When War Closed the NYSE for Nearly 5 Months November 28, 2010

Silent Cal Knew About America's Business

On This Date in History:  When World War I first broke out, the United States was officially neutral.  Calvin Coolidge would later say as President that the business of America was business and that idea had already taken hold at the outset of the Great War.  America not only wanted to stay out of the war, but also expected the beligerants to adhere to international law and allow Uncle Sam to conduct business as usual.  That meant allowing the United States to continue to participate in free trade.  Well, the Brits weren’t about to give up their advantage on the high seas by allowing Germany to get supplies, even food, from overseas.  Any supplies that Germany got would add to its ability to make war.  So, the Royal Navy used its huge numerical advantage to use with a naval blockade.  The US was not happy that its ships were being stopped and searched or its ships were denied entry to certain ports.  But, typically, American merchants were simply escorted to British ports by the navy and their cargo was searched.  A process was also set up for damage reparation claims.  Fearing that good were getting to the Axis powers in an indirect way, the British expanded the blockade to include neutral Baltic states.

Sinking of Lusitania Changed American Attitude

The Germans did not have a surface fleet sufficient to blockade goods from the Allies so they went below the waves.  The Germans used their U-Boats, or submarines, to sink ships that were supplying the Allies, mainly through England.  The difference between the two was that the U-Boats dispensed with the dangerous, more acceptable practice of stopping and searching ships and simply began torpedoing ships without warning.  If the ship was suspected of supplying the Allies, the fish went in the water and down went the ship.  Activity such as this began to gain the ire of the Americans with the sinking of the Lusitania in 1915.

Solid Line Nominal Prices; dashed "real" prices

Most of the time, people think that war is good for business.  But, in this case, a compelling argument can be made that both before and after US entry into World War I, American business was adversely affected.  One casualty of the war was the stock market.  When war first broke out in 1914, the financial world was fearful of what would happen in international markets;  perhaps European stock holders would sell their equities and the market would crash.  So, in July 1914, the New York Stock Exchange closed and stayed closed for about 5 months.  The thinking was that, with the major stock exchanged closed in the US and others overseas disrupted by war, then it would be much more difficult for anyone to dump their stocks.  But, almost immediately, a curb or street exchange developed with traders working about a block from Wall Street matching up buyers and sellers for securities.  It provided some much needed liquidity and was referred to as New Street.  However, Uncle Sam ran into a problem.  The government needed money and raising taxes wasn’t enough.  They needed to sell bonds but without a market to sell its debt, then it was in trouble.  So, on this date in 1914, the only US exchange reopened on a limited basis.  Equities were still not traded but bond markets were re-opened.  A few days later, stocks resumed trading.  And, there was no crash.  But, there also wasn’t a war boom.  For the most part, the stock market went sideways except when one figures in the effect of inflation.  In that case, the real stock value was decidedly downward. 

Most of the time, we think of the US as being a wild west show when it came to financial markets prior to the Great Depression; that before 1929 there was no government regulation.  But, as this story illustrates, the Federal Government was indeed involved in trying to control market results.  In this case, it had the largest exchange in the world shuttered until the government needed it.  Talk about insider trading.  But, it was all about business and the declaration of Silent Cal was true before he was president and 80 years after his administration.  The business of America is business.

1987 Stock Market Crash Example of Increasing Risks in Investing October 19, 2010

Biggest Single-Day Market Drop in History Oct 19 1987

On This Date in History:   After a run-up in the Dow Jones industrial average over the past several weeks that put it in positive territory by some 8% for the year, it took a tumble.  The Dow gave back about 1.5%, or 165 points to close as session that saw the big board showing a deficit well over 200 before the close.  Profits have been up for a large number of companies during the most recent “earnings season” but the Dow took a hit anyway.  The general consensus is that China raising its interest rates was the catalyst.  With a rise in Chinese interest rates, that economy may slow down and so the dollar got stronger.  The dollar rose 1.7% and commodities, including oil, fell.  Oil had been up about 13% over the past month, mainly due to a weakening dollar.  Since most commodities, including oil, are traded in dollars then when the dollar gets weaker the price of commodities rise.  Earlier this year when there was the European fiscal crisis, the dollar rose and oil prices fell.  When the crisis seemed to pass, then the dollar got weaker against other commodities and oil prices rose.  So, it would appear that, at the current time, the Dow Jones and other indices such as the S&P 500 are responding to currency exchange rates.  I think the volatility in the face of positive earnings reports just shows how nervous the investing class is at this time.

Media Hype in 1987 Proved Unfounded

However, Wall Street is not as nervous as it was 23 years ago when, on this date in 1987, the Dow Jones industrial average fell 508 points.  It became known as “Black Monday,” though its seems that moniker has been used in some form in the past.  That represented a decline of over 22% in one day of trading.  For a similar shock to happen today, the Dow would have to fall about 2400 points in one day.  Back in 1987 on October 19, the S&P 500 fell over 20% so it was a broad sell off of stocks.  The date marked the end of a bull market that had driven the Dow from 776 points in August 1982 to a high of over 2700 points in August 1987.  There was great concern in the media that we were in the midst of another potential 1929 scenario but the market said otherwise.  The very next day, the market had its biggest gain ever when it rose over 100 points and two days later rose 186 points.  By 1989, the Dow had recovered all it had lost on that one day and continued to rise for many years thereafter.  In comparison, the largest single day point drop for the Dow Jones happened on Sept 28, 2008 when it fell 778 points but that represented only a 7% decline.

Thousands lost jobs on Wall Street After 1987 Crash

So often, we hear that the market is a forecaster of the days to come so many experts thought the crash meant that it was the sign of a new recession.  The fallout though turned out to be relatively minimal.  Now, it certainly was a recession for the 15,000 folks on Wall Street who lost thier jobs, but the rest of the economy wasn’t overly affected. An easy answer to simply say that the Dow had risen about 300% in 5 years and people simply took their money off the table.  That is certainly true and probably was an incentive to sell at the first time of trouble.  Still,  it’s not totally clear of the cause, though there are numerous opinions.  However,  there seems to have been a number of factors that had more to do with a changing trading envrionment and new technology than anything else. 

Traders in a Frenzy like in this photo from 1987 may be a thing of the past with the increase in computer trading

It’s as if it was a hiccup in a transition from the old world to the new.  The Brady Commission, formally known as the Presidential Task Force on Market Mechanisms, determined that the failure of stock markets and derivatives markets to operate in sync was the major factor behind the crash.  Several sources put the blame on the then relatively new practice of using computer programs to initiate trades.  The idea is that when certain conditions were met, computers used by large, institutional investors sold large quantities of stocks and a waterfall effect followed suit.  Only trouble with this argument is that markets that did not use computers also dove.  But, it seems to me that if traders on other markets saw the Dow tanking that maybe panic would set in.  Another finger has been pointed at the lack of liquidity of the market.  Traders were unable to handle the large number of trade orders that came in and trading was halted for many stocks.  While it clearly was a problem it doesn’t explain why so many people decided to sell at once.  The bond market at the time featured yields that had risen from 7.6% to over 10% and that provided a nice haven for folks investing in the equity market but those rates did not rise overnight.  Perhaps it provided for a nice alternative and may have encouraged nervous investors who found it a lucrative place to park their tidy profits, but it doesn’t explain the everyone overboard scenario.

