I wonder if bin Laden is still alive. We have read conflicting statements from those supposedly in the know in and out of government. What a blow it would be to the al-Qaida and their cronies if his body could be positively identified! What a boost it would be domestically!
As for the economy, who does the average investor trust to tell them that it is safe to invest again? Rather than the death of a hated enemy, who could return--alive--to save us? I doubt that a politician could have that kind of impact. Would a positive ruling in favor of Microsoft have the opposite effect of the guilty verdict back in early 2000 on the market? Would tech stocks bounce?
Probably not. But if you are going to own tech, own Microsoft.
Sunday, July 14, 2002
While the run of stories on corporate responsibility is bad, let us not forget that this is America. Only in America can there be such widespread discussion of issues like this, whether the discussion takes place in the mass media, on talk radio and TV, or on the Web.
I enjoyed a comment I heard on the radio today very much. A caller challenged Congress to sign the federal budget with the same responsibilities for accountability that CEOs are expected to follow. Will Congressmen (and women) ever stop pointing fingers at "evil executives", or other scapegoats of the moment? The Democrats are returning to their roots as the "anti-business" party. Class warfare gets us--all of us--exactly nowhere!
I hope that some sort of reason takes hold and that the baby is not thrown out with the bath water; that is, that the stampede to "do something" about executive power run amok does not itself run amok. Many, many people in America have large personal stakes in the capital markets. Winning the 2002 elections through the long-term destruction of the investment class would be a pyrrhic victory indeed for the Democrats. What would the Social Security system--not to mention society at large--look like if every person entering retirement age truly depended upon it for 100% of his or her retirement income? I don't believe any Democrat wants that, not even those hypocrites who flew on corporate jets to get to fund raisers this weekend.
Give the SEC the headcount and budget it needs to vigorously uphold the laws that are on the books today. Change the law to make stock options an expense, if that is the right thing to do--after an informed debate. For God’s sake, stop demagoging the economy!
I enjoyed a comment I heard on the radio today very much. A caller challenged Congress to sign the federal budget with the same responsibilities for accountability that CEOs are expected to follow. Will Congressmen (and women) ever stop pointing fingers at "evil executives", or other scapegoats of the moment? The Democrats are returning to their roots as the "anti-business" party. Class warfare gets us--all of us--exactly nowhere!
I hope that some sort of reason takes hold and that the baby is not thrown out with the bath water; that is, that the stampede to "do something" about executive power run amok does not itself run amok. Many, many people in America have large personal stakes in the capital markets. Winning the 2002 elections through the long-term destruction of the investment class would be a pyrrhic victory indeed for the Democrats. What would the Social Security system--not to mention society at large--look like if every person entering retirement age truly depended upon it for 100% of his or her retirement income? I don't believe any Democrat wants that, not even those hypocrites who flew on corporate jets to get to fund raisers this weekend.
Give the SEC the headcount and budget it needs to vigorously uphold the laws that are on the books today. Change the law to make stock options an expense, if that is the right thing to do--after an informed debate. For God’s sake, stop demagoging the economy!
Saturday, July 13, 2002
Do you remember the early days of the Bush administration? Back when the Democrats accused Republicans of talking down the economy? It turned out that we really were in a recession, and that a stimulus was required to help bring us out of it.
Now, it seems, Democrats are talking down the economy and the stock market. Investors are taking major hits. People who were looking forward to retiring are now looking at working for several years longer.
What are the motivations for this behavior?
I believe that the President, back in 2001, wanted to avoid a deep recession becoming the hallmark of his presidency, and acted quickly (with the support of both houses of Congress) to do what could be done by the government. The Fed acted in concert, perhaps concerned that the interest rate increases of 2000 were too much, too quickly, for the economy to take.
Now, the Fed is standing pat, having shot most of its bolts. Interest rates are more than low enough, if only businesspeople would borrow to make investments.
However, we are caught in the quarterly numbers trap. For many years, businesspeople have warned that business is becoming too beholden to next quarter’s profit and forecast data. Even mighty Microsoft has to beat the whisper numbers and year to year comparisons, no matter how much it invests in new initiatives that will, eventually, bring in more revenue and profit.
