Hold on Tight

We've officially been in a recession for 15 months now and it looks like we're about to break the record for the longest recessionary period since the Great Depression. With rising unemployment, record foreclosures, and depleted savings, this economic crisis is almost crushing our dreams for a secure retirement.

But, hold on tight, don't give up just yet.

After the Treasury Department's announcement today of their plan to rid banks of bad debt, investor confidence surged. The markets rallied with renewed confidence that our new administration will do it's best to keep our financial system from failure. Hopefully, the Fed's actions will spark a permanent turnaround.

However, what's really on everyone's mind is: Have we reached a market-bottom or is this just a bear market rally? Of course, everyone has their opinions pro or con, but we'll only actually know in hindsight.

Like everyone else, I have my own opinions. But, I thought I would ask a few old friends if they could orchestrate a get-together in order to shed some electric light on the subject.

Here's what they told me:

Accroches-toi a ton reve
Accroches-toi a ton reve
Quand tu vois ton bateau partir
Quand tu sents -- ton coeur se briser
Accroches-toi a ton reve.

Sounds like good advice to me. If you can't read French, watch this video for a better understanding.

Don't Believe the Hype, But...

So after the market has increased in value now for roughly 6 days, a lot of naysayers are starting to come around and say that we "may have hit the bottom". People are looking for more signs than a group of fourteen year old girls in an Ouija board. I don't believe the hype, until my friends at the paint company tell me that production is up, I am going to have a hard time believing it. There is just too many people on unemployment, too many scared to purchase more than anything besides the necessities. I won't believe it until consumer spending is up for a couple of quarters.

BUT,

The savvy investor, the contrarian, and myself know (I am the dumbest of the three) that if you wait too long you may miss the bounce. So I have begun the search for more good stocks. It is a gamble, no doubt. I have two ultimate criterion. 1] The potential company must be one that will exist when this economy has finally turned. 2] The potential company must be one that will be profitable when this economy has finally turned. Sorry GM doesn't qualify.

My favorite way to begin a stock search is through the magic formula screen. I have talked about it before, recommended buying the book, and believe in it's methodology. I won't go into full on stock research in this post, but will say that my findings turned up several good prospects including: CALM, MLHR, MSFT, PCU, PM, RIMM. Until I plow through their latest financials I won't recommend anything. Also there are a few perennial industrial powerhouse stocks that are 'relatively' cheap including LECO and EMR among others.

I will start doing the numbers because I am beginning to feel like it is a good time to start looking to buy. We will see how it goes.

An Idea...(Notice: Rant Ahead)

Recently between working on my neighbor's house for money, wading through unemployment proceedings, attempting to refinance, signing up for COBRA, and oh yeah looking for a job, I am noticing a few trends:

1. Everyone has their own idea of what will get us out of this mess.
2. No sympathy for where public America is really at right now.
3. The ridiculousness of the comments I have been hearing on radio and TV.

So 1, all over the radio and TV is a number of people stating that their own idea of what will boost the economy, and the truth of the matter is that they need to take care of their own house, their own job, and their own money. By trusting some other jack@$$ in the first place, buying crap you don't need, and banking on rapid growth or some other prospective investment we have all fallen into a trap. We used 'fake' money, overspent on ridiculous stuff, and now want someone to help the sinking ship we all created. Somewhere in life, things went from buy what you can afford to buy now pay later, even if you can't. Stimulus plan may work, may not, but if we all start coming to the epiphany of what we can really afford then maybe we will stop the scariness of everything. End overbuilding, overspending, and think. In the past two years I bought a new 'used' car and a house. I put down more than 10% on each, purchased something extremely affordable, and they may both be in jeopardy now that I don't have a job. Okay not really, but they could if I am unemployed a year from now. I take that responsibility however, and it is my job to try and take care of things.

2 is the other common theme I hear. Please understand we are past the point of the housing bubble, that was a domino, and now a lot of people, more than what is being reported, have lost their jobs or may end up losing their jobs. Sure idiot bankers should not have sold 0% down loans to risky buyers and likewise buyers should not have thought that they could purchase these homes, blah blah blah, etc. Spending is frozen, lending is frozen, and no body is really producing anything besides gas, food, energy, and natural gas. A quick call to friends from past employers over the past two weeks report 20%-30% work force layoffs at every employer I have ever worked for, ALL OF THEM. To top that off everyone of them is producing at around 10% production of their yearly average. TEN PERCENT!!! Read that as factories, companies, employees, everyone is standing on that cliff looking over the edge. Unless something changes, i.e. lending opens up, people open up their pocketbooks, then bankruptcy and shutdowns at the least are going to begin to occur. It is going to be painful, heck it is painful. Start showing some sympathy for your fellow man, because you may be next one on the chopping block, and hope your neighbor isn't serving crow when you need help with your next meal.