Politicians Have Gotten Involved With The Economy for Years

So, a look at what might have happened in preceeding days that may have caused people to collectively decide the party was over might be useful.  Many historians look to consideration by Congress of the Smoot Hawley Act as the cause for the crash in 1929 followed by an extension of doldrums when Herbert Hoover actually signed it.  Now, from October 14, 1987 to October 19 1987, the Dow lost about 30% of its value so the decline really started a few days before the bottom fell out.  It just so happens that on October 14, 1987 US Secretary of the Treasury James Baker announced that there may be a need to follow a weak-dollar policy as part of a larger scheme to stablize global currencies.  That announcment may have influenced foreign investors to pull out of dollar denominated assets.  Then, on October 15 the House Ways and Means Committee passed legislation that eliminated tax deductions by corporations on debt used for corporate takeovers.  Securities and Exchange Commission economists Mark Mitchell and Jeff Netter pointed exactly to that legislation as the underlying cause of the crash in their 1989 published report. 

People Take Different Approaches to "Playing" The Market Though Wise, Prudent Investing May Be the Best Course of Action..But It Can Be Boring

One this is for certain, investing in markets is not a simple proposition and it becomes more complicated every day.  The more we advance in technology, the more new concerns arise and new rules or limitations get considered.  The more the world gets intertwined in the business of economics, the more events in other parts of the world affect the markets at home.  Then there are the traditional risks of interest rates, exchange rates, market risk and just plain the risk involved with the specifics of any underlying company.  The stock market is not for everyone but the more people get involved in markets through their pensions or 401K’s the more markets volatility directly affects individuals.  But, most people assume that the market just goes up and their 401K is always going to grow and that is not the case.  If you want a guarantee, get a toaster.  Better yet, brokers and financial advisors are charged with recommending investments that are suitable to their clients needs, desires and sophistication.  I would submit that most folks who lose money have not been advised properly.  Many of the former employees of Enron were misled into believing that their company stock was a sure bet.  No doubt, many people let their own greed get in the way, preferring to believe that there is a quick way to make a buck as opposed to taking a more prudent way to invest.  One thing I found that is wrong with our markets is that so many people see the market as a horse race or a casino.  They don’t invest in a company but instead bet that it will go up.  Day traders could care less about the company’s long term viability and are more interested in short, quick gains or losses.  They get in or get out by buying and selling or selling short and closing out the position.  That is especially true of options  traders.  That attitude has spilled over into commodity markets where people buy and sell contracts to purchase and underlying commodity, like oil, with no intention of ever taking delivery on that contract.  The bottom line is we have many examples of the complexities of the markets and it would be wise to learn the rules of the game before you jump into the pool.  Its not for the faint of heart.

The US Banks Were Bailed Out in the Past, But Uncle Sam Wasn’t The Savior September 22, 2010

Banks Have Been Bailed Out Many Times in US History

Dow Jones Since 1900

On This Date in History In 1906, San Francisco had a great earthquake. The effects of that quake led to a financial trouble spot that turned into a full-blown economic crisis. At that time, there was no central bank or Federal Reserve. With the system stretched by the stress of the San Francisco quake, some doofus tried to corner the copper market and when that failed, all of the banks who made loans to back the scheme were in trouble so they started calling other loans and the Panic of 1907 was created. People lost confidence in the system and several banks  failed. A bailout was needed. President Theodore Roosevelt was claiming that everything was fundamentally in great shape and threatened a federal takeover of all trusts if the bankers and financial gurus couldn’t get thier houses in order. Who came to the rescue? None other than J. Pierpont Morgan was the savior; the same JP Morgan who had bailed out the system in 1871 and 1895 and the same JP Morgan that is related to JP Morgan Chase who bailed out Bear Stearns in 2008.   To fend off the threats from Teddy Roosevelt, Morgan huddled with his banking brethren and convinced them that they needed to work together to salvage the system in order to save all of their hides and the future of the banking system.   He also convinced the Secretary of the Treasury to pony up $25 million to the effort. The recession did not turn into a depression and the 1907 Panic led directly to the eventual establishment of the Federal Reserve in 1913.

JP Morgan May Have Looked Like a Wild Old Man But He Saved Uncle Sam Bailed Out the Nation Several Times

While the numbers are not as large…not the $700 billion to $800 Biillion that the banking bailout became in 2008-09, the other numbers are not as large either. The Dow Jones Industrial Average fell 39% in 1907. On this date in 2008, the market had lost and gained about two percent over the previous month and politicians ran around making comparisons to the Great Depression when a comparison to 1907 might have been a better barometer . In order to equal the fall of the 1907 panic, the Dow that was around 11,015 on September 22, 2008 would have had to fall to 7000 and it was on this date in 2008 that the Dow fell some 300 points and arguably didn’t stop falling until March 9, 2009 when the Dow Jones Industrial Average bottomed out at 6547.   So, while it was, and in some measure still is, an extremely difficult and precarious situation, it was not totally unprecedented and it wasn’t necessarily a good match with the Great Depression. It’s just the depression of the 1930′s is all the general public, politicians and most people in the media know about.  Several times in the past,  it was JP Morgan engineering a bailout with some government help and this time it was the Federal Reserve and Uncle Sam engineering a bailout with some other private help. When you hear also of rumors that today’s problem was a plot by those who stand to profit, keep in mind that in 1907 it was rumored that the banks had caused the whole panic just to line their pockets.   Aside from the Great Depression, there were a bunch of “panics” in financial circles and the resultant recessions or depressions  that came fairly regularly…perhaps too regularly. The Dow is currently in a trading range between about 9900 and 10,70o and, in recent days, there has been a declaration that the recession is over. 

Year	Unemployment rate
1923-1929	3.3
1930	8.9
1931	15.9
1932	23.6
1933	24.9
1934	21.7
1935	20.1
1936	17.0
1937	14.3
1938	19.0
1939	17.2
1940	14.6
1941	9.9
1942	4.7

With unemployment still hovering near 10%, the rebound of the stock market and the claim that the recession is over are by no means a guarantee that the market and economy won’t go back in the tank.  Nevertheless, both are, and especially the Dow Jones, are certainly at a different place than anyone in March 2009 could have foreseen.   If something happens that causes a big drop in stock prices again, then maybe we can start to refer to the Great Depression as it relates to the stock market, which is but one indicator.   Unemployment is pretty bad but its more like the late 1970s and early 1980′s, not the 1930′s.