With this sort of scrutiny, coupled with terrorist jitters, corporate scandals that affect the most admired of companies (Enron, Fortune magazine’s poster child), and perhaps most nefariously, lack of pricing power, it is no wonder that the stock market averages are dropping like stones.
The Democrats, concerned only with winning, are not helping. They appear to have Republicans running away from good ideas like Social Security privatization. They appear to have a super majority forming in Congress that will pass any new corporate reporting/accounting regulatory bill that can be cobbled together--no matter the unintended consequences. Even John McCain now opposes stock options. How many political contributions were paid with those options in the "roaring '90s"?
Investor psychology is shot. I really wish my broker would have put me in Ginnie Mae issues back in March of 2001 when I asked him to. I’d be sleeping like a baby, earning about 7%.
As for what is next, I predict plenty of demagoguery, seasoned with overlarge helpings of attacks on President Bush’s Harken energy record. As to that, if you file the form saying you are going to sell stock, is it so critical to file the form saying that you sold the stock? I think the disclosure for most investors who pay attention has taken place. There's no there there--sorry Washington Post and New York Times.
Now, it seems, Democrats are talking down the economy and the stock market. Investors are taking major hits. People who were looking forward to retiring are now looking at working for several years longer.
What are the motivations for this behavior?
I believe that the President, back in 2001, wanted to avoid a deep recession becoming the hallmark of his presidency, and acted quickly (with the support of both houses of Congress) to do what could be done by the government. The Fed acted in concert, perhaps concerned that the interest rate increases of 2000 were too much, too quickly, for the economy to take.
Now, the Fed is standing pat, having shot most of its bolts. Interest rates are more than low enough, if only businesspeople would borrow to make investments.
However, we are caught in the quarterly numbers trap. For many years, businesspeople have warned that business is becoming too beholden to next quarter’s profit and forecast data. Even mighty Microsoft has to beat the whisper numbers and year to year comparisons, no matter how much it invests in new initiatives that will, eventually, bring in more revenue and profit.
With this sort of scrutiny, coupled with terrorist jitters, corporate scandals that affect the most admired of companies (Enron, Fortune magazine’s poster child), and perhaps most nefariously, lack of pricing power, it is no wonder that the stock market averages are dropping like stones.
The Democrats, concerned only with winning, are not helping. They appear to have Republicans running away from good ideas like Social Security privatization. They appear to have a super majority forming in Congress that will pass any new corporate reporting/accounting regulatory bill that can be cobbled together--no matter the unintended consequences. Even John McCain now opposes stock options. How many political contributions were paid with those options in the "roaring '90s"?
Investor psychology is shot. I really wish my broker would have put me in Ginnie Mae issues back in March of 2001 when I asked him to. I’d be sleeping like a baby, earning about 7%.
As for what is next, I predict plenty of demagoguery, seasoned with overlarge helpings of attacks on President Bush’s Harken energy record. As to that, if you file the form saying you are going to sell stock, is it so critical to file the form saying that you sold the stock? I think the disclosure for most investors who pay attention has taken place. There's no there there--sorry Washington Post and New York Times.
Thursday, July 11, 2002
I can hardly watch CNBC. I can remember watching it constantly back in 1998 and 1999. It was on a good portion of the time at the PRO Sports Club in Bellevue. All those Microsofties who worked out at the club had elaborate spreadsheets written in Excel, but really burned into their brain. I can still estimate the tax impact on a given level of income--like that!
Obviously, the late 1990s weren’t really about investing for a large number of people. To them, the stock market was a huge lottery that almost always paid you for playing. The coolest people flipped IPOs. Others bought the stocks of the day mentioned early on CNBC, then sold after lunch. Sadly, real investors tried to follow the buy and hold strategy that seemed to work for so long, and saw smaller returns than the gamblers. Still, do you know any day traders today?
It’s hard to see when the current negative psychology will turn. The business reporting in the 1970s and that of today seem eerily similar--there’s almost no good news, and what good news there is doesn’t matter.
