Kangaroo Money

( Please see Kangaroo Money’s Disclaimer below. )

You will find our weekly comments here on this page with fuller opinions and reasons following after you hit the (click here to read more) highlights.  ( Currently, we have turned this feature off so that one and all can get a feel for our openings and read all that is available.  In the future, this feature will be turned on.)  Anyone can tell you a one or two sentence blurb, but we like to back up our comments with our views so that you can understand where we are coming from.  Below that in the U & C section, the KM Team will give you some of the latest information concerning some of the previous comments published here as well as compare the KM Team take on things to other counterparts.  The U & C section will be a nice way to see if the KM Team is staying the true course in the ocean of Economy.  Down lower, you will find our Market Mover of the Week feature, highlighting the one person that the KM Team thought was most responsible for moving the USA markets and / or economy for the week past.  Then will come the Definitions of the Week.  These are items that will be complied into a term dictionary at a later date but that will help you now as we explain some of the power phrases of the week just passed.  And starting this week, another new feature has been added called International Impact Incident of the Week.  The Triple I section will highlight an international situation either just passed or an upcoming event that the KM Team sees as a United States financial markets mover.  Somewhat like the MMW feature, we will check to see how our forecast of the Triple I event turned out.  Most importantly, The KangarooMoney.Com disclaimer has moved to the bottom of the last post on the page.  Please make sure to check the disclaimer out if you have any questions about how you should enjoy our writings here.

Because we are writing for everyone, don’t be afraid to let us know how we are doing.  This is an ongoing work-in-progress where we hope to bring fresh changes, new site additions and page features as we go forward.  As the days go by, we won’t forget to tell you we think we are doing — so don’t YOU forget to tell US how you think we are doing!  For now, enjoy, learn and earn!

Kangaroo Money Team

1. Save some pennies and lose the store.  The Associated Press — “A new plan for layoffs at Circuit City is openly targeting better-paid workers, risking a public backlash by implying that its wages are as subject to discounts as its flat-screen TVs.  (click here to read more)  The electronics retailer, facing larger competitors and falling sales, said Wednesday that it would lay off about 3,400 store workers — immediately — and replace them with lower-paid new hires as soon as possible.  ‘This strategy strikes me as being quite cold,’ said Bernard Baumohl, executive director of The Economic Outlook Group.  ‘I don’t think it’s in the best interest of Circuit City as a whole.”  Washington Post, Tuesday April 15, 2008 — “Blockbuster said yesterday that it has made an unsolicited offer to buy the struggling Circuit City for more than $1 Billion and create a new type of store that would merge multimedia content and consumer electronics.”  ( BBI, traded on the NYSE )How many times have we seen this drama?  It’s the same play only the character’s names change.  Ladies and Gentlemen, in tonight’s performance of “How To Run the Company Into the Ground”, the part of “Management” will be played by ‘insert name here’.  From KM Post “Week #16 2008″, we wrote, “‘This board is the quintessential example of what’s wrong with corporate America…’ Carl Icahn continues.  ‘What does it take to be qualified, loosing 37 billion dollars?  That’s what they’ve done.’”  Hey, we’ll stop using the quote when “management” wakes up.  (Circuit City Stores, Inc. — Circuit City Group, CC traded on the NYSE, May 2006 = 30.05 per share; May 2008 = 5.03 per share, I think they inverted it.  LOL)  You layoff your experienced help because you feel they are overpaid.  Oh yeah, we can get some young kid out of high school to do that job and pay them half the money too.  Really.  So, how did those kids do?  Let’s seeeee.  Product knowledge and service got so bad you lost customers and market share.  This happened while a pimply faced gum snapper was on their personal cell phone making after work plans instead of helping the customer.  That customer left the store in frustration vowing never to shop there again.  Go figure.  And the best part is Mr. Icahn saw the weakness, waited for an opening and now he could potentially buy the store chain on the cheap too.  Over simplified?  I don’t think so.  How many times have we seen this scenario played out over the last year?  The KM Team does not own Circuit City, or any retail stock, at this time. ( Sources: http://abcnews.go.com/GMA/story?id=2994476 ; http://www.newsobserver.com/706/story/558638.html ; http://www.washingtonpost.com/wp ; http://www.cnbc.com/id/15840232?video=69716533&play=1; Carl Icahn investment billionaire on March 24, 2008 in an appearance on CNBC’s Streetline segment pertaining to Motorola.
2. By the time you are reading this, you might have noticed that you are paying twice the amount for a gas fill-up, that your groceries cost about 5 or 10 dollars more per bag, that your basic living expenses are all going up seemingly daily.  And, most importantly, that your income hasn’t increased at all.  What can be done? (click here to read more) As we have all noticed, you expenses are rising and in the back of your mind you also realize that your income is not.  What you need to do right now is both boring and mind-opening but it needs to be done.  Gather all of your monthly bills, your last paystub, 4 large sheets of paper and 1 post-it note.  On the post-it note, write down your after taxes pay as a weekly, monthly and annual number.  Turn the post-it note face down on the table top.  On 2 of the sheets of paper, write 2008 at the top and on the other 2 sheets of paper, write 2009 on the top.  Put the 2009 sheets aside for now.  On one of the 2008 sheets, write at the top “Necessary Expenses” and on the other 2008 sheet write “Desired Expenses”.  Take the “Necessary Expenses” sheet and add 3 columns, Weekly, Monthly, Annual.  On the 1st line, write Savings.  Make this number in each column 10% of your after taxes income.  Do not argue about this as it will become obvious why you need this at the top.  On the following lines in this order write “Mortgage / Rent”, “Heating” and “Food”.  These 3 items are the next most important things in your expense life regardless of what you belief as you can live without a SUV but not without a roof over your head or food in your belly.  After these 4 items are on your sheet, add for each line your separate necessary expenses — electric, water, car payment, and so forth.  When you have completed your list, review it and make sure you have added everything you pay out on a regular basis, like cable, child support, gasoline, pet food, child care, dental and medical costs, and so forth.  Do not be general but rather be fairly detailed.  Now, take the 2008 sheet “Desired Expenses”.  On this sheet, add the 3 columns like before then start adding what you would like to buy or spend for the rest of 2008 — a new car, new clothes, a vacation, new household appliances, new CDs, new computer and so on.  All of the things that you thought that you might like this year.  Here, you need to specific as possible — do NOT generalize.  After you have completed the 2008 sheets, take the 2009 sheets and copy the columns and the items on to the 2009 sheets BUT for the numbers, increase your all of your necessary numbers, except your savings, by 10% and your desired numbers by 20%.  Are you ready?  Turn over the post-it note with your income numbers on it.  Now, compare the income numbers with the 2008 sheets then the 2009 sheets.  If your income numbers are the lowest numbers on the table, you are in serious trouble.  Put aside the “Desire Expense” sheets right now and compare the income numbers to your “Necessary Expense” sheets.  If your income numbers are STILL the lowest numbers on the table, you are almost beyond hope.  DO NOT REDUCE YOUR SAVINGS NUMBER!!!  You NEED that money to help in case of either additional rising costs in your life or REAL emergencies like illness, car repairs, or something major breaking that you HAVE to replace like a water heater or refrigerator.  You will need to cut out things like “Cable TV”, “Cellphone”, “Dining Out”, “Entertainment” and may even need to find a way to reduce items like “Car Payment” by selling the item and trading down or “Rent” by moving and trading down.  By the way, congratulations on putting together your “Budget Plan”.  Stare at these numbers long and hard little kangaroos.  The Expenses are likely to go up as opposed to your Income.  And remember, cut EXPENSES first that can be cut without harming your life, not your way of life.
3. Starting with this from Tim Paradis of The Associated Press Saturday May 10, 2008 — “Insurer American International Group Inc. ( www.aig.com, AIG traded on the NYSE ) helped send the Dow Jones Industrial Average ( see more information here at www.djindexes.com ) down about 120 points after posting a wider-than-expected first-quarter loss that rekindled anxiety about the strained state of the global financial system.  (click here to read more)  AIG reported it lost $7.81 billion — its second straight quarterly loss — and revealed plans to raise $12.5 billion in the coming months.  The world’s largest insurer, like many of its peers in the financial services sector, has seen its investments in the credit markets plunge in value.”  Then, from David Bogoslaw at BusinessWeek, May 9, 2008 — “The bulk of those writedowns was related to credit default swaps, the complex credit derivatives used either by debt owners to hedge against credit events or by speculators to bet on changes in credit spreads.  New York-based AIG said the loss included the impact of successful hedging activities that didn’t qualify for hedge accounting treatment or for which hedge accounting wasn’t used, including related foreign exchange gains and losses American International Group Inc. has lost close to half it’s stock value over the last year.  KM projects that AIG is leaving itself open for takeover or accusation.  ( 52 week range from May 2008 — 38.50 as a low and 72.97 as a high ).   Both of these companies, Travelers Companies Inc. ( www.travelers.com, TRV, traded on the NYSE ) and Zurich ( www.zurich.com, ZURN, traded on the Swiss Stock Exchange ) have the cash and the good management team to get this deal done.  Customer service complaints caused business to be lost, you know, the usual formula.  Even AIG’s own airplane-leasing business wants to cut and run…”(MarketWatch) — A profitable airplane-leasing business owned by American International Group Inc. is considering a break from the troubled insurance giant, according to a published report Monday.  AIG is going to have to do some fancy footwork to raise the capitol to get out of this one.”  “Travelers–Saint Paul, MN–(Business Wire) May 7, 2008 — The Board of Directors of The Travelers Companies, Inc. (NYSE:TRV) today approved a 3.45% increase in the company’s regular quarterly dividend, from $0.29 per common share to $0.30 per common share.”  As an investment, wait and watch, depending on who makes a play for AIG. (sources: http://www.washingtonpost.com/wp-dyn/content/article/2008/05/10/AR2008051001206.html ; http://www.businessweek.com/investor/content/may2008/pi2008059_185381.htm?chan=top+news_top+news+index_news+%2B+analysis ; http://www.zurichinsurance.co.uk/insurance/hom/welcome.htm ; http://www.travelers.com ; http://www.insurance-business-review.com/article_news_print.asp?quid=8F9E19F1-413F-4055-8BA9-E6820604AA6A ; http://www.marketwatch.com/news/story/aigs-airplane-leasing-company-may-pursue/story.aspx?guid=%7bB2567C8f-91E6-47B6-BCEF-7A3235BE2370%7d&print=true&dist=printTop ;
4. The purchase of Electronic Data Systems Corp. ( www.eds.com, EDS, traded on the NYSE ) by Hewlett-Packard ( www.hp.com, HPQ, traded on the NYSE ) for $13.9 Billion shows that the consolidation period of the recession is beginning.  While the purchase will be as controversial as the 2002 Compaq Computer purchase, the belief is that this time HP has made a good deal.  That is, unless you work for EDS or HP.  That is because what usually happens when the consolidation period begins to wind down is the layoff period heats up.  (click here to read more) As can be expected whenever one company buys another, the overlap jobs are usually quickly spotted and the weaker of the positions gets cut, usually in the purchased company.  This is not only nodded at by the two companies involved but by the general population as well.  In what had been passing as “normal days” back in 2007, a layoff total of 5 or 10 thousand out of the two companies the size of Hewlett-Packard and EDS would hardly be noticed and the affected people would be quickly picked up by surrounding companies.  But now, with the general population refusing to accept reality that the recession is not only upon us but will linger and drain us for at least 18 months more, that number of laid off people will begin to stack up in the areas that they live.  Consolidation of companies take place all of the time, and the associated job losses also occur, and usually this is all for the better.  Indeed, the consolidation that is forthcoming between HP & EDS will mean a stronger company and better products in the long run.  From a stock point of view, the long view by the way, that is a good thing because an investor such as yourself and Kangaroo Money wants a long, year-after-year earning money type of company to own stock in.  It is not going to be an explosive uphill graph climb but it will be a fairly steady rise up capable of earning a somewhat predictable income for quite a while.  That being said, the impact that as of today the size is unknown layoffs will have not only on the new combined company but rather on the rest of the economy, even within the HP/EDS competitors, is something to be concerned with.  Yes, it is only one wave on the beach but, so has every tsunami that has rolled to shore lately.  Be aware little kangaroos, be aware.