And last but not least number 3. The bits of armor are starting to fall off of everyone, and we are hearing some of the most stupid comments I have ever heard from people getting worried. For example, today on NPR's Talk of the Nation, a gentlemen called in to the station to say that it has been very difficult to get his two VARIABLE RATE HOME LOANS on his current home and his VACATION HOME, and although he has hired someone to help him get them readjusted nothing has occurred. He wanted to know when the government was going to force these banks to do something. All I can say is, where is this guy and how else can someone make money off him. Then about a month ago NPR covered the fact that California may default on their bonds for the first time ever, a consequence was that student loan checks have been late, not that they weren't paid out, just late. NPR of course found some strapping young woman at Berkeley for comment. Her quote you ask? "It's not bad enough that I am a DOUBLE MAJOR with a MINOR, but now I am going have GET A JOB to make my payments." I don't know where to begin, first college is a privilege, second 2 majors and a minor what the heck do you need that much college for, third enjoy your debt for the next 25 years, and lastly YES YOU MAY HAVE TO GET A JOB.

These times are rough, and I am sorry if I am negative. The government is doing some positive things, albeit expensive things, to try and help. I will be one of the people in line for the help, and will remember this if I make it through this intact and reciprocate to someone else in need.

Good luck, evaluate yourself, and SAVE!

Frustrating Systems = 2 Week Hiatus

Well, I have spent the last several days working out COBRA and unemployment and am thoroughly frustrated with "the system", so for the next two weeks I am going on hiatus from blogging or commenting or whatever. Even though I am not working I simply have too much crap to do.

That being said, I have had no interest from anything I have applied for, and no calls returned for any jobs out there. This truly is a scarce job market and I am going to have to figure something out, after going through my finances I should have enough money with unemployment to make it 8-12 months. My only worry is that it may not be enough, we'll see anyway.

So there you go, I will report back in two weeks how it is going and hopefully do some regular posts then.

Job Search: Making Connections

I have been searching for a job for about two weeks now and I can officially say that my personal job skills in the manufacturing and project engineering arena is not so hot. Not really all that surprising considering that my two job focuses are on factories and capital projects, which for the most part have been halted for every company out there. So my options are thin, yet some things are starting to pop up.

I consider myself a super sleuth when it comes to finding jobs for myself and I thought, hey in this employment crisis I could give out a few tips to finding a job so:

1. Find good recruiters:

In my line of work I have been called a hundred times by recruiters of all types trying to make a buck off of my back. Most are absolute meat peddlers, but some really are looking out for you. How do you shake out the good from the bad? First most of the bad is obvious, you can hear the urgency in their voice and if you don't fit their exact search criterion, they try to get off of the phone faster than the falling Dow. Good ones will probably do a long phone interview and then a face to face if they work in your town. That is typically a good sign, but the ultimate way to tell if a recruiter is good is when they give you feedback from the potential employer after an interview. That is the surest sign that they care. Those you keep in touch with and they will take care of you, sometimes for a lifetime. It must be said that some recruiters are good at getting interviews even if they are not always representing your interests fairly. They are pushy, and I dislike them greatly but sometimes that is just the nature of the beast.

When I got laid off I spoke with three recruiters immediately, and they are all beating on doors seeing if anything is available. Two are local and one is national, and they all had some possibilities. Like I said, the good ones, who know you, will take of you.

2. Know your boards:

Kansasworks.com, Careerbuilder.com, EngineeringJobs.com, CoatingsJobs.com, Monster.com, KansasCityHelpWanted.com... There are a lot of boards out there and choosing which are the best for you can be difficult. I have two tips to find the best in your area. First, figure out which board partnered with your local paper (for the KC Star it is Careerbuilder.com), it will typically have most of the jobs in your area. Second, find the state sponsored job board (Kansasworks.com for me). This can be the most effective resource because it is typically tied with the unemployment office for your state, meaning it searches a wide swath of other job boards to find you an opening. The state really wants you to make your own money. Go through the motions of creating your resume and then just search and search and search.

3. Make connections and call them:

I have met a lot of people over the years and do my best to keep in touch with lots of them. Why, because you never know when you will need a favor. A favorite target of mine is contractors. They work with lots of companies and typically have a good ear to the ground on companies that are needing people like you. One that I have dealt with quite a bit may hire me as drafter for awhile, which may be what I have to do to pay the bills. I had a good interview at a place a few years back that I didn't just quite fit the position but the plant manager said to keep in touch, and who do you think I called when I noticed that they have some openings now? That is how it works sometimes.