No Hoovervilles Today Like in 1930

The big thing about the Great Depression is that its depths were so far reaching that it led to new regulation by the government into financial markets than had ever been contemplated by the founders or anyone else in an effort to try to control the economy such that these setbacks wouldn’t be so deep or so frequent. To a large degree, it has worked pretty well but to expect these things to never happen or think its some sinister plot just is to not accept reality.

Sometimes, news people say they need to give commentary to “give perspective” or a particular news event. Dan Rather used to defend journalists providing analysis instead of just reporting for that specific reason. Yet, it helps if those giving “analysis and perspective” had some perspective in the first place. It’s probably hyperbole and just outright ignorance that media types or politicians trot out the Great Depression comparison.  I remember when President Clinton was running for his first term against George H. W. Bush, they said then that it was the worst economy since the Great Depression.  It certainly wasn’t even close to the economy of the Great Depression then and it’s arguably not the same now.   It’s probably best to leave that moniker on the shelf until its truly warranted.   Let’s hope it can stay on the shelf and we can call this the great recovery. Some of us need a job, not panic.

Weather Bottom Line:  We will continue with this mid to upper 90′s nonsense through Friday.  A front will be approaching then and will pass through.  As it does so, our rain chances will go up. Trouble is that we are so dry there may not be enough moisture for this guy to give us as much rain as one might ordinarly expect from a strong front.  But, it’s a chance.  The good thing is that it will knock the mercury down to the upper 70′s to low 80′s for the weekend and it may be the sign of a pattern change.  Some models are showing a big ol’ storm dropping down into the central plains and the Ohio Valley by the middle of next week.

JP Morgan Rejects GM’s Pleas, the Company Thrives; Morgan Bails Out GM, The Founder Lost His Job September 16, 2010

Nice Guess

On this Date in History: I read an article from the Wall Street Journal from January of 2008. It read that oil prices were around $90 a barrel and were expected to remain around that level. It had a quote from a learned man who said, at that time,  that he expected the price of oil  to drop to about $67 a barrel.   While he didn’t put a time qualifier on the statement,  about 6 months after this artcle came out the price of oil was over $140 a barrel.  I related this story to one of my classes and one student said that it sounded like someone sucks at their job. The point is we often hear these great ideas and pontifications from “experts” that turn out to be wrong by a long shot, if not completely opposite of reality.

Durant Was No Quitter

At the dawn of the 20th Century,  animal power remained much of the energy that drove the economy, though certainly not as much as at the turn of the 19th Century.  Aside from the railroads, animal power was particularly necessary for transportation and for agricultural interests. A United States Senator, Chauncey Depew, said with full confidence that “nothing has come along to beat the horse.”  He suggested to those who might invest in alternative forms of transportation to “keep your money.” Now, one who is looked up to as one who had a great financial mind and who was quite savvy in investing was J. P. Morgan. Well, Morgan had a chance to get into the automobile business in 1908 when he was approached by William Crapo Durant for a loan. Durant and Benjamin Briscoe wanted financing for the proposed merger of their two fledgling automobile companies, Buick and Maxwell-Briscoe. Durant told Morgan that automobile sales would reach a half million per year. Upon hearing Durant’s prediction, one of Morgan’s partners sniffed, “If he has any sense, he’ll keep such notions to himself.”

Depew Left Holding the Horse Shovel

Well, the deal didn’t go through and Briscoe is left to the asheep of history. But Durant soldiered on without any backing of financiers and formed a holding company on this date in 1908 with $2000 and without J.P. Morgan. Instead, he sold shares of stock and raised about $12 million in a couple of weeks. He called it General Motors. He acquired Olds Motor Works later that year, then subsequently bought Cadillac, Pontiac (originally known as Oakland), Cartercar, Ewing and Elmore. But, in 1910, Durant was in a tight financial situation and he turned to competitors of Morgan for help. Durant apparently used the financing to continue to acquire other companies. That led to more problems but, by then,  automobiles were getting popular enough that I suppose JP Morgan had changed his mind.   Around 1920, General Motors found itself with $30 million in debt and huge obstacles ahead. Durant went back to Morgan and Pierre du Pont who were two giants of the financial world. The financiers saved the company but effectively finished off Durant at GM. See, part of the deal was that Durant was out and du Pont took over as President. But, don’t feel too bad for Durant. He’s one of those guys who never quit, following the advice of the old gridiron sage, Granville Hambright who often told his Junior High football players that “a winner never quits and a quitter never wins.”    Durant went on to found a new company. You might have heard of it…Chevrolet.

Sloan: Father of Modern Corporation?

Dupont served as President of GM until 1923 when he turned the reigns over the Alfred P. Sloan who focused his attention on managing the company more effectively. Ever wonder why there are new models to cars every year? It was Sloan’s idea. How about the different pricing structure of different brands in the company? That was Sloan too. By the late 1920′s, GM passed Ford as the leader in automobile sales.  For his company,  Henry Ford  focused his attention on more efficient manufacturing instead of management, marketing and finance. Later in the 20th century, GM became the largest corporation in the world…a title it later lost and did so in quite a spectacular fashion.

Ford Legacy: Don't Give Up Control

Some interesting aspects of this story. First off, it took the geniuses like Morgan a dozen years to figure out that a visionary like Durant was right all along. Durant had the vision but he didn’t have the know-how regarding making his dream come to fruition. What is interesting is that Henry Ford rebuffed the attempts of outside financiers to take over Ford Motor Company when things turned tough in the Depression. Yet, General Motors has an early history of near disaster before they got it right.

At the first part of the 20th century, General Motors needed help and so they went to private financial institutions for that help. When they were denied, founder Durant figured out a way to move ahead while some of his competitors went by the wayside. Then additional help came in the form of the previously reluctant Morgan. Ford probably worked with Morgan on a number of deals, but none with the expressed intent of saving the company. In fact, in the early 1920′s when Ford faced potential bankruptcy, Henry Ford turned down financing from big investment houses who required that Ford turn over control of the company, like Durant did. In the early 21st century, it’s deja vu. But, this time, General Motors turned to the Federal Government (taxpayers) to get saved and private investors (stock holders, bond holders) ended up with the short end of the stick. Instead of financiers like du Pont taking control of the company, the government fired the head of GM. Meanwhile, Ford did not take government money and continues to move forward and maintain control of the company, in the same tradition of the company’s founder, Henry Ford.   While Ford Motor Company in late 2010 still had about $27 Billion in debt, it had reduced its debt by $4 Billion, had positive cash flow and the outlook for Ford looks bright in some circles with some analysts project Ford having more cash than debt by 2012.  But, be careful, those are just “expert” opinions and remember, Morgan’s experts thought that the automobile was a loser investment 100 years earlier.  What a difference a century makes. In some ways, not one bit. In other ways, a huge difference.

Weather Bottom Line:  We got the light rain in the morning but it doesn’t look like it will help advance the notion of rain, let alone thunderstorms on Thursday evening or afternoon.  It’s just too stable an atmosphere and that’s too bad because we need the rain.  This was our big chance and it wasn’t too good to begin with.  Look for a pleasant Friday with a return to hot, but relatively dry, conditions for the weekend into early next week.

