Tuesday, March 31, 2009

California Tax Hike

Tonight, at midnight, California will hike its tax rate 1%.  I have already written about how California is too expensive for most and this is only going to exacerbate the situation.

This now puts tax in the county of Los Angeles at 9.25%.  In many places in California, you are now flirting with 10%.  This is on top of one of the worst recessions we have seen in our lifetimes.  This will no doubt have an effect on consumer spending.  While it may seem small to some keep in mind you just eliminated 1% of spending power for all of California.  That is going to have a multiplier effect and ripple through all parts of the country.  It is not like people have money saved and can dip into their savings or savings rate and just absorb the 1% hike.

Further, this is getting into the territory where people are going to start to simply avoid the tax.  I expect more Californians to start buying online at places like Amazon where they can avoid paying California sales tax.  I have no plans to move out of the sunshine anytime soon, but they are making it very hard for me to justify living in California.  All I hear on the radio is how L.A. County is about to layoff thousands of teachers.  At the same time we have one of the worse education systems in the country.  But we are about to dramatically raise taxes.  I wrote it before, but I really want to know, where the heck is California spending all of its money?

Monday, March 30, 2009

Should You Splurge?

Arroyo Chop HouseThis past weekend was my birthday. I turned 31. Being who I am, we did not do too much. I prefer to stay at home which makes it pretty easy to not spend too much money.  We got up in the morning and had homemade waffles.  Shortly after that I got to open up my birthday gift.  My fiancee got me a new tripod, the Manfrotto 190XDB, to go along with my camera.

We decided to go to the local arboretum to spend the day.  It was a beautiful California day.  It was actually to the point where I was sweating part way through.  It must have been in the 80's.  I got several good shots with my camera (no shots with the tripod unfortunately) and was ready to call it a day by 2:00 p.m.  I was dead tired, the sun will do that to you, so i was ready to go home and just plop on the couch.  I watched the NCAA tournament and waited to go to dinner at some mysterious location.

Well the location ended up being the Arroyo Chop House.  It is a high-end steak house, similar to Ruth Chris but probably better.  We had been there once before several years ago but I honestly did not remember too much about it.  This time what stood out was the excellent service they provided.  They knew ahead of time that it was my birthday. So they reserved a spot right next to the fireplace.  They even left a card on the table wishing me a happy birthday.  I thought that was a very nice touch.

I ordered what else, a steak.  She ordered a lobster tail.  The food was excellent, better than you can get at other places like Ruth Chris.  All told, the meal, with two glasses of wine, cost us $150.   Was it worth it?  It is hard to say.  Is it ever OK to spend $150 on one meal?  It is not something we do very often but it is sometimes nice to splurge.  We can afford it easily, so it is not like we have to stretch to make this work.   We probably only eat out like this two or three times a year, my birthday, her birthday, and on our anniversary.

So should we do this? I tend to think it can actually be important to splurge every once in awhile.  You cannot be frugal all the time and it is important to once in awhile enjoy the fruits of your labor.

What do you think? Are extravagances like this justified?

Sunday, March 29, 2009

Did Washington Just Grow a Pair?

Death of GMIt was announced late tonight that the United States government is rejecting the restructuring plan submitted by GM and Chrysler.  I will admit the news of this is quite shocking to me as I never expected the government to actually require GM or Chrysler actually come up with a credible and viable plan.

If indeed this is true, and the government rejects these plans, this could actually mean the death of either one or both of these American icons.  The following quote came from an unnamed Senior White House official, "We have unfortunately concluded that neither plan submitted by either company represents viability and therefore does not warrant the substantial additional investments that they requested"

While I am certain something could probably still be worked out, I am a little surprised with the administration taking a hard tone here.  I was honestly expecting the administration to bend over backwards and say any proposal, no matter how lame, was acceptable.  No way I thought they might actually asks them to answer the tough questions or that they might actually consider a scenario that would let GM declare bankruptcy.