Updates and Comparisons: 

Market Mover of the Week:The KM Team debated heavily during the last week to pick Venezuelan President Hugo Chavez as the MMW.  However, there is little doubt that the Market Mover of the Week ended up being Carl Ichan due to the Yahoo / MSN situation.  Much like everyone predicted, the purchase of Yahoo by the MSN Group is still on the table and Mr. Ichan is making Yahoo management feel the pain of not getting their, and their stockholders, the money that Mr. Ichan feels everyone is entitled to.  Carl Ichan is not a man to be disregarded or shrugged off.  His comments and attitude this week put that on full display.  That’s why he is our MMW of Week 20.

Market Mover for Week 21 2008:  With all of the noise coming out of the AIG organization can Hank Greenberg keep quiet for very long?  The KM Team doubt it.  Look for Mr. Greenberg to jump up and make noise this week, shaking the whole market as he goes.  Unfortunately, this could be the last chance Mr. Greenberg gets to make noise.  We’ll see next week!

International Impact Incident:  The choice for the 2nd Triple I is the impact of the earthquake in China.  As China fights its way through a year long battle to bring the world a smiling happy face of what that government wants China to be in the world’s eyes, the truth is much grimmer and dirtier and, to their great regret, visible for all to see.  Now comes a pounding destructive earthquake of almost 7.9 on the scale and the great horror that in one place alone, nearly 900 schoolchildren have been buried and killed by nature.  The long financial impact of this disaster has yet to be assessed as people are still digging out from the rubble.  It will overshadow the human foul-up in Myanmar / Burma and cause more people to die there but the total impact on the United States economy will probably not be felt until later in 2008 and beyond.  Watch for the signs of what is to come by looking past the devastation in this unfortunate disaster.

DEFINITIONS:

EXPENSE: an outflow of money to either a person or a separate entity for services, goods or a cost of something given; paying rent for living in an apartment or home — paying for groceries or fuel — paying for a haircut or dental work are all examples of an expense; a necessary expense could be paying rent or a mortgage, buying auto fuel or paying for groceries — the items are necessary to reasonably survive in the current world

CREDIT DERIVATIVE: a financial or banking method whose price and value is derived from the belief of creditworthiness of a 3rd partys’ financial obligations of a third party, which is then seperated and traded among others who believe in the same way; an example would be taking a persons mortgage, estimating their ability to be able to pay the entire possible life the mortgage and selling either part or whole of that mortgage to others who agree with your assessment of possible lifetime payment of the mortgage debt

MANAGEMENT TEAM:  the group of people that are directly responsible for the day-to-day operations of a company, regardless of size; the accepted MANAGEMENT TEAM at Ford Motor Company is considerably larger than the same group at Kangaroo Money; an example of a Bakery Store Management Team would be the baker, the counter person, the purchasing agent, the accountant and the clean-up person; who makes up you decision making, day-to-day operations Management Team?

TSUNAMI: the common usage is a series of waves that is created when a body of water has been rapidly displaced due to some natural cause ( undersea earthquake for example ) or possibly some man-made cause ( see Soviet Union use of nuclear weapons in creating lakes, 1950’s ); in business jargon today, a tsunami of events is considered to be such things as poor sales, delayed product delivery, customer complaints and God-created problems like the weather, all impacting your business at the same time ( see United States Airline Companies when considering a business tsunami event )

BUDGET: a listing of all known and / or expect expenses and revenues; a written plan of what can be reasonably expected to be paid out for operations in all details then balanced against what can be reasonably expected to be taken in and / or banked in return; a business or a personal budget is necessary in order to determine if all expected expenses can be met by the associated revenues; a negative or unbalanced budget is when expenses outrun revenues

 While the KM Team posting is short in article count, we hope you notice that is quite full of the information that you have written to us about as being what you would like to see. The month of May is a difficult time for us here due to the many impacts of our daily lives but we hope that you still enjoy and learn from the time we spend to write to you.  In the meantime, Kangaroo Money is happy to see that we expanded our worldwide readership and can now count India, Spain, Vietnam, Sweden and Australia, oh my!, to name a few international readers) but that you are taking the time to read and digest our writings.   What better reason for us to keep doing what we enjoy doing?  Please keep those comments coming in because we do appreciate hearing from you.  As the days go by, we won’t forget to tell you what we think we are doing — so don’t YOU forget to tell US how you think we are doing!  For now, enjoy, learn and earn.    R, S & D…

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Kangaroo Money would like to apologize again for the situations that led to such a late posting this week.  The KM Team hope that your wait has been justly rewarded and that you enjoy your reading this week!