4. Buy the paper every Sunday:

This is how I have found 2 of my last 4 jobs and continues to be maybe the best source for open jobs and direct contact with an employer. It is old fashioned but still really effective. Even though my paper does partner with Careerbuilder, I find that positions posted in the paper are not always online or maybe I didn't enter quite the right search criteria or whatever. The paper works.


That's it folks. Good luck and keep your job.

What the Eff Do You Do Now?

So as I stated in my last post, I have been laid off. More specifically I have been laid for the second time in 4 months. I personnally couldn't believe it. Mostly because I had chosen this job over three other jobs that I was worried wouldn't be as safe in this economy. I was wrong, I had a target on me due to the fact I was well paid for what the latest company considered an entry level position. So out I went when the time to save the company money came. Another lesson learned by me. What is scary is now I see nothing out there in KC that my job skills really fall into.

But know I have to beg the question what in the heck do I do now? Well I do have a little bit of a plan and it involves the following.

• Know that my old company is compensating me for four weeks. So I have one month's worth of extra pay, starting now.
• Know that my girlfriend has a definate temporary job at one of her old places of work. My GF is one of the only people that knows the work for a position that someone is going to go on maternity leave. That will start in either March or April and should last three to five months. We are not married so that will allow for me to...
• File for unemployment. I am going to have to. I have about three months worth (four to five if we stretch things) of emergency money, my GF some more, but I would like to save that for when unemployment runs out if we have to. I may still need some of the emergency money to makeup for time waiting for unemployment to kick in. The unemployment money should take care of the house payment, which is the most important asset to protect in my opinion. I feel that once this economy shakes out, it is going to be pretty difficult to purchase a home for awhile.
• Look for cheaper insurance for the home and auto. Pretty straight forward, I think I can get a cheaper rates but I need to look first.
• Try to get a better mortgage rate. Actually, I am not very hopeful on this one. I was attempting to do this a few weeks back but realized I had a special 10% down loan before with a special up front PMI that the home seller paid for. Changing the mortgage may jeopardize our current setup. Also, we already are decently low.
• Cancel Luxuries. No more blockbuster by mail, redue our cable-internet package, etc.
• Be thrifty. Pay attention to groceries, cease eating out, less driving, etc.

If you can't tell, I am looking at this for the long haul. I work for factories typically and until there is some real production going on, I am afraid I am not going to see employment opportunities for awhile. I am very much willing to step outside my box and just make money, but I have to make enough to pay the bills. Things could rapidly change, but I don't really see the economy changing for at least a year. Our consumers have to fundamentally change their habits, and real money needs to go to real things. I don't know I am pretty nervous about the whole thing.

Cat and Girl and my feelings of dread...

I tried to come up with a catchy title to this one but it didn't work out. From time to time I link to various comics on my blog and tell you to check them out (Kate Beacon History Comics come to mind - still awesome). Well Cat and Girl is another of my all time favorites and the past weak has had cartoons that actually pict-i-fy (yeah I just made that up) how I feel about things.

Specifically this week, a terrible feeling of dread over the economy rubbed over me. Harley-Davidson reported that it would eliminate 1,100 jobs (out of 9,000 in the company), which surprised me, and Microsoft basically announced similar measures. Then the kicker was the unemployment numbers for November, 554,000 people, whoa. Needless to say, Cat and Girl put things into perspective, or at least how I interpreted it (Click the link to go see the original). I think this correction is forcing the public to stop living this credit lifestyle we all have lived since the '80's and move us all back to the mentality of the '50's and before. Where you bought things you had the money for and the only items you borrowed money for was homes and cars (if that).

The Cat and Girl comic that followed the one above was pretty interesting as well. To me it represented the mentality, at least in the first four panels, of the common American. The end has a good punchline as well. I love good inner dialogue and contradictive thoughts, considering that is what I suffer from continuously. I mean I am the Honda loving blog writer saying please save Detroit after all.

Anyway, click through Cat and Girl sometime when you get the chance. It is truly terrific writing and thoughtful perspectives on what we call life. Also, I love whenever the Cat is dressed for sports.

The problem with bitching out the Big 3 and Detroit...

Through the financial crisis I have seen one and only one article that seems to fairly represent what is reality in Detroit. Unfortunately I have no idea where it went, all I know was that it was a Yahoo opinion piece.