If you read the article, things look pretty serious.  Chrysler is being given thirty days to work out a deal with Fiat to buy it out else the government will walk away.  GM is getting slightly more friendly terms and is being given sixty days to restructure.  This has already resulted in GM CEO Rick Wagoner stepping down.

While this one act will not restore my faith that our government can make the hard choices when necessary, it will at least make me think we have taken a step in the right direction.  We as a nation can not continue to just throw tax payer money at every problem.  We have to allow companies to fail because stronger better companies will take their place.  Just look at last week's announcement by Tesla Motors.   They are going to try and bring to production an almost affordable all electric vehicle.  Where the heck is GM, Ford, or Chrysler with similar plans?  Let us let those companies fail and allow new companies like Tesla enter into the competition.  They will be instantly more competitive than any of the Big Three Automakers.

I predict that markets are going to end up opening down on this news, so get out quickly if you can.  If the market falls below 800 on the S&P, the rally that we have experienced over the last two weeks will be dead and you best be looking for cover.

Thursday, March 26, 2009

Raising Low Morale in a Bad Environment

One of the things that has been a focus of my work over the last several months is how to combat low morale.  We have gone through two rounds of layoffs and management is obviously concerned with the overall morale of employees.  Low morale serves as the double whammy since you have less people to do the work and low morale employees are less efficient.  So you may end up with the ability to do drastically less work.

However, my team has consistently had average morale.  They are neither thrilled or particularly sad.  They are treating their job as just that, a job.  This is in direct contrast to some of the other teams in the company who consistently voice their displeasure.  So my team, in comparison, has seemingly high morale.  How did I accomplish that?

My approach has been two pronged.  Transparency and consistency.  I apply these in two ways.

  • I am very open and honest about where the business is and what the management team is doing to turn the ship around.  I over communicate with my team and make sure they have direct line of site to where the business is even if they do not "need" the knowledge

  • I am very clear about what my expectations are for the people who work for me.  Not only am I clear about it, I set the bar high


I really think it is as simple as that. So long as you have intelligent people (if you do not this is a different problem) they know what is going on in the economy. They know that there are problems that are probably out of the control of the company and can respect that you had to do layoffs SO LONG AS YOU ARE UPFRONT AND HONEST ABOUT THE PROBLEMS. It is when people feel they are being lied to or deceived where they start getting antsy. The problem is compounded if you are not clear about what your expectations are and what it means to be successful because people start to worry about the value they add and thus if they are they next one to get the boot.

These simple things have made a world of difference in my team.  I believe they feel better than the other groups because they know where the business is and know they how they fit into the big picture.  Seems simple but it is so effective.

Tuesday, March 24, 2009

Wade in Slowly ...

and at your own risk.  The market had a monster move just two days ago, and did its normal 2% correction the following day.  It was pretty predictable after such a huge move.  But the question is, what next?

I actually think we probably go up from here in the short term.  If you can get in and out quick, that might be something you look at doing. But if you are like me, and do not sit in front of a trading window all day, then you have to think long and hard about putting any cash into the game.   What is my big concern?  I have not figured out how to play the Fed's one trillion dollar gamble.

Here are the undeniable realities.  We will have inflation in the next few years.  The value of the dollar will definitely drop in relation to other currencies, particularly the Chinese Yuan.  But the question is when will it happen.  If you have a long term horizon, your move is simple.  You need to short US treasuries and take an inflation play like gold.   The problem is determining where these are going to be in the short term and if you can stay in these plays long enough for them to play out.

I think Gold trades in this $900 range for some time.  I do think it will probably break out above $1000 and stay there over the next year or two.  Same can be said for the treasuries.  But it presents an even bigger problem.  Short term, I think treasury prices could actually go up.  But there is no way that investors are going to continue to stay there when yields are this low.  So do you get in now?  Can you wait two years for this to play itself out?

I need to spend some time thinking what the other side effects of this move will be.  This is a non-trivial shift in money.  There are going to be winners and losers and the trick is to be on the winning side of it.  The bad news for the rest of us?  Taxpayers will MOST DEFINITELY be the first loser if this plan goes south.

