Just on November 23rd, I posted here on how Dr.Paul's idea of a return to gold as money is derided as "lunatic" by mainstream economists.
Guess who decided to join the lunatic fringe? Newt Gingrich!
Just google "gingrich gold" and you'll see many appropriate links. Here's one :
http://www.nysun.com/editorials/gingrichs-gold-group/87666/
But wait, there's more! Remember when RP proposed to slash 1 trillion Dollars in spending from the budget in just the first year? THAT surely disqualified him as a serious candidate, right ? Pundits all over claimed that it would lead to a collapse of the US economy. Ahh, well....
Here comes Rick Santorum, needing to outdo Dr. Paul, promising to cut 5 trillion in 5 years.
http://blogs.wsj.com/washwire/2012/01/05/santorums-top-goals-5-trillion-in-cuts-entitlement-overhaul/
Thank you guys for the wonderful, if belated, endorsement of Dr.Paul. Needless to mention, only Dr.Paul has the proven integrity, the record to show, that he can actually be trusted to keep his promises once elected.
Wednesday, January 25, 2012
Monday, January 23, 2012
The Other Side Of The Trade:
"U.S. stocks are trading at their cheapest levels since at least 1990 based on the most commonly used valuation metrics, including price-to-earnings and price-to-book ratios, as well as dividend yield, according to Bespoke Investment Group. This realization will lift the S&P 500 Index by 11 percent to 1,400 this year or maybe more, according to the research firm’s 2012 outlook report."
(complete link to article here: http://www.cnbc.com/id/46102636
Let's see who will be better off one year from now!
(complete link to article here: http://www.cnbc.com/id/46102636
Let's see who will be better off one year from now!
Friday, January 20, 2012
Stocks ? Why I'm Not Buying:
Warning: I have not personally researched the majority of S&P 500 stocks, my arguments are based on the few companies that I actually had the time to analyze in more detail.
I read it all the time: stocks are incredibly cheap and especially with interest rates as low as they are, you cannot go wrong buying.
I'm not buying, and here is why:
1. When the price/earnings ratio for the S&P is calculated, only earnings are considered. When companies make losses, their "earnings" are not subtracted from the total.
2. Companies report "earnings from continuing operations" and tell analysts that losses from discontinued operations should be disregarded. It's equivalent to me trading IBM with a nice profit but trading US Steel incurring large losses and then taking an oath not to trade US Steel again. The loss on my US Steel trades is disregarded and only my profit on IBM counts. I still made a loss overall, but to the casual observer, it appears I made a profit.
3. Industries invent their own accounting yardsticks, like FFO (Funds From Operations) for Real Estate Investment Trusts (REITs) and present those as "earnings". Again, the casual observer/investor who is getting his info from the likes of "Yahoo" is tricked into believing that his REIT is profitable when it is actually losing money according to GAAP ( Generally Accepted Accounting Principles). The difference between the two measures is that FFO does not account for depreciation. The REIT industry likes to make you believe that real estate improvements do not lose value and do not become obsolescent. Yet commercial real estate is not much different from other ventures, like manufacturing facilities.
4. Government contracts, subsidies and incentives can make an industry look very inexpensive based on reported earnings, yet those subsidies are at risk to be cut and can turn a seemingly profitable industry into a basket case almost overnight. Recent Examples? Ethanol producers and solar companies.
5. Interest rates can only go up from here. When they do, stocks will lose their comparative income advantage.
I read it all the time: stocks are incredibly cheap and especially with interest rates as low as they are, you cannot go wrong buying.
I'm not buying, and here is why:
1. When the price/earnings ratio for the S&P is calculated, only earnings are considered. When companies make losses, their "earnings" are not subtracted from the total.
2. Companies report "earnings from continuing operations" and tell analysts that losses from discontinued operations should be disregarded. It's equivalent to me trading IBM with a nice profit but trading US Steel incurring large losses and then taking an oath not to trade US Steel again. The loss on my US Steel trades is disregarded and only my profit on IBM counts. I still made a loss overall, but to the casual observer, it appears I made a profit.
3. Industries invent their own accounting yardsticks, like FFO (Funds From Operations) for Real Estate Investment Trusts (REITs) and present those as "earnings". Again, the casual observer/investor who is getting his info from the likes of "Yahoo" is tricked into believing that his REIT is profitable when it is actually losing money according to GAAP ( Generally Accepted Accounting Principles). The difference between the two measures is that FFO does not account for depreciation. The REIT industry likes to make you believe that real estate improvements do not lose value and do not become obsolescent. Yet commercial real estate is not much different from other ventures, like manufacturing facilities.
4. Government contracts, subsidies and incentives can make an industry look very inexpensive based on reported earnings, yet those subsidies are at risk to be cut and can turn a seemingly profitable industry into a basket case almost overnight. Recent Examples? Ethanol producers and solar companies.