( Please see Kangaroo Money’s Disclaimer below. )

You will find our weekly comments here on this page with fuller opinions and reasons following after you hit the (click here to read more) highlights.  ( Currently, we have turned this feature off so that one and all can get a feel for our openings and read all that is available.  In the future, this feature will be turned on.)  Anyone can tell you a one or two sentence blurb, but we like to back up our comments with our views so that you can understand where we are coming from.  Below that in the U & C section, the KM Team will give you some of the latest information concerning some of the previous comments published here as well as compare the KM Team take on things to other counterparts.  The U & C section will be a nice way to see if the KM Team is staying the true course in the ocean of Economy.  Down lower, you will find our Market Mover of the Week feature, highlighting the one person that the KM Team thought was most responsible for moving the USA markets and / or economy for the week past.  Then will come the Definitions of the Week.  These are items that will be complied into a term dictionary at a later date but that will help you now as we explain some of the power phrases of the week just passed.  And starting this week, another new feature has been added called International Impact Incident of the Week.  The Triple I section will highlight an international situation either just passed or an upcoming event that the KM Team sees as a United States financial markets mover.  Somewhat like the MMW feature, we will check to see how our forecast of the Triple I event turned out.  Most importantly, The KangarooMoney.Com disclaimer has moved to the bottom of the last post on the page.  Please make sure to check the disclaimer out if you have any questions about how you should enjoy our writings here.

Because we are writing for everyone, don’t be afraid to let us know how we are doing.  This is an ongoing work-in-progress where we hope to bring fresh changes, new site additions and page features as we go forward.  As the days go by, we won’t forget to tell you we think we are doing — so don’t YOU forget to tell US how you think we are doing!  For now, enjoy, learn and earn!