Monday, March 23, 2009

Nothing Stops the American Consumer

I thought we are in the middle of a recession?

I went to Fry's this past weekend.  I'm looking for some accessories for a new laptop I just bought (more on that in a later post).  On the way to Fry's, I stopped at a mall that was nearby and could barely even get into the parking lot it was so busy.   Later, when I finally made it to Fry's, the parking lot was almost unmanageable.  I parked at the very far corner of the lot.  Inside was almost as bad.  They have a line that snakes around at Fry's, and it actually overflowed it.  Lucky for me I ended up not buying anything because I would have gone insane waiting in that line.

It just goes to show you, people will keep buying no matter what the heck is going on around them.  I had some hope that America would learn its lesson and end its spendthrift ways.  Maybe it was too much to ask for.

Sunday, March 22, 2009

What is the Right Amount of Sympathy

What is the right amount of sympathy to give to people who are down and out because of this economy?  Over the last several weeks, there have been numerous stories in the various outlets about people losing their job and now having to scrape by to make things work.  Most of the stories go a little bit something like this.

John Doe used to live the good life.  He used to make $150,000 a year selling mortgages to people.  He would take trips to Hawaii every few months, bought a big house, drove a BMW, and never worried about what something cost or if he should be saving money.  He was honest but he got caught up in corporate greed and was forced to make loans to people who could not afford it.  When all of those loans dried up, so did his job.  That was 8 months ago and he has not been able to find work since.   His house is now in foreclosure and his wife has left him along with their 5 year old son. 

How sorry should I feel for these people?  The capitalist in me of course says I should not care at all.  People should always be thinking about the future and be prudent with their money.  In almost all cases, you could point to these people living extravagant lifestyles and not saving enough money for the eventual rainy day.  A day which came sooner than they expected.  Then again, it always does.  I look at my own situation and I can only say to myself, "What are these people thinking.".  I too make a good salary.  I have better reason to believe it will continue to go on than most others do since my success is not sudden and is not nearly as tied to a booming irrational sector like so many other people's careers have been over the last few years.  But I save, and I save like crazy.  People who follow this blog know that I tightly control both my discretionary and my non-discretionary spending.  In a worse case scenario, I could probably survive several years of unemployment.  I would have to make sacrifices of course, but I do not believe I would experience quite the same life crisis these people have.

But of course there is the part of me that does not want to take the "I told you so" and "Holier than thou" attitude that so many others have.  While I think many of these people caused many of their own issues, I do not wish to dance around and make light of their situation.  These are of course real people with real suffering.  They are not blameless in their plight but that also does not mean they are not worthy of a little sympathy.  I emphasize "little" because some of these people just really do not seem to get it.  My favorite (although I cannot seem to find the article now) was one man who was living large in the Los Angeles area on $70,000 a year.  Seriously folks, that is not a lot of money.  The article talked about how he spent all of his money on trips and a nice house, all of which is gone now.  But if you think you have the right to live a lavish lifestyle when you only make $70,000 in Southern California, how is anyone supposed to feel bad about that?

Thursday, March 19, 2009

What To Do About AIG

AIG

Today, Congress passed a law basically taxing back the bonuses that AIG gave to people even though they received taxpayer bailout money.   While I understand that Americans want to see some justice, and believe me when I say I agree that these bonuses are completely inappropriate, I am not sure that this was the best way to go about this.

When I first heard about these bonus payments, I was as outraged as any other American.  I could not understand how any company would agree to pay millions in bonus money to peole who basically ran the company into the ground.  How is that fair?  At first, I thought they needed to block the payments.  But when it came out that they needed to pay it due to contractual law (I still question how this got into a contract) I relented since I do believe in the sanctity of contracts.

I then thought about this tax solution, and I liked it at first.  Strange I know considering how much I hate the tax code but I really did want to see some fairness.  But after I thought about it, I just do not like it.  The precedence it sets is completely wrong.  I do not like punitive tax laws.  While I do believe it is justified here, I believe it can be used as one of those things that is extended to other, less warranted, situations.