Some Say Friday 13th is Bad Luck; Study Claims It’s Bad For The Economy August 13, 2010

Bad Luck: Horse or Driver?

This Date Happens At Least Once AYear:  Because there are 7 days in a week, there is at least one Friday the 13th each year. Sometimes there are two and occasionally, there are three; 2009 was one of those years. It looks like to me, though I haven’t researched it fully, that whenever there are three it often happens in February, March and November, but not always. The next time the trio of malaise shows up will be in 2012, then 2015 and then again in 2026.

According to the founder of the Stress Management Center and Phobia Institute, “It’s been estimated that $800 or $900 Million  is lost in business on this day because people will not fly or do business they would normally do. ” Some people are apparently so fearful that they won’t even get out of bed. I guess it’s Friday 13th for me every day because I never want to get out of bed. People won’t buy a house or even buy stocks. They claim that Friday 13th phobia affects some 20 million Americans. They’ll probably get a bailout from the “stimulus bill.” How do you know if you have the phobia? Symptoms are described as ranging from mild panic attacks to huge panic attacks that render the victim pretty useless to the point that they don’t go to work. If I had a job, I wonder if that would qualify as an excused sick day from work. An English psychologist interviewed about 2100 people in 2003 and found that about one fourth associated the number 13 with bad luck. Apparently, people who think of themselves as unlucky are most likely to believe in superstitions.

Deceptive Loki

Apparently, this obsession with the number 13 goes back a ways, as most of these type of things seem to do. This one is blamed on the Norseman that involves a story of 12 gods having a party at Valhalla. Presumably they aren’t talking about the golf course in Louisville. In walked an uninvited guest…a party crasher named Loki. Loki went and got Hoder, the blind god of darkness to fire a mistletow dipped arrow at Balder the Beautiful, the joy and gladness god. I suppose that mistletoe isn’t too good for you because Balder died. With the god of joy and gladness gone, the earth turned dark. Everyone was sad and it has been associated as a bad, unlucky day ever since.

They also try to drag Christianity into it by pointing out that Judas was the 13th person to show up at the Last Supper and then was the one who betrayed Jesus of Nazareth. If that’s not enough, then there is the Roman story of how 12 witches who routinely would gather together with the 13th who showed up being considered the devil.

A mathematician blames it all on the number 13 suffering the fate of following 12. This guy says that numerologists consider 12 a complete number as there are 12 months in a year, 12 gods of Olympus, 12 tribes of Israel, 12 apostles of Jesus and 12 signs of the zodiac. If you exceed 12 by one, then you get a little beyond completeness and “the number becomes restless and squirmy, which suggests that numbers are alive. This fear of the number 13 has worked its way into modern culture as the claim is that 80% of all high rises lack a 13th floor.

Was I Cursed on 13th Floor at Jester Hall?

What does that mean for me? I lived on the 13th floor of Jester Hall at the University of Texas. I was a cursed freshman and didn’t know it.

Many airports apparently do not have a gate 13, Hospitals and hotels often do not have a room 13, in Florence, Italy houses between 12 and 14 get an address of 12 and a half instead of 13. French socialites are known as quatorziens or fourteeners so as to make sure they have 14 dinner guests. Wonder what happens if someone gets sick? Do they cancel the party?

Apollo 13 Doomed by 13?

Want proof of the evils of the number 13? Why just look at Apollo 13, the ill fated trip to the moon. It departed on April 11, 1970 at 1:13 pm Houston time. Never mind they launched on east coast time. Anyway, 1:13 pm is 13:13 in 24 hour clock time. April 11, 1970 can also be written as 4/11/70. Four plus One plus One plus Seven plus Zero equals 13. Or you can say 4+11+70 + 85 and 8+5 =13. Their last television broadcast was on April 13. They entered the moon’s gravitational field on April 13 and were scheduled to land on the moon on April 13. The failure of the number 2 oxygen tank occurred on Apirl 13th at 3:08:53.555 UTC which in the eastern time zone would be 9:08:53:555. 9+8+53+555=625 and 6+2+5 =13. If the explosion that caused the damage had occured on earth, it was supposedly estimated to cost $13 million to repair the damage. Seems like someone had a lot of time on their hands.

Gristle Can Cure What Ails You

Now, Friday seems to get suckered into this by going back to Christianity and pointing out that Jesus died on a Friday. What they fail to mention is that Christians ironically call this “Good Friday.” Supposedly, some biblical scholars claim that Cain killed Able on Friday the 13th and that Adam was tempted by Eve on a Friday. How they can know this is beyond me.

If you find yourself believing in all of this and have a fear of Friday 13th, then you should consider yourself a

Burn'em if you Got'em

triskaidekaphobe. But, there is hope for you. Modern psychology says that all you need to do is focus your mind on pleasant thoughts. You haven’t lost your mind, you’ve just lost control of your mind. You should realize that you have the ability to create your own luck and its up to you to decide if that is good or bad.

I don’t like those ideas. Since most of this is folklore, I like the old remedies. One is to climb a mountain or the top of a skyscraper…kinda like King Kong. Once you get there, burn all of the socks you own that have holes in them. What if you don’t have any holey socks. Then you can stand on your head and eat a piece of gristle. If you can’t stand on your head, don’t know what gristle is and don’t have holes in your socks, then I guess you’re just out of luck.

Weather Bottom Line:  We will again push toward 100 and there will probably be a few t’storms in the late afternoon.  Saturday we will see an increase in activity with the approach of a cold front.  That front will slowly pass through; slow enough to provide a fairly decent chance for rain on Sunday as well.  The front will pass through and we’ll knock some 10-12 degrees off the temperatures with someone lower humidity….in other words we’ll get back to seasonal average highs for a few days.  Some relief but not a real pattern change.

Could Donald Trump Lose His Name? March 1, 2010

Trump May Have to Fire His Name!

Surely Dad Won't Have To Kiss Ivanka Goodbye with his Name?

What’s In a Name?  Donald Trump and his casino arm, Trump Entertainment, filed for bankruptcy for a third time in February 2009.  This third bankruptcy filing is not too big of an indictment on Trump given that the economy has hurt the gaming industry nationwide.  Trump tried to flip a deal in which he would buy out the bondholders but those who owned the bonds didn’t go for it but it was announced in November 2009 that Trump and his daughter Ivanka would retain a stake in the company and take it out of bankruptcy in a new deal.  But there was a fly in the ointment.  That fly was none other than Carl Icahn who is a very prominent investor.  Seems Ichan bought a bunch of the bonds and Icahn announced a rival plan to take over the Trump casinos.

Carl Icahn Has A great Name for Investing...but a Casino?