Kangaroo Money Team

1. In Week 16, the Kangaroo Money Team  the article ”Rely on the strength of your Brand -OR- Dance with the Girl that brung ya“.  In considering that topic, the Disney Company ( DIS, traded on NYSE,  stock owned by Kangaroo Money partners ) under the leadership of President Robert A. “Bob” Iger has worked that angle to perfection.  (click here to read more)  CNBC.com on May 6, 2008, reported that the Walt Disney Company reported a higher quarterly profit, boosted by strong results at its studio and stronger-than-expected theme park attendance.  Net income in the fiscal second quarter ended March 29, 2008 was $1.1 Billion, or 58 cents per share, as compared with $919 Million, or 44 cents per share in the same quarter ended last year.  Disney’s revenue rose to $8.71 Billion from $8.07 Billion a year earlier.  “The Disney Difference” keeps the magic going for the 2nd quarter profits.  Last year, the Disney Company rolled out their “Basics” program.  The goal was, and still is, to improve guest service.  Disney also introduced “Bibbidi Bobidi Boutique”, which is currently doing  turnaway business.  Along with a combination of international business ( because of the favorable exchange rate ) and the affordable hotel packages as presented by the theme parks has made for a profitable 2nd quarter.  Even through the winter-spring writers strike this year, Disney’s ABC TV division had a great deal of live sporting events which minimized the strike effectiveness.  So, as an investment, Disney seems to be recession proof.  And in this current market, better to invest in a business that is going to be around for the long term.  (for additional information : http://en.wikipedia.org/wiki/Robert Iger and http://disneyworld.disney.go.com/wdw/moreMagic/shoppingDetail?id=BibbidiBobbidiBoutiquePage  http://www.cnbc.com/id/24489753/for/cnbc/ )
2. American households are finding that the increase in the many typical weekly and monthly bills that they are trying to keep up with are putting an extra crimp in a special area that they never thought would be impacted.  That one special area will also shake up a $41 Billion a year industry.  What is affecting these households?  Their pets.  (click here to read more)  As money becomes tighter and the individual standard of living drops so that gas tanks can be filled, rent can be paid, groceries can bought and school supplies and clothes can be bought, Fido and Fluffy are finding themselves on the outs with the people who took them in.  The truth of the matter is, people are finding out that the Big Box Store canned food tastes just as good to them as the expensive stuff that they had been buying before.  These same people also know that Fido and Fluffy, much like their own children, will eventually eat what is before them rather than go hungry again.  But wait.  “$41 BILLION a YEAR industry”?  Can that number be correct?  According to BussinessWeek August 6, 2007, (http://www.businessweek.com/magazine/content/07_32/b4045001.htm) Americans were spending that amount per year which they point out was greater than the GDP of all but 64 of the world’s current 182 countries.  It is safe to assume that number was still tracking upward in the last 6 months until lately.  While it is too soon to see a downward trend starting, it is safe to assume that Fido, Fluffy and the host of other furry and finny little critters that people had loved before will be just too much of a cost burden to them now.  The KM Team are stating now that the downward push on pet orientated companies, such as PetSmart (PETM, traded on the NASDAQ) and Procter and Gamble (PG, traded on the NYSE, owner of the Iams brands) to name just two of the bigger companies impacted, will begin to show up in the 3rd and 4th quarters of 2008 and continue for several years to come.  The KM Team are aware that pets now impact food, toy, medical and housing companies that you wouldn’t think about, and BusinessWeek as well as the American Pets Products Manufacturers Association, Inc., or APPMA ( www.appam.org) agree that wide ranging affects will be occurring.  So learn from Fido and Fluffy right now and be finicky about these types of stocks.  And  please, don’t send Fido andFluffyto the SCPA just because you think a tank of gas is more important than your life long friend.
3. As if there wasn’t enough competition between the old “Baby Bells” telephone companies, now we have ClearWire, Sprint and Nextel talking a possible merger.  Cable companies Comcast, Time Warner Cable and Bright House, to name a few, are offering telephone service.  And now, there’s MagicJack, a free telephone service?  Well, almost free.  (click here to read more)  YMAX founder, (www.ymaxcorp.com)  Dan Borislow, invented the MagicJack allowing landline telephone charges to be virtually eliminated.  MagicJack, LP, is a limited partnership that supplies the MagicJack device which enables you to make telephone calls through your computer with some enhanced features also requiring the MagicJack device to be installed.  In addition to the device and software, you will need a computer running Windows XP with a high speed internet connection and an available USB port.  Here’s the catch: the MagicJack device allows you to receive for free incoming calls using the telephone number assigned to you.  If you register for MagicJack outgoing service ( MagicOut ), the MagicJack device allows you to make free outgoing calls to other MagicJack device users located anywhere in the world, as well as the subscribers on traditional telephone networks and cellular networks in the United States.  There are other services out them such as Skype (www.vonage.com) and Vonage (www.skype.com) that comparisons should be made with.  Will these alternative companies be able to affect the traditional phone company profits?  Maybe.  One of the KM Team did order the  MagicJack in the week past.  He’s not totally confident in the reliability of the system yet, as for example service was interrupted for site upgrades according to the fault message this week.  But he likes it as a second home telephone line for handling US calls only.  The KM Team will keep watching the MagicJack group to see if they decide to go public. 
4. Usually when people talk about utilities, they are not typically spoken of with fondness.  Most people think of utilities as things dealing with their homes — gas, oil, electricity and water.  This would be a very true assumption.  And lately, the one utility spoken of more than anything else in most of the country is not what you think: water.  (click here to read more)  Some of the most unglamourous and boring items in an investment persons’ arsenal are utilities.  They typically do not have a great deal of movement outside of a small trading range; up a dollar one month, down 75 cents the next month and then up 75 cents the next month to use an example.  Up until the powerful drought that has gripped the United States over the last few years, water companies were boring and steady earners that were treated much like a bond fund or saving account.  Then came the low hurricane counts, the light winters and the lack of rain in the United States.  Now, water is debated in State Houses around the country, lectured about in the US Congress and argued about in the US Supreme Court.  And Kangaroo Money has been following this situation for about that whole time.  A quick search will bring up at least 15 different companies, from Aqua America Inc. ( WTR, traded on the NYSE, a stock owned by Kangaroo Money Partners) to Pennichuck Corp. ( PNNW, traded on the NASDAQ ) and on to China Water Group Inc. ( CHWG, traded on the OTC exchange ).  These companies are not hot sexy money like Google ( GOOG, traded on the NASDAQ ) or even last year’s darling Garmin Ltd. ( GRMN, traded on the NASDAQ ) but a quick review will find these plain jane water stocks now dancing along their bottoms with little to go except up.  Review their profiles, read their accounting and check to see if these are good items to either start your portfolio or to add to it.  The KM Team believes that having one or two of these “boring” items in your holdings will be excellent in the long run.
5. The intent of this article is not to knock the medical profession.  Congress is working on a proposed bill to bar the medical companies from advertising for three years after they introduce a new drug.  This is in response to the rush in some cases to get drugs out into the public use world as fast as possible to capitalize on the “buzz” that they had created coming out of development.  Some of those drugs did not work as advertised.  (click here to read more)  So, with a bad drug in one hand and a doctor willing to “play ball” in the other, you can see how this could go on for so long.  Anyway, if I could refresh your memory of the situation some years back of doctors who were reselling company supplied medical samples.  Now, I’m not saying the same type of doctor that was prosecuted for Medicaid insurance fraud would love this arrangement, or maybe I am.  According to the Boston Globe (www.boston.com) as of April 20th 2004, 11 officials of TAP Pharmaceutical Products went on trail for fraud in a case that would challenge long standing marketing tactics in the drug industry.  This group were on trail for allegedly defrauding the US government of millions of dollars by bribing doctors and hospitals to buy and prescribe the company’s products instead of a less expensive rival drug.  Previously, the company had already paid a then record $855 Million federal fine to settle SIMILAR charges.  More disconcerting to the overall trail situations were the 25 individual doctors, 6 hospitals, 2 health plans and 26 group practices that ended up being named but not charged in the situation.  Besides cash, bribes included free company drugs, trips to swanky resorts and, in New England the Holy Grail — Red Sox vs. Yankee tickets.  Also: Medicaid fraud schemes, or billing for “phantom patients” who did not really receive services, or goods that were not provided, or billing for old items like they were new or billing for services more hours in the day than there really is.  The point being, some doctors, not all doctors but some, may not be as honest as we would like.  In the Wall Street Journal’s blog on health and the business of health, written by Jacob Goldstein, in particular the May  8th, 2008 article, the Lipitor, Vytorin and Procrit COMMERCIALS  were scrutinized in Congress, the point being, some companies, not all companies but some, may not be as honest as we would like them to be (http://online.wsj.com/article/SB121021529508976149.html?)mod=WSJBlog).  And now, even as this is being read, US Rep. Bart Stupak is preparing and or delivering remarks in a Congressional hearing on “potentially misleading and deceptive tactics” in direct-to-consumer drug ads.  Stupak, (D-Mich) aimed to lay the groundwork for legislation to clamp down on drug marketing, including giving the FDA the power to force changes in TV drug ads before they are broadcast.  Stupak and Co. will look specifically at ads for three drugs: Lipitor, a Pfizer drug; Vytorin, from Merck and Schering-Plough; and Procrit, a Johnson & Johnson anemia drug.  Stupak had told the Wall Street Journal ( www.wsj.com) that the drug ads “brings patients into their doctors’ offices and helps start important doctor-patient conversations about conditions that might otherwise go undiagnosed or untreated.”  The point being, some drug companies, not all but some, may not be as honest as we would like them to be.
6. Over the last five to six years, dating back to at least the benchmark date of 9/11/01, the natural and man made disasters that have befallen our planet has been incredible.  Beginning with that horrific date, following through monstrous winter and summer storms in the Untied States, the devastating hurricanes, the earthquakes, the volcanoes and the tsunamis, the amount of destruction that has taken place has been incredible to say the least.  And some companies are still making money because of it.  (click here to read more)  Companies such as Caterpillar ( CAT, traded on the NYSE, a stock owned by Kangaroo Money Partners) and Schlumberger ( SLB, traded on the NYSE ) while not considered to be directly profiting from disaster have been doing rather well because of them.  The entire heavy equipment sector that these companies belong to has seen a very nice run for the last 7 years now.  And the happiness that can be found in that long run is that those businesses are making money around the world.  Thus, they are not tied in to the economic downturn ( can’t we just all say recession and be done with it? ) that is taking place in the United States and Europe but are making sales where ever buyers need equipment.  The range of equipment needed in the need “hurry up and develop” countries such as China, India, the Koreas and the richer North African countries, is long and varied.  When you don’t have anything, you need everything.  Disasters make for misery untold, such as the tsunami that hit South Western Asia, the hurricanes that hit South Eastern United States or the earthquake devastation’s that struck the Middle East but, they also allow for a reshaping of what was to what is needed or what is desired.  These companies are sought out to help put the world right again whenever possible.  And during very good times, like what is just starting to happen in South America in Brazil and Venezuela, that reshaping is turning nature into man desired areas.  While it appears that the man made horrors and disasters are calming down for now, look for the US hurricane season to be terrible as it follows an outlandishly stronger tornado Spring.  And look for more countries that are beginning to enjoy new found prosperity at the expense of the US weakness to want to buy equipment in order to look more like…the US.  Of course.
7. You want to do what…per the “May 6th (Bloomberg) — Obama, Clinton Put Gasoline Tax at Center of Debate (Update2) by Catherine Dodge; Obama last night again blasted the summer gas-tax holiday idea saying it offers “pennies for 90 days but probably won’t deliver those pennies.”  Get Through the Election.  Such proposals are examples of when “politicians are saying something just to get through the next election instead of actually solving the problem,” he said at the American Legion Mall in Indianapolis.  (click here to read more)  The gasoline-tax moratorium emerged as a campaign issue as the two Democrats, who on other issues have offered policy prescriptions with more similarities than differences, tried to contrast the choices before voters.”  (www.bloomberg.com)  On this occasion, the KM Team agrees with Mr. Obama, this gas-tax holiday, it is nothing but a stunt.  Not even a year ago, we had a bridge collapse, people killed.  Is everybody’s memory that short?  Andnow we are actually thinking of cutting the gas tax for the summer.  For people who are trying to get elected to the highest public service job in the country.  This proposal is a disservice not only to the motoring public but also for the safety of the public at large.  Please let me remind everybody of a tragedy that happened less than a year ago…Minneapolis Bridge Collapses, a portion of Minneapolis’ I-35W bridge fell into the Mississippi during rush hour August 1st, spilling cars into the Mississippi River below.  Investigators are seeking answers as to why the bridge collapsed.  Officials Warn of Possible Flaw in Nation’s Bridges by Jason Beaubien August 9, 2007.  Federal authorities are warning that there may be a design flaw in bridges nationwide.  The problem is not omitted to bridges similar to the one that collapsed in Minneapolis.  They’re also warning about the extra weight put on a bridge during repairs…”Federal authorities are warning that there may be design flaw in bridges nationwide.”  The nation doesn’t need candidates that can cry on queue or war hero’s from days gone by or smoothtalkers with no real plan to back up their pie in the sky ideas talking about change for change sake.  We need common sense leaders who put the public good ahead of special interest.  (see the following: http://politicalticker.blogs.cnn.com , www.npr.org , www.businessweek.com , www.fhwa.dot.gov , www.bloomberg.com )
8. Many of you have asked the Kangaroo Money Team how do we come to know the articles that we are writing about.  How do we come up with the information to tag our writings to give you a brief but compact and tight situation that could help you not only learn about “The Economy” but to possibly profit from it as well.  The answer is simple: we read.  ALOT.  (click here to read more)  The KM Team do a great deal of what can only be termed “free association”, which is to say that we make logic jumps based on what we see and hear going on around us, like seeing the 18 wheelers pass us on the highway and thinking that perhaps new business is in the area and then what that might mean to the local economy.  But having a thought and having a plan are two very different things.  So the KM Team will take those thoughts back to our offices or to the library and dig into the newspapers, into the business magazines and into the other periodicals and books that make up such a great deal of the business world.  What may have started with seeing a truck on the interstate go by for the first time turns into looking them up in the Wall Street Journal ( www.wsj.com) pages which turns into checking the back copies of BusinessWeek ( www.businessweek.com) which turns into cross checking references of a CEO turned author about how United Parcel Service ( UPS, traded on the NYSE ) started out and now needs to change based on today’s economy.  Reading plays such a large part of Kangaroo Money Partners buying and selling decisions because the talking heads on television and / or the internet can distract away from a major point that would show up in a well written article or book.  And, for as much as the KM Team enjoys watching CNBC, Bloomberg Television, Fox Business Block and CNNFinancial, those talking heads tend to quickly become yelling heads when more than one of them are in studio together.  Please.  Take the time to read, re-read and digest a section of the WSJ at the library ( your tax dollars at work! ) or borrow your office copy of Newsweek or Time and glomb onto a new situation that merits an extra look see.  Go at your own pace.  No one reads “War And Peace” in one sitting so you shouldn’t feel that you have to “go deep” at the beginning.  Too much to ask for to get you to read an hour or so per week?  Then find your local business news radio station ( probably down on the AM dial for those of you without pay for radio ) and tune in on the way to work.  The KM Team is partial to MarketPlace on NPR (see our blogroll above) on the way home at night.  But, take a moment and read all about it.  It will compound your interest in more ways than one!