So after thinking about it a little bit, I think the best way would be to just let it "slip" what the names are of the people who accepted the bonus.  Give all of them a chance to pay it back (and some already have) and those that do not, simply reveal their name.  Given the outrage that exists in America, I think the public could put a lot of pressure on these individuals to do the right thing.  The stigma that would follow these people would be enormous.  Any company that hired them would get tremendous negative press.  Basically you shame these people into doing what they ought to do.  It gets done what you want, and it does not do something that in my mind is just dangerous to do, fix problems through the tax code.

Wednesday, March 18, 2009

Playing it Right Lately

Thus far, I've been pretty spot on with some of my trades.  Two days ago, I bought more of the financial ETF UYG.  In essentially one day, I've made 25% on this.  If the financials rally again tomorrow, I'll be getting out of part of the position.  In this environment, you just do not ignore a 30% gain in two days.  A few days ago, I also got into material names by buying the ETF XLB.  I've done this not because I think we are going to rally strong and we have hit bottom.  I did it because we were way oversold and there needed to be a short term rally.

I think this rally still has some legs, but not much more than this.  I would not be surprised if we break through 850 on the S&P and we get up beyond 8000 on the Dow.  I still went short on the DOW recently to give my portfolio some balance and hedge my bets but I think we still have some room on the upside before we correct again.

Do not chase this rally.  You should be selling now, not rushing in and chasing stocks as they take off.  If you feel you absolutely must get in now, just be ready to get out just as quickly.

Monday, March 16, 2009

How Much Money is "a lot"

I was asking a few people today at what salary do you consider someone to be making "a lot" of money.  I am not asking for any specific reason, I am just curious what people actually think is high salary wise.

The most common answer is "it depends".  Most people want to qualify what they think is a lot of money.  You get responses like, "what is a lot for one person is not for another" or "it depends on what your expenses are".  I get all of that but I am really want people to ignore all of that.  Just think of it from your perspective.  At what point, if you hear what someone makes, do you say to yourself, "That person makes a lot of money".

For me, that number is around $250,000, right at the Obama definition.  But I get my view might be skewed.  What do you think?

Sunday, March 15, 2009

BodyBackBuddy - A Review

Back Buddy Message CaneI am a back massage whore.  I constantly ask my FianceĆ© to rub my back and she was getting sick of it.  So I decided to get a Body Back Buddy Massage Cane.  It is an odd looking thing, but it is very effective.  I was not sure about getting it at first, but I figured at $30 it would not be that big of a risk getting it.  Add it to the fact that Amazon lets me return it within 30 days and it was a no brainer.

I have had this thing now for a few weeks and I have found it well worth the money.  It is no substitute for a good massage but if you have a knot in your back that you just cannot get at, this thing works great.  It can put very targeted pressure on a very specific spot.  Usually just what you need if you have had a hard day at the gym.  I find it very good on the trapezius parts of the back as well as the shoulders.  I find it less effective on my lower back where I often have a lot of back pain.  It is also supposed to be effective on other parts of your body like your feet and your legs but I rarely am sore in those parts of my body so have yet to really feel like this thing does anything for those body parts.

At the very least, this thing is a great conversation starter.  I usually have the thing lying around the house when guest come over.  If the person has never been to my place, they inevitably asks what the heck that thing is.   You have to admit, it is pretty odd-looking thing.  Most people think it is something for the cat since most of the odd looking things in the house are for the cat.

So while it is not a Massage Chair (which I will eventually get when I finally buy a house) it is not that bad at 1/100th of the price.


Wednesday, March 11, 2009

What to Say When You Get a Good Review

I finally got my annual review from my boss the other day.  All in all, it was really strong.  I did well across the board and scored really well in some key categories like "results focus" and "subordinate management".  I appropriately got some areas for improvement.  Most of it revolved around my somewhat abrupt style of talking at times.  While I pride myself on being an excellent communicator, there are times when I get into arguments that I can be very short with people.  I have a strong personality and when I think I am right, I REALLY think I am right.  If I am dealing with people who just do not see it my way, and I feel passionate, I admit I can be somewhat abrasive and condescending.

