The summer ended, and fall started with a very eventful week. The continuing insanity which is the middle east showed once again the region is not a place which can ever be thought of as stable. Ben Bernanke unleashed the financial version of being "All In," with the announcement to buy up to $80 billion of mortgage backed assets per month (in some form or another). The focus of the Fed has completely become reducing the unemployment rates, essentially saying it has inflation under control. Time will tell about that as ignoring inflation usually is not a wise move for central bankers. Hmmm, could it be a coincidence we have a presidential election coming up in 50 days or so? No, I knew you did not think so either.
Speaking of the little contest known as the Presidential election, well, there are no words to describe what took place with respect to their handling of the events in the middle east. Sorry, yes there are, "MISGUIDED. STUPID. MORONIC. CHEERLEADERS. BLEEP-BLEEPS."
You have a U.S. government whose responsibility is to protect U.S. citizens, diplomats, and assets throughout the world. In Libya, a U.S. ambassador was killed on the anniversary of 9-11. You would think the government would provide extra security, or arrange for extra security for those people in countries where extra danger could be present. Instead, the country saw valuable people, people who have wives and families die. The radical muslims blame the attacks on a film made in the United States, a country which has what is called the first amendment, the right to freedom of speech. One of the great things about the U.S. is you have the right to say you disagree with things. Apparently, nobody can make anything which would in any remote way criticize Islam, or the prophet Muhammed. In the U.S., people make films advocating Naziism, show people defacating or uriniating on all kinds of religions, and plenty of kind of pornography, and I have never seen the kind of rioting and violence which goes on in the middle east.
Mitt Romney gets attacked by many members of the media for saying the U.S. government should support freedom of speech. The U.S. government asked Youtube to pull down the video, and Google refused here in the U.S. Essentially, what has happened is the media are tools of the campaigns. Forget about neutrality, that has long been thrown out the window. On the right, you have Fox. On the left, you have CNN and MSNBC. The degree of cheerleading depends on who is doing the rooting. The only problem is politics is not a game, it is serious business, and it has real world consequences. You know, like a country with radical islamic leaders running it, Iran, potentially getting a nuclear weapon. It is a country which has stated it wants to wipe other countries off the earth. There are no extra points for a good routine here. You had families lose their head this week, those kids will not see that parent again. Real consequences result when leaders do not do their jobs and instead are focused on public perception. It is tragic the media does not ask the tough questions which need to be asked- sis boom bah!
Regarding QE3, yes, the market went up nicely last week. There is a very high probability it will continue to go up through the end of the year. However, in many instances, the cure is worse than the disease. When you are running trillion dollar deficits with no end in sight, and have nearly 50 billion dollars of unfunded liabilities, eventually there are consequences. As someone who tries to benefit when asset prices are not accurate, in many instances, especially financial matters, things are seldom what they seem. The equities market has been performing well, and corporate profits are enormous, which has a great deal to do with the market going up. However, the underlying currency, the dollar, faces a terrible financial situation with a very weak balance sheet and deficits which continue to grow. In addition, there is no indication the U.S. has leadership which can enact policies to solve the enormous financial challenges which face the country.
Having taught history and been a basketball coach, I am very familiar with competition and how things can change rapidly. In contests, there are ebbs and flows, but many times, the status quo exists, until, bam, it does not. You are ahead and you stop scoring and lose by 10. In World War 2, Holland, Belgium, and France were thought to be unattackable. They fell in less than a week. This presidentail campaign is a long haul, and a terribly bitter struggle. Both sides want to win badly. The country is deeply divided. I suspect the final chapter has yet to be written, but one can be certain November is coming quickly, and all eyes will be watching the presidential debates and anything else which could affect the outcome.
Nice interview with Zillow CEO-http://techcrunch.com/2012/09/16/make-sure-your-company-is-ready-for-ipo-prime-time/
About time, HP is getting into the smartphone business. Very good chance it could be a case of too little, too late. You are going head to head with Apple, Google, Microsoft, etc. Not for the faint of heart. http://www.denverpost.com/business/ci_21548816/hewlett-packard-developing-smart-phone-computer-business-dwindles
Apparently, the world's largest money manager things stocks are the place to be. http://www.bloomberg.com/news/2012-09-12/fink-belies-being-boring-telling-customers-to-buy-stocks.html
Very interesting story about a gold bug. http://www.lasvegassun.com/news/2012/sep/16/gold-worth-7-million-found-house-after-nevada-man-/
Mark Zuckerberg fires back, and the stock had a very good week-http://marketday.nbcnews.com/_news/2012/09/14/13867775-facebook-stock-recovers-sort-of-after-zuckerberg-speaks?lite
I hope everyone has a great week, and please comment on the blog, regardless of whether you agree or disagree!!
Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charterholder.
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