I’m not an expert by any means, but I think that there are a few signs that could point to a turn-around--when and if these events occur are open questions:
• Coalition forces find the body of bin Laden and his top henchmen. Despite denials in the Arab world, the identities of the remains are established beyond a shadow of a doubt. I wonder what the market reaction to the discovery of Hitler’s body was back in 1945?
• The FBI, CIA and the agencies in the Department of Homeland Security (more on this below) stop the attack that Al Queda must be planning for the 9/11 anniversary.
• Accounting and brokerage/investment banking reforms are signed into law. Of course, the people in the agencies entrusted with the new powers must be competent and the agencies funded sufficiently to do the job.
• Some high profile cheats go to Attica, or some similar prison without a putting green.
• The Department of Homeland Security is formed. By the way, could that name be any lamer? How about calling it the United States Security Agency? Or the Department for the Protection of American Freedom? Homeland seems so Russian—they referred to their country as “the Motherland”. It's sad that one of the major impediments to the passage of legislation to create the agency is a provision that the President wants that would allow agency employees to be fired. Imagine, firing someone because they couldn't do their job. The union that represents government employees has made it all but impossible to get rid of incompetents, and it looks like they plan to oppose this provision "vigorously"
• The elections conclude this fall. I think that this cycle will surprisingly bitter and cynical, but the bitterest and most cynical may be surprised—at their losses. I believe that the public is weary of politics, and wants a government that really does work together for the common good without demagoguery.
Of course, people will feel better--at least for a couple of hours--when the next Tolkien installment comes out at the end of the year. The title has nothing to do with the WTC, as anyone who’s read the trilogy knows.
Obviously, the late 1990s weren’t really about investing for a large number of people. To them, the stock market was a huge lottery that almost always paid you for playing. The coolest people flipped IPOs. Others bought the stocks of the day mentioned early on CNBC, then sold after lunch. Sadly, real investors tried to follow the buy and hold strategy that seemed to work for so long, and saw smaller returns than the gamblers. Still, do you know any day traders today?
It’s hard to see when the current negative psychology will turn. The business reporting in the 1970s and that of today seem eerily similar--there’s almost no good news, and what good news there is doesn’t matter.
I’m not an expert by any means, but I think that there are a few signs that could point to a turn-around--when and if these events occur are open questions:
• Coalition forces find the body of bin Laden and his top henchmen. Despite denials in the Arab world, the identities of the remains are established beyond a shadow of a doubt. I wonder what the market reaction to the discovery of Hitler’s body was back in 1945?
• The FBI, CIA and the agencies in the Department of Homeland Security (more on this below) stop the attack that Al Queda must be planning for the 9/11 anniversary.
• Accounting and brokerage/investment banking reforms are signed into law. Of course, the people in the agencies entrusted with the new powers must be competent and the agencies funded sufficiently to do the job.
• Some high profile cheats go to Attica, or some similar prison without a putting green.
• The Department of Homeland Security is formed. By the way, could that name be any lamer? How about calling it the United States Security Agency? Or the Department for the Protection of American Freedom? Homeland seems so Russian—they referred to their country as “the Motherland”. It's sad that one of the major impediments to the passage of legislation to create the agency is a provision that the President wants that would allow agency employees to be fired. Imagine, firing someone because they couldn't do their job. The union that represents government employees has made it all but impossible to get rid of incompetents, and it looks like they plan to oppose this provision "vigorously"
• The elections conclude this fall. I think that this cycle will surprisingly bitter and cynical, but the bitterest and most cynical may be surprised—at their losses. I believe that the public is weary of politics, and wants a government that really does work together for the common good without demagoguery.
Of course, people will feel better--at least for a couple of hours--when the next Tolkien installment comes out at the end of the year. The title has nothing to do with the WTC, as anyone who’s read the trilogy knows.
Tuesday, July 09, 2002
Why is it that people do not act with enlightened self interest foremost in their thoughts? Of course, the obvious retorts are, "Enlightened--from whose point of view? Enlightened--by whom (or what)?"
