently) is so virtual that a vast majority of the jobs today can be done from home…or anywhere.  That is great news.   On the other hand, this virtual economy is bad news as where is the manufacturing?  Do we need to concern ourselves?  I’m thinking Yes…

So you say “finally he’s talking about the economy”.  Well, does anyone recall where they heard a few weeks ago that our financial markets were headed for a correction and our market could dip down to 9200?  If you don’t recall, it was HERE.  Ironically I bring this up on a day in which the market is up triple digits.  However, the trend has been down, closing down the past few weeks on a weekly cumulative.  It is also amusing that the market surge today is tied to leading news that the country of Greece is virtually bankrupt and needs a bailout.  Sure, take profit from other’s misfortunes.  Effectively it is positive news to the market as it shows there is global support available (European Union and specifically Germany) to ‘bailout’ Greece.  But mark my works, this is a short-lived, as other Baltic countries are in similar pain and Germany can’t commit to bail them.  Sound like AIG and Merrill and Bears and Lehman’s all over again?

I made my predication several weeks ago, before the recent downward trend, strictly based upon my interpretation of two year charts.  We were due, and in fact, the markets are charting exactly as I predicted.  While I’m beating my chest here like a Super Bowl hero, the biggest test will be is 9200 the current floor as I suggested weeks ago?  If I was able to call the current downturn from chart movement, I don’t see why I can’t call the bottom.   I will cover my “call” by saying I personally find it easier to pick out peaks to retreat from versus bottoms to buy.  However, I still believe this is an interim downturn as a primary market signal is up – temporary hiring.  In all rebounds, temporary staffing increases are one of the first indicators of future economic activity. Also, shipping news– the Baltic Dry Index is climbing (barely, but nonetheless climbing) – I heard iron ore and copper are being shipped to China and hence are bidding up freight rates.  If you’re a follower of the Weekly Economic Report you will know I am partial to the BDI and cooper as very good signals.  Good news and stay tuned (the international issues above are a slight concern, but they don’t come close to the amount of debt the U.S. had/has in September 2008, so they will be ripples).

Ending today’s report, in a peer to peer conference I just attended (which included much discussion on estate planned giving), I’m hearing out of the Congressional Record that Washington finally has had substantiate discussion regarding gift and estate taxes.  Apparently late last week the Senate reviewed and passed onto Congress a continuation of the 2009 estate tax at $3.5 million with the 45% maximum tax.  I also heard there was positive news regarding some of the 2001 tax incentives which expired last year.  Both of these are good news, but it is a trade off, from what I’m reading, for votes on a jobs bill.  Politics as usual. 

Have a great week.  Enjoy your friends, kiss your Valentine next Sunday, and of course comment freely.  Advancing Tomorrow Today.  Greg

The Farrell Chronicles: The Land of Make-Believe

Supercalifragilisticexpialidocious.  Ok, I’m not turning into Mary Poppins, but since its Super Bowl week, I figured I needed some tie in to all the pomp and circumstance and why not use the longest word in the land of make-believe. 

First, before I start talking about the land of make-believe, let’s put this coming Sunday into perceptive.  It’s probably the first time in a couple of years that we have some genuine, season long, favorites playing in the Super Bowl (disclaimer to my close friends who are Giants and Steelers fans).   The fact of the matter is these two teams combined hard work and smart play all season long to end up in the big face down.  The other great thing is we have some solid citizens here who are excellent role models to our children in form of Drew Brees and Payton Manning.  Additionally, the New Orleans Saints are a Cinderella story due to their comeback after Katrina.  It’s Supercalifragilisticexpialidocious – in the land of make-believe.

So, back to make-believe.  For a couple of weeks I have been holding you at bay regarding previous comments I have made regarding portfolio construction, or lack thereof.  Yesterday (and frankly everyday lately) I have been seeing two series of commercials.  The first is “the green line” from that monster retirement asset company.  Their latest commercial yesterday had a couple in bed and the green line appeared (ok…I guess  that is as good as any other place to talk about retirement funds…what are they thinking??).  Anyway, the theme was about a young couple discussing the “advantages” of a fund which automatically becomes more conservative as they grow older.  Essentially they are taking about a “target” fund which many of the mutual fund companies came out with about 4 years ago.   This is the pinnacle of preeminence in my protest against alleged financial planning.

My alliterations stress my frustration with the vast majority of financial planning these days for the general investing public.  It’s all about ease and staying out of jail.  Yes, you read that right.  Target funds are a core standard now in virtual every company’s defined contribution plan (401k/403b).  The reason is very simple – they keep the plan trustees out of jail.  You see, whoever is responsible for the plan at the company, has the burden of fund selection and making sure they are acting in the best interest of all participants.  Hence, they need to make sure a good selection of funds are available for self allocation models, and they have to make sure the funds are best in class (in relative terms).  Therefore, with the emergence of target funds, the burden is relieved. 

The problem I have with these funds are when a professional, who allegedly works for you, uses them to construct your “customized” plan.  It’s basically the equivalent of “dine and dash” or “wham bam”.  I don’t like to use that last phrase but the use of these funds by professionals is nothing short of cheating your client.  It’s almost like saying, “I will never again have to bother with this client as this fund will keep them satisfied…or at least I will tell them that whenever they call me”.  