Ironically, I also got feedback that while I am very focused on my work and the work of my team I tend to do it at the exclusion of others.  That is, if it is not one of my projects, I do not really care as much to see it to the finish line.  Well duh!  I do not mind getting the feedback.  If people feel that way and wish to point it out to me, I am happy to hear the feedback and see if there is something I can do about it.  But I find it a little bit ironic that I would get praised for my results focused but get the feedback that I should divert some of that focus to help others achieve.  It is not that these two things are mutually exclusive, but there is a reason I am good at accomplishing my goals and hitting my deadlines.  I bring deep focus for myself and my team on the things we work on.  I get my team moving in the same direction and that requires doing this by deflecting external distractions.

In any case, my review was positive.  I got strong remarks from my main customer, the SVP of the division and that was probably the most important thing.  He is perhaps my strongest supporter and he is the person who probably matters the most.  But during my review I kept thinking to myself, "What the heck am I supposed to say to this?"  What do you say when your review is almost all positive.  All I could think of was, "Thanks" and then I focused on my areas of growth.  I just felt like saying anything more would just be silly.  Despite my rather large ego, I do not like people singing my praises and get uncomfortable in those situations.  So I moved the conversation on to other things.

The thing is, I do not think most people say anything.  I have had to give several reviews and many of them were really strong.  I do not remember having too many deep conversations with people who have done well in their review.  So I ask you, what do you say when you get a great review?  Do you go over why you got a great review?  Do you want more specifics about why you are so great?

Tuesday, March 10, 2009

Ignore This Rally

The market had its best day in months.  If you are smart, you will ignore it.  I will say it again, this market is not going anywhere.  We may see a bear market rally, but we will stay in this low trading range for months as the market finds a base.  When market moves violently, it is dangerous.  You can not get in and out of positions very safely.  So as much as this rally might bring a smile to your face, it could just as easily punch you in the nose when it reverses in a few days or weeks.

That being said, I did do a little bit of buying.  I bought some material names by buying the ETF XLB. I think material names might be down from here on a pullback, but I think the long term picture for commodities is bullish so I'm starting a little bit of buying here.  Overall, my portfolio had a great day.  I own some Nasdaq, some energy names, and some financials.  Most notably I am double long the financials here and long Morgan Stanley.  Both rallied over 20% today which made for a nice little bounce in these names.

I am hoping for a rather flat to down market tomorrow as there was some buying I wanted to do, but did not want to chase anything into today's rally.

Monday, March 9, 2009

Managers Should Not Need to Be Managed

It is amazing to me how much some managers need to be managed.  I am not sure why this is. After all, the ability is built into the job title.

I have worked with numerous managers in the past who for the life of them cannot even remember the simplest things that they need to do.  If you do not constantly remind them to do things it might never get done.  I often joke with people that Program Managers should have almost nothing to do.  If everyone just did their job and made sure the people who work for them do their job, then high level Program Management would almost be unnecessary.

But the ironic thing is that almost everywhere I have worked has a strong need to have someone coordinating the work of others.  Not just other individual contributors, other managers.  But why is that?  My thought is that managers have not actually learned how to be managers.  Most managers are just thrown into the job because they were very strong individual contributors.  This of course is the exact wrong way to pick who should become a manager.  We have a work society where your next promotion is almost exclusively determined if you did your current job well.  But that is a little silly if you think about it.  Just because I write solid code does not mean I have the people skills to be a good manager.  In fact, it might almost exclude me from it :)

But in all seriousness, I think it is astonishing how much time and effort is wasted in managing managers.  Perhaps if they were just given a little more training on how to be effective in this area it would not be such a problem.  At the very least, their bosses need to be very clear what a manager is expected to do and what they are expected not to do.  This is what I do.  I give my managers tremendous freedom on how they need to accomplish their job but at the same time I make it very clear that their main concern is the proper functioning of their team and responsibilities.  They should not rely on others, either myself or my Program Manager, to constantly remind them to do the things that are core to their job.