So much of history shows these mistakes in naked clarity. Economic and political issues are not settled in World War II, leaving openings for the rise of Fascism and Communism. Today, Arabs sit on vast oil resources with the potential to make the desert bloom, and raise their peoples to the forefront in industry, education, social advancement--all the aspirations of first world democracies. Millionaire professional baseball players and billionaire baseball owners squabble over largely economic issues, threatening each other with a work stoppage that might, just might, finally drive the long suffering fans away for good.
Why are these things so hard to see now, when action is possible, rather than afterwards?
If national fascism and Communism--in Europe--can be conquered, then concerted efforts can conquer religious and political differences in Ireland, in the Middle East, and in other hot spots around the globe. Recent reports of the size of Israel’s nuclear arsenal attributed to the USAF put the number of warheads at 400 or so. This is more than enough to make Mecca and Medina uninhabitable for 57 years or more--if anyone would want to visit a slag heap--with more than enough left over for most of the other Arab cities. The Arab birth rate shows a growing need for land, food, water and services in Arab territories that must be met. Otherwise, those basic needs will couple with religious fervor to pressure Israel and its supporters in the West mercilessly for concessions. Add to this the decline of the Israeli birth and Jewish immigration rates, and it can be seen where economic and political power will fall inevitably.
What of immigration in the developed nations of the world. Declining birthrates among the indigenous populations coupled with legal and illegal immigration changes the political, cultural and economic infrastructures of these countries. Will a future US be as willing to intercede in the Middle East, Asia or Europe as it might be in Central or South America? Will our need to spend on Social Security--the effort to privatize it having been effectively countered by the news of ten or so spectacular corporate frauds and the commensurate impact on stock prices overall--overwhelm all other aspects of government spending?
Will government remain a driver for technology research and innovation? Will we even have a space program for anything other than communications satellites? Will basic science lack a sponsor other than those interested in directed research rather than pure scientific inquiry?
What will the world of 2022 be like? Will our leaders continue to demagogue each other on petty concerns of the moment, or will it take wake up calls louder than 9/11 to awaken the populace that a new class of leader is required? Will the great New York Times continue to print stories that blame an administration for cutting spending on items like Superfund site clean up when in fact the spending on such programs has increased over past years, just not at the rate that special (Democratic) interests demand?
I hope that my wife’s grandchildren grow up in a world where leaders lead from principled thought on such issues rather than be led by polls and pollsters who hope to "win the week". I urge everyone to read a wide variety of news sources in order to be informed independently of political flacks and party hacks. Use the tools to understand the issues, and insist that candidates address them. And vote, in every election.
Information--and the capacity to understand it through education--are the best tools that citizens have to protect their rights from those on both sides who would curtail them. All business is not bad, not even big business. Without investment there would be no products, no housing, no utilities or services. Without regulation--enforcement of laws on the books today, for example--opportunists who exist during every age will run rampant. The trick is to strike a proper, fair balance, and to restore confidence that the system is operating in its own "Enlightened Self Interest".
So much of history shows these mistakes in naked clarity. Economic and political issues are not settled in World War II, leaving openings for the rise of Fascism and Communism. Today, Arabs sit on vast oil resources with the potential to make the desert bloom, and raise their peoples to the forefront in industry, education, social advancement--all the aspirations of first world democracies. Millionaire professional baseball players and billionaire baseball owners squabble over largely economic issues, threatening each other with a work stoppage that might, just might, finally drive the long suffering fans away for good.
Why are these things so hard to see now, when action is possible, rather than afterwards?
If national fascism and Communism--in Europe--can be conquered, then concerted efforts can conquer religious and political differences in Ireland, in the Middle East, and in other hot spots around the globe. Recent reports of the size of Israel’s nuclear arsenal attributed to the USAF put the number of warheads at 400 or so. This is more than enough to make Mecca and Medina uninhabitable for 57 years or more--if anyone would want to visit a slag heap--with more than enough left over for most of the other Arab cities. The Arab birth rate shows a growing need for land, food, water and services in Arab territories that must be met. Otherwise, those basic needs will couple with religious fervor to pressure Israel and its supporters in the West mercilessly for concessions. Add to this the decline of the Israeli birth and Jewish immigration rates, and it can be seen where economic and political power will fall inevitably.
