The Dow Jones Industrial Average did an amazing thing on Tuesday 10/28/2008, rising nearly 900 points for the day, wrapping up a great roller coaster ride after being down below its opening price twice during the day. A great deal of those up points were made in the last 20 minutes of the session showing that people and businesses are indeed watching the markets and the USoA economy much more closely than anyone has given them credit for. This is all well and good but it is not normal business. Which brings us to the point of this Special Notice.
There is a great deal of talk going on about “hitting bottom”, “finding the bottom”, “are we at the bottom yet?” throughout the financial markets and around the world in the economy. With oil prices floundering at near $60 per barrel and US gasoline prices dropping below pre-Katrina figures, it would seem to indicate that the good times will be here for Christmas 2008 and that all is right with the world again. Stocks for some companies, most in fact, “are trading at HISTORIC lows!”. People are claiming that you will never see prices this low again which is always just one step short of saying you should buy right now. Don’t be fooled. The KM Team and KM Partners have said before that you must look at what can be different from this day today and this time the week before, both in the world and in your world. Has the world changed so drastically that everything is “right” again and you can go back to doing things exactly the way you had been before you woke up in 2008? We believe you will find that rampant optimism is just as bad as rampant pessimism.
History shows us all that the bottom of anything is best seen in the rear view mirror or with a glance over the shoulder as you drive forward up the hill. Sometimes that bottom can only be seen from a distance. The KM Team and KM Partners fully believe that will be the case again here. Review your personal facts and figures as well as your personal comfort zones. Don’t rush to get into something just because it seems to be what everybody else is doing. Remember — that is what got the DJIA to 8500 to begin with.
( Please see KangarooMoney’s Disclaimer posted on 08-17-2008. )
Remember, the KM Team has decided to publish the KangarooMoney Disclaimer as a separate post, dated 8/17/08, which has made our Lawyers extra pleased. The KM Team hopes this will make our Lawyers happy to no end, in fact. Because as any businessman knows, if the Lawyers are happy, we’re happy.
Another week, another 168 hours of insanity. During a business week where a trip to the bathroom could mean a hundred point swing on any worldwide market if you weren’t listening closely, the Dow Jones, DJIA, closed down 5.54% for the week. This was after the previous week that saw the largest weekly gain for the DJIA in almost 5 1/2 years. Not that it was easy by any stretch of the imagination. At the open on Friday, the DJIA futures had already dropped to minus 550 points, which had automatically halted the overnight trading. This was pressure almost entirely from International Markets around the world as every other country began to come to grips withthe simple facts that A) the World is entering a worldwide recession and B) government help is any thing but. On Friday, how bad were the swings on the DJIA? At the open the numbers went from 8683.21, dropped down to 8237.58 and then bounced to 8509.20, down to 8250.24 and finally settled at the close down to 8378.63. But it was the last day of the week and it allowed us to catch our breath going into the weekend. Well…unless you’re a Rays or a Phillies fan.
Obviously, the pressure and the wild swings have reached the world markets as well. Across the globe the same radical market swings that the DJIA showed during Week 42 and Week 43 2008 have been playing out around the globe on a daily basis. And the same reasons apply for those wild swings as for our own swings here at home in the USoA — us, the Individual Investor. For months now the KM Team and KM Partners have been telling all of you readers that the biggest problems with the financial well being of the United States is her citizens. That’s all of us. You and me, him and her, they and them. The Wall Street Journal writer Jason Zweig ( writing the column The Intelligent Investor, located here : http://online.wsj.com/article/SB122428810219346585.html ) published on Saturday 10/18-19/2008 a column that is in keeping with what the KM Team and KM Partners have been saying since we’ve been publishing this general site — “Take a Deep Breath, Turn Off the TV, Calm Yourself” which is also the title of the article. Read it. Without the Talking Heads on the telly behind you. If you don’t believe the KM crowd maybe a regular WSJ writer can sway you towards a balance in the force.
As withyou the Reader, the KM Team and KM Partners are suffering from “financial news overload”. The end of the Boston Baseball Season, not to be confused with the end of the baseball season as the Phillies and the Rays ( geez ) battle for the World Series title, has led us all to undertake a difficult daily slough through ten times the amount of financial news that was available only 8 to 10 weeks before. Back in the beginning of KangarooMoney.Com it had been difficult to find enough stories and information to either support or debunk our writings, discussions and advice. Now it is as if we live our days and nights on the floor of the New York Stock Exchange with no computers, cellphones or BlackBerries available. And to make matters worse, what information is not coming from the Financial Arena is coming from the US Government. Conflicting and doubled up information at best! Throw in the world wide markets AND their governments, well, sleep has been hard to come by. The KM Team and KM Partners still believe that this time is the best period to make money for the long term in stocks, bonds and real estate for the next 20 years or so but, a reasoned and valued approach must still be made, just as before. Perhaps this weeks quote will help to keep that perspective for you : “When you get to the end of your rope, tie a knot and hang on.” On with the show little kangaroos.
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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, we are looking at 01/01/09 at this point, 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 the weeks’ stories, there is 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 there is 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.
An additional 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.
