Thursday, March 12, 2009

Mr. Obama’s bubbles..

Do you remember the huge crowds going to see Mr. Obama deliver his campaign speeches? I do.. do you think those were ‘bubbles’? Do you remember how much money Mr. Obama raised online? I do.. Do you think that was another ‘bubble’?

Has Mr. Obama become afraid of bubbles all of sudden?.. Remember when they wanted his blackberry? His answer was that he didn’t want to live in a ‘bubble.’
So far so good.. bubbles everywhere.. so why would Mr. Obama be afraid of creating another bubble in the economy? Or the stock markets?

Mr. Obama, Sir, we are soooo far from being in a ‘bubble’ that you cannot believe it. With assets being at the lowest levels in years, with home values going down every day, with the stocks of the major banks selling for pennies on the dollar, with 401k’s and college endowments dropping 40-50%.. should I keep going? The entire world lost nearly 50% in wealth over last year.. No bubbles here Sir. So why even bring that up in today’s speech?
By the way, China has been growing at over 10% per year for decades – they didn’t mind the ‘bubble’ don’t be afraid of bubbles Mr. President. Go ahead and create one, and then create another one and another and another. WE LOVE BUBBLES, SIR! Just make sure that they come one after another, if you get my drift here.. or make sure that the entire world comes to invest in the US stock markets because they can make money taht way! Not just bonds Sir, actual stocks. Then you can start talking about actually balancing the budget rather than mortgaging the future of our kids because of your administration inability to balance the budget as they are afraid of ‘bubbles’. When you go in front of the world and ask for $ trillions it really takes something to turn around and lecture us about ‘bubbles’..
Go ahead, Mr. Obama, show us bubbles, lots and lots and lots of bubbles. WE LOVE BUBBLES!!

Thursday, March 5, 2009

Words do matter Mr. President – remember that?

We all remember the debate around the words vs. experience issue that Mr. Obama had during the campaign. He kept telling us that ‘words do matter’ .. and he continued to be very carefully crafting words for all of us.. and his stock continued to rise.. For a person who understands the value of words, I have to say, this Obama administration is so negligent with the way it is using words that attack ‘our’ stock markets. I mean, everything that the Obama people who are in charge of touching anything to do with money starts and ends with how bad everything is and how bad everything is going to get. I mean, if things were extraordinarily good and the continuous attacks with ‘words’ of our stock markets would bring everything down. ENOUGH ALREADY!!
Have you seen the markets, what we would consider good stocks, collapsing 10-20-30% in a day? The attacks on our stock markets continue at an extraordinary pace, unprecedented in recent history.
Things may be bad.. but Mr. Geithner and company (i.e., the Obama gang), when you go to Congress to borrow the huge amount of money you are about to borrow have the decency to end on a positive note, have the decency to tell people that whatever was wrong is getting fixed and that the markets do not need to worry anymore..
We may be in a recession, we may be about to borrow huge amounts of money, we may be going to major social transformations as a society.. but when it comes to words, Mr. Obama, words do matter!
If you were careful with words for your own benefit during the political campaign, there is no reason for your administration to continue the negative attacks on our economy. As you can see, it brings the stock markets down indiscriminately.
Enough is enough, Mr. President order your troops to be careful with the way they use ‘words’!!

Wednesday, March 4, 2009

We need wealth creation, we love wealth creation!

When the president expresses confidence in the stock markets we all listen..It does matter when you hear the administration not only asking for money but also showing us some hope for all that money.
Let us be clear about this: we need strong stock markets as soon as possible! Forget the politics, forget whatever budget fights we are going to see.. without strong stock markets other countries (China anyone?) will seize the leadership. China is not alone in focusing on its internal market so it doesn’t rely on exports as much in the future. A lot of countries have just realized that the most affluent consumer in the world, the American consumer, might not be able to spend anymore.
Mr. President, we’ve heard encouraging words about the stock markets the other day. Don’t stop now! Keep going! As wealth creation is the main driver out of this mess.. Wealth is the magic of America and without it there isn’t a lot of anything else.. We need wealth creation, we love wealth creation and we all must work together to create wealth in America. Wealth is something that everyone around the world dreams of, but America has the best engines in place to create it at faster speed.
I know that the financial markets have failed us this time around. But let us not desert the most important instrument we have: wealth creation.
It is never too early to start creating wealth. We’ve seen a timid start the other day, but Mr. President, keep going! We might just see that by creating wealth we can start again to hope for a ‘balanced budget’..
Mr. President, tell us more about opportunity in the stock markets.
We need wealth creation, we love wealth creation!

Tuesday, March 3, 2009

Is it time to bring in a Wall Street guru?

Where is the ‘confidence’ of this administration?
There is long term strategy and there is tactics. Stock market is about both. The problem this new administration doesn’t get is a simple math problem: you can’t borrow your way out of problems. Sooner or later you have to create ‘wealth.’ The numbers these people are throwing around are staggering. Yet, none of them is capable to instill the confidence in the markets that they are in control of the situation, and that they will turn this thing around. They don’t seem to walk the walk..On the one hand they keep saying we have to borrow these huge amounts of monies.. on the other hand, they claim that they can’t monitor the stock market on a daily basis. Go figure.. where do you guys think that money is coming from?

Why can't you keep an eye on the market? It is time to bring in a Wall Street guru. You have to keep an eye on the market, because you don’t live in a lab.
The math that most investors know by now is pretty simple: if the stock goes down from $10/share to $1/share that is a 90% drop. But to bring it back to $10/share the market would need a 900% jump.
So take care of the long-term strategy while taking care of the stock market. Stop pretending that things will take care of themselves.. and Start giving this stock market the confidence that you are doing the right thing. The markets, along with all its stake holders are demanding it.

Monday, March 2, 2009

A secular change in asset valuation

What’s going on with the stock market? For one thing, the master of the spoken word, Mr. Obama’s refuse to say the words ‘wealth’ or ‘balanced budget’ alongside the words ‘investments’ and ‘change.’
However, I believe that there is something else going on: a secular change in asset valuation. What does it mean? It simply means that what we used to value at healthy multiples will not be like that going forward. After all, the entire financial system that supported the old valuation system has just collapsed. So who is there to credibly support that the old-type assets deserve the multiples of the past? Not very many players.
We are witnessing a major overhaul of the asset valuation system. It is happening right here right now. Will there be survivors? Yes. But the industries of the 20th century are about to fundamentally change.
If anything, there are new expense items that will show up on future balance sheets: carbon credits, market adjustments to financial assets, transportation costs, new taxes per a new tax code, and more.
More, the new administration looks to recognize that we are part of a global economy. What the direct financial implications of that recognition are we still have to see. But we can suspect that foreign vs/ local labor costs will change, foreign vs. local manufacturing will change, tax incentives for foreign vs. local operations will change and will be tariffs.
While the stock market overall will rebound (eventually), we should not expect that the winners of the past will be the winners of the future – no matter how low the stock prices seem to be today.
The Obama administration made it very clear that change would be coming. And change is coming as we speak. And it alters the asset value in ways that we have not seen in generations..