What of immigration in the developed nations of the world. Declining birthrates among the indigenous populations coupled with legal and illegal immigration changes the political, cultural and economic infrastructures of these countries. Will a future US be as willing to intercede in the Middle East, Asia or Europe as it might be in Central or South America? Will our need to spend on Social Security--the effort to privatize it having been effectively countered by the news of ten or so spectacular corporate frauds and the commensurate impact on stock prices overall--overwhelm all other aspects of government spending?
Will government remain a driver for technology research and innovation? Will we even have a space program for anything other than communications satellites? Will basic science lack a sponsor other than those interested in directed research rather than pure scientific inquiry?
What will the world of 2022 be like? Will our leaders continue to demagogue each other on petty concerns of the moment, or will it take wake up calls louder than 9/11 to awaken the populace that a new class of leader is required? Will the great New York Times continue to print stories that blame an administration for cutting spending on items like Superfund site clean up when in fact the spending on such programs has increased over past years, just not at the rate that special (Democratic) interests demand?
I hope that my wife’s grandchildren grow up in a world where leaders lead from principled thought on such issues rather than be led by polls and pollsters who hope to "win the week". I urge everyone to read a wide variety of news sources in order to be informed independently of political flacks and party hacks. Use the tools to understand the issues, and insist that candidates address them. And vote, in every election.
Information--and the capacity to understand it through education--are the best tools that citizens have to protect their rights from those on both sides who would curtail them. All business is not bad, not even big business. Without investment there would be no products, no housing, no utilities or services. Without regulation--enforcement of laws on the books today, for example--opportunists who exist during every age will run rampant. The trick is to strike a proper, fair balance, and to restore confidence that the system is operating in its own "Enlightened Self Interest".
Wednesday, July 03, 2002
I had hoped to make this a daily occurrence; a catharsis of sorts. I have not been as diligent as I planned to be, however.
In order to eliminate availability of a PC in every room of the house as an excuse, I am trying an experiment with this edition. I am writing this on my Pocket PC in Pocket Word. I will e-mail the final result to myself, and then copy the text into the site tomorrow. Eventually, I will buy an 802.11 card for the Pocket PC so that I can complete the entire process from the Pocket PC from start to finish.
The NASDAQ average is down again today. It is about where it was 5 years ago. At one point during its run-up that ended above 5,000, "investors" jumped from one "New Economy" trend to another. The Dot Coms--any Dot Com. Then Palm. Then phone software. Then cellular networks and telecommunications infrastructure. Then Linux. Then optical networking. Then the bottom fell out.
Ironically, the explosion of demand for 802.11-based wireless networks in recent years has not seen a run-up in associated stocks. The momentum players are played out; the battered individual investor no longer trusts an analyst's recommendation.
Still, we will see. Microsoft embraced wireless LAN technology in Windows XP. As component prices drop and security is strengthened, more and more networks will go in--at home and at work. People will buy cheap, heavy laptops that can be put away & out of sight at home, yet brought out to connect through broadband anywhere they are needed.
Tech stocks, anyone?
In order to eliminate availability of a PC in every room of the house as an excuse, I am trying an experiment with this edition. I am writing this on my Pocket PC in Pocket Word. I will e-mail the final result to myself, and then copy the text into the site tomorrow. Eventually, I will buy an 802.11 card for the Pocket PC so that I can complete the entire process from the Pocket PC from start to finish.
The NASDAQ average is down again today. It is about where it was 5 years ago. At one point during its run-up that ended above 5,000, "investors" jumped from one "New Economy" trend to another. The Dot Coms--any Dot Com. Then Palm. Then phone software. Then cellular networks and telecommunications infrastructure. Then Linux. Then optical networking. Then the bottom fell out.
Ironically, the explosion of demand for 802.11-based wireless networks in recent years has not seen a run-up in associated stocks. The momentum players are played out; the battered individual investor no longer trusts an analyst's recommendation.
Still, we will see. Microsoft embraced wireless LAN technology in Windows XP. As component prices drop and security is strengthened, more and more networks will go in--at home and at work. People will buy cheap, heavy laptops that can be put away & out of sight at home, yet brought out to connect through broadband anywhere they are needed.
Tech stocks, anyone?
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