Friday, November 21, 2008

The Great Depression....

Guest Post: The Great Depression, as I remember

By Walter Stoiber

The Great Depression began on Thursday, Oct. 24th, 1929. It would become known as “Black Thursday,” and rightfully so. The stock market crashed, and a record 13 million shares were traded that day. Some of the larger banks tried to help by buying shares at above the quoted prices. It didn’t work. Several corporations suffering today — General Motors (GM), General Electric (GE), Sears (SHLD) — were in dire straits. Some companies’ stocks dropped 50%. After five days, banks began to close. Most depositors were left “holding the bag,” and an empty one at that!

We were an average blue-collar family in Altoona, Pa. My father worked at the silk mill, as a shipping clerk and later as a supervisor. As businesses in Altoona cut back and then closed entirely, the silk mill did too. My father had a backup career, giving piano lessons and playing in a five-piece band for weddings and other events. As the Depression got worse, though, those things were no longer affordable. He took a job as an insurance agent. But people didn’t have the money to buy more insurance.

I was in the sixth grade in 1929. I got a job at our grocery store, stocking shelves for 25 or 50 cents a day, plus a bag of penny candy. My sister, Charlotte, who was in the third grade, helped Mother with chores and meals and made her own doll clothes out of odds and ends. Mother was a great cook. She got vegetables from other families in our neighborhood and made soup. Our butcher would give us soup bones (leaving a little meat on it), free of charge. He remembered that we were good customers in good times.

We couldn’t go to the movies on Saturdays anymore. But we kids had no trouble finding fun things to do. We had a makeshift baseball diamond in the city park. There were eight or 10 of us, and not everyone had a glove. So we would just keep swapping. A ball lasted us a long time. When the cover came off, we would get black friction tape and wrap the ball with it. Eventually we would all have to contribute the pennies we had saved to buy a new ball.

We also had a favorite swimming hole about 10 miles away. We would ride there on our bicycles. Somehow everybody managed to have their own bike. My father’s friend had an old bike gathering dust in his basement, so he gave it to me. We had to work on it, but it lasted me a long time. We also made our own scooters. We’d get a wooden soap box from the grocery store, a three-foot piece of 2×4, and a pair of old roller skates. Soon we were set to go.

Things didn’t get easier for a long time, but we managed. My last two years in high school, I got two part time jobs — ushering at the State Theater, for 25 cents an hour, and delivering special-delivery letters and small packages on my bike for the Altoona Post Office. I was paid a percentage of the postage, and sometimes I made $4 on a weekend! When my father was no longer with us, we couldn’t afford the $35 a month to stay in our home. Luckily, we got an apartment across from the Dutch Kitchen, where my mother got a waitress job. My mother liked her job and made good tips. On a good day, she would make as much as $10.

We got through it. In 1932 Franklin D. Roosevelt was elected our 32nd president and brought with him a number of wonderful programs and signs of recovery. I graduated from high school in1935 and went to work as a meter reader for Penn Edison. Charlotte graduated three years later and got a job as a secretary. Things just seemed to get better as time went on.

So now it’s 2008. We’re now in the midst of another financial crisis — this one global — brought about presumably by “the powers that be” on Wall Street and in the upper echelons of the federal government. A classic display of selfishness, greed, and politics. I’m 91 years old, and I sure don’t want to see another Great Depression. But I wouldn’t part with the experience I had 80 years ago. I learned that we could do without things that we thought we had to have. I learned how to “stretch” a dollar. And I learned that the words on the back of the dollar bill, “In God We Trust,” have merit. Hoping and praying isn’t all we need to do, but it helps.

Walter Stoiber is my uncle and an amazingly healthy 91-year-old. He lives with his wife, Dorothy, in Boardman, Ohio, outside of Youngstown. Charlotte, his sister and my mother, died at 87 in January.

Really? How much worse can it get?

It seems like the current situation that's going on in the world is pretty bad, and they're saying it can get worse??

Its tough to say being someone who did not live through the great depression, but is it going to get that bad? It has seemed like all you have heard on the news over the past months has been bad news, or very pessimistic outloos on the economy, but there is always that one persn out of the group who is optimistic. If you are like me, you will probably take the side of the optimistic one because it makes you feel better about what's going on, even thought he or she may be grossly out numbered, and it makes no statistical sense to take their side, it makes you feel better. At least that's how it is for me, I like to try to make sense of everything optimistic and throw all the rules on statistics out the door and claim the pessimists are missing out on a great opportunity!

Here's an article from msn money.

Economists: US is in recession and will get worse

ANN ARBOR, Mich. (AP) - The U.S. economy is in a recession that will worsen until mid-2009, University of Michigan economists said Thursday in their annual national economic forecast.
They expect the recession to bottom out in the middle part of next year, but say the country will see only modest economic growth in 2010 with unemployment above 8 percent throughout that year.