Finally, there is the feature that we hope will help you to see where KM is coming from and where KM is trying to go to. Up under the Blogroll section in the upper right hand corner of the page, is a link to a list of companies and stock symbols called the “Stock Docket”. The link will take you to a list where there will be the companies, stock symbols, index it is traded on, the price per share the week that it was mentioned and what that price per share was as of Friday just gone by. Also, we will highlight which stocks we supported at the time and which we did not. While this is a considerable undertaking on the KangarooMoney Teams’ part, we do feel that this will help to determine how things are going. Eventually, this item will also be moved to an interior page, so please comment on this feature as much as possible before that happens. KM would love to be right every time in this area, so we will see how things go as we drive forward. There are already some very interesting up and down movements just in the short time we have been talking with you all. We have added the totals for the stocks mentioned on the docket, withthe exception of Bear Stearns ( BSC is no longer with us as a viable stock but it is left on the docket to show what can happen to any company that does not bear the proper burden of taking care of its stockholders ) and Electronic Data Systems Corp. ( EDS was bought and absorbed by Hewlett Packard ). The totals shown at the bottom of the spreadsheet show winners and losers both as an overall number if you held 1 share of each stock mentioned as well as the biggest winner and loser of the week. The KM Team revamped the sheet a little bit to show the totals more directly and we’ve tweaked this feature yet again as we go along. A share here, a share there, and it all starts to add up! Keep asking for more and we’ll see what we can do little joeys!
Please remember, KM Partners and the KM Team are not accountants, stock brokers or personal financial advisers, nor are we even Lawyers. You need to be sure that you do what YOU want to do. If the KM Team opinions can help you have an understanding of what has happened, is happening or will happen so as to help in your decision, then our blog serves a purpose. If, on the other hand, this is the ONLY guidance and direction that you are basing your decisions on, please do not come crying, or suing, any member of the KM Team or KM Partners. We hope this clears up any questions to that regard.
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!
Is it time for a Fairy Tale yet? How about an updating of the old standby “Goldilocks and the Three Bears”, where you get to play Goldilocks the Investor and the Three Bears are played by the companies Ford, GM and Toyota? But no porridge, I promise. ( click here to read more) So, once upon a time there were three car companies that were big, mean and able to, well, eat like a bear. Papa Bear Ford has always been the big bear on campus here in the United States, plowing through the woods in search of more nuts, berries and of course, honey. Mama Bear GM came later to the forest, never really teaming up withFord but always plowing through the forest cheek to jowl withFord and the other bears. Very much later, along came Baby Huey Toyota who, like a good offspring anywhere, ended up getting more of the nuts, berries and especially honey than either Papa Bear or Mama Bear, even when times were not as good for bears as they could be. The problem with our story comes now, during the bad times that are affecting all of us. But is’s not a problem really but rather just a rejiggering of the thought of the story. You see, Ford has been the Big Bear for so long that it doesn’t change anything that it does because it has always worked. The deals that they sign with the unions they employ are rarely very different in concessions or financial considerations. Why should they be? Ford is going to make X number of cars per month, at 10x hours per monthat a cost of 100x per month all while only selling a much smaller number of cars per month called Y. And why not? That’s what they have done for over 100 years now and that plan has worked more often than it hasn’t by a wide stretch. So has GM. Make more cars, even if you don’t sell them, because the unions need those high paying good American jobs. And Papa Bear and Mama Bear even have a fool proof plan for when they can’t really make any more cars they can’t sell — they put the workers out of work on something called “temporary layoffs”. Most of the time, these TLs as they are called, sends the workers home on 80% pay for up to 3 years while no cars get made. The workers don’t really like the plan but it gets them paid and allows them to work at something else if they so desire. Ford, GM and all the American smaller union car employers and auto part suppliers don’t really like the plan but it keeps their companies up and operating. And, of course, the American public never thinks about the deal. Except now comes the information that Baby Huey, who really isn’t as dumb as the cartoon would have you think, Toyota has twisted the theory of “no work - 80% pay” that has existed for almost 50 years now. You see, Toyota here in the States figures that if they are going to pay you, they want something in return. The unions have no say in the situation because the workers still are not working but they are not at home doing nothing either. They’re learning. And teaching fellow workers as well. What kind of craziness is this??? Seems that Toyota has their non-performing workers come to the plant on their regular schedule when they are waiting out either a plant retooling or a building freeze. These workers are then put into different work shops where they are either further trained on their jobs and positions or they are led in team work-flow groups that allow them to find new, better, more efficient ways to do their regular jobs. They are not working out of their job descriptions so there is no union beef. They are still drawing full pay so there are no complaints about only 80% pay coming home. Best of all, they are contributing to their own future financial health buying learning and helping others to learn, including their own bosses. Is it any wonder that Toyota is finding a hell of a lot more honey in the American forest than Ford or GM? No, we didn’t think so either. But you have to wonder what the UAW REALLY thinks about the whole situation.
Greed. We’ve all heard the “Gordon Gekko” character explain his philosophy on greed in the 1987 movie “Wall Street”. The problem is that greed and selfishness usually go hand in hand. We have seen that situation in the financial sector and it has now spilled over into the whole market and gone global. ( click here to read more ) Greed has caused a great deal of carnage over the past year. Almost nothing has not been affected by it, from the filling station, to the housing market, to retailing markets, even employment overall. Unfortunately, the list is long and getting longer. The KM Team wants you to be mindful of how greed is one of the factors that drive the market, even more so than logic. In the current economy, the greedy decisions were made for the here and now, for the moment, not for the long-term but for the make-it-now quick buck. When making an investment, we here on the KM Team and at KM Partners use the premise of greed as a tool all the time. “What would these greedy ‘traders’ do now?” We are currently getting a look at the underside of Corporate America and, it is not pretty. Whatever will make them money, whether it’s to close a plant, move a business overseas, suspend healthinsurance to retirees or to release software with known bugs in it, then it gets done and the buck gets made. In this world of CEO’s Golden Parachutes, what ever will make them money. Ride the storm out. The KM Team has been setting up their personal portfolios for the coming recovery and for the long term. Hold your positions and don’t sell out your holdings. Now, as a result of this down turn, there are a lot of great bargains out there. Step right up, everything is 30 to 40% off, IF the company can survive this down turn. That’s the real trick isn’t it, which companies among us are going to survive? And which aren’t?
