Finance « Chris Penningroth’s Weltanschauung

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The Return of Feudalism?

Sunday, June 14th, 2009

I had been updating one of my useful (not earth-shatteringly important) slide shows a couple months ago in an effort to help explain to my fellow Airmen what had been transpiring in the larger economy and to try to help them understand where we were likely to go. In the process of looking forward I wanted to give a quick look back. I ran them all the way back to feudalism. In the process of researching what I thought would be a bullet that amounted to an historical footnote, I ran across a blog article on Mises.org called The Return of Feudalism that I thought I’d check, just in case we really did end up running the clock all the way back.

Is it possible we could be running all the way back full-circle to feudalism (either through or bypassing mercantilism on the journey)? I can’t say I’m fully confident in the direction we’re heading. It seems like there are too many people who have departed from smart game-playing who keep saying we’ll be able to fix the big problems via gimmicky (nuanced!) trick plays; as though one could get to and win the Super Bowl not with a West Coast offense but by making the fake field goal/punt or reverse handoff their standard tactic. Sometimes I wonder if we aren’t headed toward some sort of feudal version of the information economy. Some people, I’m sure, never doubted we’d left it (didn’t Marxists equate industrial capitalists with medieval robber barons? Why robber barons and why not the prior established aristocracy? I digress).

In the feudal era, those hardy souls who were mightier than the others of their tribe rose to prominence to become chieftains through the divine right of might. These gave way over time to landowning aristocrats who swore fealty to those with the divine right of kings. That age was largely overcome by industrialists wielding the divine right of capital backed by court-enforced contracts. Not satisfied with material wealth, or not appreciating it, we seem at the dawn of the information age to be also entering the age of the divine right of intellect. Who will be the gatekeepers and the power-wielders of this age? So far they seem to be folk so shrewd that they’re fooling no one but themselves.

Good luck plowing the land with your high IQ, fellas!

Posted in Finance, Politics, What's Left | 1 Comment »

A Reduction in the Defecit? Cool!

Thursday, June 11th, 2009

I must admit I had my doubts that the Federal Government would be able to reduce the deficit by half within the next few years like it said it would. I thought later that I saw a possible way to make it happen. I spent over twenty pages trying to explain and came to the conclusion that in order for the deficit to be halved, the Federal government will have to raise revenues (taxes) or cut spending. I’ll leave that to you the reader to determine which avenue will be the most likely.

The file I developed should be light reading (if you’re into economics)! Enjoy it if you can! I’ll post it in the Pages section. Unfortunately I was unable to copy the figures (which had been screen shots from graphs generated by an Excel spreadsheet I seem to have left on another computer somewhere). I’ll try to find them and get them updated.

Posted in Bonds, Finance, Politics, What's Left | 2 Comments »

My Quick Take on the Possibility of Inflation

Sunday, May 10th, 2009

Most of us know that the government is having Treasury spit money off the presses at the Mint fast enough to beat Jeff Gordon in the Daytona 500. Typically when this occurs, inflation rears its ugly head and devours the real value of any of my holdings in a bank. As I was thinking of ways to build a better shield to ward off this recurring demon, I began wondering if inflation would really become a problem at all.

It may sound insane, but think about it: For the past 12 years, much of our "economic gain" has occurred using credit, or in other words money that wasn’t really ever there to begin with. So perhaps to a large extent the newly minted reduced-value dollars will simply be replacing money that never existed in the first place. Maybe we can afford to print a lot for a little while and suffer no net inflation?

Thoughts?

Posted in Finance, Politics, What's Left | 1 Comment »

Just One Time

Sunday, May 10th, 2009

I’d like to see just one article in the weekly Motley Fool e-mailings not mention Warren Buffett.

Could you imagine ESPN never going without mentioning the New York Yankees once per hour? That’s kind of what it’s gotten to be like over there at Motley Fool. Foolishness with a small ‘f.’

Posted in Business, Finance, Internet | No Comments »

You Could Fool All of the People

Sunday, January 11th, 2009

I ran across this gem at the Motley Fool this morning while speeding through my e-mail. It was a post called Sizing Up Banking’s New Giants and was written by Morgan Housel. I emphasized my favorite part of the quote.

Back in August, I wrote, "If something is too big and complex to fail, perhaps we should make it smaller and less complex." Now’s probably not the time to throw another wrench in the financial system, but someone, someday is going to have to realize that if something’s too big to fail, it’s also probably too big to bail.

Posted in Banks, Business, Finance, Politics | 1 Comment »

Seventy-Nine

Sunday, December 7th, 2008

http://www.youtube.com/watch?v=nbK3RhCQoI8

Here’s an academic take on the financial crisis. This is 58:19 long, so grab a break and a cup of coffee if you mean to watch this! [Update - Sorry, for some reason embedding it did not work this time.]

I also just ran across a new favorite quote by Brian Rogers, T. Rowe Price Chairman and Chief Investment Officer: "Statistically speaking, the world does not end that often."

In case you were wondering, seventy-nine is 2008 minus 1929.

Update 2 - Attempt 2 to embed is below:

Posted in Banks, Business, Corporations, Finance, History, Real Estate | No Comments »

Crazy Market

Friday, January 25th, 2008

I know the market is going down. I’m just happy it’s finally stopped going sideways. I personally don’t sell short or deal with put options (or options in general). I had quit looking at my accounts for the past six months (I’m exagerating) because it was always the same number.