They expect the nation to lose about 2.4 million jobs over the next 18 months.

Michigan economist Joan Crary characterized the recession as "moderately severe," but said she expects a stimulus package put in place early next year will keep it from becoming worse.

"We're not forecasting economic catastrophe," Crary said. "We expect the set of policies put in place will be successful."

Among the policies she expects to see are stimulus checks given to taxpayers to spur spending, more money for infrastructure improvements and state and local governments, loans for domestic automakers and extended unemployment benefits.

She warned that if steps aren't taken to spur the economy the recession would be worse.

Motor vehicles will continue to slide, from 16.1 million last year to 13.3 million this year and 12.2 million in 2009, the lowest number since 1983, she forecast. She expects sales to pick up to 13.6 million in 2010.

The Michigan economists expect to see a reduction in market share for the domestic automakers but said the forecast isn't built on the demise of any of them.

The forecast said inflation will drop from 4.2 percent this year to 1.3 percent next year before rising again to 2.6 percent in 2010. Falling oil prices will be responsible for some of that drop, with the forecast calling for prices to stabilize at under $60 a barrel in 2009.
It expects housing prices will fall 14 percent this year and 6 percent next year, with new housing starts dropping to a low of 836,000 next year and to improve slightly in 2010, but not to this year's level of 965,000 units.

Wednesday, November 19, 2008

Eddie Lampert

I don't like hearing this stuff about my man Eddie Lampert. I am, and have been ever since I first read about him, a big fan of Eddie Lampert. From reading of his start at Goldman, and then when he left to open his own hedge fund, to when he was kidnapped, up to current day Eddie. So to hear something like this about how poor his company is doing and how people do not like the stock makes me hope, or think that he has an underlying plan, I just have no idea what it could possibly be. He has not been known for being overly people freindly as he rarely gives out much information on his funds or it holdings.

This article was pulled from, and like I said I am hoping he has a master plan and it is not just that his company is slowly falling to its demise.

Whatever you do, don't buy Sears
Investor Daily: Betting on the retail sector these days isn't for the faint of heart. But here's one stock to avoid at all costs.

By Suzanne Kapner, writer
November 18, 2008: 11:50 AM ET

NEW YORK (Fortune) -- Investors who think shares of Sears Holdings are a bargain after plummeting 80% from their peak should think again.

That might sound like a no-brainer after retailers across the board - from Macy's to Best Buy - have been reporting dismal third quarter results amid one of the worst consumer spending downturns in decades. But there are reasons why Sears is likely to disappoint more than most when it reports earnings Dec. 2.

A big chunk of the Hoffman Estates, Ill.-based retailer's sales comes from appliances, tools and electronics - categories that have been decimated by the housing collapse. Sears and its sister retailer Kmart have long been getting clobbered by competitors like J.C. Penney and Wal-Mart. That drubbing is likely to get worse in an economic downturn.

What's more, Sears provides few clues between earnings reports, such as monthly sales figures or earnings guidance, to help analysts make accurate profit predictions. Analysts expect Sears to lose 50 cents a share in the third quarter ended Nov. 1 and earn $2.51 for the year. That compares with break-even for the year-ago quarter and $5.70 in earnings per share for fiscal 2007.

Credit Suisse analyst Gary Balter cut his 2008 earnings estimates last week, to $1.19 a share, but concedes that his revision may be too high.

Meanwhile, Richard Hastings, a consumer strategist at the investment bank Global Hunter Securities, says he's concerned that Sears' sales of big-ticket items were impacted in the third quarter "greater than is generally understood."

Another bearish sign: Hedge fund Pershing Square Capital, run by activist investor William Ackman, recently sold all but 500,000 shares of what had previously been a 6.7 million share stake in Sears.
Sears' stock, which traded above $190 back in April 2007, is now changing hands around $34. Some analysts say the shares have further to fall. Balter thinks the stock could trade as low as $20. At is current level, Sears' trailing price to earnings ratio, at 9.7, is more expensive than most of its major competitors, including J.C. Penney, Macy's and Kohl's.

"It's the most expensive stock we
cover," Balter said.

A years-long decline

Much of that premium is predicated on the expectation that Eddie Lampert, the billionaire hedge fund manager who controls Sears, will live up to his boy wonder status and magically turn Sears' lemons to lemonade.

The company owns valuable brands, including Kenmore appliances, Craftsmen tools and Lands End apparel, as well as a pile of real estate. But those assets are worth less than they were in November 2004, when Lampert, after rescuing Kmart from bankruptcy, used its shares to buy Sears, Roebuck & Co. and create what is now called Sears Holdings.

So what does the future hold for Sears, one of the oldest names in American retailing? Despite a brief revival in the 1990s, Sears long ago lost its way. The company's problems, including a lack of focus and eroding customer service, predate Lampert's involvement. But Sears' slow decline doesn't mean it can limp along indefinitely.