The bulk of the argument was that Congress and the public has been slamming the big three for their lack of viable, profitable small cars, yet Detroit has never ever had a small car anchor their company profits. The cars they sell are cheap and costs less than there Japanese counterparts but that is because they have never had a highly profitable small car. Honda and Toyota not only do well with small cars but typically are making $2k-$3k more in profit per small car than the GM, Ford, or Chrysler counterpart.

That being said all three could produce such a car, but it is an uphill battle. Think of an alternate universe where the Japanese government chastises Honda and Toyota for not building vehicles that compete with Suburban XL's and Expeditions (okay Toyota has one, but the idea is the same). It would be difficult for an auto company to turn that niche in the market their direction. First, they would have to build an vehicle that truly convinced the public that their vehicle is the best. Oh and it would need to be at a price point to convince the population to purchase said car. Think about that for a second. This requires a great investment of engineering, production, and advertising on a vehicle that may not really turn a profit in its first 4 years. Meanwhile you will have to change the perception of the auto media and the car buyer that a company known for making questionable quality small cars now makes great small cars. Don't forget your competitors which already are good at making its auto equivalent can release a new, better vehicle a year after which can wipe your products advantages off the map and is known as a quality vehicle (good example is the Chevy Colorado/GM Canyon and then Toyota's release of a new Tacoma a year later). It is a difficult hill to climb.

That hill can be so great that it leads to companies having an easier time creating new niche vehicles than over fighting in a saturated market. These CEO's are not dummies, they are doing what makes sense. What makes the most sense is continuing the success the niche markets that they are strong in (see trucks and large cars), draw a line in the sand on markets they can compete in (see midsized sedans) and create new vehicles when they have been kicked out of a market (see minivans to crossover vehicles). It is really like telling JA Henckel's (the knife maker) to make hand tools. It can be done, it might turn a profit at some point, but it will take a lot of money to make it happen.

To me it was funny, they ripped the CEO's, which rightfully so when they all show up asking for money in posh jets, but beyond that it was nothing more than impressive political sound bites. Believe it or not, automotive production is one of the two last great manufacturing industries that remain in the US (the other being airplane), congress should do everything they can to protect the industry. It is fragile, it did need a scolding, but after that do what is right and save the companies. At least they make a product, a real product.

My own private market update

Well after I lost roughly 46% of what I had put away in my Roth IRA I have been slowly climbing instead of digging with a portfolio shuffle that I think will work for both the short term and long term. I am now firmly only at a 26% lost. That means I have raised my funds roughly 20% from there worst point in the past 2.5 months. How did I do it, mostly buying two stocks that are a couple of the only companies that will do well in this economy Kroger (KR) and Walmart (WMT). Not to mention timely purchases of Baldor (BEZ), Philips Morris International (PM) and Vanguard Total Market Etf (VTI). I am buy no means a savvy investor again (was I ever) but I resolved late last year to make conservative long term purchases in the market. Also, I am going to go forward with an investing strategy which I will explain someday in a later post but the biggest impact is going to be anchoring ETF's like VTI and smaller investments for long term stocks using principals that I have laid out over the past year in this blog.

I haven't even begun adding to my 2008 Roth yet, so a big plop of money is going to get infused soon into my future funds and a close scrutiny of the market will litter my posts once again.

A little blurb no one saw...

I would call this the article of the week, but I didn't want to do to it being so close to the last one.

I may have been wrong, although I think not. The following article is a report of how well the reworking of mortgages have gone for the first half of this year, reality is not that good. I think though that we really haven't seen the major modifications yet. I think that some of this representative of people not having any money and trying to still keep it together.

Regardless read on, it certainly could be proof for the naysayers of what I thought would help this economy.

http://clusterstock.alleyinsider.com/2008/12/ouch-borrowers-keep-defaulting-after-mortgage-modification

Added Note: In a funny coincident, I am watching CNBC right now and James Stewart (Smart Money editor-at-large) makes a great suggestion that let's just lower the mortgage rates across the board. That way those who have been making the right decisions all along on payments could refinance (thus being rewarded) along with some of the fringe people getting a chance to switch as well to a better payment. Not a bad idea at all to free up money.

Added Disclaimer: I think James Stewart is an absolute genius, his articles in Smart Money have always been excellent.