Updates and Comparisons:

In Week 17, Kangaroo Money gave you a brief overview concerning PayDay Loans, writing “So you don’t have to use something that looks like and works like a Payday loan.  The KM Team wants you to build up your bank account or maybe invest in the stock market.  The point is to help change bad financial habits to good ones. ”  As of May 7th, 2008, The Unionleader newspaper of NH (www.unionleader.com) reports that the State of NH has passed a law that the Governor was expected to sign that would effectively shut down the PayDay loan business in that state as of January 1st 2009.  In part, the report states “The bill sets a 36 percent cap on annualized interest rates, and restricts the number of times a borrower can take a loan from a pay day loan shop.”  (read the whole article at http://unionleader.com/article.aspx?headline=Legislature+cracks+down+on+payday+lenders&articleId=04003028-ddda-4f63-9371-fb5670a9f5e9 )  Again, Kangaroo Money is ahead in reporting on things to come in the economy.  It appears that legal loansharking is now paid out.  Too bad.

MARKET MOVER OF THE WEEK: The KM Team was right on the money last week as Microsoft CEO Steve Ballmer set the tone for the week on Wall Street by backing away, at least for the moment, on having Microsoft purchase Yahoo, Inc.  Truth be told, Yahoo turned down the last offer from Microsoft but it was the determination of the Mr. Ballmer to dump the deal as it stands.  That move started the week in a tailspin for Wall Street from which it did not recover.  The doom-and-gloom group, coupled with the spinning upward oil prices, started in a sour mood, stayed in a sour mood and ended in a sour mood.  Mr. Ballmer did not really say too much about the situation after Tuesday evening but what he already had said was more than enough to move the markets for Week 19 2008.  Congratulations on being our MMW Mr. Ballmer.

Week 20 2008 Market Mover of the Week: There is little doubt at KM that the unfortunate MMW of Week 20 will be the President of Venezuela, Hugo Chavez.  His continued battling with the United States, his neighbor government in Colombia and even with his own people will set up a situation in which the US has to punish him and there by hurt the US in obtaining oil supplies.  If the United States is to carry a legitimate role against state sponsored terrorism and the government leaders who support such a thing, then the way is clear that President Chavez must be dealt with in the same way as Cuba, Iran, North Korea, Sudan and Syria.  Let us all hope that President Chavez finally realizes the dangerous game he is playing.  The KM Team hope that we he is the MMW in only a positive way.

International Impact Incident:  The clear choice for the first Triple I would be the Myanmar / Burma Cyclone disaster, which will have a very long range impact to the Southeast Asia part of the world.  When you consider how the Junta of that country is reacting not only to the actual disaster itself but more so to the help that is being offered from around the world, it is clear that this situation can not stand for long.  The human foul-up in Myanmar / Burma will certainly cause more people to die but the future harm to the overall economy and the ability of that country and the surrounding countries of the region to recover and grow will put a strain on an already worldwide economic crunch.  The impact to the United States will probably not be seen for 6 to 12 months.  Watch for aid related industry impacts.

DEFINITIONS

GDP- Gross Domestic Product — one of the measurements of national income and output of a country; typically the math formula is comprised of other national measurements and would look like: {consumption + gross investment + government spending + ( exports - imports )} ; the total is considered the GDP of a country, with a higher number being a good figure

Limited Partnership –in a business arrangement, one or more contracted partners have limited management control, share the right to use company assets and properties, and share in a predetermined manner profits of the company

FDA — abbreviation for Food And Drug Administration; an agency inside of the Health and Human Services Department of the United States; responsible for the safety regulations of areas concerning not only food and drugs consumed by humans but also as a regulator of safety concerns for medical devices, blood products, cosmetics and veterinary products

OTC — abbreviation for Over The Counter; over the counter trading is considered trading any financial instrument such as stock and bonds directly between a buyer of and seller of that instrument; many such traders use the OTCBB or Over The Counter Bulletin Board via the Internet

Heavy Equipment– heavy duty vehicles specially built for major construction tasks such as mining and terraforming, large scale building erection and / or large scale demolition projects; sometimes also referred to as “earth moving equipment”

 Kangaroo Money is happy to see that we have a worldwide readership! What better reason for us to keep doing what we enjoy doing? Keep those comments coming in, we do appreciate hearing from you. As the days go by, we won’t forget to tell you what we think we are doing — so don’t YOU forget to tell US how you think we are doing!

For now, enjoy, learn and earn. R, S & D…

Due the unfortunate weather conditions in the Kangaroo Money Team areas, the Week 19 2008 posting has been delayed until later May 13th 2008 EST.  This is the result of destructive storms in the areas of our communication servers.  We apologize for the inconvenience and will be back with all of you as soon as possible on the 13th.  In the meantime, please re-read some of our earlier postings and do some research via your chosen method.  The KM Team look forward to working with you later on May 13th 2008.

Kangaroo Money Team

( Please see Kangaroo Money’s Disclaimer below. )

You will find our weekly comments here on this page with fuller opinions and reasons following after you hit the (click here to read more) highlights.  ( Currently, we have turned this feature off so that one and all can get a feel for our openings and read all that is available.  In the future, this feature will be turned on. )  Anyone can tell you a one or two sentence blurb but we like to back up our comments with our views so that you can understand where we are coming from.  Down lower, there is a feature called Updates and Comparisons.  In the U & C section, the KM Team will give you some of the latest information concerning some of the previous comments published here as well as comparing the KM Team take on things to others of our counterparts.  The U & C section will be a nice way to see if the KM Team is staying the true course in the ocean of Economy.  Below that you will find our Person of the Week feature, representing the one person that the KM Team thought was most responsible for moving the USA markets and / or economy last week.  And finally there is the KM Team Definitions of the Week.  These are items that will be complied into a term dictionary at a later date but that will help you now as we explain some of the power phrases of the week just passed.

