Market Conditions

It's against human nature to be bullish these days. (…)

The stock market has been posting gains the past few days. After two very tough months to start 2009, what could go wrong? Plenty, especially if you are focused on just the Dow Jones Industrial Average.

Don't get hung up on the Dow Jones. The Dow Jones may not be a "relevant" yardstick for you to use. After all, it's only 30 stocks…and you might not own ANY of them.

You're probably not aware of this, but in the financial services industry, firms and advisors are strictly prohibited from running testimonials of any sort.

Someone is actually holding Jim Cramer responsible for some of the advice he has given, and also for the fact that CNBC has "morphed" into an entertainment channel.

Banks (and brokerage firms) that own mortgage backed securities have been required — since November 2007 — to use mark to market accounting on these securities. Coincidentally, this was just around the time these mortgage securities started dropping precipitously in value. 2007 saw many mortgage firms get wiped out, and brokerage firms and banks holding these assets started realizing the volatility of these assets.

By re-inflating the value of many securities on hand at banks, this will automatically raise the capital ratios at these banks.

I received a phone call this afternoon from someone who found my firm online.  The gentlemen has received no guidance regarding his 401k at work.  Last July, he had $286,000 in his plan. (…)

Mark to Market is a topic I have written about previously.
You can read about them here. (…)

Warren Buffett writes an annual letter to the shareholders of Berkshire Hathaway each year.  If you've never read them, you really ought to.  They are priceless gems.  Not a laugh a minute, but an interesting observation on what's happening. (…)

Throwing good money after bad into these banks is not the answer. (…)

What is left in the governments bag of tricks to get the banks back on track?  One topic that I wrote about — 5 months ago — has popped up this past week with more and more frequency.  We are finally starting to hear more and more chatter about relaxing "Mark to the market" regulations. (…)

This may be enlightening.   Guess what?  In some cases,
Your Stockbroker is Getting TARP Money.
Not just the brokerage firm, YOUR stockbroker himself or herself is getting TARP money. (…)

In this podcast, Tom Mullooly discusses several reasons why
Citibank would consider selling Smith Barney, to their competitor, Morgan Stanley. (…)

Economic recessions and economic depressions

Since 1854, the United States has been through 32 economic cycles, one cycle lasting (average) nearly 5 years.  That's not the length of a recession, that's an entire economic cycle.  This includes some recessions/depressions in the 1800's that lasted 3 years, another for 6 years and a long depression that lasted from 1873 through 1896, a period of 23 years. (…)

It was reported this week that the Treasury Department sold $32 billion in T-bills at a yield of 0%. (…)

How can so many people be so wrong for so long?
It wasn't all that long ago where we had gas lines, a prime rate that reached 20%, unemployment reaching 12%, and inflation at 13%. (…)

I don't know which side of the argument you fall on…bailout the automakers, or let them fail.  But a very compelling, and well-written editorial was submitted to the New York Times by Mitt Romney.  The question has been asked the last few days, "if the airlines can slink in and out of bankruptcy…why not the automakers?"  In fact, the NYC subway system originally ran as independent lines, until the magic word forced them all together into one wonderful rat hole: money. (…)

Don't worry about "why" your investment is falling.
Focus on "what" instead.  What is happening now. (…)

Take a walk with me down Memory Lane:
1973: S&P down over 17%  (ouch)
1974: S&P down over 29%. (ouch again)
The bottom for the S&P was reached in October 1974. (…)