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Stock Ideas Investors Daily Edge If You Wait For The Robins,Spring Will Be Over
Stock Ideas Investors Daily Edge If You Wait For The Robins,Spring Will Be Over 
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A contrarian speculator couldn't ask for a better sell signal… The International Energy Association reports worldwide demand for crude oil will to accelerate in 2008. The news comes on top of its claim that an oil "supply crunch" is around the corner. |
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| If You Wait For The Robins,Spring Will Be Over |
| Friday, 24 October 2008 | ||||||||
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Friday, FY08 week 43 Quote of the week: "Never let your ego get so close to your position that when your position goes, your ego goes with it." - Gen. Colin Powell A dozen thoughts on week 43. 1) Not taking Warren Buffett's advice is like turning down free golf lessons from Tiger Woods because everyone knows golf is a white guy's game. 2) Shocking! That's the only way to describe most of the media's reaction to Warren Buffett's remarkable admission in theNew York Timeslate last week that he is now buying stocks with his personal money. The majority of the media suggested that the world's greatest investor (and once again its richest man) was off his rocker. The old coot is just guessing, well-known commentators sneered. And, the media had to sneer, because Buffett's hopeful message runs counter to their's. It spent the past months over invested in scaring the pants off you... conspiracies abound! 3) If Warren Buffett were sitting in your living room having coffee and playing bridge with you and, say, financial guys from FOX News, CNBC and the Internet, whose investment advice would you take? Yeah, that's what I'd do too. I'd always go with the guy who built a $62-billion personal fortune from scratch. 4) Could two reasons be driving Buffett to buy stocks now? Sure, today's very low prices should mean superb long-term gains. But, maybe Buffett has figured out a short-term advantage, too.
You have to think with oil under $70, that there are going to be some real earnings surprises for companies such as Tyson Foods. Companies that haven't passed on too much of their added fuel costs to customers. Amid all the fear and loathing they've been spreading, there's a good chance that most financial writers have ignored the impact of oil that's 50% off its high. Though, I did see one headline that implied that oil that's too cheap would negatively impact the economy. I just couldn't bring myself to read that. Doom and gloom over cheap oil. Yikes! Anyone want to bet that this story's theme was something like, oil to cheap means people aren't buying it and that means we're in a recession. That would imply that conspicuous is the economy's savior - yeeeesh! Damned if you spend, damned if you don't. 5) Speaking of financial types, reading about Iceland's huge ongoing economic crisis reminded me of a very famous investment guru. He spent the past few years being way high on investing in Argentina, overly orgasmic on Iceland and depressingly down on China. Wonder if I'd get Nobel consideration for a paper identifying him as a true contrarian economic indicator. 6) Everyone got hot and bothered when Bank of America cut this quarter's dividend by 50%. If that extends through the year, it means buying BAC today would still lock you into a 5.20% annual yield. To review, here's a healthy bank that eased off its payout in order to get healthier. It now owns Merrill Lynch and Countrywide… two notorious outfits the bank must clean up. BAC's dividend yield is still 5.20%. Hint: BAC's ex-dividend date is December 3. 7) One of the cultural traits that makes America great is that we are dreamers… big dreamers. It's why a man in his mid 30s, with little or no post-secondary education… a laborer who has never even been an apprentice, and is a single parent who may make as much as $40,000 a year (about $586 a week take home after taxes)… is so worried about the $250,000 he's going to make someday. He's so worried about tomorrow, in fact, that he'll likely vote for the presidential candidate from the anti-labor political party with a history of cracking down on unions. It's the same party that is opposed to raising the national minimum wage from a whopping (pre-tax) $262 for a 40-hour week. In fact, if there were an award for most outrageous dream - one that flies in the face of both past and current evidence - the man who is now simply referred to as Joe the Plumber would be this week's big dream winner - hands down. He's sure he'll overcome 98.5 to 1 odds. You see, according to the US Census Bureau, only 1.5% of all American households have a combined annual gross income of $250,000 or more. 8) Don't know which is the bigger whore, the politician that used Joe the Plumber or the media that will now haunt Joe the Plumber. From this day on, any editor at a major financial publication, who's worth his salt, will send out a reporter every year or so to check on Joe's annual take-home pay. Even though he was probably the wrong guy to ask Sen. Obama a question about taxing the wealthy - having brought nothing more than a pop gun onto the presidential battlefield - you have to root for the naïve, old Joe, if only because it will keep the media off his back. 9) If you'll remember, Joe the Plumber lives in Ohio. According to the May 2007 occupational earnings report from the Bureau of Labor Statistics, the average annual income of Ohio's plumbers, pipefitters and steamfitters was $47,930. 10) Wouldn't you have loved to have witnessed Joe's reaction when he learned that the Republican National Committee (my old employer) dropped at least $150,000 on Gov. Sarah Palin's new wardrobe? That heady figure included nearly $50,000 at Saks Fifth Avenue and $75,062 at Neiman Marcus - two stores where all good reformer/mavericks shop. Too bad St. John Knits is a private company. 11) According to the Kaiser Family Foundation, in 2007 only 45% of companies with fewer than 10 employees offered health benefits, down from 57% in 2000. 12) Just to give you an idea how this works out for small businesses, here's what we're up against. Lynn and I have been a two-person small business for the past five years. We just changed our healthcare plan to an HMO with a $1,000-per-person annual deductible. This is a plan that isn't quite as good as our previous one. But, this one only costs us $15,288 a year… actually, with deductibles a $17,288 max. You small businessmen also know our other huge bill. Unlike people who work for an employer, we pay 100% of our Social Security and Medicare taxes… that's a fat 15.3% right off the top of everything we earn. So, even before we pay health care, combined with Massachusetts' 5% income tax, more than 40% of what we earn is whacked right off the top. And, this is why I think Joe the Plumber is really naïve. He's worried about how totally screwed he'll feel on that faraway, maybe "someday" when his income is $210,001 more than it is now. There's no way he'll get there with that attitude… with that chip already on his $40,000-a-year shoulder. Instead, he should envision the day when he runs over to Philadelphia in his BMW 750i each quarter to happily pay tax on $250,001. He was once taking home $30,000, now he's taking home around $150,000. On the way, he can shake his head in an ironic manner as he shoots past all those sniveling crybabies who think that taxes are what keep the working man down. And, since he's in Philly, he can have dinner at Le Bec Fin - or my favorite, Striped Bass - and commiserate with other wealthy people about how his taxes financed a middle-class tax cut for all those darned Joe the Plumbers in the world. Have a great weekend. Andy P.S. To let me know what you thought of today's article, send an e-mail to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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