Article of the Week and Automaker Commentary:

Hurry up and read this week’s article before it goes into WSJ’s archives:

Auto Chiefs Admit Mistakes as They Make Case to Congress (http://online.wsj.com/article/SB122840102318379327.html)

My thoughts on what is going on in the US Auto Industry is well, mixed. I grew up a GM teen with 2 Buick Regals, 2 Oldsmobile Cutlass Supremes, and a Saturn SC2 (still own it), and always thought there drivetrains were excellent. Now-a-days though I have definitely switched to the darkside, I am firmly a Honda and Toyota guy. Someday, I will go into that more but really feel the need to evaluate the US Big 3. Before I evaluate each company it is important to note that all of these companies were restructuring when the whole market went to crap. Most have some decent new vehicles, but with nobody buying cars, and nobody putting out loans, they all got screwed so to speak. Others would say too little too late, and I do agree to some extent.

Let’s start with Ford. Ford in my opinion is the best run company of the three right now. Why, because they have viable small cars and light trucks that are reliable, built well, and really as good as anything Japan offers. They went to the government asking for a $9 billion line of credit, not bail money, but credit just in case they need it (which they may), and they have a realistic plan for profitability by 2011. They have four excellent models in the Focus, Fusion, Escape, and F-150 that will retain a good demand. To me this company is the best bet of the three for succeeding. Worth noting is that they have an extremely good hybrid in the Escape that is in its second powertrain generation, meaning already have some of the technology needed for higher mileage vehicles. The bad is that Ford is looking into selling some of Mazda, hopefully not all. Mazda has basically been the test dummy for a lot of the Ford drivetrains that are now used, and Mazda really makes some good cars.

GM is next. Frankly, I am disappointed with GM and I do not think that Rick Wagoner is the right man for CEO. However the good is all of the Cadillac product, Buick Enclave, the Chevy Silverado, Malibu, and the tiny Aveo are all pretty well built cars. The Malibu in particular is again one heck of a vehicle, now with the possibility of a 4cyl engine mated with a 6-speed transmission, which really is a car made for the common American public. Another bright spot is that the Ecotec 4cyl engine is actually pretty decent and reliable; too bad the Malibu and Saturn Aura are the only decent vehicles that it goes in. The Cobalt and variants really could be a nicer vehicle (cheap), the Saturn lineup needs more of the Opel fuel efficient engines that are common in Europe, and they need to abandon this push towards E85. The Volt looks promising. Also good is there strong presence in China’s emerging economy. I feel that with the right leadership all these loose good parts of GM could be remade into a really reliable company. It has a real chance if it can get away from acting like cow is a stallion, and instead just make that stallion. Also, they need to stay far away from merging Chrysler.

Chrysler is in terrible shape and Cerebus is to blame. What exactly was Chrysler thinking would happen when it continued to promote and develop big cars for the Hemi and delivering on such crapfests as the Dodge Caliber? Does anyone else thing that they were idiots for abandoning the Neon (the pre VW Bug redo before the actual VW Bug redo)? The only good products in their lineup are the mini-vans, Jeeps, and the Ram trucks, consequently those are the products that they spent their money on after the take over. What stinks is their eagerness to merge with GM, which to me reeks of Cerebus ready to cash out and GM to get as much money from the government as they can. Mark my prediction if GM bought Chrysler, they would dance with the corpse long enough to get paid and then burry the body. The two companies’ product lines just do not compliment each other at all. Where I am most upset with Chrysler is that the best option was out there and they didn’t jump on it, which was working with Nissan. Charles Ghosn CEO of Nissan-Renault is probably the brightest man in the auto industry right now. He offered at one point to take up to a 20% stake in Chrysler, allowing Chrysler to get Nissan built small cars, and Nissan to get Chrysler built large trucks and minivans. It actually was an excellent plan and gives Chrysler a real viable future, and they walked. To me that was worse than Yahoo walking away from Microsoft. I don’t know if I would loan them any money unless they began some good real talks with a potential buyer not named GM.

All this being said, I do really feel the government should save the companies, with true oversight. Some have suggested giving up some true bail out money for now, and then requiring the companies to prove that more is needed and will be well spent. I would approve of any plan like that, there are really too many people that this would risk, and basically end major manufacturing in the US other than planes.

State of the Economy....

The announcement by Bank of America (owner of Countrywide), CitiBank, Fannie Mae, and Freddie Mac that they will start renegotiating mortgages may begin what turns around the economy, in the least it may help keep this bail out to a minimal. Times are tough however and more outside the bank world companies are going to start asking for money. Tough times are ahead.

More signs of a down market that I have heard / seen:

* Paint orders are still extremely low.
* Construction orders are being put on hold / slowed down.
* People I know are still worried about losing their home.

For now my money besides what is already in, is going to wait. What I would like to know is what is the everyday investor's sign of a turn around? So what are your ideas, metals stabilize? New house orders rise? You tell me...