Now, where is all the money going? I used to suspect that when the big money started selling, the money had to go somewhere else. That may be true to an extent, but I was reading one prospectus that said the fund could invest defensively (to put it in a nutshell), but I wonder really how many funds invest in commodities, precious metals, etc. Or do they mostly just go into cash or bonds once they’ve sold their holdings?

I clearly need to get better at reading prospectuses (or is it prospecti?).

Posted in Business, Finance, Stocks | No Comments »

Selling

Thursday, November 8th, 2007

For any of you who have been tracking my investments with me, here’s what I’ve experienced and seen lately:

First, IBD has suggested that the market is now in a correction. After teasing us with 5 or 6 rolling distribution days for what seems like the past two years (or at least the past two months since the last correction in August), now’s the time to sell short if you’re into that sort of thing; or write a bunch of put options. Don’t quote me on options, I’m not an options trader/writer.

Apple Computers went from $15X.00 up to over $180/share, then yesterday it dove $10.83/share along with the rest of the market. I suppose if I’d held on for the past month I could have made a lot more than I did, but hey! at least I made money off that deal.

The shipping company I bought suffered a catastrophic decline after the last dip I mentioned. It went back up a little, but I ended up selling for a loss. It has since gone down quite a bit.

Same for Crocs footwear. I had been up a tad, but not up 20% within eight weeks, so I’d settled on holding it for awhile when something happened and it got crushed, I think it went down something like 35% in one day, plunging below its 50-day moving average. When it didn’t recover, I sold for a decent-sized loss. Apparently they reported earnings and everyone was unhappy. News I didn’t catch at the time included Crocs’ expansion into clothing. You’ve always got to watch for such things, earnings get diluted when growth companies start branching away from their core competence. Also, this is a disadvantage to being in the Far East. The market is open while I’m asleep, and there’s no way for me to see the stock action in order to sell before the next day. In cases like this, the damage is done and I don’t find out until the next day. Living in Germany wasn’t much easier, but at least I could see early action when before I went to bed and put in a sell order, limiting my potential losses (of course, sometimes the stock started down and then recovered later in the day. . . you can’t win ‘em all!).

Force Protection – I have no idea what went on there. It went up slightly and then dropped 20% and stayed down. I sold for a loss. I figured the contracts for the MRAP vehicles would buoy it and another company whose stock I bought, but that wasn’t the case at all.

I picked up a Chinese solar equipment company earlier, and it’s gone up nicely. One of the solar companies I was looking at but did not purchase went up $57.31/share yesterday! I wish I knew why the big jump (so does everyone else). That said, with the market going into a correction, it’s probably time to sell and lock in the profit from this one.

Overall, the losses haven’t quite wiped out the gains, but from June through now, I’m probably only up about 15%. That’s a lot better than almost all of my mutual funds have done! If I’d sold Crocs when it topped out and trimmed my positions in Force Protection and Garmin relatively early, I’d be up something like 35%.

Lessons learned! Check the charts and listen up for the news! Checking the news is easier said than done, of course. My wife keeps suggesting I use stop-loss orders; while I’m not a big fan of that, maybe my positions are too small to worry about a market maker deciding to shake me out. Maybe I’ll try that technique.

Posted in Finance, Stocks | No Comments »

Shipping

Thursday, October 18th, 2007

Wow! Here’s something you don’t want to see the day you buy a stock — a huge drop in price in high volume! Two days ago I purchased shares of a shipping company. The sector looks like it’s doing pretty well, and I picked what looked like the best of the bunch. It had about 35% institutional ownership (according to MSN Money) and was ranked highly by IBD. I checked the charts and it was definitely well-extended from a decent buying point, so I knew I was taking a risk (like leaving a couple grand in a money market that gets eaten by inflation isn’t a risk in and of itself!). Sure enough, the order went through first thing next morning, and the stock got crushed during the day.

Lucky for me I’m not prone to panic, because it went up on high volume the next day!

Posted in Finance, Stocks | No Comments »

Marketing

Friday, October 5th, 2007

I haven’t written about investing for awhile. I recently sold my holdings in Apple, it gapped up about a week ago and the volume seemed to be drying up. I made my 20% gain on it, although not in the IBD-recommended eight weeks or less. So I sold, making a small profit.

Other issues I’ve been scoping out have been Crocs and Force Protection. They’ve done well this week, but they went up on extremely light volume yesterday while the rest of the market chugged higher. That leaves me a tad concerned. Crocs is the maker of the shoes everyone seems to be buying. The danger there of course is that everyone who wants them has them, and earnings will dry up. Force Protection makes the Mine-Resistant Anti-Ambush vehicles that are in-demand in Downrangeland. They’re going to be facing some competition from Oshkosh trucks at a minimum, and depending on which team wins the most contracts, Force Protection may go nowhere. I’d consider it a fairly good risk, but I’m prepared to have to sell later on with no profit.

I’ll offer the standard disclaimer: I’m an amateur investor. You must do your own research. I tend to buy things late and have to sell early, making only a little profit. By the time you read this, there’s a good chance the stock will be on the way down.