These funds are like many of the Modern Portfolio Theory allocation models which hundreds of thousands of “advisors” use for their clients.  MPT is the core investment philosophy used by practically every single firm.   The inventors of MPT won a Noble Prize for its construction.  In short, it’s the framework of every allocation model, which effectively employs a system of checks and balances to keep your assets supposedly protected.  The theory is mixing some stocks with some bonds.  Portfolio balance allegedly is achieved as when one goes up, the other typically, and inversely, goes down (and vice-versa).   These models, while they might take a little involvement upfront by the advisor to pick the funds, are also a “walk away” method of portfolio management for the advisor. 

I mentioned another commercial I have been seeing.  In fact it is virtually the same commercial format used by two different companies.  They both employ human caricatures talking about investment theory and their advisors.  I have no investment commentary here other than what is the point of caricatures?  Who are they appealing to?  I would hope we all have a higher standard of ourselves than a caricature, but perhaps that’s how these companies envision us, just puppets….in the land of make-believe.

So, now that I’ve aggravated virtually every investment manager (and company) in the free world, where do you, my reading public, go to get more active portfolio management?  Are you ready for technical analysis management versus traditional fundamental analysis which so many advisors employ?  This is a whole other report which I will have to ask you to hold tight on.  The purpose of today’s report was to let you know that a good share of you have been in the land of make-believe but you just didn’t quite know.  And in the land of make-believe, advisors might be prone to making up excuses, or theories, which really have no real world practicality – essentially “Supercalifragilisticexpialidocious”. 

Have a great week.  Enjoy your friends and family on Sunday. Comment freely.  Advancing Tomorrow Today.  Greg

The Farrrell Chronicles: Follow the Bouncing Ball

So I’m getting myself all primed for the big speech – the State of the Union.   I’ve been following the bouncing ball…basketball on ESPN.   But who remembers “Follow the Bouncing Ball”, a catchphrase coined by Mitch Miller on his early 60’s show – Sing Along with Mitch?

I bring up Mitch Miller for a couple of reasons.  First, he is a marvel of American achievement, hailing from Rochester NY, graduating from the University of Rochester’s world acclaimed Eastman School of Music, and eventually becoming a household name with his above show (that was only a side gig as his main contribution to the music industry was his leadership at Columbia records during changing times from big band and ballad singers to the emergence of Rock ’n Roll). The most amazing thing is Mitch is still alive at the age of 98!  How do I know that?  I saw his ‘younger’ brother, Dr. Leon Miller, age 96, walking down one of our hospital corridors, all decked out in his pressed white lab coat, tie knotted perfectly at his neckline.  And you wonder why we have such high unemployment – we have 96 year olds keeping jobs from 69 year olds….(obviously just kidding and no disrespect to Dr. Miller – God Bless him and a career of service to others!)

So, follow the bouncing ball is what I’m figuring I’ll be watching in a matter of moments (the President just took his place in front of the House and Senate and is starting his speech……).   The Future is anything but uncertain…America prevailed in the past, again we are tested…

Tonight, I’m watching the ball, because it’s bouncing fast – bouncing from small business tax credits to dreams of full employment by refusing to accept “second place” for America and promoting innovation, especially in the field of energy, through incentives.  Plus, we will double our exports over the next two years and gain two million jobs (got everyone to stand up on that one!).  We are investing in education, because a good education ends poverty – but a high school education isn’t enough, we need college more affordable, so we are going to give a $10,000 tax benefit and we will forgive loans after a certain period of time – hell…where was this guy 7 years ago when I started my paying out “a Lexus a year” in college tuition? 

I’m going to take an aside here – what the heck is with that last promise?  I do the right thing – I pay for my kids’ education, and suck it up for years, and now everyone else gets a free ride (so to speak).  I buy a Chevrolet last December (08) when Detroit was on its knees and a month later they are giving away free interest and rebate after rebate.  I lose my job for 8 months, I meet every obligation I have, we sell our home….where is my thank you Mr. President?  Ok, I’ve vented…

Back to the bouncing ball, what about our economy?  So the above credits and incentives will stimulate the heck out of our economy and we will recover.  Perhaps, but not to the value we were before.  Now, it must be said, that “before” was artificial, but nonetheless, it was a reality.  They say we have 10% unemployment.  As I have stated here before, the 10% is really close to 20% of FULL employment.  We have people like me, fortunate to have a job, but who made the choice to accept a job at a significantly reduced pay, or those who have taken part-time employment to get by (hence pulling them off the unemployed roster).  Or those who have just given up….No matter how you add it up, We STILL HAVE a long way to go to “Carry the Dream Forward”.

Things have changed and when we start the decade NEXT YEAR – yes next year, we should be on better ground, for we still are finishing the “lost decade”.   But, for now, 2010 will be bumpy.  As our President recognizes, we still have political divides which prohibit the core of cooperation.  Until we get commonsense, we will still be challenged.  However, tonight our President announced that all earmarked spending will be disclosed on a special website.  ALL.  This got a full room standing.  Maybe there is hope…  (By the way, regarding the misunderstanding regarding the decade starting in 2010, consider this: When the world started…or thereabout, did we have a calendar date of January 27, 00?  I don’t think so; it was 1/27/1. Hence the decade will start in 2011.) 

So, the ball is out there, bouncing around….but I’m sure Mitch and Leon have seen a few in their lifetimes and they are still proudly doing their jobs…this too shall pass….if we all live to our 90’s!  (I know I promised some discussion on portfolio managment – I promise next week – it will be about trend following and my association with an innovative group in the field). Until then….

Have a great week.  Comment freely.  Advancing Tomorrow Today.  Greg