Brilliant! CitiMortgage Coming Through!

Recently I have been eluding to what I think will recover the economy the quickest both here and on thecornerofficeblog run by my friend Grant. Basically, figure out a way to keep as many people that can into homes, without letting them off the hook for payments.

The idea is simple, people that can afford to stay in there home can afford to buy other stuff. Thus ensuring the great capitalist society that is America.

Math will tell you that as long as a homeowner stays in a home for some given amount of time, then the interest on that loan will ensure a bank makes a profit. Most times it means the bank will make a big profit if that homeowner remains in a house 8+years or more. Well I have recently thought that two strategies to keep homeowners in their house would be to A)adjust the interest rate to a level that they could afford and fix it for 30-years or B)extend the mortgage to a 40-year fixed and adjust the rate appropriately. I am not talking about handouts but something appropriate for that homeowner. Don't ask me to define what determines what, I don't know that answer, but something reasonable should be able to be agreed upon. I believe this will still shake out the people who can't afford a home period, but maybe saving some people on the fringe and those who may have recently lost their job. Like arm floaties for those getting tired of swimming.

I know the argument against doing anything like this was that people should have known better and if they couldn't afford the home that they were buying then shame on them. That is a good argument, but I would argue as well that many of these people probably thought if I can't afford this when the my 3 to 5 year ARM ends, then I will just refinance like this banking guy is telling me or just sell the house. Both of those "fail-safes" have, well, failed. Now people are upside down, banks aren't collecting any money, and foreclosure is abound. If you could keep people in homes, home values could stabilize, governments property tax funding could stabilize, and maybe the taxes we all see on the horizon could be greatly reduced.

Now I originally thought that the government would be the only entity that may put together a plan like I was speaking about, but to me real capitalist hope is on the horizon. Citi (the nation's largest or second largest bank I can't remember) announced that it was going to put together a team of 600 specialists to help their struggling customers figure out a payment that they can afford. Although it may be too late for our economy and many foreclosed homeowners, but the lender is finally coming through with the promise to refinance, albeit not in the way they were originally planning.

To me, a big signal of the economy starting to turn around would be several more of the big banks following suit without government involvement or encouragement. Until then I think you will not see an end to this economic struggle until floor opens up and a lot of otherwise good, smart decision people have lost their jobs along with all of the idiots. It is a downward cycle in my mind that will continue until something is done.

The downward cycle:

1. People can’t afford their home, bills, etc.

2. People stop spending on anything that isn’t necessary.

3. All those companies making the non-essentials suffer greatly, because now there aren’t any orders.

4. Those companies layoff people, close plants, and consolidate.

5. Now more people can’t afford their home.

6. Repeat 2-5 over and over.

All that is occurring right now, and we all are going to be affected. I don't know about the rest of the world but I want the costs to me, the working population to be minimalized, before my life or my job (again) to be affected.

This week's article of the week...

This week's article comes from the most unlikely of places for me, Seeking Alpha. My brother can be thanked for finding it however. Seeking Alpha is pretty hit or miss as far as quality of articles, but this one seems to hit well.

This week's is from Seeking Alpha's James Quinn, titled "The Shallowest Generation" it goes on to speak about the amount of debt that he believes his generation has spent. I don't know how true his facts relate back to the Baby Boomers, but it is an acurate depiction of the our current state of the nation. His solution is odd as well, basically for the boomers to pull out their wallets and pay for things, which would be hard I think if they have already maxed out their credit as the article says. Either way, enjoy...

http://seekingalpha.com/article/103202-the-shallowest-generation?source=from_friend

The truth about Warren B...

http://online.wsj.com/article/SB122548632193589047.html

Read it while you can, it is currently free.

This is what I have been saying to people that have responded to me with the phrase, “well Buffett is buying again.” He is getting deals we are not getting, a 10% dividend on GE and Goldman Sachs is hardly something the rest of us can get. That 10% hedges most of the activity of the stock he is holding whether it goes up or down.

It looks as if the market is starting to level out, but I still don’t think this is the end. My prediction is to see how the market reacts to the post holiday earnings reports and then judge the state of the economy.

Market Status Update...

(que cool news ticker evening news beginning music)

Well don't know if anyone has been looking at the news recently but the economy is in the can. Some people are seeing this time as now being a buying opportunity, but I am not so sure. I have bought some PM stock and VTI shares, but otherwise I am keeping about half of my money off of the table. Why, because well I am observing my environment.