While Sears is sitting on a $1.3 billion cushion - the difference between the cash it brings in from operations and what it owes in rent and interest payments - that safety net is expected to shrink in coming years as sales continue to decline.
"Sears is about as badly positioned as anyone we cover," said Morgan Stanley analyst Gregory Melich.
Also key to its survival is maintaining the confidence of suppliers.

Electronics retailer Circuit City, which filed last week for Chapter 11 bankruptcy protection, was pushed to the edge when vendors stopped shipping goods. One important difference in Sears' case: collateral - essentially its inventory - is more than double its credit line, which should reassure vendors.
Sears spokesman Chris Brathwaite denies that the retailer is in dire straits. "Sears Holdings has consistently maintained a strong capital structure with more than adequate liquidity," he said. At the end of the second quarter, Sears had $1.5 billion in cash and a $4 billion revolving credit facility in place, which doesn't expire until 2010.

Still, it's not clear that Lampert wants Sears to survive. He has not made the usual store upgrades necessary to keep Sears competitive with peers, which suggests he is running the company for the cash it generates. Lampert has used some of the cash for buybacks, which typically boost a company's share price.

But you can only milk a cow for so long before it runs dry - one reason why investors should steer clear of this stock.

Tuesday, November 18, 2008

From WSJ

Maybe There Is an Upside to This Mess

The market has tumbled, the financial system is wobbling, and global economies likely are in a deep
But one big positive has emerged: The plunge in prices of all kinds of commodities, from oil and natural gas to steel and copper. These moves will ease some pressure on strapped consumers and will give a boost to a range of companies by reducing their costs and increasing demand for
some of their products.

Searching for stocks likely to be helped by tumbling commodity prices can be tricky, however, because the benefits can be offset by growing problems elsewhere. Companies in the gambling business, for instance, will be aided by falling oil prices as travel to casinos becomes cheaper. But rising unemployment, housing troubles and other issues plague their customers, even as some casinos deal with heavy debts, making these shares look risky.

Look for an Energy Lift

Analysts say the best move is to focus on companies that are helped by falling energy prices and are in relatively stable businesses -- ones that aren't dependent on consumer spending or other areas of weakness.
"Energy costs represent only one dimension to the business," notes Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Without evaluating their overall business environment, you could get caught with the right idea but the wrong company."

Last week, the Dow Jones Industrial Average was down 5%, leaving it down 36% so far this year.

The Nasdaq Composite index was down nearly 8%, bringing its 2008 drop to 43%.

Energy prices continued to plunge, as did other commodity prices. Oil, which closed at $57.04 on Friday, now is off more than 60% from its record close of $145.29 on July 3.
Falling energy prices hurt companies in the oil patch, of course. But many others rely on energy as a key input to make their products. These companies are seeing their own costs drop sharply.

One company likely to benefit: Pactiv, the maker of Hefty trash bags, plastic containers and other products such as plastic plates, cups and cutlery. Pactiv relies on polypropylene and polyethylene, both oil-based resins. Cash flow is impressive. The shares were selling Friday for a price-earnings multiple of about 16.
Pactiv's products are relatively stable, even in a global slowdown. During the 2000-2002 downturn, the stock climbed, a sign of its defensive nature; shares are basically flat from a year ago. Pactiv has raised prices on its products in recent months, a healthy sign.

The company's third-quarter results fell compared with a year ago, in part because energy prices soared earlier this year and its products became more costly to produce. But Chairman and Chief Executive Richard L. Wambold late last month said, "As we move into the fourth quarter, this situation will change as a result of our pricing actions in the third quarter, and [because of] resin-cost decreases, which are expected in the fourth quarter."

It's in the Bag

Pactiv is a "perfect example of a company that has benefited from lower crude prices," says Harris Private Bank's Mr. Ablin.

The falling costs of commodities such as resin, diesel and other raw materials also will help consumer-products maker Clorox. Meanwhile, about one-third of Goodyear Tire & Rubber's costs of goods sold are products derived from oil. While the company could be hurt by the continuing troubles of the U.S. auto makers, sales of replacement tires -- 80% of Goodyear's business -- are tied to miles driven, which should rebound if gasoline prices fall further.
Airlines benefit from lower oil prices, and many investors rush into these shares when crude drops. These companies added fees over the summer to compensate for the higher energy costs they were dealing with at the time. Now that fuel has fallen, many carriers have simply incorporated their former fuel surcharges into ticket prices, which could lead to profits. Shares of AMR, parent of American Airlines, have almost doubled since mid-July. But airlines have deep difficulties, such as fierce competition and heavy employee-pension costs, making the area highly risky.