So, now the two titans face off in bankruptcy court and the most interesting charges flying have to do with the “Trump” name.  Icahn want’s to buy the casinos and keep the name without Donald or Ivanka.  Some say that the Trump image has been tarnished by a number of financial battles in which The Apprentice star finds himself.  In fact, Icahn lawyers in court filings said that, “The Trump name may no longer be ‘synonymous with business acumen, high quality and style, a luxury lifestyle and enormous success’ as Mr. Trump asserts.”   Say what you want about Donald’s hair but there is no way that Mr. Trump would allow an attack on the family name to go unanswered.  He implied under crossexamination that Mr. Icahn’s name has been associated with some less-than-successful deals of his own saying,  ”Well, Mr. Icahn has led companies into many, many bankruptcies.”

"Con" Works with Extermination Products

So the fight goes on.  Trump is arguing that Icahn does not have the right to take his name if he takes the casinos.  Icahn says that he does.  But, there’s the kicker and perhaps the ultimate insult.  A Wall Street Journal article says that the main reason Mr. Icahn wants to retain the Trump name is that it would cost $15 to $20 million to change the signs.  He says that, otherwise, the name has nothing to do with the future success of the properties.  Ouch!   In court, Trump says that Icahn should not be able to to take over the casinos at all, painting an unflattering picture of a quick buck artist, perhaps not unlike Gordon Gekko.  Trump doesn’t say that Icahn won’t spend money to rebuild the casinos and the brand name, the New York Post reported that he says Icahn is a “cheapskate” who wouldn’t spend three dollars.  Mr. Trump says, “If Carl spends $3, I’d be shocked.” 

"Con" Worked for a Movie But Not Sure if it Fits Casino

Now, who knows how this whole thing will come out in the wash.  But, the fact that anyone is saying that the only reason he wants to keep the Trump name on the buildings is becuase he doesn’t want to spend the money to change the name is amazing.  It may support Trump’s assertion about Icahn or it may be Mr. Icahn’s way of sticking it to a rival.  Either way, it seems rather odd for someone to be able to lose his name if he loses his business. I suppose it has happened before but still…a Trump named casino without a Trump?  I guess it’s better than an alternative like “Icahn Casino” which is pronounced Eye Con.  Somehow I think that there may be a bit of a difficulty in the marketing department with attracting customers to I Con Casino.  It workd for ConAir which was a ficticious movie starring Nicolas Cage and it works with bug killer..D-Con…but I’m just not certain about a Casino.  Maybe the Trump name is worth more than Icahn is letting on.

By Wed AM, all critical thickness or freezing lines are well south

GFS claims a little moisture in our area with East Coast Storm Early Wed AM

Weather Bottom Line: We did get to 41 but largely, the day was just like Sunday which was still cold and not feeling like much of a warm up.  A system is running along the Gulf Coast and will take a turn across Georgia and then off the North Carolina Coast and up the eastern seaboard.  Look for more snow stories from the Northeast this week but not as dramatic as the last couple of storms.  The bulk of this guy should stay far enough offshore as to not affect more than coastal regions with snow, but it still may be significant in some areas.  As the low passes us to the South, the long wave pattern will again adjust with the base of the trof to our South.  A couple of flurries will be possible Tuesday night or early Wednesday but the moisture will more or less be cut off by the Appalacians so it doesn’t look like a big deal.  I still think that we don’t get out of the 30′s on Tuesday or Wednesday and maybe even Thursday.  We get some sun on Friday and  move to the low 40′s before getting into the average range for Saturday…which is about 51. So don’t break out the tanning butter.  But, if we can’t have snow, I say go to 70.  This Houston-type of winter weather in the 40′s and clouds stinks.  If its gonna be cold, then lets have some exciting snow. If not, then let spring hurry up and get here and let me plant my sunflowers.  A little rain Sunday or Monday won’t be out of the question as the long wave pattern may be breaking after about 2 months of it being stuck.

Answer to Haiti Crisis to Create Bigger Global Financial Woe? January 17, 2010

 

How Will Citizens of the World Pay?

Crisis in Haiti Demands attention (Click Image for recent slideshow)

US Intervention: First off, just a note.  A few days ago I posted a piece that suggested it was time for US intervention in Haiti for the umpteenth time in the past 150 years.  I had someone suggest that I had rocks in my head for comparing relief efforts to an intervention.  Well, Time Magazine seems to be on the bandwagon now as they have called it a “compassionate invasion” by the United States.  In my view, the article starts off by making some comparison to New Orleans and Katrina. Here is a recap of the real problems associated with Katrina.  A difference is that the Haitian government invited the US in almost immediately whereas the Governor of Louisiana did not ask for federal help in such a timely manner. What the media does not say, or does not know, is that the Federal government cannot just send troops willy nilly into any state, even in a disaster, without an official request from that state’s governor.  In the Civil War, the United States did not send troops into Kentucky until the state asked for assistance to rid the Commonwealth of an invading Confederate force.  In any event, the Time article does suggest that for all intents and purposes, Haiti is now the 51st state.  It will be intersting to see how this all turns out and if US intervention this time ends up in something positive for Haiti and for the Western Hemisphere.

US total debt

Who is going to Pay and How? The world is coming to the aid of Haiti as nations and individuals are pledging money.  Earlier this year, several creditor nations had agreed to cancel all Haitian debt but France is now asking those nations to speed up the process of Haitian debt forgiveness.   The global community is pledging all sorts of financial support.  But, the question must be asked: where is this money going to come from?  The US is pledging $100 million.  That comes out of the US treasury.  The US is also footing the enormous bill for deploying troops, transportation and supplies.   The US national debt already is past 50% of the GDP and experts recently warned Uncle Sam to not let the debt rise beyond 60% of GDP.  

Olbermann, Limbaugh Probably Not Best Friends

America is stepping to the plate en masse.  USA Today reports that in 2005, private American donations following Hurricane Wilma, Hurricane Rita and Hurricane Katrina totaled nearly $6.5 billion.  USA Today says that Americans are on pace to surpass that total following the earthquake.  Rush Limbaugh recently took heat for reminding people that President Obama’s pledge of $100 million was from the US Taxpayer.  Limbaugh said that he did not trust the Obama Administration to properly collect and use donations made through the White House web site.  Keith Olbermann, among others, attacked Limbaugh for his statements.  Many have suggested that Limbaugh was encouraging people to not donate monies to relief efforts, but Limbaugh defended himself by saying that he never said any such thing.   As I had commented regarding Pat Robertson,  I am not sure what the value was for Limbaugh’s timeliness in expressing his opinion on the subject as, without evidence to support his fears, he stood very little chance of gaining sympathy for his position.  As it stands, the USA Today report indicates that Americans are indeed opening their wallets.  So, if Limbaugh’s detractors claim he told people not to donate to anyone, this would be proof that listeners don’t necessarily do what he says. 