Fact is I was laid off just a month and a half ago from what I do still think is a well run company. While I will not share the company's name, I will reveal their business, which is paint. Paint is a lovely commodity that can instantly give an investor a clear picture of one clear customer, the American Consumer. Let me explain a little bit further, paint covers everything a buyer really wants: appliances, mowers, home hardware, power tools, windows, cars, and mailboxes. Traditionally it is all that stuff you buy within six months of buying a house. The housing market dried up two years ago, and it started affecting the paint business six months after. Then the market sort of flattened out and paint was still being made, just at a lower rate. I recently learned that paint orders have basically just dropped off the face of the planet. That is a hair raising bad thing to hear.

I have a good ear to construction and agriculture equipment as well. I thought that when I left the con/ag situation a couple of years ago, things were going to start to fall off. I was wrong then, but look as if I am getting more right now. The Caterpillers, Deere, and CNH's of the world have actually started showing signs of slowing. I always think that when these companies as a collection start showing weakening returns, then that shows a slow down in all construction: residential, commercial, or government. To me that means funding is really drying up, loans are becoming much more scarce to build not only what is wanted but what is needed. Or even worse, industrial improvement operations have ceased and companies are now in waiting game mode.

So what does look good. Well during my interview process for a new job, I think that I found the industrial sectors that are doing well. Railroad car manufacturers cannot produce enough cars to keep up with demand. Increase costs in shipments by truck has led to a mini boom in railroad cars. Companies are working 7 days a week to keep up. I worry some about the railroad industry as the economic structure falters though for the industry, gas keeps falling as well too. Food ingredient companies are hiring and spending lots of money. My new job sells a certain type of equipment to various food, petrochemical, and industrial sectors. Well a quick scan of orders shows who is really spending cash, and food is in. They are going about spending smartly as well by expanding operations at current plants to state of the art systems that can reach a lot of profitable returns. I have been looking at Kroger (KR) but I think now companies like Kraft and Del Monte may be a good bet.

The economy is still in rough shape however, a lot of good people have made some bad decisions and more foreclosures are still coming over the next 2 -4 years as these 3-5 ARM's expire and change rates. Remember that unemployment rates are not necessarily showing the big picture either. For every job lost or plant closed, there is someone with a customer lost, and then some money on their paycheck is lost and so on and so forth. It's not just the unemployed's missing funds, but the ripple affect will move on to contractors, salesmen, commission jobs, and small business. That in turn will hurt the big businesses that much more. I think we are six months to a year before this truly bottoms out.

Government is focused on the day to day lending and borrowing but truly what will save the common American is working with the mortgages that they are upside down in. I think that what will end up saving us is a forcing of a low interest rates on banks loans for those who screwed up and in turn lower the borrower's monthly payments. I don't care if they make them 40 year fixed or whatever, banks will be in a lot better shape with a steady payment and by extending the loan years will ensure that they still get their money in the long run. Foreclosures are not working, and bailing out banks is a Band-Aid. Rooting out a solution for the actual mortgage issue should be the top priority. I think people will start spending again once they know that they can make the payment for the month and their family is safe.

I guess we will all see. Be careful out there and keep some money back.

Read before it goes to the archives...

An excellent interview this weekend in the Wall Street Journal of Anna Schwartz about the current economic crisis versus some of our past economic downturns. She co-wrote a book that Bernanke thinks is the best explination of great depression failures in the 30's. Please stop and read it this weekend while it is free and before it turns into the WSJ archive.

Link here: http://online.wsj.com/article/SB122428279231046053.html

Ticket to Crazytown: Market Thoughts...

Well I haven't updated on stocks recently, but should probably say that I went to all cash except for Baldor (BEZ) Wednesday morning and then picked up one of those two stocks that I have been eyeing Phillips Morris International (PM). I have been thinking a lot about the market and how to make safe money in this our current economy and have come up with a couple of thoughts.

The first being I am going to stay away from ETF's until there are real signs of market improvement. This may sound crazy, ETF's by nature are supposed bring some stabilization, but all the ones that I have held and were eyeballing have been slowly deteriorating in share price. I am negative 20% on my account because of it. When signs truly trend a little better I will buy VTI and PWV again, but for now I am going to wait.

The second being that there is some real values out there right now. If you are a contrarian investor you should be having a field day. I am trying to find some real hard and firm value stocks with good economy proof basics. Baldor is still one of those stocks for reasons that I have spoken about before. Philips Morris International is one that should be both economy proof to the US and also provide long term growth across the world, and because smokers smoke. The others that I have been looking at is Kroger (KR), Intel (INTC), and Ship Finance International Limited (SFL). I am searching for more, but I am looking for a solid long term companies.