While it’s hard to accept the fact that major retailers like Wal-Mart and Target have already been pushing the Christmas and the holiday season full force for the last 8 weeks, the rest of us have to accept the fact that Thanksgiving is only 6 weeks away, Christmas is only 10 weeks away and your Tax Records and preparations are only 11 weeks away. How prepared are you going to be? ( click here to read more ) If you are one of those people who spend the day after New Years Day until the night before April 15th each year moaning about how they have to get their taxes done and put together NOW, you can stop reading this article right now. The pain will be too much for you to take. That’s because it is the last week of October 2008 and the KM Team and KM Partners want to talk to you about getting your 2008 Taxes in order NOW. It’s not a lot of hard steps really. Start collecting your documents now — pay stubs, 401K information ( isn’t it about time to make 2009 choices at work? READ UP already! ), health insurance payments and debts, property tax records, auto tax records, home insurance documents, auto insurance documents — get the idea? If you do this time of record sweeping now, you will find that you still have benefits to spend before the Holiday Party Season is in full swing — dentist visits to make on the company dime, health check-ups that are ‘use’em or lose’em” values, eye doctor visits, and general wellness program benefits that you just haven’t gotten around to using yet. On top of these things, you might want to check up on your homeowners policies to make sure you have the right coverage in force or at least have it ready to change when the policy change date comes due in the next few months. How about your auto insurance? Do you have enough? Maybe you have too much and need to downsize it since you dumped that Hummer for a Mini Cooper? Better check it out. How about your stock / bond portfolio? Hard to believe you might have had any winners in the bunch but do you have the right records to show how to write off those losses you might have had? Better get that information now before the company is totally gone and so are your documents. Did you get to move that 401K from the last job? Better hustle up — New Years is coming, New Years is coming. Or did you sell off everything you owned and now the mattress is so full you can’t sleep well at night? Time to look at making that big once a year dump into your IRA Account. *whew* That’s a lot to do, to think about, and to evaluate, isn’t it? Better to some of that each week between now and the end of the year. Which is only 66 days away…oops, only 65 days away…down to 64 days away…tick-tock, tick-tock…63…62…61… ( get it yet? )
It’s Linen’s N Things first to the close out bin, announcing that for the 2008 Holiday Season, they are running a Going Out of Business Sale and not even trying to lie their way out of a bad situation with an attempt at staying afloat. The KM Team has already picked a date for the demise of Circuit City as being WK04 2009, which is probably 26 weeks too late. Have you seen their stock price lately? And who could be next? Who indeed. ( click here to read more) There have been some major names that always seemed to be just one step ahead of going under that this year, 2008, just couldn’t quite struggle through the doom and gloom long enough to survive. Bennigan’s, Aloha Airlines, and let’s not get started with the financial sector, okay? Still, times had been bad before but now names we know are getting kicked to the curb like so much “what have you done for me lately” trash. Add Linens N Things to that list. Can Toys R Us be that far behind? What about Winnebago Industries? ( WGO, traded on the NYSE, not recommended at this time, owned by KM Partners ) Has there been a big run on people running out to buy $100,000 8 mile to the gallon RV’s this month? Or how about Brunswick Corp? ( BC, traded on the NYSE, not recommended at this time ) They also make boats besides other lines of business. Seen people lining up to get that big cabin cruiser for the summer weekends lately? The businesses like Circuit City will also suffer, not gain, from the death of CC. Again, no one is beating the doors down to get that 1200 inch plasma multi-layered satellite broadcast tv to hang on the bedroom wall. And people can not buy if from Best Buy and Wal-Mart just as easy as not buy it from Circuit City. The point is this: Companies are going to go out of business now because they either did not follow a good business plan or they did not have a good business plan. These are companies that had too much debt, or too much inventory, or too many employees, or not enough work and they just never did anything about their individual problem before the “bad times” got here. Truth be told, these companies were not doing so well during the GOOD times that had been here. They didn’t follow their own rules, listen to their own people, handle their own affairs, that would have allowed them to take a beating but keep on going, even just a little bit forward until the next good time gave them a free ride down the hill. Now we can see bigger, supposedly smarter companies struggling up that hill. Companies like Ford, GM, GE, MetLife and Prudential are falling backwards down the hills that they should be standing on top of. The election in just 10 days will hold some of the closings and layoffs down but, only temporarily. Bankruptcies might delay the end a little longer in some cases too. But in the end, there is no substitution for crisis planning like crisis PRE-planning. In the KM world it’s called “Plan for the worst, hope for the best.” This Christmas Season, it looks like there will be more hope and less planning again this year.
