Who knew??

A Congressional hearing into the workings of the S.E.C. is scheduled soon. People want to know how it was the S.E.C. failed to heed warnings about scammers on Wall Street. Were these smart people just duped??? I don't think so. I believe they chose to look the other way, just like Enron's auditors. Remember them (Arthur Anderson.)? Remember the Kansas City building inspectors and the New York City building inspectors who ignored problems in structures that later failed? Same thing. I once asked a CPA friend how it was that Mexico enjoyed such a high level of corruption in government if the books were audited? His response: "The auditors are in on it." OBVIOUSLY. This woman is looking the other way, but I'm pretty sure she's not an auditor.

Blagojevich saga

Mr. Rod Blagojevich seems to be giving the people of Illinois a hard time. From a New York Times story: “Around the state, elected officials, many exasperated after three weeks of topsy-turvy political drama, responded with fury. “This provocative action is an insult to the people of Illinois,” said Pat Quinn, the lieutenant governor and a fellow Democrat, who added that the governor had defied the desires of an entire state.” Let me suggest something. If someone just finds Rod a good job, he will go away quietly. He needs the money from his job as Governor; he would otherwise not be fighting so hard to keep it. It’s like when your best friend suddenly takes off on you. You will have a hard time dealing with it until you find someone else, no? PLEASE. The woman at left seems to be saying something like “Catch me if you can.”

Cinco minutos

I know you’ve been wondering which Symphony Orchestras are the best in the world. I can help you with that. This is my own order of preference: Vienna Philharmonic, London Philharmonic, Berlin Philharmonic, Royal Concertgebouw, New York Philharmonic, Pittsburgh Symphony, Chicago Symphony, Paris Conservatoire, San Francisco Symphony, Boston Symphony, Philadelphia Orchestra, Los Angeles Philharmonic, Czech Philharmonic, Detroit Symphony, and the Cleveland Orchestra. I cannot go into why I chose these but I can tell you I gave the list some thought – about two minutes’ worth. When you’re an expert at something, you don’t need to re-think your biases too much, no? That, by the way, is the best concert hall in the world, too. Take my word.

Recession???

I stopped by Target, Wal-Mart, and JC Penney this afternoon to do some last minute shopping. The parking lots were full to the gills, filled to the rafters, standing room only inside. Many shelves were bare. So, I asked myself - where is this recession that economists keep talking about??? Maybe everywhere else except here? Washington should put a commission together to look into this mystery. I did notice the price of gas is at $1.60 now. That much is true, but everything else is still expensive. Where is the deflation I keep hearing about? The woman at left must be smiling because her unemployment check is huge? Or she has a very rich husband? I have no clue.

Out of Afrika

NPR always has something to say about the troubles in Zimbabwe. It’s irritating. They just won’t leave it alone. Why is Afrika so dysfunctional? Does anyone know? Can’t someone do something to help this poor continent? There must be dozens of specialists in the State Department who make it their business to know as much about Afrika as their brains can hold, no? So, why don’t we have answers? Why no solutions? Who benefits from having Afrika remain a non-functioning continent? Is it anybody’s business to help the poor continent anyway? Certainly the Africans suffer from injustices right and left. They suffer from very poor health. That doesn’t help. Their life expectancy is the lowest on the planet. They suffer at the hands of dictatorial, unjust, and corrupt governments. That doesn’t help either. They fight each other in violent civil battles constantly. That’s not a positive thing. What to do? Throw money at it? Do they just need to learn to be just, to be fair, to share, to be honest, to be constructive, to be productive, and treat each other kindly? Would that do it? Can they even imagine a better world? Does anyone know? Hello?

I.O.U.S.A. what???

From an ad I recently read: "At last, here's how you can own the award-winning I.O.U.S.A. documentary FREE on DVD... over a month before it's even available to the general public! It's my gift to you, and it's also just the beginning of what you'll get in our new "Emergency 'Personal Bailout' Bundle" — also FREE — which shows you... What a sham the bailout is, how we got here, and what happened to the America we used to know. How to rescue your retirement with up to 78 personal "bailout" checks instead, paid direct to your account over the next 24 months. And how to salvage the financial security of your children, your grandchildren and America itself." So, you think this is free??? Nope. Nothing is free. If you follow the ad until the very end - it is extremely long and wordy and repetitive and wordy and long (written for persons who have nothing better to do), you will discover that you will be pitched a report on how to get out from having to pay taxes to support the government. If you don't pay taxes, how will that salvage the financial security of America? It is sad and funny at the same time. I don't see the girl on the left laughing. She is sort of asking something like "What's all this about?"