I am interested to know what other people think of what has happened with the economy. I have mixed feelings for the government's bailout / takeover / whatever that has occurred this week. On the one hand I am glad that they are doing something, I think that the current financial market dictates that this needed to occur. I don't like that it is my money, but I think that saving us from a complete financial collapse is a good thing. On the other hand, I am pissed that we all didn't do something six months ago when we knew that this was a possibility and when it would cost us a lot less. Beware now of the hidden inflation that will now occur. I am unsure how it will affect the everyday person, but we can't keep throwing money at sinking ships and expect for the return to add value to the economy. I am nervous that is for sure.

#1 way to “help” the green movement: Reuse

(This is one of the articles I wrote while on vacation last week, so I am no longer in the Philippines even thought I am referring to it. I am excited about what I wrote over there and should have a new update everyday this week, so come back daily)

While waiting in Manila for a flight to Dumaguete, I have been reading the latest Dwell Magazine. This issue is about the popular topic of green building / sustainability and one article in particular sparked my thoughts about what is the most green thing one can do with building or buying anything. The article, about someone’s modern expansion and makeover of a home with new green, recycled, processed, and organic materials and its design process. It’s a very beautiful home but I can’t help think about all of the energy used to make these new recycled panels, parts, and materials, not to mention of the fuel needed to power the equipment used to build the house. Sure they utilized biodiesel fueled trucks, processed hay, denim insulation, special insulating windows, solar panels, and low-VOC paint but what if first they took a trip down to the local recycled materials store (KC Restore, etc) first for windows, doors, sinks, wood, flooring, and tubs. Reusing what isn’t “new” is the best way to keep trash out of dumps and not use time, money, and energy to produce a product. This obsession with “new” is what is truly wrong with the American lifestyle. We all are obsessed with “new”, you suffer from it, and I suffer from it. If we all just stopped at the thrift store first for some clothes, not all, but some, it would reduce some of that time, money, and energy needed to produce new clothes. Just being satisfied with the furniture we have or with the current layout of our kitchen, should be considered just as green, if not more so than some LEED’s certified property built from the ground up. Okay truly if we have to build something new, then using and investing in these new recyclable or more sustainable materials is great and needed, but not reusing older, perfectly fine materials and goods is just reckless, snobby, and wasteful.

Go back just 100 to 200 years ago to America and farmers would use as much wood as they could from the old barn to build the new barn, the old bath tub in the old house would get transferred over the to the new house, the old sink was the new sink, and on and on. The products were typically more robust then, usually made to last a little better than our current throw away society. Somewhere in Americana, we all started to want “new” and more “new”, and in order to afford the variety of more “new”, we needed cheaper and cheaper stuff. First came the old Sears and Roebucks and then came out Wal-Marts, providing us with all of the crap we want as cheap as it can get. At one time the little closets in the old houses Americans owned fit all of the clothes that a person held, all of them. Now we need so much stuff that huge closets and rooms are needed to pack all that crap in. More stuff, more crap, more space, and it all has to be “new”, that is the problem. Enjoying what we have, or reusing someone else’s perfectly good stuff, is the best, most green solution. Magazines may never write about it, media may never promote it, but there really is just no better thing to help the green movement than to reuse.

Tenure?!?

A question I hear quite a bit now a days is how my generation's work force (I am just shy of 30) has no company loyalty. Well here is why:

Everyday I have seen the 20-30 year veterans of the various famous US companies given plaques for their service, and soon after, shown the door. Along with them priceless knowledge of the company that you may never have available again. My generation has seen their fathers and mothers booted after years of hard work and modest increases in pay. How many of you have been a part of major moves to a new town in your childhood only to see your parents let go by that company 6 months later. When I saw that as a child, I thought, "what is the benefit?" It didn't improve them. Now that I am older, I see that the business system is a pyramid, lots of jobs at the bottom and fewer and fewer at the top. As you progress through a company it is only logical that you may have less and less likely a chance to continue with the company.

Lay-offs suck and seeing people get tossed out really makes you wonder about who you work for. Reality is that my generation will continue to look, if they are smart, every 3-5 years. I know of 3 examples of people I know that switched companies, increased pay by 20% and like their new job better. I am not saying that I condone it (I say stay long enough to keep the company matched retirement benefits and then start looking), but I definitely understand it.

To all the "early" retirees out there, good luck, it may be a difficult road ahead for you. My dad found some luck working in small towns after years in HR in the city and my mom went into work for herself, maybe that helps.