By contrast, companies that cater to the aerospace industry, which includes both commercial and military business, appear more attractive, according to some investors. Precision Castparts, which makes rivets and metal parts for aircraft, as well as fasteners for automobiles, could be a beneficiary of any improved airline health.

Precision shares have fallen 60% so far this year, but as the outlook for its customers improves, so will Precision's. It also will be helped by falling metal prices. The stock trades at about 12 times its expected profits for the next year, a relatively attractive multiple. An industrial-gas-turbine business is growing, even as sales of fasteners to auto makers slow. Most analysts have a "buy" rating on the stock.

Flying Higher?

Aircraft-component manufacturer TransDigm Group, down about 40% in the year to date, is trading at a P/E ratio of about 11. The company, which makes ignition systems, gear pumps, cockpit security devices and other components for commercial and military airplanes, recently authorized a stock-buyback plan, a healthy sign.
Defense spending could fall in the Obama administration, but some analysts say those concerns are overstated (see Barron's Insight).
Dean Machado, managing partner of New York hedge fund Akita Capital, says he is a fan of BE Aerospace, a maker of aircraft interiors. Its shares are down about 84% in the year to date, and it recently cut its earnings expectations for next year. But the stock now trades for just four times these estimates, getting Mr. Machado excited.

"While energy isn't a major input, the company is a major supplier to airlines and aerospace, and to the extent that airlines now are healthier ... BE shares should benefit," he says.

Monday, November 17, 2008

Article from another great blog

Stockmanmarc wrote...

The Dhando Investor: Mohnish Pabrai
For those of you that are not familiar with Mohnish Pabrai, he is a devout disciple on the teachings by Warren Buffett and Ben Graham. Mohnish runs a fund identical to Warren Buffett's original Buffett Partnership which was the predecessor of Berkshire Hathaway(BRKA,BRKB). Pabrai wrote a book about a year ago titled the Dhando Investor. The word Dhando which is pronounced dhun-doe is a Gujarati(a state in India) word. Dhan comes from the Sanskrit root word Dhana meaning wealth. Dhan-dho, literally translated, means "endeavors to create wealth".

Pabrai is a focus investor usually holding about 12-18 stocks in his portfolio. Pabrai likes to put no more than about 10% in each stock. Currently Pabrai holds about 16 stocks in his portfolio with about 320 million under management. Fairfax Financial(FFH), Harvest Natural(HNR), and Sears Holdings(SHLD) represent his 3 top holdings. The current 13F filings show that Pabrai increased his holdings by 52% in Wellcare(WCG) while selling most of his position in Jackson Hewitt(JTX).

For those of you that have not read the Dhando Investor, you should, it is simple to understand and makes a lot of sense.

Thursday, November 13, 2008

Values in the market?

Its tough to decide what stocks are values or what stocks you'll keep dollar cost averging down to zero. Check out this Forbes slide show and see some that they think are selling for some low prices...

Tuesday, November 11, 2008

Investing for tough times

7 investing themes for tough times
Investor Daily: Here's where to find the few stocks that could beat the bear market.

NEW YORK (Fortune) -- As the bear market becomes situation normal, successful investing has become more a matter of "my stocks are down less than your stocks." But should it be? The old adage is that any fool can make money in a bull market and we saw that writ large over the past couple of years. Making money in today's market takes real skill. The question really then is what kind of stocks could possibly go up in this market?

Well, first of all not many. Or at least not many over the past couple of months. Only about 2% of U.S. stocks are trading above their 200-day moving average, which in plain English means that some 98% of all stocks sell for below their average trading price year-to-date. (Next to none are trading at their 52-week highs, by the way.) So stocks are beaten down, which means they could be a bargain, but they could also fall lower. The frustrating point is that SOME stocks will go up over the next year; we just don't know which ones.

To help narrow down the search, I've come up with some investing brain food. Themes that might help you find that select group of stocks that go up.

BE OBAMA-FRIENDLY: A recent Bloomberg article tapped into bullishness about the president-elect's position on compressed natural gas as a source of automobile fuel. That moved stocks like Chesapeake Energy (CHK, Fortune 500), Devon Energy (DVN, Fortune 500) and XTO Energy (XTO, Fortune 500).

TAKEOVER BAIT: There will still be mergers. In fact bear markets can spur this activity. In tech, giants like Oracle (ORCL, Fortune 500) and Cisco (CSCO, Fortune 500) are known to be acquisitive during such times - i.e. take a look at smaller software and networking companies. (And don't forget Yahoo (YHOO, Fortune 500)!) Banks will also be bought out, but that is a most dangerous game. Energy too: Chesapeake (see above) has been mentioned as a takeover candidate. You didn't want to own these stocks on the way down, but now the time may be ripe.