1. You may be surprised to realize that there are only 168 hours per week, in any week, always.  Really.  If you could find the time in one week, on a regular basis, to earn a solid return in money for your foreknowledge in investments and the Markets, would you take the time?  How about if it was 1 hour a week?  Would you do it?  Come with Kangaroo Money while we find you that time.  ( click here to read more )  Let’s begin by breaking down where your 168 hours a week probably goes.  If you get 8 hours of sleep per night, 7×8=56, 168-56=112 hours left; if you work full time, 5×8=40, 112-40=72 hours left; if you have an average commute to work of 30 minutes one way, 5x.5×2=5, 72-5=67 hours left; if you take an average of 30 minutes to get ready for work in the morning, 5x.5=2.5, 67-2.5=64.5 hours left; if you take an average of 30 minutes to get ready for bed at night, 7x.5=3.5, 64.5-3.5=61 hours left; if you watch an average of 3 hours of television per day, 7×3=21, 61-21=40 hours left; if you take an average of 30 minutes per meal, 3x.5=1.5×7=10.5, 40-10.5=29.5 hours left in your week.  These are the averages that the typical working American spends per week doing “normal” activities.  The bulk of that 29 1/2 hours that you have left would probably end up on your weekend, where you would be working in the yard, fixing up the house, playing with your children or indulging in other leisure activities.  Wouldn’t it be great if you could take just 1 of those free 29 hours ( KM will give you the other 1/2 hour as a freebie ) and head off to the local library to scan all of the material that has been assembled using your tax dollars and just immerse yourself in the Wall Street Journal, Money Magazine, Barron’s, Investor’s Daily, or newspapers with a broader worldwide perspective like the London Times or the New York Times, or even just to pause over the weekly news magazines?  The Internet might be a great place to visit for a quick snack or a visual 2 minute story but nothing beats holding something in your hands and digesting the whole thing while your mind works through the many angles it might involve.  Too much to chew on in one trip?  Newspapers and magazines have the luxury of still being around the next time you want to read them — no on-line searching necessary!  One hour a week that you can spend broadening your knowledge about a news event, a company, a commodity or a financial situation that could affect you, your family and / or your business.  Less tiring than the gym and more satisfying around the water cooler at work the next day as you show your new found knowledge.  More enabling to get your mind flowing towards a hot, new, unknown company or process, unknown except for you!, that will make the stockholders rich over the next few years.  Turn the trip into a family event and help broaden your little ones horizons as well.  What better way to get children to read than to show them that Mommy & Daddy do it too!  And the best part is, you not only didn’t miss any television but you still have 28 1/2 hours left to enjoy!  One hour a week — it’s all that the Kangaroo Money Team asks you to do for a better financial future. 
2. Growing pains Toyota Motor…Toyota is experiencing the growing pains that all expanding companies feel.  It’s a double edged sword, with increasing production, the harder it is to maintain per unit quality.  Some of the processes and procedures that worked in the past production are no longer adequate.  As a result, new procedures must be developed.  What kind of impacts is this having on Toyota Motor? ( click here to read more ) Over the past year Toyota ( TM, traded on the NYSE ) has seen it’s stock price decrease from a high of 127.97 on 7/3/07 to a close on 5/2/08 of 104.94.  Not to say that Toyota is a bad investment.  But, if you were a short-term trader, then you lost money.  And you should all know by now how the KM Team feels about short term trading.  A good company like Toyota, staidly going up based on the five-year chart, and yet you lost money and the stock is trending down.  Why?  Rapid expansion.  Let’s be clear that Toyota is a great company that by it’s own admission has stumbled lately.  They will give the current number 1 company General Motors ( GM, traded on the NYSE ) a run for their money.  The question is can GM adapt the way Toyota has since they started selling cars in the United States 50 years ago?  The KM Team is saying that every company must manage expansion as closely as they manage their production line.  In January 2008, Toyota out sold Ford ( F, traded on the NYSE; a stock owned by KM Partners ), to become the number 2 automaker.  When Mr. Katsuaki Watanabe visited the 2008 Detroit Auto Show ( NYT 01/15/08 President & CEO Watanabe Comments on Toyota Quality )  he used this very public forum to convey a passionate plea to his employees to take personal responsibility for the quality of Toyota cars and trucks.“Each individual must carry the responsibility” for ensuring quality, from design to manufacturing and selling cars and trucks, Mr. Watanabe said. He went on to say that the dictate was “something that’s really shameful for us to share with you.”  There has been a series of recalls in the United States and Japan over the last two years totaling in the millions of cars.  Mr. Watanabe also instituted a “back-to-basics” campaign, stating “I told them to reaffirm once again whether they did the proper job.” Further, he stated “When Toyota was a small company, we could expressly communicate” any quality improvements that were required, he said. “But now that Toyota is so big, we’ve realized that we have not adequately communicated.”  The 46 year old Mr. Watanabe became President and CEO of Toyota Motor in June of 2005 after spending years in the Production Control section of the company. 
3. The new Farm Bill is being debated in Washington DC in the Senate and after a 6 hour meeting that stretched from Thursday night into Friday morning, it is being reported that the new 2008 Farm Bill is complete except for some minor details.  ( see information and links here www.brownfieldnetwork.com )  KM believes that this new subsidy bill should be defeated.  In fact, KM believes that farm subsides should be done away with altogether in the United States.  Why would we do that?  (click here to read more)  Putting aside the fact that most people believe, and for the most part correctly, that “the” Farm Bill that is passed by the Senate on a (fairly) yearly basis pays farmers not to grow produce, to be sure this is part of but not the whole point of, the Farm Bill.  The other issue with the average American idea of the Farm Bill is that it is for individual farmers.  The truth be told, most of the agriculture that takes place in the United States today is done under the umbrellas of several major corporations.  While lip service is paid heavily towards supporting the small family style farms that we all believe make up the middle third of America, the companies like ConAgra ( CAG, traded on NYSE ), Hormel Food Group ( HRL, traded on NYSE) , General Mills Inc. ( GIS, traded on NYSE ) and Kellogg Co. ( K, traded on NYSE ) just to name a few that make up the agriculture sector of American stock markets, are the players making the money and decisions as to what is grown this year for profit and what is not being grown at all.  A quick search of the brand names that belong to these four companies will turn up a wide number of products in your kitchen.  The truth is that these companies and others like them can control the future of food in the world much like Standard Oil once controlled the oil, kerosene and gasoline future of the world.  The United States does NOT control its oil and gas destiny any more.  Other countries do.  And those countries do not much like us most of the time.  Trading our farming and food producing skills and bounties for the energy that we need ( not crave and waste, but NEED ) is the smartest thing America can do going forward.  The United States could start a Food-For-Oil program far better than ever seen before.  And it would not have to stop there.  Food-For-”Pick a product” programs that would help the world instead of destroying it.  With a possible Rice Cartel ala OPEC looming on the horizon, then paying for not growing food is rather silly in a world that is starving and-dying.  It’s kind of like paying for not working.  Rather silly to those of us who are doing both to those who do neither. It is also a great place to learn and earn — learn who grows what where and why then look at the associated stocks that will earn you money.  Better for the country as a whole too, as farming can mean “going green” in more ways than just growing plants.
4. This week saw the company Take-Two Interactive Software ( TTWO, traded on the NASDAQ )  release through its subsidiary Rockstar Studio the latest chapter of its brutal and satirical video game, “Grand Theft Auto IV” to stunning results.  Reminiscent to  the “HALO 3″ game release in the fall of 2007, the fan fare and build up to release was similar to a blockbuster movie opening or the pending sale of superstar concert tickets.  The result to publicly traded companies also was similar to the star power of those movies or concerts.  ( click here to read more )  Like its previous versions, this latest update is drawing fire from many groups for its violence and character depictions but, the result of this weeks release was a 1 point gain in Take-Twos’ stock price, up to $26.20 per share, as well as making Take-Two that much harder for its unwelcomed suitor Electronic Arts, Inc. ( ERTS traded on the NASDAQ ) to acquire the company.  Also, the impact to retail vendors such as Best Buy ( BBY on the NYSE ) and GameStop ( GME on the NYSE ) was very noticeable and positive.  The games’ delayed release from last fall helped to increase upgrade sales to the game consoles it is played on possible as the youth gaming market waited for the release date.  The game may not win any fan raves from Police Departments or MADD Chapters across the country but the game’s sales’ dollar figures and the surrounding impacted companies handling the game will benefit through the summer months.  At this time, GTA IV would seem to be the only blockbuster video game to come to sale for the remainder of 2008.  The lack of buzz on other sequels or outright new games would seem to show that this market will be suffering a slow downward slide through the rest of the year.  The KM Team recommends putting the associated stocks on your watch lists and then tracking the trends of those companies, especially the retailers like Best Buy, GameStop and the other big box stores.  At this time, until the youth gamers start to make noise about some other hot new graphically superior game, the KM Team will only be watching these stocks.