Timid Reporter interviews Bernie Madoff

The Timid Reporter sent me this interview. Judge for yourself. (Any similarity to persons actually living or events actually happening is coincidental, he said)

TR: Good afternoon. Are you Bernard L. Madoff?
BM: Yes, but you don’t have to be so formal – call me Bernie, please.
TR: Yes sir. May I come in?
BM: Sure. Make yourself comfortable. I’ve been expecting you.
TR: It smells like apple cider in here.
BM: I hope you find it pleasant my friend.
TR: Yes, very pleasant.
BM: I would offer you some but I’m afraid we’ve run out of Styrofoam cups.
TR: Why not use a real cup?
BM: My wife won’t let me.
TR: Well, I drink beer anyway.
BM: Beer is bad for you.
TR: Not so far.
BM: Why do you say that?
TR: I’ve been drinking beer since 1798 and have not been badly affected.
BM: Is that so?
TR: Yes sir. I only stay away from dark ale.
BM: That’s very amusing although a little perplexing too because I know you can’t be conning me – I would be able to tell, you know. You don’t look more than forty years old.
TR: I suspect that’s probably true. You are a very shrewd and wise man.
BM: I know how men think and what they crave the most.
TR: You would have made a good psychologist.
BM: On the contrary – I think I would have made a good politician. A psychologist is easily fooled. A politician only pretends to be fooled – a politician is the greatest deceiver of all. He is the master of the ancient art of manipulation.
TR: Mr. Bloomberg might not appreciate your saying that about him.
BM: I can always say I was misquoted.
TR: But my readers know I’m very careful.
BM: Sure, but he’s not one of your readers. What are people saying about me anyway?
TR: That you’re a schemer, a deceiver, a thief, a fool, a fixer, a flake, and a fraud.
BM: Well, that’s not too bad though I don’t really care what people think. I only care about what my own family thinks.
TR: They are the ones who said it. It’s in The New York Times.
BM: How can they be so ungrateful?
TR: The New York Times?
BM: No, my sons.
TR: …Ruth and your sister and your niece, too.
BM: Well, shame on them for kicking a man when he’s down - a poor elderly man.
TR: Do you think you’ll end up in prison?
BM: You mean, die in prison? Of course not. What do you think lawyers are for? By the time we get done with all the appeals, I’ll be ninety five. I just hope they can save my licenses. I might go work at Merrill Lynch or Bear Stearns or Lehman - as a partner, of course.
TR: They no longer exist.
BM: What are you saying - since when?
TR: About four months ago.
BM: Are you serious? What is this world coming to?
TR: I think they went bankrupt.
BM: I remember hearing something about it. You know, I haven’t read much in the last three years – not even the financial papers. I simply haven’t had the time.
TR: What have you been doing?
BM: Doing? Doing a lot of bookkeeping, that’s what I’ve been doing.
TR: Didn’t you have people doing that for you?
BM: They couldn’t be trusted with the Ascot accounts.
TR: A lot of your friends are angry with you.
BM: How come they weren’t mad at me when I was making them a ton of money? Do they expect me to apologize?
TR: They want their money back.
BM: Sure, sure, everybody does. Don’t they realize that asking for their money back is what caused this whole enterprise to collapse in the first place? It was like a run on the bank. I warned them. Don’t cash out, don’t cash out – wait for a scheduled distribution. Be patient. Instead, it was like a stampede of wildebeest.
TR: Didn’t you at least have a few billion left?
BM: Sure I did, but I had to pay as many people as I could before word got out that I was insolvent.
TR: Who?
BM: My closest friends.
TR: Like who?
BM: Let’s just say Bloomberg, Trump, Schumer, and Kennedy got taken care of.
TR: …Because you didn’t want to cross them or what?
BM: No, I didn’t. They’re a mean bunch – more cold-blooded and ruthless than I am, especially that Caroline girl.
TR: What about Clinton?
BM: The Clintons took their money out two months ago - even Chelsea.
TR: Maybe they knew something….
BM: Of course they knew – everybody knew. Nobody’s that dumb.
TR: And the SEC auditors?
BM: They were somewhat incompetent, but I also think they had their doubts - you know how the government is – if you have enough clout, you have nothing to fear from them. I just told them that if they wrote me up I would go above their heads. They wrote their reports full of imprecise and equivocating double talk – you know, maybe this and perhaps that; it appears that and it seems like – really vague stuff, nothing you could sink your teeth into. Naturally, the upper guys let me off the hook every time. There was a lot of gray in those reports. I also let some of the SEC higher ups invest with me.
TR: Really?
BM: Sure. Would I lie about something like that?
TR: How did you fool the sophisticated investors and hedge fund managers?
BM: Easy.
TR: How?
BM: Look, let me give you an example. I’ve been around financial jargon all my life. I know how people react to it. When they don’t understand it, they get frustrated and would rather be gored by a bull than be made to feel dumb. I will give you an introduction to my investment strategy and you tell me when to stop.
TR: Ok.
BM: Typically, a position in an Ascot Partners account will consist of the ownership of 30 to 35 S&P 100 stocks, most of them correlated to that index, the sale of out-of-the-money calls on the index, and the purchase of out-of-the-money puts on the index. The sale of the calls is designed to increase the rate of return, while allowing upward movement of the stock portfolio to the strike price of the calls. The puts, funded in large part by the sale of the calls, limit the portfolio's downside or risk ratio. A simple split-strike trade involves buying a stock at price X, selling a call option with a price Y which is above X, and purchasing a put option with a strike price Z which is below X. If the price of the stock is above Y at expiration, the stock will be called away and the investor receives Y for the stock. If the price is below Z at expiration, the put can be exercised and Z received in cash. This effectively caps the maximum gain….
TR: Stop. Please.
BM: I could go on like that for hours.
TR: I believe you.
BM: So the idiots would just say to me: “Bernie, don’t bother to explain all this to us, we trust you, you’re a genius, just send us any gains.”
TR: Do you have any words of advice for my eight readers?
BM: Tell them they’re lucky to be poor.
TR: Thank you Bernie.
BM: Thank you my friend and sorry about the cider.