Updatesand Comparisons:
Please check out The Stock Docket again for this week. You will notice that this week, of the 73 total stocks listed, exactly THREE went up in value last week, a remarkable 200% increase over Week 42 and a 100% increase over Week 43. This after two weeks ago that saw the DJIA have its largest gain in 5 1/2 years and then sink over 400 points for its 4th losing week out of the last 5. A crazy market? You betcha. How else would you explain an oil market that has lost over 50% of its run up value in less than 3 months ( $147 per barrel oil in July 2008 but now $67 per barrel oil here in October 2008? ) BUT then watches Hess Oil drop 55% of its stock value at the same time? How can America be cutting out foreign oil dependency BUT coal mining companies Arch Coal and Foundation Coal Holdings drop nearly 75% value in those same 3 months??? And don’t mention the electronics / computer companies! Look at Dell, MSN, IBM and heaven help us Apple. You can see the numbers on the Stock Docket Week 44 2008 but take heed that these are crisis / panic numbers. Please digest with a large amount of salt as necessary. Still, the KM Team and KM Partners stand by our decisions. Here’s hoping you stand by your convictions as well.
Week 17 2008 : That’s right, Week 17. Just 6 months go, you read here that the Nanny Government of the USoA was trying to “bail out” everyone who had made a bad mortgage deal in the past 3,4,5 years. At that time, the comments were made that “The Nannies want to take your money and mine and give it to the people who made a bad deal so as to keep things the way they are NOW, with no consideration at all about the current or future market conditions.” Strange that this is EXACTLY what is happening as of Week 44 2008. Can we say “We told you so!” now?
( Ah, there have been so many others that they are hard to get to press before Sunday deadline! Tune in as we fill you in how the KM Team and KM Partners have done over the last several weeks! )
Market Mover of the Week 44: This week the KM Team is picking the MMoW for Week 44 to be the Next President of the United States. That is to say, it will be either Senator McCain or Senator Obama. It may be both. Certainly they will be the two most vocal people in the USoA for the next 9 days when it comes to talking about the US Economy. Also, by dint of being who they are and what they are trying to become, the World Markets and Economies will also move, float, sink or swim during the upcoming week as well based on their comments, soundbites and planned programs. An easy pick the KM Team feels, but we have been wrong before.
Market Mover of the Week 43: Regardless of what the KM Team thought or felt about last weeks situations in the USoA markets with the roller coaster ride that took place, the pure and unfortunate MMoW for Week 43 was a blast from the past — Mr. Alan Greenspan. Brought back to Capital Hill to spend 4 grueling hours sitting in front of what can only be called a hostile House Oversight Committee, the former Federal Reserve Chairman who was lauded, feared and studied down to what briefcase he was carrying to the House Committee meetings, was finally beaten down to admit that some of “his predictions and policies had been wrong.” ( WSJ 10/24/08, front page above the fold ). It was sad and wrong to watch the great man chided, prodded and lectured by House Members who have nothing more to prove except that they can hold up quotes from the meeting during their own re-election stops this upcoming week. The KM Team has said it before and will again — when everyone was making money hand over fist there were no questions or concerns. Only when the money stopped coming were there any questions raised or concerns voiced. We still believe Mr. Greenspan, we still believe.
International Impact Incident: The report of the President of Iran being ill with something listed as between exhaustion and up to “something” much worse, has sent a shiver through the International Community. President Mahmound Ahmadinejad, who turns 53 on October 27th ( a frightfully too close age for “something” much worse for some of us on the KM Team ), has a difficult uphill battle over the next several months as he prepares for his attempted re-election. In the land of now half-value oil prices, food and fuel riots, unknown nuclear capabilities and a rifle-to-person ratio equal to Americas’ auto-to-person ratio, Mr. Ahmadinejad’s health is a major issue. Now that it has been noticed, will it have the major play that the KM Team expects it will? Check back next week.
DEFINITIONS:
Internet Bubble:More commonly referred to as the “dot-com bubble”; was a speculative bubble that was created during 1995 and lasted until early 2001 because of the wide availability of venture capital, rising stock prices and the growth of individual speculation and then built on new companies that were internet based; after reaching a peak in early March 2000, the collapse of dot-com internet companies came rapidly in Mid-March 2000 during a Federal Court case of the United States vs. Microsoft ( where Micosoft was being called a monopoly ) as well as the coincidental same day processing of large sell orders for major high tech stocks on Monday March 13th 2000; the huge drop in the NASDAQ stock exchange which had most of the high tech / dot-com companies listings was a supposed pre-cursor to the predicted economic slowdown of 2001
( stay tuned — they will be more here…we promise! )
( This weeks quote is the time that we keep hearing more and more about as the daily news comes out about the US Stock Markets. The quote is from none other than FDR, which would be President Franklin D. Roosevelt. That’s right. The same man who gave us the equally applicable quote of “We have nothing to fear except fear itself…” offered up this weeks quote. The funny thing is, it would seem that most people have tied their knot into a big loop at the end of their rope. Be patient everyone. Just as nothing good lasts forever neither does anything bad last forever. Go back to doing the work and keeping the faith and then all will be well. )
All things considered, the KM Team and KM Partners feel more than optimistic as we make our way forward through October and into November. As we have written above, the country and the world have been here before. Tomorrow is never as bleak as we fear it to be. And yesterday is never as bad as we remember it to be. Coming from a bunch of head shaking, hand wringing “I-told-you-so” people like the KM Team and KM Partners, can there be any doubt that things will not only improve but are actually improving as you read? In the meantime, enjoy our return to increased stories and comments as we work harder to support you all. New features are coming and new voices are rising so stay tuned. In the meantime, the entire team rejoices in our readers, their comments and their input. Having you all read us and communicate with us is what makes us continue. 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 and the whole KM Team! …
( Please see KangarooMoney’s Disclaimer posted on 08-17-2008. )
Remember, the KM Team has decided to publish the KangarooMoney Disclaimer as a separate post, dated 8/17/08, which has made our Lawyers extra pleased. The KM Team hopes this will make our Lawyers happy to no end, in fact. Because as any businessman knows, if the Lawyers are happy, we’re happy.