THEORY OF RELATIVITY: This is all about not having to run faster than the bear, just running faster than your fellow hiker. (Ouch!) Time Warner (TWX, Fortune 500) - yes my parent company - recently announced third-quarter earnings that were decidedly blah, but here's how the AP saw it: "Time Warner 3Q profits beat expectations." And so TWX stock is up a smidge over the past ten days (I'm using that period because it includes trading days before the announcement whereby investors may have anticipated the news) while the S&P 500 and competitor Disney (DIS, Fortune 500) is down. Of course that is a small victory for long-suffering TWX shareholders, but you get my point about beating expectations.

BUYBACKS: Yes we know this can be a false promise, but with lower stock prices this strategy might actually make sense. An example here would be US Cellular parent Telephone and Data Systems (TDS, Fortune 500) announcing a $250 million buyback. Not huge but enough perhaps. That stock has been up recently.

DIVIDENDS ARE YOUR FRIEND: Cash is king in this environment as Fortune's Shawn Tully recently wrote. (Why do I always confuse Shawn with Cary Grant?) I don't think that it's too late to buy stocks after companies announce dividend increases, by the way, because in this environment you can see investors moving more and more to dividend payers. Check out Questar (STR), Emerson Electric (EMR, Fortune 500) and even Vornado (VNO) if you can imagine.

FRUGALITY: As in look for companies that are cutting costs, or even scaling down. But be careful here. Look at this story: "Investors send Genco Shipping shares higher after it drops orders for six ships, freeing up cash." Only problem is the market changed its mind about the move and soon sent Genco southbound. (Oh. Never mind.)

EARNINGS: Remember some universal truths still apply. John Eade, who is the CEO and director of research at Argus Research, says this: "What makes stocks go up, consistently across the board, in any kind of market, are growing earnings. We've been in a market environment for five quarters where overall, corporate earnings have been falling and [we're] looking ahead toward lower earnings in 2009."

Is there any hope John? "The areas where our analysts are actually seeing some strength would be healthcare. They have been increasing their estimates for pharmaceuticals, biotech and medical devices." What names? Eade says companies like Baxter International (BAX, Fortune 500), Abbott Labs (ABT, Fortune 500), Schering-Plough (SGP, Fortune 500), and Johnson & Johnson (JNJ, Fortune 500). The other area is in for-profit education. "I guess people are losing their jobs and thinking it's going to be a while before they get a job. They're going back to school and taking courses at traditional colleges and schools but also these for-profit universities." Here Eade points to ITT Educational Services (ESI) and Corinthian Colleges (COCO). Makes sense, right?

Again, some stocks will be winners. Finding them is the trick. Let's hope by this time next year things are looking up.

Friday, November 7, 2008

Obama is having an economic strategy meeting today

Apparently Barack Obama is having a meeting today to figure out the strategic plans to fix our economy. According to CNBC the group is called Transition Economic Advisory Board, TEAB. The guys who are on this board all have pretty good track records of success and it seems likely they could help our economy. Members of the group are former Fed Reserve Chairman Paul Volcker, former Treasury secretary Robert Rubin, Google Chairman Eric Schmidt and of course, the infamous Warren Buffett.

I don't know a ton about all of them, but I do know that Robert Rubin and Warren Buffett are probably two of the best guys to have on a board like that, so I wish them the best of luck in fixing our nations problems.
Sent from my Verizon Wireless BlackBerry

Flash Back - Article from 2005

Greed on Wall Street
The Rise and Fall of Tyco's Dennis Kozlowski

Nov. 11, 2005

This fall's art season brought a gathering of multimillionaires to New York's famed auction houses, where connoisseurs competed for the latest
must-have works of art.

"It's a big night for money," the actor Steve Martin said as he mixed into the crowd heading into Christie's at Rockefeller Center for the evening's auction of postwar and contemporary art.

The bidding was fast and furious, with works by Warhol, DeKooning and Lichtenstein changing hands for tens of millions of dollars.

"It's amazing. It's like grand opera. You have egos fighting other egos," said Brett Gorvy, international co-head of the Post-War and Contemporary Art Collection for Christie's in New York.

The night's star was Homage to Matisse by Mark Rothko, which set a new record when it sold for $22.4 million.

One Multimillionaire Missing from the Crowd

Yet, while the auction houses filled with collectors, the face of one multimillionaire art aficionado was missing from the scene. His name is Dennis Kozlowski, and his attempts to become part of the world of wealth and prestige led to his downfall.

Today Kozlowski, the former chief of Tyco, is known as New York State inmate #05A4820.

"Greed is one of the seven deadly sins," reminds author Tom Wolfe, whose novel "Bonfire of the Vanities" profiled the men who considered themselves "Masters of the Universe."
"If you feel you are a master of the universe, then a lot of rules just don't apply," he says.

