Ephemera

Thursday, October 16, 2008

The Apple computer I probably won't buy.


I've been on the fence for months now about whether or not to buy a new machine. Figured there would be some kind of price rollback on Apple's ridiculously over-priced machines. Sure enough, they announced it the other day $100 off. Laptops only. No mention of teh Imac I had my eye on.
Meanwhile, I'm getting used to Linux... just need to solve this little pesky problem with video. Will probably burn an image of the Gutsy Gibbon and do a fresh install on this laptop one more time. Maybe I don't even need a new machine. If that doesn't work, then I'll see how much processing power I can buy with my $1000. My bet? Can probably get an Intel quad core with dual 500g sata drives, 4 gb ram, plus Windows Vista Business, plus graphics card, dual monitor capabilities, etc.

Steve Jobs-- get serious! People are willing to pay a little more for your Apples, but this is a serious downturn, and businesses are looking for bargains. You have a great ad campaign, but you haven't closed the sale.

More prognostications

OK, I'm really having a vision of Obama taking the White House, especially after McCain's failure in the debate last night. (Nick said it was like watching Elmer Fudd trying to box with Bugs Bunny!)
Watch big pharma stocks and any ETFs with exposure to health insurance carriers sink relative to the broader market. I think it is starting to sink in that Obama will be our next president.

Wednesday, October 15, 2008

Roubini-damus

RGE - Bloomberg (October 14, 2008) Roubini Sees Worst Recession in 40 Years, Rally's End: "The economist said the recession will last 18 to 24 months, driving unemployment to 9 percent, and already depressed home prices will fall another 15 percent."

Roubini is a Nostradamus's Nostradamus.

Thursday, October 09, 2008

Black Friday: A One Act Play

Here's the scenario... Monday is a federal holiday, so quite a few people will get the day off, or will take a vacation day to stay home with the kids. Some of these folks will also take Friday off, to stretch that three day weekend into a four day weekend.

Mr. Dude: So have you seen the stock market lately?

Mrs. Dude: I don't understand it. I thought the big bailout thing was supposed to keep everything going while they figured this thing out.

Mr. Dude: It doesn't look like that's happening; the Dow dropped down to around 8500 yesterday. GM shares lost 33% of their value in one day.

Mrs. Dude: That's insane! Wait a minute... don't WE own a lot of those stocks in our mutual funds?

Mr. Dude: Well, I suppose so... because we picked those index funds ten years ago.

Mrs. Dude: So what's happening with our retirement money.

Mr. Dude: To be honest with you, I've avoided looking... also because they say we're supposed to be in it for the long haul... yadda, yadda yadda.

Mrs. Dude: Yeah, but I've also heard that some experts say if you're as close as retirement as we are, that we might need to have less stocks, because we wont' have as much time to make up a loss.

Mr. Dude: Hmm... well, maybe we'd better look.

[typing on keyboard]

Mr. Dude: Here it is.... The Edge of the Ledge Mutual Fund...

Mrs. Dude: Oh my god, is that right?

Mr. Dude: Wait a minute...

Mrs. Dude: That's $170,000 less than it was a couple summers ago when we were looking at it! And that doesn't even count all the money we've been putting in there since then!

Mr. Dude: Well...what do you think we should do? If we sell out now, we take the loss.

Mrs. Dude: If we don't sell out now, and it goes down more, we'll have even less money! Or none!
Do you think these guys really know what they're doing? They've never seen anything like this before. What if the company that runs this fund goes out of business like these other companies? What if the money just isn't there when we need it. How the hell are we going to retire?

Mr. Dude: Well... maybe we should take some out, and then if it looks like things are getting better, we can jump back in. I don't think we should take it all out... but we should probably do something.

Mrs. Dude: [Reaching for the phone] I think we need to take out the amount that we simply can't afford to lose if the bottom totally falls out. We've got to preserve a least that much. We can't afford to lose everything. Don't you think? We've got to save at least half... and if we wait to take action, it'll be worth even less. We don't want to be the last people trying to find the exit... this could really turn into a panic!