US Debt to GDP Ratios

Nevertheless, the issue of international debt is something that must be considered.  While a time of crisis is not a time to be pinching pennies, someone has to figure out how meeting the needs of humanity today will not create a larger global crisis tomorrow.  Businessweek published an article that details a potential global debt crisis.  It claims that the US is already way beyond the 60% ratio of debt to GDP as it assert Uncle Sam is running at over 93% of a Debt to GDP ratio.  It puts Iceland at over 300%, Greece at 125%, Spain over 66%, Britain and Ireland around 82% and Mexico a winner at just under 50%.  The monies allocated for earthquake relief do not generate any return income so any contributions made from the public sector of any country comes directly out of the treasury. 

Citizen Taxpayers Carry Gov't Debt Burden

 Jamaica is trying to negotiate its way out of it’s debt crisis and Argentina is struggling to find a pathway from its big hole.   But, it’s not just nations that are teetering on bankruptcy.  Word out of Ho Chi Minh City in Vietnam is that banks there remain burdened with bad debt.   Brazil’s main bank, Banco de Brasil,  is issuing quite a bit of debt at low, but slightly higher, interest rates.   In Europe, Hungary is finding ways to lend to that country’s banks to try to prop up lending.   In the US, banks in Illinois, Minnesota and Utah were recently seized by regulators.   So, while the stock market continues to rise, there are still many landmines remaining in the global financial system.  We are told that we are in recovery, but China is warning that the slew of international debt may be a roadblock to the future.  China is fearful that a global recovery could be stimied by faulty exit strategies by the international community as well as weak demand and high unemployment.

Global Money Tree Drowning in Debt

So, the world is clearly not out of the woods just yet.  The world must respond as it is to the humanitarian crisis in Haiti.  It is completely necessary on many levels for the US to take the lead in helping Haiti immediately and creating an environment for a better Haiti in the future.  And, while Limbaugh’s reference to funds coming from the US treasury was extremely untimely, the question remains for Uncle Sam and the rest of the world: how do we pay for it?  It used to be in America that charitable giving was completely the responsibility of individuals and they gave  what they could.  Since the Great Depression, America and other nations have grown increasingly comfortable with their governments providing funding for domestic and international social and relief efforts.  Unlike individuals though, governments tend to give more than they can afford, reasoning that taxes can always be collected to make up the difference.  But, at some point in time, someone has to pay.  Care needs to be given because solving one crisis by creating a bigger crisis is not much of a solution.

NAM calls for over 1/2" of rain by Sunday Evening

Weather Bottom Line:  I told you that Saturday would be good and it got even warmer than I thought.  Mid 50′s were commonplace across the area.  Now, a system is lifting up from the Gulf and up the Appalachians to bring rain on Sunday.  By Sunday evening, the NAM advertises over a half inch of rain.  I would think somewhere in the neighborhood of .75″ areawide would be a good bet.  As the system lifts northeast, we get slightly cooler air behind it with a decent Martin Luther King Day on tap with highs around 50.  Then a front comes down and gets hung up across the Ohio Valley bringing a few days of clouds and showers with temperatures cooler, but still above seasonal norms into the mid to upper 40′s.

Study: Friday 13th Costs Business near $1 Billion; Could 3 2009 Friday 13ths Be Root of Poor Economy? November 13, 2009

Bad Luck: Horse or Driver?

Be Afraid For the Third Time This Year! Because there are 7 days in a week, there is at least one Friday the 13th each year. Sometimes there are two and occasionally, there are three. This year must be unlucky because there have been three after today is over. It looks like to me, though I haven’t researched it fully, that whenever there are three it often happens in February, March and November, but not always. The next time the trio of malaise shows up will be in 2012, then 2015 and then again in 2026.

According to the founder of the Stress Management Center and Phobia Institute, “It’s beenestimated that $800 or $900 is lost in business on this day because people will not fly or do business they would normally do. ” Some people are apparently so fearful that they won’t even get out of bed. I guess it’s Friday 13th for me every day because I never want to get out of bed. People won’t buy a house or even buy stocks. They claim that Friday 13th phobia affects some 20 million Americans. They’ll probably get a bailout from the “stimulus bill.” How do you know if you have the phobia? Symptoms are described as ranging from mild panic attacks to huge panic attacks that render the victim pretty useless to the point that they don’t go to work. If I had a job, I wonder if that would qualify as an excused sick day from work. An English psychologist interviewed about 2100 people in 2003 and found that about one fourth associated the number 13 with bad luck. Apparently, people who think of themselves as unlucky are most likely to believe in superstitions.

Deceptive Loki

Apparently, this obsession with the number 13 goes back a ways, as most of these type of things seem to do. This one is blamed on the Norseman that involves a story of 12 gods having a party at Valhalla. Presumably they aren’t talking about the golf course in Louisville. In walked an uninvited guest…a party crasher named Loki. Loki went and got Hoder, the blind god of darkness to fire a mistletow dipped arrow at Balder the Beautiful, the joy and gladness god. I suppose that mistletoe isn’t too good for you because Balder died. With the god of joy and gladness gone, the earth turned dark. Everyone was sad and it has been associated as a bad, unlucky day ever since.

They also try to drag Christianity into it by pointing out that Judas was the 13th person to show up at the Last Supper and then was the one who betrayed Jesus of Nazareth. If that’s not enough, then there is the Roman story of how 12 witches who routinely would gather together with the 13th who showed up being considered the devil.

A mathematician blames it all on the number 13 suffering the fate of following 12. This guy says that numerologists consider 12 a complete number as there are 12 months in a year, 12 gods of Olympus, 12 tribes of Israel, 12 apostles of Jesus and 12 signs of the zodiac. If you exceed 12 by one, then you get a little beyond completeness and “the number becomes restless and squirmy, which suggests that numbers are alive. This fear of the number 13 has worked its way into modern culture as the claim is that 80% of all high rises lack a 13th floor.

Was I Cursed on 13th Floor at Jester Hall?

What does that mean for me? I lived on the 13th floor of Jester Hall at the University of Texas. I was a cursed freshman and didn’t know it.

Many airports apparently do not have a gate 13, Hospitals and hotels often do not have a room 13, in Florence, Italy houses between 12 and 14 get an address of 12 and a half instead of 13. French socialites are known as quatorziens or fourteeners so as to make sure they have 14 dinner guests. Wonder what happens if someone gets sick? Do they cancel the party?

Apollo 13 Doomed by 13?

Want proof of the evils of the number 13? Why just look at Apollo 13, the ill fated trip to the moon. It departed on April 11, 1970 at 1:13 pm Houston time. Never mind they launched on east coast time. Anyway, 1:13 pm is 13:13 in 24 hour clock time. April 11, 1970 can also be written as 4/11/70. Four plus One plus One plus Seven plus Zero equals 13. Or you can say 4+11+70 + 85 and 8+5 =13. Their last television broadcast was on April 13. They entered the moon’s gravitational field on April 13 and were scheduled to land on the moon on April 13. The failure of the number 2 oxygen tank occurred on Apirl 13th at 3:08:53.555 UTC which in the eastern time zone would be 9:08:53:555. 9+8+53+555=625 and 6+2+5 =13. If the explosion that caused the damage had occured on earth, it was supposedly estimated to cost $13 million to repair the damage. Seems like someone had a lot of time on their hands.