That appears to have been the mindset of Kozlowski. Earlier this year, he was convicted of stealing hundreds of millions of dollars from the company he ran to finance a worldwide spending spree.
"The airplanes, the cars, the courtiers, the chefs, it really was something that you would have expected to see at Louis XIV's court at Versailles," described author James Stewart, a contributor to the New Yorker, who chronicled Kozlowski's rise and fall in the world of the rich and the greedy.

Kozlowski wanted to be a part of that exclusive world. Indeed, he "felt he needed to be a part of it in order to take his place among the ranks of the corporate chieftains that he thought he deserved to be compared to," Stewart explained.

As the head of Tyco International, Kozlowski became known as the country's most aggressive CEO as he made millions for himself and the company.

"He was entitled to draw a very large salary legitimately, and yet he still decided well, that was not enough," Stewart continued. "He first began cutting corners and then cutting more than corners, and then just going full tilt into pretty much whatever he could get his hands on to the tune of millions and millions and millions of dollars."

Kozlowski's downfall began with art, in particular his failure to pay the New York State sales tax on several multimillion-dollar paintings.

"If we had not asked the question, what about the taxes, that would have ended the investigation," John Moscow, the assistant district attorney who discovered Kozlowski's failure to pay the sales tax, recounted.

"If you can afford the paintings, you should be able to afford the tax," he said of the taxes, which totaled more than $1 million.

Investigation Shows Life of Extravagance

Moscow's investigation slowly began to reveal how Kozlowski, the son of a New Jersey policeman, came to afford his grand lifestyle.

He kept homes in Nantucket and Boca Raton, Fla., in addition to his lavishly decorated Fifth Avenue apartment in Manhattan containing a $6,000 shower curtain, a $15,000 umbrella stand and almost half a million dollars in draperies and 17th-century antiques, all of which were bought with company money.

He also bought the famed sailing yacht Endeavor with his own money and hired a full-time crew of nine to help maintain it.

"Baby, if you've got it, flaunt it," said Wolfe.

"I think people in many cases are dying to flaunt it. If you're 59 and you've made a fortune, and you're still not attractive to women because you can't explain to them what you do, and you can't go around the beach with a sign hanging around your neck saying 'Financial Giant,' you have to call attention to yourself," Wolfe said.

And Kozlowski did. To celebrate his second wife's 40th birthday, Kozlowski rented a five-star resort on the Italian island of Sardinia. On a videotape of the party, later played at his criminal trial, waiters in togas greeted guests while Jimmy Buffett and a band flown in from Nantucket serenaded them. A life-size cake in the image of his wife had breasts made of icing that later exploded. Vodka was served out of an ice sculpture of Michelangelo's David.
"He was nouveau riche. No question about it. Old money would not be throwing that kind of party in Sardinia," New Yorker contributor Stewart said.

"That was a dreadful waste of money," assistant district attorney Moscow agreed. "He certainly was willing to spend other people's money at an incredible rate for himself -- we call that stealing."
The affair of Kozlowski capped an era of unchecked greed in corporate America that began in the 1980s and was celebrated in the famed movie "Wall Street." Since then, the country has watched several multimillionaires, from Bernard Ebbers and Scott Sullivan of MCI WorldCom to Kenneth Lay of Enron, be asked to explain their avaricious behavior.

Sent from my Verizon Wireless BlackBerry

Thursday, November 6, 2008

Took this from - wanted to give everyone some more information on the President Elect

Obama’s 10 Big Challenges

The president-elect faces a recession, a revamping of the world’s financial system and two wars -- just for starters.

President-elect Barack Obama won’t have much time to savor his historic victory as the 44th president of the United States. It may be an exaggeration to say that becoming the first African-American president of the United States was easy compared with what comes next, but there’s much truth in it.

That’s why Obama and his aides have been quietly planning the transition and the first 100 days, hoping to use the superb organizational skills that helped win the election to get a new administration up and running in record time.

Expect the president-elect to move quickly on several fronts. In the next several days, he’ll reach out to reassure Republicans, independents and those Democrats who didn’t vote for him. He’ll move to restore public confidence and signal his intentions in Iraq and Afghanistan. The freshness of his election will probably boost optimism among the huge number of Americans eager for change, and Obama will try to channel that into a mandate for many of the things he wants to do.

Mandates are easier claimed than realized, however, even with the large majorities that Democrats will have in the House and Senate. Obama will find that out when he tries to tackle the 10 big challenges he’ll face first.

1. Naming his economic, foreign policy and defense and security teams. He’ll move on this very soon, perhaps within days. The aim is to send a message to the markets and to foreign leaders that a smooth transition -- even if it brings a host of policy changes -- is coming.

2. The economy. The economy will dominate Obama’s first year, and maybe his entire term. He’ll start to put his imprint on the issue within days by urging Congress to pass a stimulus bill in a lame-duck session in November. Obama has called for another round of rebates, aid to states, an extension of unemployment benefits, new spending for roads and other infrastructure needs and a new tax credit for domestic hiring. The president-elect will have to decide how far to go in pushing for what he wants, even before taking office, and how much to compromise with Republicans, who favor a smaller package.