There is no easy explanation for the last 14 plus days. The problem with any explanation for that time just past is that the situation has been brewing for at least the last 7 years. Allow us to repeat that statement — “the situation has been brewing for at least the last 7 years”. Back during the 1999 Presidential Election, the quiet fear running through the voters was that the next President would be a “recession President” regardless of who that was. At that time, the recession situation was due to come up because of the Y2K fears as well as the economy itself at the time. The Internet Bubble was building at the time. The phrase “affordable housing” was being used by both US political parties as something that was more than necessary to keep Americans as a growing people. And the economy was screaming along so quickly that then Fed Chairman Alan Greenspan could barely constrain the growth that was going on.
So first there was the shake out from having a Republican elected — or chosen depending on your political viewpoint — whose business point of view was different than the preceding Democratic President. The US Markets rocked and reeled a little bit but that was all. Then the Internet Bubble burst, like almost all had predicted. The US Markets rocked and reeled a little bit more but while they lost a good deal the faith remained. Business resorted themselves with brick-and-mortar companies picking up the slack from the total internet attempts of earlier. By Christmastime 2000, old companies had learned how to use the ‘net and were making great strides forward. Americans discovered that they could move around the country by using the new job search sites so they did, taking jobs often sight unseen or not visited other than by telephone or on a quick flying trip on a weekend. By the time 2001 began, the country had recovered its walk but not its swagger. No one used the “R” word but times were not as good as before the bubble burst. Then, after a dull summer with money tightening and the international business world sorting itself out after lagging behind the USoA, the country headed toward Labor Day 2001 with what could only be termed a “tough slough” ahead of it. Predictions of a flat Christmas was countered balanced by air travel being made the cheapest and most direct since commercial flight had been created. Flying was more like a bus trip than it was a special occasion and dealing with people “face-to-face” to make business was being touted over any impersonal internet transactions.
And then, 9/11 happened.
4 planes crashed. 2 major building crashed. Several buildings were damaged. Nearly 3,000 people died in a very, very short period of time. The skies cleared of planes in just a few hours. The major US stock markets shut down for days. Companies were destroyed, fortunes lost, people died. And while America cried the hardest they collectively had since December 7th, 1941, the rest of the World held its collective breath. Not only was the question asked of what would America’s response be, and to who, but the question of what happens to all of the rest of the world now was being asked at the same time. The World did not have long to wait for their answer. The markets reopened the following Monday September 17th 2001 and immediately headed south with their worst losses in decades. But after some reassurances and posturing, the markets held in the US and then around the world. Then on Sunday October 7th, 2001, the United States of America surrounded by committed allies attacked the creatures who had attacked them the month before. The Recession that had been most assuredly coming for Christmas 2001 was gone.
Now it is here. Caused by the same things that caused 1929, 1951, 1973 and, most closely perhaps, 1987. Greed. Guile. Fear. Gullibility. The Four Horsemen of any good mass halluciation in the financial world have reappeared. And what do the good but harmed people of the recession trap do? They cast about, looking every way possible for a person to blame, for some one to tie to a stake so they can light the fire that will burn the evil out of the situation and sooth their soul. Even now, we are finger pointing about CEO salaries and CFO golden parachutes, about spa junkets and hand shake back room deals, about vote trading and “guaranteed no loss” Congressional Bills, about bringing somebody out in handcuffs so they can be stoned in public. What we need Kangaroos, is a mirror. As a friend of KangarooMoney is so fond of repeating, “We have met the enemy, and he is us.”
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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, we are looking at 01/01/09 at this point, 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 the weeks’ stories, there is 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 there is 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.
An additional 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.
Finally, there is the feature that we hope will help you to see where KM is coming from and where KM is trying to go to. Up under the Blogroll section in the upper right hand corner of the page, is a link to a list of companies and stock symbols called the “Stock Docket”. The link will take you to a list where there will be the companies, stock symbols, index it is traded on, the price per share the week that it was mentioned and what that price per share was as of Friday just gone by. Also, we will highlight which stocks we supported at the time and which we did not. While this is a considerable undertaking on the KangarooMoney Teams’ part, we do feel that this will help to determine how things are going. Eventually, this item will also be moved to an interior page, so please comment on this feature as much as possible before that happens. KM would love to be right every time in this area, so we will see how things go as we drive forward. There are already some very interesting up and down movements just in the short time we have been talking with you all. We have added the totals for the stocks mentioned on the docket, with the exception of Bear Stearns ( BSC is no longer with us as a viable stock but it is left on the docket to show what can happen to any company that does not bear the proper burden of taking care of its stockholders ) and Electronic Data Systems Corp. ( EDS was bought and absorbed by Hewlett Packard ). The totals shown at the bottom of the spreadsheet show winners and losers both as an overall number if you held 1 share of each stock mentioned as well as the biggest winner and loser of the week. The KM Team revamped the sheet a little bit to show the totals more directly and we’ve tweaked this feature yet again as we go along. A share here, a share there, and it all starts to add up! Keep asking for more and we’ll see what we can do little joeys!