Gristle Can Cure What Ails You

Now, Friday seems to get suckered into this by going back to Christianity and pointing out that Jesus died on a Friday. What they fail to mention is that Christians ironically call this “Good Friday.” Supposedly, some biblical scholars claim that Cain killed Able on Friday the 13th and that Adam was tempted by Eve on a Friday. How they can know this is beyond me.

If you find yourself believing in all of this and have a fear of Friday 13th, then you should consider yourself a

Burn'em if you Got'em

triskaidekaphobe. But, there is hope for you. Modern psychology says that all you need to do is focus your mind on pleasant thoughts. You haven’t lost your mind, you’ve just lost control of your mind. You should realize that you have the ability to create your own luck and its up to you to decide if that is good or bad.

I don’t like those ideas. Since most of this is folklore, I like the old remedies. One is to climb a mountain or the top of a skyscraper…kinda like King Kong. Once you get there, burn all of the socks you own that have holes in them. What if you don’t have any holey socks. Then you can stand on your head and eat a piece of gristle. If you can’t stand on your head, don’t know what gristle is and don’t have holes in your socks, then I guess you’re just out of luck.

Russian Sees US “disintegration” in 2010; Norwegian Sees US collapse in 2020; American Sees Mary Todd as misunderstood November 5, 2009

Russian Professor Says This is Our Fate

At the end of last year, the Wall Street Journal reported the assessment of Igor Panarin who said that US would “disintegrate” by June or July of 2010.   He said that a collapse of economy and of morals would result in a Civil War that would end with the United States being broken into the Republic of Texas, The Californian Republic, the Central North American Republic, Atlantic America and Russia would lay claim to Alaska while Hawaii would hook up with either China or Japan.   The journal describes Mr. Panarin as a “Russian Academic” and later points out that he is a former member of the KGB.  It seems that another professor  has come up with a similar prediction in a new book called, The Fall of the US Empire-and Then What?  Johan Galtung explains his new rationale in and interview with Russia Today.  He thinks that the fall began with the Korean War and claims that he had successfully predicted previous events, such as the fall of the Soviet Union.   But, Professor Galtung, the Norwegian sociologist and a principal founder of the discipline of Peace and conflict studies, offers hope.  He says what the US can do to avoid his gloomy forecast and its not another stimulus package, but instead a mixed bag of geopolitical action.  Keep in mind the book was published by Transcend Peace University Press and it provides the prolog to Galtung’s book.  I wonder if he would have had any marital advice to give Abraham Lincoln because…

On This Date In History: On this date in 1842,  Abraham Lincoln married Mary Todd. She was considered quite a catch in her day. I don’t think they had a “catch and release” program back then.

Mary Todd at age 28...catch of the day?

She actually is a rather interesting figure and there have been several biographies about her and numerous…hundreds…..written about Lincoln which delve into their relationship, how it affected his presidency. Its probably a good idea to read several to get some sort of perspective because each author will come at it from different perspectives and sometimes with a preconceived agenda or notion of what they want to say.   Jean Baker has one of the more recent biographies of Mary Todd and it paints a very sympathetic portrait by often using late 20th century sensibilities and transporting them back to the 19th century.  In my view, that is a flaw because you really can’t take modern psychology and modern ideals of society and try to use them to create a portrait of a person from the past.  I believe its like comparing apples to oranges and is often a problem when trying to draw conclusions.  One must understand the thinking and customs of the day when examining the events and people of the past.  If you look closely, you find that Professor Baker received funding from the Elizabeth Connolly Todd Foundation. Like I said, biographers look at subjects from different perspectives and different photos…the one adorning the Baker portrait of Todd is not the same presented above.

On this date in 1965, speedster Craig Breedlove’s wife, Lee Ann, tried to steal his thunder when she became the first woman to drive more than 300 mph on the Bonneville Salt Flats. I’m not sure if Craig got mad, but he certainly made sure he shared the spotlight. Just few hours later, Craig Breedlove got in his car and shattered his land speed record by reaching over 555 mph in his Spirit of America jet powered car. I don’t have a photo of Lee Ann.

Friday Morning Temps (NWS LMK)

Weather Bottom Line:  Lee Ann Breedlove might have been hot and someone in the mid 19th century might have thought that Mary Todd was hot, but our weather will remain on the cool side.  Thursday morning found some lows below freezing in the extreme southern and eastern parts of the viewing area and Friday morning, there may be more wide spread instances of the mercury tickling the freezing mark.  The National Weather Service in Louisville under the steadfast guidance of John Gordon provided their notion of area temperatures overnight in map form above.  What’s gonna happen is that the big fat area of high pressure that is over us now will move to the east and we will get a nice return flow.  That means are temperatures will be on the rise to the point that Saturday afternoon we will see mid to upper 60′s and Sunday afternoon maybe even some low 70′s.  A front moves through here on Monday bringing some rain and an end to the mild conditions.  That same front may also dictate what happens with Tropical Storm Ida, if it has not been broken up by its current trek over Central America.

Stock Market Crashed in 1929; 80 years later some say we are in recovery October 29, 2009

Brooklyn Newspaper Oct 30 1929

Until you have a job, it's a depression, not a recession or recovery

The GDP numbers for the third quarter of this year came out today and after months of contraction in the economy, the US Gross Domestic Product rose by about 3.5%. How can that be? Some say we are in recovery while others say it can’t last.  Critics point out that there was about a 23% increase in durable goods and that the overall increase cannot be sustained. They point to the US government’s “cash for clunkers” program and that created a one-time, artificial jump in new car sales. It is said that it is not sustainable. Then there was the real estate numbers which also rose about 23%. That too, critics say, was a result of another government program of giving several thousands of dollars in tax credits to first time home buyers. That too is seen as unsustainable. Interest rates have been near zero for a long time now and now there are fears that the Fed will raise interest rates, though others point out that a rise in interest rates would indicate that the economy can handle it and that the economy is indeed pulling out of the recession.  Then there is this oddity.  Edmunds.com is a site that is an advocate for car buyers.  Their analysis of the cash for clunkers program says the government spent $24,000 per car sold, which is about 6 times more than the actual allowance provided.  They say that only 125, 000 of the 691,000 cars sold were directly tied to cash for clunkers.  While that’s a criticism, is that not also an argument that car sales were indeed real and not a facade?  Yet, the government disputed their numbers as if to say, “hey…those car sales were too ginned up by our program and not a real indicator of growth!”    Of course, theI have yet to hear about this duplicity in the media.

Who knows?  No one predicted the big decline in the economy, yet we are supposed to believe that the sages know what will happen in the future.  If you look at the chart below, you see that after the crash of ’29, the markets rose several times over the next 3 years, only to fall farther.  So, who knows what will happen.  One thing that is for certain.  Millions remain without jobs and until those who want to work can get work, it matters little what the data shows or the experts say.  If you have a job, its been a recession.  If you are out of work, it’s a depression.  Which is what began 80 years ago.