5. Interest rates can only go up from here. When they do, stocks will lose their comparative income advantage.
Monday, January 16, 2012
Why It's Getting Worse
A hundred years ago, what I'm writing now was self-evident.
What is the essence of a good person? Someone who produces more than he consumes. Why? Because that is the only way someone can give away anything: By making more than he consumes himself.
With honest money, savers get rewarded. They achieve individual Liberty and prosperity for all, as the savings will be invested to improve the lives of everyone.
When money becomes dishonest, when it becomes inherently worthless, it destroys the savers. It instead rewards those who live beyond their means. For the longest time, we (me included) believed that we could outfox inflation by buying assets on credit and come out ahead. Many who followed this belief have now been bankrupted by the collapsed real estate bubble.
Instead of encouraging savings, fake money has rewarded consumption. Real wealth has disappeared. For a while, it appeared, on paper, that we were getting richer: In reality, wealth and incomes declined.
Instead of reversing course and learning from our mistakes, those in power are determined to accelerate in the same direction. The predictable outcome? Our money will truly be worthless: Savers and retirees will be destitute, unemployment will rise, and the only people to make money will be those who are connected to the government.
We have seen this scenario play out too many times in the 20th century: Destitute people will call for a "strongman", a dictator, to set everything right again.
Can we avert the precedence set by Germany in the 30s, South America in the 80s, Yugoslavia, Russia, Zimbabwe ?
At this moment, we are still enjoying a most incredible lunacy: Record low interest rates as inflation has already taken off. The German government sold 6 month paper at a negative yield last week.
This, in my view, represents the mother of all bubbles.
What is the essence of a good person? Someone who produces more than he consumes. Why? Because that is the only way someone can give away anything: By making more than he consumes himself.
With honest money, savers get rewarded. They achieve individual Liberty and prosperity for all, as the savings will be invested to improve the lives of everyone.
When money becomes dishonest, when it becomes inherently worthless, it destroys the savers. It instead rewards those who live beyond their means. For the longest time, we (me included) believed that we could outfox inflation by buying assets on credit and come out ahead. Many who followed this belief have now been bankrupted by the collapsed real estate bubble.
Instead of encouraging savings, fake money has rewarded consumption. Real wealth has disappeared. For a while, it appeared, on paper, that we were getting richer: In reality, wealth and incomes declined.
Instead of reversing course and learning from our mistakes, those in power are determined to accelerate in the same direction. The predictable outcome? Our money will truly be worthless: Savers and retirees will be destitute, unemployment will rise, and the only people to make money will be those who are connected to the government.
We have seen this scenario play out too many times in the 20th century: Destitute people will call for a "strongman", a dictator, to set everything right again.
Can we avert the precedence set by Germany in the 30s, South America in the 80s, Yugoslavia, Russia, Zimbabwe ?
At this moment, we are still enjoying a most incredible lunacy: Record low interest rates as inflation has already taken off. The German government sold 6 month paper at a negative yield last week.
This, in my view, represents the mother of all bubbles.
Sunday, January 8, 2012
Ron Paul 2012 !
My official endorsement for Dr. Ron Paul for president 2012.
It should be obvious: I entered the USA as an immigrant in 1987 and for the first time in my life I discovered a politician who would voice what I was thinking. I didn't even know that people like that existed.
As far as I could remember, my beliefs, my views were just impossible in the "real world". Ron Paul was running for the Libertarian Party as a candidate for the highest office. I have supported him ever since.
You should think that his views are just common sense. You should think that there are more candidates like him to choose from. True on both counts, but at this point there is only Dr.Paul who is able to reach the finish line.
Look how far we have come: From sub-one percent in 1988 to major contender to be the Republican nominee and running neck and neck with Obama in a direct contest.
He is detested by the MSM (main stream media) and his views are routinely grossly distorted, but people are more and more getting used to researching on their own, and Ron Paul is winning !
It should be obvious: I entered the USA as an immigrant in 1987 and for the first time in my life I discovered a politician who would voice what I was thinking. I didn't even know that people like that existed.
As far as I could remember, my beliefs, my views were just impossible in the "real world". Ron Paul was running for the Libertarian Party as a candidate for the highest office. I have supported him ever since.
You should think that his views are just common sense. You should think that there are more candidates like him to choose from. True on both counts, but at this point there is only Dr.Paul who is able to reach the finish line.
Look how far we have come: From sub-one percent in 1988 to major contender to be the Republican nominee and running neck and neck with Obama in a direct contest.
He is detested by the MSM (main stream media) and his views are routinely grossly distorted, but people are more and more getting used to researching on their own, and Ron Paul is winning !
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