3. Financial market fix. Obama’s economic team will get involved quickly with the implementation of the $700-billion debt rescue plan. Treasury Secretary Henry Paulson has said he wants to involve officials of the new administration in the debt rescue effort as soon as possible. Obama supports giving the Treasury Department and the Federal Deposit Insurance Corp. wide latitude to move rapidly where needed to save teetering institutions and promote credit lending. The unprecedented government intervention will be a major headache for months, if not years.

4. Economic summits. President Bush will consult with Obama on plans for the world economic summit on Nov. 15. The aim of the meeting is to set goals for a new worldwide financial regulatory framework, and foreign leaders will want to be sure that Obama and Bush are on the same track. The meeting will bring to Washington two dozen world leaders, many of whom may get a chance to meet privately with the president-elect.

5. Naming remaining Cabinet. Immediately after naming his economic and national security teams, Obama will get to work on the rest of the Cabinet. His transition team has already narrowed the list of potential picks, and relatively early decisions are likely. He’ll name some Republicans to show he’s serious about wanting to end the partisan divides that infect Washington. All in all, Obama has about 5000 political appointees to name, as well as ambassadors. About one in five requires Senate confirmation, a process that takes time.

6. Iraq and Afghanistan. Obama will meet soon with military commanders and the joint chiefs of staff to plan an orderly reduction of troops from Iraq and an increase of troops in Afghanistan. General timelines will be mentioned, but no firm deadlines will be set. The U.S. will have a significant presence in Iraq for a few years yet.

7. Regulatory environment. Obama will try to reverse many late Bush initiatives and then set to work on several changes aimed at tightening regulations at the Securities and Exchange Commission for investment banks, hedge funds and credit rating firms.

8. Setting a legislative agenda. Obama’s first challenge will be to unify Democrats behind his agenda, rather than be pulled along by congressional leaders, who have a long list of pent-up priorities. Obama will have to decide whether to move quickly on major issues such as health care, climate change, energy and tax plans or aim lower initially and get some legislative wins under his belt on less controversial matters such as children’s health care, stem cell research and a new federal aviation law. Best bet is that Obama will try to set a bold agenda, but move cautiously to rack up some early wins. Republicans will want to cooperate to some extent rather than risk getting tagged as obstructionists, but they will stick together and block some moves, lest they appear irrelevant to their supporters.

9. Dealing with the deficit. It will haunt his domestic plans, requiring him to scale back on investments in green technology research, student loan assistance and possibly a middle class tax cut. He won’t scrap his ideas, but some will be pared back and delayed. It’s possible a staggering $1-trillion deficit will be on the books next year, due to the financial and housing market rescue.

10. Foreign relations. Obama is unlikely to start with a flurry of foreign trips, but he will need to establish good initial communications and relations as president-elect with allies the world over. He’ll turn early to the Palestinian issue, as well as with the threat of a nuclear Iran.

I read about this the other day and it is a pretty cool program, its worth checking out, it only takes a few minutes and can save you some money. I used it to check my cell phone plan and it was pretty impressive how it worked. It checked all the other companies around as well as checked all their plans and took into consideration the service you can get in the particular area that you use your phone most. Look into it, it could be worthwhile for you...

Wednesday, November 5, 2008

How will the election effect investments, from Fortune

Red stocks, blue stocks
Investor Daily: Here's how to choose a presidential portfolio.

NEW YORK (Fortune) -- Does your faith in your candidate extend to your investment portfolio? If so, this column is for you.

While Barack Obama, John McCain and their respective supporters may argue over who would be a better president for the stock market, there are specific investments for which no debate is necessary.

The candidates' policy proposals so favor or so disfavor particular companies and industries that the outcome of the election (assuming we have a clear winner) is almost certain to have an impact when markets open Wednesday - though given the country's fiscal and economic condition, how long any victory glow lasts is another question entirely.

Let's start with the blue stocks - investments most likely to benefit from an Obama win and from Democratic gains in the House and Senate.

PowerShares WilderHill Clean Energy Portfolio. The case for buying this exchange traded fund, which owns shares in alternative energy companies, is simple. Obama has said that his top priority as president will be ending U.S. dependence on Middle Eastern oil, and that the path to freedom lies in investing $150 billion over the next 10 years in renewable energy. He also wants to require utilities to generate 10% of their electricity from renewable sources.

All of this adds up to a potential bonanza for the solar, wind, biofuel and other companies included in the PowerShares WilderHill (PBW) ETF. Best of all you'd be buying low: the ETF's price has sunk from $29 to $10 a share since last December.
Jacobs Engineering. Jacobs is another buy-low, blue-stock opportunity. Obama's economic stimulus plan calls for the creation of a "National Infrastructure Reinvestment Bank" that would spend $60 billion over 10 years on roads, bridges, ports, airports and rail lines.