What have your experiences been like?  Have you worked with a lot of mangers that need managing?  Have you done anything to try and address this issue?

Sunday, March 8, 2009

Time to Dip Your Toe?

I am not so sure if the market is done going down.  In fact, I do not think we are done here.  I think S&P 600 is very possible which is just scary if you think about it.  That being said, you just never know when the bottom hits.  I am not suggesting it is time to run into the market, but there are certain stocks that are probably pretty good buys here if you can just put them away and not look at them for five years.

What do you ask are these stocks?  I have written before, I want to own the maker of stuff.  That is, I want to own companies that are actually tangible.  These are not the consumer names like Apple but rather the mkers of things like steel like US Steel (X) or copper miners like Freeport-McMoRan (FCX).  I think energy has found a nice little bottom now and want to look at energy names like Conoco Phillips (COP) which will do well when everything rebounds and we suddenly realize we all still drive cars.

I am not advocating running in tomorrow and buying everything in sight.  You have time to make your move, there is no doubt about that.  Even if the market makes a 10% move tomorrow, it will come back, so do not just run in.

Thursday, March 5, 2009

Setting Goals

Only a quick post tonight because I'm busy doing what I'm about to blog about, setting goals for my team and for myself.

It is an odd to set goals for your team and to watch other set goals for their teams.  I believe in setting SMART goals.  For those that don't know SMART goals are

  • S pecific

  • M easurable

  • A ttainable

  • R elevant

  • T imely


This simple thing is actually quite important because I am a strong believer in you have to do what you say you are going to do. Setting goals is just that, you should be sure that they are clear and that you can achieve them.  Other people just do not seem to get that and it amazes me.

Now to be fair to others, this is the first time my current company is really having everyone do goals.  This is a huge change than in years prior where nobody really had goals and everyone just went around to do their job without having any clue about how their performance would be measured.  Now, I do not believe you should go overboard with goal setting.  I have seen it go too much the other way, especially when I was at Microsoft.   But in general, I think it is important for employees to know what is expected to them and how they can demonstrate it.

But as I look over the goals of others, so many of them are extremely vague or completely unobtainable by that employee.  I have seen goals like, "Make people better".  What does that mean and how do you achieve that?  I see several people with revenue goals for the company but these people have no real way to affect that number.  I know it is important that the company meets their financial targets but why should an employee have a goal which they have no way to influence?

My goals are by no means perfect, but they generally follow the SMART guidelines.  How about you, have you ever had to set goals or had goals set for you that were completely unrealistic?

Wednesday, March 4, 2009

Democrats Oppose Increasing Taxes on the Wealthy?

Has the world gone mad?  Today, several Democratic leaders seem ready to oppose the President on his proposed tax hikes on the wealthy.  What the heck is the world coming to.

Most people who read this blog can probably guess I'm not in favor of raising taxes on the wealthy to support more government programs.  I would prefer we get back to a place where we have smaller government and less taxes for EVERYONE.  But yet in one of these ironic twists, this part of Obama's plans probably bothers me the least.  Now how on earth can someone with my views write this?

Well if you know me, you know I HATE the tax system.  I seriously think it may be the evilest tax system in the world.   I prefer any plan which makes the tax code simpler and more fair.  While I do not think this makes the tax code simpler, it makes it more complex, it does make it more fair. But it is not more fair in the way most people think of it.  I honestly do not care to tax the rich more than the poor.  What I do not like is when there are deductions in the tax code.  The more deductions you have in the tax code, the more loopholes you have.  The more deductions you have, the more you distort economic behavior.