Please remember, KM Partners and the KM Team are not accountants, stock brokers or personal financial advisers, nor are we even Lawyers. You need to be sure that you do what YOU want to do. If the KM Team opinions can help you have an understanding of what has happened, is happening or will happen so as to help in your decision, then our blog serves a purpose. If, on the other hand, this is the ONLY guidance and direction that you are basing your decisions on, please do not come crying, or suing, any member of the KM Team or KM Partners. We hope this clears up any questions to that regard.
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!
Many of the KM Team are collectors of one thing or another. Coins, stamps, baseball cards, comic books, spoons. Okay, not spoons so much but you get the idea. One thing that all of us understand, is that the items we collect are worth only as much as somebody else is willing to pay for them. This is the most important attitude to have when collecting anything. Especially stock in companies. ( click here to read more) If you happen to collect something other than a companys’ stock, you know first hand that if you want to sell something you own there are only two ways to do it: 1) take the offer of the person standing in front of the item as soon as they make it or 2) go to auction either officially via a website or auction house or unofficially by shopping the item around on your own. Now, sometimes in life, because you need the money, you have to take that first offer as it is made or you have to put your item up for auction as soon as possible. The problem with either of those methods is that you are selling your favorite item at someone else’s price. You get the cash but they get the deal. They get your item on their terms and you get to go pay off whatever it is you need to because you needed the cash. As you may have heard lately, the collectibles market is fairly warm at the moment. All the items mentioned above are driving up in price because they are tangible, hold-in-the-hand things as opposed to stock in companies you have never seen beyond a paper report a few website pictures. However, the markets have seen the same type of forced selling of stock shares as written above about collectibles. Some people are wanting to get out of the market so badly that they are taking the first offer made to them, regardless of the price or the cost to their pocketbooks. Those people are getting money on the table but at such a cost that even now they don’t know the full extent of their losses and probably won’t until they do their taxes. Who knows why they needed the money or even if they needed the money. All we know is that the panic that has overtaken the global markets has gotten some people pennies on the dollar and others future dollars for pennies. And our 1985 Topps Mike Greenwell rookie cards? Let’s just say that EBay has not been kind to Greenie this month.
The problems I wish I had…Taxes. In the office, there was a recent discussion about taxes here in the USoA. Normally, the KM Team advocates long term investing but, on this occassion after a one day drop of over 700 points on the Dow Jones 30 Industrials ( DJIA for short ), the KM Team expected a Dead Cat Bounce. And that was exactly what we got. The masses had played the part of a mod and they had played the market to predictable measures. Kangaroo’s - stop following the mob! ( click here for more ) The stock that caught our attention was Regions Bank, more correctly Regions Financial Corp. ( RF, traded on NYSE, a stock owned by KangarooMoney Partners, recommended at this time ). On September 30th, 2008 the stock buy price was at $9.95 per share whereas on October 3rd, 2008 the sell price was at $13.52 per share. In a matter of 4 business days, the stock had changed $3.57 per share UPWARD, a shock for the situations involved and even more so when considering that this is a financial stock that we are talking about. The person seeking the KM Partners advice was showing a great deal of true mob mentality - he did not want to make the $5000.00 investment that was being recommended. Not because of the overall market conditions here and abroad but, because of the potential TAX IMPLICATIONS involved. Needless to say, there was a great deal of “Are you KIDDING me???” going on around the table at that point. While no one around the table then knew exactly when or how much the stock would be later on ( if we did, we would all be on a beach of an island that we owned! ) the end of the story is that thein question did not make the buy as suggested. But, the KM Team did the math afwards as a case study for our benefit, and now for yours. The estimates are the extreme in tax category but watch what happens : $5000.00 investment divided by $9.95 - 502.5 shares purchased on September 30th, 2008 - a sale at the close of business on October 3rd, 2008 would have been 502.5 shares multiplied by $13.53 = $6793.80 or a profit of $1793.80 on the transaction - take 38% of the profit for taxes = $681.64 paid out for taxes, leaving a profit total of $1112.16 for 4 days effort of money work. Oh yeah. The original $5000.00 is still intact as well, minus expenses of course ( in this day of self-electronic trading that could cost you as little as $20 total for purchase and sell of shares!! ). On October 3rd, that Friday night at the weekly wrap-up / pre-weekend wind down pub meeting, the eyebrows of the table crowd refused to come down. For a $5000.00 investment and 3 minutes of computer trading, you could have walked away with a 20% increase in income AFTER TAXES! Now little ‘roos, you have an excellent idea of how the main man Jim Cramer made his name on Wall Street. BOO-YAH! ( http://www.thestreet.com/investing-a-z/jim-cramer-essentials/ ) Because the investor in question decided that workiing more hours at his current job was a better choice to him, the question came up as to just how many hours someone would have to work in order to take home $1112.26, the profit total, at current pay rates. It was also pointed out that you would be taxed at a higher for any overtime involved at the job worked. The quick math bore out that about 63 hours of labor in one week, involving 40 hours of straight time and 23 hours of overtime at about $20.00 per hour pay rate would cover the profit total - and then