This would a boon to Jacobs (JEC)a contract engineering firm that specializes in municipal infrastructure. The stock is down 63% this year due to concerns about whether in a weakening economy states and cities can afford new infrastructure projects.
Municipal Bonds. This isn't a stock pick, but munis are a no-brainer for anyone in a high tax bracket. Obama has made no bones about the fact that he intends to raise income taxes on anyone earning more than $250,000 a year, and with Democrats controlling both houses of Congress, he's likely to get his way. That would make munis' tax-exempt income more valuable.

Plus, munis are great value even at today's tax rates. Munis normally yield less than U.S. Treasury bonds, but today the yield on a triple-A-rated 10-year municipal bonds is 4.48% versus 4.0% for comparable Treasuries, according to Bloomberg.
Our red stocks won't so much benefit from a McCain administration as much as they will gain in the absence of an Obama administration.
Take utility stocks, for instance. One reason utilities are popular is their high dividend yields. Chuck Gabriel, a veteran Washington analyst now with Capital Alpha Partners, thinks the utility sector has been depressed by the likelihood of Obama rolling back President Bush's 2002 dividend tax cut. (Dividends used to be taxed as regular income; now they're taxed at 15%.) Thus a McCain upset should lead to a big rally in utility stocks.
Our favorite way to play this: Utilities Select Sector SPDR (XLU),an ETF with 4.1% dividend yield.

Transocean. The conventional wisdom in Washington is that Obama would revive at least a partial ban on offshore drilling in the Outer Continental Shelf were he elected, whereas McCain "would push very hard for more drilling," says Dan Clifton, Washington analyst for Strategas Group. That's good news for the offshore drillers. Transocean (RIG)in particular is incredibly cheap, trading at only five times projected 2009 earnings.

Sunday, November 2, 2008

Stressed about the Economy?

An article I read, though it is from about a month ago, is probably still true or maybe the percentages have gotten higher. 80% of people in the US are stressed about their personal finances and the economy, says the American Psychological Association. Apparently most people are drawn to counseling because of relationship problems with marriage and children, depression and anxiety, but now, 8 out 10 people that go see doctors for counseling are there for reasons related to personal finance.

Thats sick that so many people lay sleepless at night (says the article) about money. I was talking with my Grandfather last Thanksgiving and he was going on a rant about how when he was a kid they would work and earn a few cents and they would go to the bank and deposit it into their accounts and mark it up in their ledger, and everyone of his friends had an account like that, that they took care of and followed closely with their money. I don't know what he was getting at really, if he was saying that the internet might have something to do with the change or what, but I started thinking about it, and I think he may have meant that at such a young age he and all of his friends were caring after their own money and not having the parents watch after it, therefore instilling a strong sense of what a dollar is worth at a young age.

I can see that...I know people who up through college did not manage their personal finances, and even myself, I don't think that I manage my personal finances well enough. I had a checking account opened as soon as I got my first job, and I had learned to keep the ledger and knew how to write checks, go to the ATM and make deposits. I still think though, even as of right now, I don't budget well, or stick to budgets well, and I don't watch money as closely as I should and maybe if I had grown up in my Grandfathers time it would be different...who knows.

Think about it now though, if everyone paid a bit closer attention to everything thats been going on, maybe they wouldnt have to be stressed. A lot of baby boomers are most likely stressed out about this financial crisis right now as they are closing in on retirement and they have just lost 30 or more percent of their retirement nest egg. Though, Bogle, the Vanguard founder, says that if they had listened to his investment philosophies and used target retirement accounts that automatically adjust for you based on your retirement year, they would not have gotten hit hard at all because as you get closer to retirement he would have had your investments switch to more conservative investments, such as cash, bonds, etc...

Who knows the right way to invest, it all depends on what you are personally comfortable with, but what is money worth if you can even sleep well at night, and you are constantly stressed out? Though I am younger than these baby boomer's my advice to anyone is to pay yourself first, put money aside to an emergency fund that is in a high yield savings account, then consistently put money away into investment accounts (IRA's, 401k's, and brokerage accounts) to invest for your future. I feel that if you follow those simple instructions always put some money away for yourself, and choose investments that are right for you as well as right for your retirement time line, that should alleviate a lot of stress. Start as early as you can, and put as much money as you feel comfortable doing, it'll start to add up quickly and it will feel great and make you want to do it more.

Also, the best thing you can do is to educate yourself on personal finances, investments and the economy. There are plenty of magazines out there, books, and websites that can help you learn so that you can take control of your money as opposed to have someone else constantly take some of your earnings every money in investment management fees. And hey, be real with yourself, if you don't have the time to master your investments, leave it to someone else then, you dont want to risk losing that nest egg of yours.