By essentially giving rich people less deductions, you are distorting their behavior less.  If housing prices and charitable giving drop because rich people can no longer deduct these things I have absolutely no problem with that.  If people need a deduction to be charitable then we have some other problems.    If housing is only high because government subsidizes it at the expense of non-landowners and it falls, oh well.   What I would actually prefer is to get rid of these deductions for EVERYONE.  While there are other tax systems I prefer over the flat tax, I would at least concede that a flat tax would be better than the current system we have today which just does not make any sense.

Tuesday, March 3, 2009

Obama States Market is A Good Buy

Today, Obama came out and declared that for long term investors, the market is probably a good thing to buy right now.  The market reacted by selling off from its highs.

Not sure what the purpose of Obama coming out and saying this is.  In fact, I think it is pretty counterproductive.  The problem right now for the markets is the lack of confidence in the system.  There is so much uncertainty right now, that nobody wants to play the game.  The more that the government does, the more the market goes down.  Do not discount the market's reaction to Obama's plans.  They do not like it.   As much as I hate to say it, this is not all Bush's fault.  A lot of what the market is doing right now is in direct reaction to what they see as the government increasing regulations and controls on the economy.  This is something that market players obviously does not like.

To further my point, I think the market does not like being told by people like the President what is "good" or "bad".  It just feels like I'm being "sold" to.  It feels a little bit like he is trying to build confidence up by saying we should all be confident.  I have learned in my career that when people try to tell you everything is OK, chances are everything is not OK.

Is the market a good buy right now if you are a "long term" investor?  Is Obama right?  That is REALLY hard to say.  Do not buy the company line.  The company line just two or three years ago was that housing was ALWAYS a good buy.  Housing NEVER goes down.  Now people are trying to tell you if you have a buy and hold strategy you should do just that.  Tell that to the people who did that a dozen years ago.  We are right back where we started.  Not working out so great for those people.

Monday, March 2, 2009

More Bailouts & Dow 6000

It was announced today that AIG is getting yet another bailout. This is the fourth time the government has stepped in to try and save the company.  Does it worry anybody else that this the fourth time they are going back?  One thing I learned early on in my career is that when you have to deliver bad news, you do it exactly once.  You course correct and you give yourself enough room that even in a worse case scenario, you do not have to go back to the well.   Going back again just makes you lose credibility.  This clearly is not being done with any of the bailout plans.  People keep coming back for more.  AIG is back, GM and Chrysler are coming back, and more banks will come back.

You take this news along side the Dow breaking below 7000 and you have to wonder if there is any causation.  The market is behaving so badly because nobody has any confidence that we can get out of this.  Markets bounce back because people do not want to miss out on the potential upside.  But with the rules changing so rapidly and it being impossible to tell who will will and who will fail, there is nobody to buy stocks.  Just looking at volumes in trading, it does not seem to me to be an overabundance of sellers.  There just are no buyers.   In any market you need both.  So while I do not think sellers are rushing for the doors, you are most definitely not getting people who have any desire to get in.

At this point, I do not think Dow 6000 is that far fetched.  You would not have gotten me to say that a week ago but this is how quickly things have changed.  Lucky for me, I'm still mostly in cash and have not made any moves to get more long other than to get less short.  I am not sure I would get short from here but I also am pretty damn sure I will not be getting long either.

Sunday, March 1, 2009

Is There Any Good News?

Don't look now, but the market closed below the November bottom.  As I said in my last post, if it closed below this, all bets are off.  Next week is a make or break week.  Either stocks need to bounce here or we could easily have another 100 points to the downside.  Just a few weeks ago, I honestly could not  imagine a scenario where we could lose that 100 points. But in this type of market, it is impossible to really predict what the heck is going on next.

The news out there right now is just bad and looking to get worse.  A few things that caught my eye

They say, when there is no good news, that is the time to buy stocks.  I am not so sure I believe that right now.  I still think we are only in the 6th inning with plenty of more pain to go.  At the very least, I think we are probably flat for the next several months here so there is no rush to buy anything.  I may take a small long position and see if a bounce happens, but it will be a very small position.  It will be a position I will get in and out of quickly either direction the market moves.