the arguments started. What about deductions? How many times have you heard the saying “The more you make, the more they take?” What about other taxes like withholding for Social Security and the like? What about the expenses of working that week, of driving to and from the job, of lunches, of getting up and going to bed? Soooooo, the table decided that a realistic estimate of 4 hours overtime for 20 WEEKS would give the same estimated total when all considerations were made. 20 weeks of job compared to 3 minutes of computer work with knowledge. The table talk ended sadly to say the least. Now, don’t get the KM Team wrong. We all believe in hard work that should be noticed and properly compensated for. Much UN-like the people over at that soon to be out of business Circuit City ( CC, traded on NYSE, most definitely NOT recommended at this time and, not expected to last past Week 4 2009 ). You should do your own research and you should have faith in your investment. And, yes, there is a risk that you could lose the money you have invested as the stock price goes down. Remember, for every buyer of a stock out there convinced the price is going to go up, there is a seller of the same stock convinced that this is as high as the stock will ever go. So many of you are new to trading stocks and bonds as well as the year end paying of taxes part of investing. But after that first 1040 long form you put together, you get used to doing all of that work. Just keep good records so that you can show what you did, make duplicate copies of computer files and / or hard copies, then keep them in a safe place. If you can’t figure out all of the tax work on your own or don’t feel comfortable with your results, seek out a tax professional for help. But please, don’t fear paying taxes with part of your profits! Working a job is a guaranteed income - you work for someone, you get paid for your efforts what they decide to give you. Home-to-work, Work-to-home in this investment case study above was a short walk to a computer, twice. Just to make the equivalent of 20 weeks of a long day in your business days’ time. The KM Team and KM Partners would love to welcome all the new readers. We look forward to hearing from all of you in the comments section. Remember - don’t follow the mob! ( “BOO-YAH” is the catch phrase used by Jim Cramer and his listeners - Booyah is a registered trademark of Booyah Bait )
In the excellent book written by David O. Stewart, entitiled ”The Summer of 1787″, subtitled “the men who invented the Constitution”, one of the front passages leapt off the page to beat us about the head and shoulders : “…Rhode Island went the furthest. The state issued L100,000 of paper notes that by law had to be accepted on the same terms as gold. [ James ] Madison wrote of the little state in horror: ‘Supplies were withheld from the market, the shops were shut, popular meetings ensued, and the state remains in a sort of convulsion.’” Sounds a great deal like today, doesn’t it? Just without the gold. ( click here to read more) As some of the KM Team are ardent students of US History, it stands to reason that we are backtracking throughout our American heritage to find some time points that look like what is happening today. The time period just after the American Revolution is an excellent place to start. At that time, one of the driving factors to even think about a new United States Government was the weakened national economy and the huge debt that was swallowing the country whole thanks to larger than life loans that had been made to the new country by France among other nation states at the time. Indeed, by 1776 only one man in the colonies had enough clout to personally back the new nation withmoney both hard and paper, Robert Morris, who once dug up a chest from his homes’ back yard and sent to then General Washington to help the struggling Continental Army make pay and buy supplies. The chest had held a motley selection of hard currency from several nations but it had been enough to make situation back down enough to carry on. It had been the ever tireless Robert Morris who had signed every single back pay chit in 1783 at the ending of the Revolutionary War that handed what was supposed to be 6 months pay to all then serving Army members, a dawn to dusk task that took weeks and in the end meant only a hollow gesture because the speculators made the money while the soliders ended with nothing but it was a heartfelt gesture none the less. From 1774 until after the new US Constitution took effect on June 21st 1788 ( after New Hampshire became the 9thstate to approveit ) the monetary system and indeed the entire economic situation in the Untied States was more local and direct rather than universal and unified. The term “not worth a Continental” was used the world over to describe something that was worthless. The problem was a hodge podge of laws, a lack of clear news and easy to understand rulings and the overall demand for hard money to have in ones’ hand drove the attempting and completed nation almost to the brink of ruin and split. The same economy and economic situations have convulsed this nation about every 20 years ever since. Rules, regulations and directives are put into place to prevent a free fall, a stock run and / or bank ruin just long enough for some very clever fellow to come along with an angle, a testing, a shot at getting around the rules jjjuuuuussssttt ever so barely in order to make piles of “legal” money. The efforts of those men in that hot and humid upstairs hall during the summer of 1787 would begat the largest one day collapse of the US stock market 200 years and a few months later in 1987, when the Dow Jones would lose 25% of its value in one day. Like the time 200 years before and now 21 years later, the tremendous amount of paper money loss and the overall panic in the hearts and mind of all concerned would drive the policiticans of the day to rewrite the rules and change the way business was done both inside and outside the Government. Although it didn’t seem to at first, it did work in 1787, and then again in 1987. The question is, do we believe it will work again now, here in 2008. We have no choice Kangaroos. We have to believe that our latest plans will be as successful as those that came before. The other choices are just too horrible to think about.