Mr. Dude: Well... I suppose we could take out half, put it into some sort of cash account, 6 month CDs or something... then we could always go back into stocks if things start looking a little more normal. We'd only lose the 6 months of appreciation, and the stock might still go up from there... but at least we'd have a little security...

Mrs. Dude: I think we should do it, then.

Mr. Dude: We don't have a lot of options. I don't think... If we were 30 or 40 years old, we could probably just ride this thing out...

Mrs. Dude: [starting to cry] I don't want to lose everything we've worked so hard for.

Mr. Dude: Don't worry, honey... we've got a plan. It may not be what we wanted, but we have a plan, and we're working that plan. We can work through this. I'm calling them right now. We're not going to lose everything. I'm calling right now. Everything is going to be fine. I'm calling.

Sort of Nostradamus

Evil Woodpecker: "Predictions from 9/25
1. Washington Mutual will fail this Friday.
2. The Fed will lower rates by 50 basis points BEFORE their next meeting.
3. Current stock market rally is a dead cat bounce. Look for the Dow to sink to 8,700 points in the next 12 months. Expect further dead cat bounce after rate reductions, then much deeper declines as investors lose confidence in government to manage the problems in the finance industry."

Well... my first 3 predictions came true. Sort of. I should have points deducted from my final score for guessing that it would take 12 months for the Dow to get down to 8,700 points. I also guessed that when the Dow got down around this point, it would mark the beginning of the recovery. Timing the end of a bear market, kind of like catching daggers... which is why I am not a day trader.

I would guess that the Dow is now trading at pretty low trailing P/E, historically. As of September 30, it was 15.68 when the DJIA was at 10,850.

So unless these companies have disastrous earnings, that ratio should be much lower.

It kind of hints at indiscriminate selling, which is a good thing if you still have decades left to figure out retirement. It's basically your favorite stocks going on sale.

Wednesday, October 08, 2008

Fed leads round of global rate cuts - Stocks & economy- msnbc.com

Fed leads round of global rate cuts - Stocks & economy- msnbc.com: "The Fed reduced its key rate from 2 percent to 1.5 percent. In Europe, which also has been hard hit by the financial crisis, the Bank of England cut its rate by half a point to 4.5 percent and the European Central Bank sliced its rate by half a point to 3.75 percent."

Tuesday, October 07, 2008

Bernanke opens door to Fed cutting rates - Economy in Turmoil- msnbc.com

Bernanke opens door to Fed cutting rates - Economy in Turmoil- msnbc.com: "WASHINGTON - Federal Reserve Chairman Ben Bernanke warned Tuesday that the financial crisis has not only darkened the country’s current economic performance but also could prolong the pain.

The Fed chief’s more gloomy assessment appeared to open the door wider to an interest rate cut on or before Oct. 28-29, the central bank’s next meeting, to brace the wobbly economy."

And then the Dow fell 500+ pts. Probably would have had a more bracing effect if he'd talked about inflation and talked about what his buddy over in the Treasury Department was doing to help the commercial paper market. IMHO

Monday, October 06, 2008

Inter-meeting rate cut in the offing?

Credit crunch continues as lending rates climb - MarketWatch: "'The probability of further Fed easing has increased and markets are now considering a 50 basis point inter-meeting rate cut' before the rate-setting Open Market Committee meets later this month, said economists at Danske Bank. 'While we do not rule out such action, we think more specific measures directly targeting the problems will prove more efficient.'"

Wednesday, October 01, 2008

Subway series in Chicago?

Is it possible we could see a White Sox Cubs World Series?
If the Cubs win, would this be a sign of the Apocalypse?

Terms

Remember what people called the First World War prior to the Second World War?

They called it the Great War.

What term do people use to refer to the economic depression that started in 1929?

That's right; they call it the Great Depression.

Think about it.