1929 Wall Street Panic

On This Date in History: On this date in 1929, the stock market crashed. The Dow had been quite

Dow Chart Before & After 1929 Crash

volatile before suffering a sharp drop on Oct 24 and then again on Oct 28. On Tuesday October 29, 1929, a day that became known as “Black Tuesday,” The market collapsed. 16 million shares of stock were sold as prices tumbled with a loss estimated at $9 Billion, which was a lot of money back then. The decline continued and by mid-November losses totaled some $30 Billion. (Video from 1929)

Fortunes were lost and eventually jobs were lost

Panic at the Exchange 1929

and then there was the Depression that followed. Many historians of economics suggest that it was not the stock market crash that caused the depression, but rather governmental action and reaction that caused the economic malaise. Congress passed the Smoot-Hawley Act that raised tarriffs on 3200 imports by 60% in late September. On October 21, Congress defeated an attempt to exempt agricultural goods. Three days later, the market began its decline. President Hoover could have vetoed the measure but instead signed it 7 months after its passage and the resulting market crash. Prices on many good rose. Taxes were also increased. This is why you hear politicians today say that now is not the time to raise taxes and not the time to be closing the global market place.

Why would they say this now?  Last year, we were  in a stock market decline with shares falling some 40% from the all time highs from the prior year. I have compared this with the panic of 1907.(Click Here) However, I must say that history is not prescriptive and what happened in the past does not necessarily repeat itself. The times and conditions are different on a number of levels.

Dow: A Long Recovery

Nevertheless, if you must look at history as a guide, you need to know the truth. In general if you bought stock at the highs in 1929, you did not see your portfolio back to even for 25 years. Some individual stocks took longer than that. The speculation running rampant in the “Roaring 20′s” was probably more comparable to the run up in the market in the 1990′s than this past run. The decline in the late 1920′s into the 1930′s was about 87%. An 87% of a drop from the Oct 2007 highs would be about 1700 which would take us back to the 1980′s. Last fall’s decline took us back to numbers we had in late 2001 and early 2002 then they fell even farther before bottoming out in March 2009.  Now, we have rebounded to near 10,000.  So, we’ve gone up and down and up and down again in the past 10 years, which is not comparable to the 1920′s, 30′s, 40′s and 50′s.

Anyway, with all that in mind, I offer you this. It is an excerpt of a letter written by Earnest Elmo Caulkins to

Caulkins: Confident Investor

the New York Times on this date in 1929, the day after “Black Tuesday.” Caulkins was a successful advertising executive who had a rather extraordinary life story.(Click Here) He was deaf but was an achiever who did not let his disability get in his way. It’s really remarkable when you consider that he did this in the late 19th and early 20th century when it was particularly difficult for deaf individuals living in a hearing world.

He began by saying “I have a feeling that fewer persons are affected by the stock market drop than one would infer from the figures, just as fewer persons were affected by the previous rises.” That can be said today but not entirely. Today, millions of Americans have pension plans and 401K plans that are affected. For instance, I have a 401K but its decline does not affect my standard of living today.

He goes on to say that one day, the men on the market decide his AT&T stock is worth $310 and a few weeks later $232. He bought the stock at $98, so he is disappointed but he doesn’t consider it a loss. First off, he points out that its still more than twice as much as what he paid for it. So, to suggest that lumping he and other together and say that millions have been “lost” is a false implication. Compared to the previous day its a loss but compared to a few weeks before, he’s even and compared to prior to that, its a gain. I think what he is pointing to is the only difference is time. Millions of shares were NOT traded and for those who did not trade, what was a great position of happiness and wealth in September was being characterized as a position of gloom and despair in late October.

He went on to review his portfolio and said that his previous high profits were on paper and his recent losses were on paper and reasoned that the two cancel each other out. He concluded with a story of a farmer who told his friend that Mr. Stebbins offered him $200 for his horse. The friend replied, “But Stebbins ain’t got $200.” The farmer answered, “yes, but ain’t it a good offer?”

Much of what Caulkins says here is true today. The Dow at the end of Jan 1980 was at 874.40. Oct 28, 2008 it closed at over 9,000. Yet, in October 2007, the Dow hit 14,000. When I worked at Merrill Lynch, my office mate, Martin Feinberg, used to say “Stocks go up and stocks go down.” They do. The question here is time. We like it when stocks go up quickly but then get upset when they fall quickly, as if one is normal and the other is a crisis when, in fact, both signal volatility.

I have always reasoned that it is not wise to “play the market.” Over the past 30 years, people have entered the stock market like they are going into Churchill Downs to bet on the ponies. Men like Caulkins entered as investors.

Lombardi:Inspirational Quotes

I guess what I am saying is that it’s silly for people to claim this is 1929 all over again. I took a look at 1907 but I never suggested that this was 1907 all over again. That was then. This is now. The future has yet to be written. It is often said that it’s not whether we face adversity but how we react to adversity that counts. I’ve read a quote from Vince Lombardi(inspirational quotes) (origin probably elsewhere) that said “the greatest accomplishment is not in never failing, but rising again after you fail.” The past is the past and its how we conduct our future, whether it be governmental policy or personal actions, that really counts. With global intervention, coordination and new policies, this may be the beginning of a turnaround and, then again, it may be the beginning of a long fall. Who knows for certain? But, I do know that nothing lasts forever either way. If you believe that the sun rises every day and will again on this nation, this economy and the global economy, then invest in the future. If you do not, then stay out of the market. In my view, its as simple as that. Mr Caulkins overcame his disability and had great confidence in the future. You need to ask yourself if you have the same ideals.

Rain but not as much as feared

Weather Bottom Line:  I made a mistake yesterday.  I thought that Halloween was on Friday. It’s on Saturday.  I never know what day it is.  I took a quick looksee at the models and I’ve got a bit of a dillema.  See, the GFS numerically claims that rain begins lightly on Friday morning then more in earnest by late Friday and then carries it through Sunday for a total of about 1.33″.  Yet, when you look at it graphically, it advertises all of the rain is out of here by Saturday afternoon.  Now, the NAM is a bit more consistent as the numbers reveal .77″ from Friday evening through midday on Saturday and the graphic presentation shows the same thing.  Either way, neither model is bullish on the big rain event that loomed in yesterday’s numbers and some folks on TV decided to take as Gospel.  It was never really forecast but, the area was reasonably close to keep an eye out for that possibility. 

Now the HPC rain forecast has come in line with what my contention was several days ago, which was that the convergence zone is really in the lower Mississippi Valley and I had reasoned that would be the area of big storms and that it might tend to cut off the moisture our way.  Well, now the 3-day total QPF from the HPC indicates over 4.5″ inches of rain in that convergence region and just about an inch around here.  All of that seems reasonable.  So, my bottom line is that it will be cool for the trick or treaters but probably dry.  Look for rain activity from say noon on Friday to noon on Saturday.