5. Nobody cares about their inventory until they run out of it…A common flaw with a great number of manufacturing companies is that for all their skills at what they produce for sale, they can’t seem to manage their in house inventory.  In house inventory includes all of the associated raw stock materials and components necessary to fabricate a complete finished and salable unit.  Why is this a concern to you, the Kangaroo Money reader? (click here to read more)  The lack of accurate inventory and it’s control in the manufacturing plant, impacts the company as an investment to you the stock holding public.  Companies that have their inventory under control and well managed, both by what is already in house / in stock and what is scheduled to come in house, are a better investment by far than those that do not have the same control and procedures in place.  The KM Team have worked on and have managed production lines, unit cells and warehouses for many years.  We have seen the implementation of a cost saving inventory control plan and the myriad benefits in available cash on hand as a result.  But unfortunately, the downfall is usually spread among many areas of the manufacturing facility not following a raw materials and sub-assembly build production and inventory flow that works for all the components of the finished unit.  Too many times, an individuals’ fear of not having product on hand when they determine they need it will lead to materials being stockpiled in many links of the assembly chain instead of allowing materials to be delivered when needed.  As the definition of “Just In Time”, or JIT, states — see below under Definitions — a “strategy to improve the return on investment of a business by reducing in-process inventory and its associated carrying costs”, a leaner manufacturing flow will lead to less money being tied up in idle on hand parts in your warehouse.  Great!  The solution seems at hand for a well managed company to have tighter inventory and thus more money on hand to move forward and expand into its industry.  But, here is the problem with JIT Manufacturing — you must have a solid forecast of your future sale orders that are not going to drastically change.  Still, the company that today has more cash on hand and less idle cash already tied up in sitting inventory in its warehouse, is going to be a company worth looking at and worth owning its stock.  A solid educational group to check out to help you in whatever inventory situation you might find yourself or your company can be found at the Association of Operations Management, or APICS as it is known, website located at www.apics.org.  ( NOTE: Members of the KM Team are members of the APICS organization and want to state so.)  The problem of accurate inventory and its impact on a business is large and complex however, so it can not be easily explained in just one article.  Look for this subject to continue in later articles by the Kangaroo Money Team.  And don’t be fooled by a company that you might review as having good inventory control when in reality they have NO inventory to control.
6. The KM Team would like to shout the praises of companies like IBM ( IBM, traded on the NYSE ) who announced this week that not only would they be raising their quarterly dividend by 25% to 50 cents per share to shareholders of record as of May 9th, 2008, the 13th consecutive year of dividend increases, not only did they also announce a share buy back program to take place this year with a value of $12 Billion ( with a “B” ), but they also announced that there would be an increase in pension payments for workers who retired prior to 1997, affecting about 42,000 of their previous loyal employees.  ( click here to read more )  In the eyes of the Kangaroo Money Team, this is a triple play worthy of note and also worthy of our respect.  While the stock buyback will increase the value of the publicly held stock by removing stock from trading and thus making the remaining stock more valuable, it also shows that IBM is not rushing to spend their hard earned cash on ventures that could show little or no return in the future.  IBM is taking a reasoned and forward looking approach to the money they have on hand.  But the buyback ranks 3 out 3 to the KM Team.  The adding to the pension payments of their previous employees, all 42,000 of them that will be impacted, shows that IBM has not forgotten those who helped to get them where they are today.  Indeed, it would seem anything but that, as they add about 10% per month to their pension payouts and thus reward and recognize the hard work of the people who stayed with the company during the dire 1990’s to make IBM what it is today.  But the pension payments rank only 2 out the 3 to the KM Team.  No, number one of this weeks good news from the International Business Machine Corp. would be that dividend that is coming.  In today’s business world here in the United States, companies are finding their loan sources drying up and they must find cash to expand and update their facilities where ever they can.  More and more that means that they are cutting or doing away with their dividend payments to their stockholders.  Not cutting salaries or cutting manufacturing waste but cutting the money that goes to the people who believe in them enough to buy and own their stock.  In a country where a savings account will net you 1 or 2% annual interest, a good dividend paying company is better than a good local Co-Op Bank.  The dividends can be sent to your account as straight cash or can be used to purchase more stock in the paying company. Either way is a return of faith to the stockholder by the company, a way of thanking you to continue believing in the way the company is doing business.  Kangaroo Money has noticed a very high number of companies, especially in the Financial Sectors, that are cutting or eliminating their dividends, adding to the grumbling that was already pretty high about their methods of business.  KM hasn’t noticed a lot of CEO or Presidents of those companies getting THEIR payments cut via salaries perk eliminations.  We are all wondering why.  But IBM is certainly bucking the trend with their 50 cent cookie and glass of milk.  While Kangaroo Money Partners don’t own IBM shares — yet — we are watching closely to see if the company is at the forefront of a trend or simply out in front of everybody else.
7. The shape of things to come…A trend seemed to start about five years ago or so.  It has to do with companies doing away with their traditional pension plans and switching over to 401K plans.  ( click here to read more )  If you have the option, and we believe that you eventually won’t, compare the offered plans.  Take into account your health, your familys’ health history and try to estimate your life expectancy as if you were comparing life insurance policies.  Make sure to take into account your expected employment expectancy as well!  You don’t want to run out of money in your retirement years, which are getting longer and more active than ever before, so be honest and realistic with yourself.  From the Associated Press ( www.ap.org ) April 19th, 2008 — “When Boeing Co. (BA, on the NYSE–KMT) and its unions representing machinists and aerospace engineers sit down to negotiate a new contract later this year, the airplane maker plans to discuss about changes to retirement benefits for new hires.  Boeing spokesman Tim Healy said in an interview that the company would propose to offer new union hires 401(k)-style plans, and not the more traditional pension plans.”  From the National Public Radio ( www.npr.org ) April 19th, 2008 — “Fidelity Investments Drops Company Pension Plan.  Companies small and large have been phasing out their pension plans and pushing their employees into 401-K plans.  The mutual fund giant Fidelity Investments is following the trend with its own workers.”  At this time, it is important to note that KM Partners have self-directed stock plans as part of our overall retirement plan.
8. You have read Kangaroo Money talk about sectors, comparing one company to another within its industry or sector, and watching the trends in a sector as a whole that might drag down a well performing company just because of the industry or sector that it is in.  A sector is an area in market trading that groups like companies together.  ( click here to read more )For example, the Oil & Gas Sector would include companies like Shell, BP and Exxon-Mobil.  One of the sectors that the KM Team has been watching with great interest is the Metals and Mining sector with a further breakdown to Industrial Metals and Minerals.  Even deeper into this is what we have been focusing on — coal mining.  Whereas this particular field seems to only gather attention when something breaks and people die, the trends on coal has been moving upward now for quite awhile.  Two of our review companies — Arch Coal ( ACI, traded on the NYSE ) 52 week low of 27.76; 52 week high of 62.99; May 2nd, 2008 close of 59.25 and Foundation Coal Holdings ( FCL, traded on the NYSE ) 52 week low of 30.87; 52 week high of 66.69; May 2nd 2008 close of 59.72 — has held our attention during their climbs.  Both companies show steady upward climbs over the last 8-9 months ( although FCL has been steadier than ACI ) and indications are that this upward movement should continue.  This should also hold true for other coal companies that are out there as well.  While it is true that most of the coal is going overseas, especially to China, there is no reason why that coal could not stay here in this country to make the same type of products that China seems to be making so much cheaper than we used to, like steel for example.  It is also worth noting that our grandparents and great-grandparents had no problem living and heating with coal powering their homes and heating their lives.  Yes, it was much dirtier to store, handle and burn back then but that is true about almost everything prior to today.  Advancements in processing, burn control and remains handling were ongoing just a short time ago and would continue should the need rise to use this valuable commodity that lay below a good part of North America.  If there have been major improvements in getting coal out of the ground for use, and there have been, then there is no reason to believe that major improvements is using, filtering and disposing of coal could not be made by United States companies and for considerable profits.  As the Kangaroo Money Team believe strongly in long plays, the American Coal Industry should come in with a double win.  For the short term, coal looks to be a success as it is used more and more by industry even if right now that industry is overseas.  For the long term, coal looks to be a success if American companies approach its use and disposal like it has for some many other products.  While our great-grandparents might shake their heads at the suggestion of going back to coal with all of its many problems in using it, we could also point out to them that the days of rivers catching fire due to excessive kerosene spillage and railroad tracks going up in flames due to leaky barrels of raw gasoline being shipped across Pennsylvania are long gone.  American know-how should do for coal what we have done for other fuels.  The KM Partners have yet to own a coal mining company but we are reviewing with great interest to that end.  And you Kangaroos should look at this sector now before everyone else does.

