The stupidity in congress continues. The latest round of fiscal recklessness was in the form of a new House Bill (now approved!) to hand out $4,500 in free cash to anyone who owns a scrap of metal they call a car.
The bill (H.R. 1300) is formally called the “Consumer Assistance to Recycle and Save Act”, but more commonly referred to as “Cash for Clunkers”. The full text of the bill can be found at this link.
Ohio democrat Betty Sutton is the sponsor of the bill. But “sponsor” is a very loose term, because Betty Sutton obviously has no idea how to pay for it. The $4 billion cost allocation for the bill will come entirely from begging the Chinese government to buy more of our outsized debt. Way to go, Betty. I’m sure your fellow Americans will be proud to know that paying their neighbors mortgage is not nearly as fun as paying their mortgage *AND* buying them a new car!
Jim Rogers, serial author of A Bull in China, Hot Commodities, and Adventure Capitalist, recently gave an entertaining interview with the Economic Times of India. Rogers is known for a being a market bear and his investment themes usually center on rising commodities and falling dollars. This interview was no different, and he remarked that the S&P could easily hit 50,000 and the Dow could hit 1,000,000 – but in terms of a useless currency he adds.
His humorous (not to him) advice to would be money managers is to do something real – “Become a farmer”.
If I am correct, the financial community is not going to be a great place to be in for the next 30 years. We have many periods in history when financial people were in charge, we had many periods when people who produced real goods were in charge — miners, farmers, etc.
The world, in my view, is changing and is shifting away from the financial types to producers of real goods, and this is going to last for several decades as it always has…
To read more on Jim Rogers view of the world, pick up his best book shown below. Just click to buy.
Adventure Capitalist: The Ultimate Road Trip by Jim Rogers
For a quick, yet very insightful view of fundamental analysis, look no further than Michael Thomsett’s book Getting Started in Fundamental Analysis. It’s not quite the in depth (and boring if you ask me) view that Benjamen Graham presents, but it does give the beginner and intermediate trader a great snapshot on the most important principals. The book is available in paperback, and is a quick read, but can also occupy a permanent spot on your bookshelf.
Here is one of my favorite sections of the book on Off-Balance Sheet Liabilities:
A very troubling final observation about balance sheet ratios concerns off-balance sheet liabilities. Most of the trends you develop and track will be affected by obligations that do not show up.
Among the many tricks used by executives in those corporations caught deceiving stockholders in the past, was one in which off-balance sheet liabilities were carried, at times in the billions of dollars. As a consequence, the value of the company and its stock could be vastly inflated….
The lack of disclosure may easily distort the true picture, just as increases in long-term debt may distort a seemingly positive trend in the current ratio. The solution is to develop an ability to understand footnotes, and to adjust your trend analysis so that your trends and ratios are complete and realistic.
For a more detailed view of the book’s contents or to purchase the book, just click the book below.
Getting Started in Fundamental Analysis by Michael C. Thomsett
Like many cable consumers in the Great Northwest, I recently switched from Comcast cable and Internet to the Verizon offering. It’s not because I like Verizon FIOS better or think it is a better technology. In fact, at the time I switched I still had bad feelings about Verizon in general. But this was mainly due to all the increased traffic they have caused in the last year from ripping up the roads in my neighborhood for the new fiber optic cables.
The reason I switched was simple. My Comcast bill was averaging over $140 per month and Verizon FIOS had a very similar package for only $79 per month. Prior to switching, I had called Comcast and asked them to match the FIOS price; their response was “Sorry, but No”.
It’s been a few months since switching, and as expected, the service offerings and quality are nearly identical. But I do get a surprise mailing from Comcast at least once per month begging me to switch back. Here is their offer:
- $99 per month triple play – cable, Internet and phone
- Free HD-DVR for 12 months
- Free Starz subscription for 12 months
- Free Installation
- Free Upgrade to Blast (Higher speed Internet)
- $200 Gift Check to “spend any way I wish” – I would have to spend it on the Verizon termination fee of course, something that could have been avoided if Comcast would have matched Verizon’s price *BEFORE* I switched.
I don’t care about Blast. And I definitely don’t want a home phone, even if its free. From the fine print, the Comcast “free” phone comes with a $29.94 activation charge and an “EMTA” charge of $3 per month.
I tried to reach Comcast to inquire about non-triple-play plans – a plan for just Internet and Cable. On the first attempt, the 866 number on their promotional mailer failed, and directed me to a new non working telephone number. I finally got through on the second attempt. The end result is that for only cable and Internet plus HD-DVR (what I have now with Verizon), the price is $69.95 + $15.95 = $83.90. It’s only a few dollars more than Verizon, but even more importantly, not worth the hassle of switching back. And the cable/Internet only plan does not include the extras that the more expensive triple play does. Comcast’s window to save customers ended before those customers switched. Lowering prices now, especially to a price higher than the competition, is just pointless. Good Bye (again) Comcast.
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