Circuit City CEO Gets Unplugged — Back in Week 20 2008, KangarooMoney reported that during the month of March 2007, Circuit City ( CC, traded on NYSE, most definitely NOT recommended at this time and, not expected to last past Week 4 2009 ) laid off 3,400 employees as part of their “wage management initiative”. We here at KM called it “screwing your employees”. And it should have been no surprise to anybody that the quality of service dropped right along with the value of the company stock. ( click here to read more ) This type of corporate behavior can not be condoned. What would be the incentive for your employees to go above and beyond the designated duties? “I know it’s the end of your shift but, stay and help out…” Why would anybody? If not for the expectation of a possible wage increase in return for hard work, nobody would do more than they could get away with. If there is no chance for a wage increase even with longevity, what is the point of doing a good job? Even if you DID receive a pay increase, then at Circuit City, your length of service would put you in danger of being laid off. But I digress. At that time, the stock was trading at $18.43 per share. As of October 3rd, 2008, the stock was trading at 57 cents per share. Poetic justice. So now I get to use my favorite Motorola line again. How many times have we seen this drama? It’s the same play only the characters names have changed. 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 KangarooMoney 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. Sources: http://www.businessweek.com/bwdaily/dnflash/content/sep2008/db20080922_237728.htmhttp://www.msnbc.msn.com/id/17837882/
You will Please check out The Stock Docket for this week. You will notice that of the 73 total stocks listed, exactly NONE went up in value last week. Even the “winner” for the week only broke even during Week 41 2008. That was enough to win the title of Biggest Gainer for the Week as all others managed to lose money. Check out the numbers and see for yourself
( Ah, there have been so many others that they are hard to get to press before Sunday deadline! Tune in on Monday as we fill you in how the KM Team and KM Partners have done over the last several weeks! )
Market Mover of the Week 42: The President of the United States, George W. Bush, will be the MMoW for Week 42. There is no other choice in our opinion here at Kangaroo Money. The President must stride forth and not only calm the financial waters both here at home and abroad but he must also step up and answer the situations in Parkistan, Afghanistan, North Korea, Iraq and of course in our dealings with Russia. Only a solid week of point-counterpoint can be expected and should be delivered. For that effort, President Bush should emerge as the major market mover for Week 42 2008.
Market Mover of the Week 41: Like Time Magazine before us, we’re copping out to call the MMoW of Week 41 to be the Individual Investor in America. the mob mentality drove the US markets to the lowest point since before most of us were born, both in actual dollars measured and in percentage based measurement scaled for inflation. Here is hoping that this is the last time KangarooMoney gets to announce that 350,000,000 people were the Market Mover for a week!!
International Impact Incident: The report of Russia, or the New Soviet Republic, testing a long range ballistic missile that was report to have traveled over 11,500 kilometers ( approsimately 6,500 miles ) and hitting on target, will put an additional push on a world that had gotten used to uniformaty and quiet while struggling with the worst financial crisis in recent memory. Russian President Dmitry Medvedev, acting in his straw dog role for the still ever ambitious ex-President Putin, announced after the successful tests that this was pledge to build up Russia’s military forces which would include building new aircraft carriers and submarines besides updating its missile forces. The American response as well as the European response, should be measured but direct, ignoring the impact of the financial situations that are going on. It remains to be seen just what will happen.
DEFINITIONS:
( stay tuned — they will be here on Monday! )
( This weeks quote is attributed to a bygone comic strip by the name of “Pogo” that ran in newspapers – those things we read everyday before the internet– around the country from 1948 to 1975 and written by the famous Walt Kelly. The strip was more along the lines of a daily editorial with pictures back in the day when people cared about editorials. The quote had been used by the Pogo characters earlier but became finalized as a 1970 anti-pollution poster for the accepted birth date of Earth Day, back in the day when people cared about pollution and Earth Day. Considering that the strip characters lived in a swamp where morals were talked about but rarely practiced, the quote seems more than appropriate for this situation. )
All things considered, the KM Team and KM Partners feel more than optimistic as we make our way forward through October. As we have written above, the country and the world have been here before. Tomorrow is never as bleak as we fear it to be. And yesterday is never as bad as we remember it to be. Coming from a bunch of head shaking, hand wringing “I-told-you-so” people like the KM Team and KM Partners, can there be any doubt that things will not only improve but are actually improving as you read? In the meantime, enjoy our return to increased stories and comments as we work harder to support you all. New features are coming and new voices are rising so stay tuned. In the meantime, the entire team rejoices in our readers, their comments and their input. Having you all read us and communicate with us is what makes us continue. 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 and the whole KM Team! …
KangarooMoney has spent the last ten days reading, watching and listening to the financial meltdown 24/7. Except for the time spent in the Real World at real jobs with real people, of course. That has made it not just difficult but absolutely impossible to coordinate and write anything about the ongoing situations. How can you write about something when it is changing hour by hour, minute by minute?
KangarooMoney has over two dozen articles up and ready to go to print as we write this. However, those articles are out dated because of the happenings in the real world. They will need re-writes to bring them up to current speed. In the meantime, two dozen new ideas and major stories are being fleshed out to be presented in the next several weeks. Providing, of course, that we are allowed to catch our breaths and begin to look forward towards where we all need to go rather than look backward in panic at past sins committed.
Kangaroos, it may not seem like it at this exact moment but, we are looking at one of the greatest money making opportunities of our times, if not the best chance to make money for the next 15 to 20 years. Do your homework, research your targets, validate your future goals by reviewing the past and finally, do the things you need to do NOW in order to be making money for the future. Panic is for the weak. Prosperity is for the strong — of heart, mind and soul. Challenge the future. Be strong Kangaroos.
KangarooMoney, the KM Team and the KM Partners remain steadfast in opposing a Bailout or Rescue Bill that will mortgage America’s future, such as the latest bill that was passed by the United States Senate on Wednesday October 1, 2008. This bill was not only larger in size and scope than the previous United States House of Representatives, weighing in at 435 pages, but it added more useless pork to the party than a Mid-West pig farm ever could.
There is little doubt that the respected, and demanding-to-be-Savior, US House will allow itself to pass this bill after failing to put forth its own bill only 48 hours before. That will mean a joint committee of both House and Senate members will be necessary to attempt to hammer out a compromise bill combining the worst of both bills. While promising to supply something to everybody, it will accomplish nothing, certainly not what was originally proposed.
It is a bad bill. It will prevent nothing except success. It will cause only debt and failure. It should not pass. It should not be cobbled together with the equally bad and flawed House bill. Both should fade away.
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