Updates and Comparisons: 

In Week 17, Kangaroo Moneys’ direct quote was “Financial houses have been losing Billions of dollars because it now appears that some of the banks and brokerage houses were not all that forth coming about their losses.“  In Beginnings, Kangaroo Moneys’ direct quote was “To top it off the sub-prime mortgages that people never would have got in the first place if the companies involved didn’t, you know, overlook the little things like, oh, check incomes and actually look at the documentation provided.“  At the time, those statements seemed bold, and perhaps, a little over the top to some of our readers.  Well, a bit of vindication to Kangaroo Money, thank you very much.  In the Wednesday, April 30th, 2008 Wall Street Journal ( www.wsj.com ) in a banner topped article on page B1 titled “Countrywide Loss Focuses Attention on Underwriting” written by Glenn R. Simpson and James R Hagerty, those gentlemen write about a program called “Fast and Easy”.  To quote:”Fast and Easy borrowers aren’t required to produce pay stubs or tax forms to substantiate their claimed earnings.  In many cases, Countrywide didn’t even require loan officers to verify employment…”  Further, “That left the program vulnerable to abuse by Countrywide loan officers and outside mortgage brokers seeking loans for customers who might have turned away…”  Kangaroo Money’s statements WERE bold but, as it turns out, they were not over the top but rather muted.  And you read it HERE first.

In Week 16, KM said, “As the economy begins to turn further downward, coasting at a lower level than even in 2007, the Have-Nots will begin to grow in much greater numbers than the Haves.  This will lead to the Have-Nots to once again start taking what they want instead of even trying to work for it.”  To show that the KM Team also watches television where necessary, at NBC on the tube and ( www.msnbc.msn.com) on the web, there was the story of the delivery service with the mid-sized box truck whose gas tank had been power drilled out and drained of $150 of gas (current value 5/3/08) not once but TWICE in the past month.  Gas cap locks didn’t do a damn thing.  Also, on the front page of the May 1st, 2008 Wall Street Journal was the story by Sarah McBride of all of the large, 250 pounds and up, bronze and / or copper statues that are disappearing by theft from public display in Brea, CA.  But that kind of thieving isn’t stopping at what can only be termed “interesting pieces of art” as thieves around the country are stealing exposed pipes in construction projects, wiring where it can be found and, of all things, manhole covers from where they are found.  Again, Kangaroo Money warned you that this was coming.

In Week 16, KM said “That should mean a new Golden Age for television and the Networks as a whole as we see a new “have to see TV” era.” as we commented on the expected weak movie season and the expected down turn in travel and vacations.  In the Wednesday, April 30th, 2008 Wall Street Journal, on page B6, an article by Shira Ovide notes that CBS had a net rise in its first quarter of 14%, led by its TV unit.  While the numbers reflect one time payments and some lower production costs thanks to the Hollywood writers’ strike, this increase did allow for a dividend increase and does point out that the television unit of CBS is expecting ad sales to be “very healthy”.  While the Summer Movie season seems to promise big dazzling blockbusters that even has the Kangaroo Money Team excited about, we still feel that the money to be spent AT the theaters may not be there as the unemployment rates continue to climb.  The CBS numbers bear out the KM Team so far.

 II

DEFINITIONS:

Big Box Store: a store belonging to a national chain that is large in floor space and in items for sale; a chain store that is typically not located in a downtown setting because of size or products; see Wal-Mart, Target, K-Mart as a typical “big box store”

Commodity: things of value that are made in large quantities by a large number of different producers; a commodity may be worked mineral such as gold or silver, an agricultural item such as corn or soybeans, or animals to be used for food or oil, gas and coal products;

Sector: as used this week — a particular grouping of industry or business; a grouping of like businesses that can be compared against each other for financial or economic reasons to determine perceived value and worth

JIT Inventory: a business inventory system put in place to improve the overall return on investment by reducing the on-hand inventory and its associated carry costs; the fast communication that in process inventory to manufacture items has been used results in moving warehouse based inventory to immediate use; a method to track and forecast the use of materials so as to allow a plan to be put in place to have inventory on hand only when needed

Market Mover of the Week: The KM Team pick of the Dalai Lama was in the running all week long but could never make the move to the front of the pack, getting to the outside and ending up no higher than third in any of the KM Team weekly polls.  The MMW for Week 18 2008 goes to a pair of older gents who seem to know a thing or two about “The Market” — Warren Buffett and Kirk Kerkorian.  Master Buffett helped to put together a huge deal between Mars and Wrigley, which could fuel a larger merger situation not just in the food areas but in many other industries as well.  Master Kerkorian decided that he had driven a Ford lately and through his Tracinda Corp. announced that not only had that company amassed 100 million shares of Ford but that it was looking for at least 20 million more shares — at a hefty premium of $8.50 a share.  The KM Team and KM Partners owns Ford shares and is enjoying the ride after buying that grand old brand at bottom prices of under $6 per share just weeks ago.  The markets enjoyed a nice bounce from these two announcements and was able to fly through the Fed cut and bad financial sector reports because of Buffett & Kerkorian.  And THAT is what makes a Market Mover of the Week!  We’re off to see the Wizard…but let’s take the ol’ Ford down the road, okay?

The Pro-Rate Cut View:  The United States Government and the Fed Board agreed that all was still not well in the US markets and that further “poking” by the Fed was necessary to keep the economy as a whole moving ever forward.  The fact that inflation is beating down the door and that the mortgage / lending crisis is far from over in their view only added to the need of the rate cut.  This showed itself to be a good move as the US Dollar abroad strengthen and oil prices, measured in US Dollars, dropped across the markets.  At this time, to have come to the table and to have done nothing would have signaled to far too many people and companies that as far as the government was concerned, you were on your own.  With poll ratings already the worst ever and a weak, weak, weak Lame Duck year passing by, President Bush would have suffered mightily as a do-nothing even when people should realize that economy was of their own making not his.  The Fed Board stepped in and like a reluctant Father, added a little more to the allowance short teenagers’ pocket but at the same time made it clear that this was the last time it was going to happen…probably….maybe.  Anyways, the rate cut kept the house of cards from collapsing and the markets, the companies and banks, and the economy as a whole was able to keep on keeping on, even moving upward to numbers not seen since January 2008.  Well done!

The Con-Rate Cut View:  The United States Government and the Fed Board once again agreed that image is everything and reality is not by “poking” the US markets and the economy as a whole and granting a .25% rate cut on the prime rate.  This cut shows that the people in charge are more interested in shoring up a situation that should have been allowed to collapse of its own bad business traits than to be propped up and maintained like some rotting old mansion by a bayou riverside.  While the US Dollar is showing signs of strengthening, it is difficult to believe that this smallish rate cut had much to do with it.  Likewise, is the decrease in worldwide oil prices that occurred, which seemed to be momentary at best. Much like people who have spent far too much without thinking about the consequences of all that borrowing to do it, the rate cut is only stretching out and prolonging the inevitable collapse of a housing market that is over built, under sold and over borrowed against.  Instead of allowing normal free market situations to prevail and right the still sinking ship of housing and real estate markets, this rate cut props those situations up for a while longer.  The cut did nothing to stem inflation or to trickle down and help the people who need to find bags of money in their backyards to keep their homes.  Like a doddering old Father and a tottering old Uncle, the US Government and the Fed Board has handed out money again without thinking about the long term consequences.