Lesson learned?

From an investor advisory letter: “A lot of people are wondering if there is anything at all good that will come from the financial crisis. Call me naïve if you like or even an eternal optimist, but I think so, beginning with the following: A regulatory overhaul leading to pro-active regulation: With regard to the financial markets, I believe that we will see new mechanisms designed to monitor problems before they get out of control. Some of that will include more transparent valuations and mark-to-market rules, but the lion's share will likely focus on the credit extension problems that have largely created this mess on a variety of levels. What's more, history suggests these changes will stand in stark contrast to Alan Greenspan's repeated refusals to crack down on sub-prime lending practices and his hesitation to impose regulations on derivatives that have figured so prominently in the current meltdown.” I disagree – I think people will always be greedy and irresponsible. In the meantime, Greenspan sits comfortably in his easy chair. Despite his old age, he is not wise. The woman at left probably has no opinion on the matter – she is simply waiting for us to act responsibly, PLEASE.

Work it Out

Work is movement. Don't be inert. Just move. Even rich people work - most of them anyway. Paloma Picasso may not need the money but she has worked practically all her life - she needs to work. She will forever be known as the daughter of the famous painter but she works anyway. She does not paint - she designs stuff like jewelry and perfumes and fashion accessories. Learn from her example. She's fifty nine and still working.

Horse sense II

Okay, the credit emergency seems not to be over. Lots of people never saw it as a real emergency since the stock market seemed to be doing fine inspite of the delay in securing the 700 billion dollar injection of funds but there you have it. There is more to be done. More businesses to save. More jobs to create. It will be so much fun. Did Wall Street learn anything? Who knows? Just buy as many conservative shares as you can while they're still cheap. I think WAMU is about 4 cents. Is that cheap enough? We need an injection of plain old horse sense. That's what we need.

Hans Rosenfeld II

No, that's not Hans Rosenfeld on the left - that's a movie star from another era. Anyway, as I was saying, Mr Rosenfeld had one of his ideas stolen by Hollywood bigshots - the idea for the movie ROBOTS. Remember that movie??? It wasn't just the idea itself - it was the entire script and the design for the robots. Imagine you talk to someone about an ingenious new invention. Next thing you know, they manufacture it and make lots of money and you're left standing there wondering how they could do this and get away with it.

Just maybe

From an abbreviated article in an investor newsletter:

By Tom Dyson: Less than nine weeks ago, I was in Singapore, at the headquarters of one of the fastest-growing, best-managed companies in the world. This company is the world leader in water treatment and purification systems. The name of this company is Hyflux. The CFO told me his company was on course to make 300 million Singapore dollars (SG$) in earnings over the next five years. He told me his order book is so full, the company is turning business away. The only problem was, I wasn't the only person who had figured out what a great company Hyflux was. The stock price – at around SG$2.75 – implied the company was worth more than SG$1 billion. I would never spend $1 billion to get $300 million in earnings over five years, even on this superb company."If only this stock was 50% cheaper..." I thought to myself as I left the company, feeling a little deflated. "Maybe someday." Now... after stocks have experienced one of the worst crashes in history, Hyflux is 35% cheaper than it was during my visit. It's amazing it's not down more. International stock markets have been destroyed. Ireland fell 80% during the crash. Russia fell 79%, China fell 74%, Brazil fell 72%, India fell 71%, and Korea was down 70%. In all, 43 stock markets have suffered even greater declines than the U.S. market, and only three did better (Switzerland, Israel, and Jordan).These stupendous declines tell me we're now living in a different world. This isn't just a standard bull-market correction like the crash of 1987. This is something bigger. Like a child who touched a hot stove, investors won't make the same mistake twice. I see a return to thrift and caution all over the world. Saving trumps speculation. Prudence trumps risk. And unfortunately, with this sentiment, it's going to be a long time before emerging-market stocks embark on a new bull market. In light of all this, I'm making cash the focus of my portfolio. Let me explain... First, the crisis we're heading into will have strong deflationary forces. Deflationary means prices fall. I expect we'll see a wave of bankruptcies, defaults, forced selling, and unemployment. Cash will be the most valuable asset around. It already buys double the real estate, the stock, and the natural resources it bought six months ago. I expect cash will be even more powerful in the years to come. I want to own Swiss francs, New Zealand dollars, and U.S. dollars. I'll also be buying safe stocks that generate lots of cash. I'll look to buy a stock like McDonald's or Wal-Mart. The crisis will also have strong inflationary force, as governments furiously pump in cash to revive the economy. These inflationary pressures could generate some spectacular "ripples" in the market. In a few years, we could see the rate of inflation get much higher. END OF ARTICLE

I disagree with almost all of what this guru has to say. Cash might be powerful but not for years to come - perhaps in the next few months to come. Inflation destroys the power of cash. You cannot have too much cash and assets at the same time. Use your cash to buy good, conservative stocks or real estate (not land). Real cash (paper currency) will sooner or later be outlawed anyway. Almost all investor newsletters are the same - they drone on and on about the same things. All they want to do is sell you something.

Hans Rosenfeld

No, that's not Hans Rosenfeld on the left - that's a movie star from another era. Anyway, as I was saying, Mr Rosenfeld had one of his ideas stolen by Hollywood bigshots - the idea for the movie ROBOTS. Remember that movie??? It wasn't just the idea itself - it was the entire script and the design for the robots. Imagine you talk to someone about an ingenious new invention. Next thing you know, they manufacture it and make lots of money and you're left standing there wondering how they could do this and get away with it.

Stealing an idea

Flash of Genius is a new movie which depicts an injustice which is not unheard of. Big people are always trying to steal ideas and inventions from little people. Sometimes they succeed. Almost always they succeed. Little people have no weapons with which to fight the unfairness of large and powerful businesses or corporations. As a matter of fact, I have a friend that suffered the same fate as the guy in the movie. His name is Hans Rosenfeld.

Do you remember the movie "Robots?" It's a very nice movie. It was a hit, especially with children. It made a lot of money for Hollywood. The big thing is that there is something very sinister about Robots. Very sinister. Why? BECAUSE IT WAS STOLEN. If you saw Flash of Genius, about the guy who invented the intermittent windshield wiper, you know how easily that can happen. Robots was stolen. Just like that. History is full of fortunes that have been made on the backs of others - others who never received a dime for their inventions or intellectual property. Hans Rosenfeld is one such artist. 20th Century Fox stole his script for the movie Robots. Please help me correct this unjustice. We just might make history.

Money and Markets

Money and Markets has produced a free one-hour video which you (one of my eight readers) might be interested in, especially if you're looking forward to some day receiving payments from your 401K pension.

Here is what the banking experts behind Money and Markets say:
"We NAME NAMES — 198 of the big banks we believe are most likely to fail, the 197 strongest banks in America, and the most solid brokers as well ...
We give you the simple, step-by-step instructions for finding out how safe your bank is even if it's not one of the 395 named in the X-List report ...
And we give you the four crucial guidelines to follow when choosing a bank to trust with your money." There is, of course, tons of other useful financial information in the video. Buy stocks and plenty of them, but make sure you're investing conservatively. Do not worry about the stock market. It can only go up.

Hollywood thievery

Do you remember the movie "Robots?" It's a very nice movie. It was a hit, especially with children. It made a lot of money for Hollywood. The big thing is that there is something very sinister about Robots. Very sinister. Why? BECAUSE IT WAS STOLEN. If you saw Flash of Genius, about the guy who invented the intermittent windshield wiper, you know how easily that can happen. Robots was stolen from a friend of mine. Just like that. History is full of fortunes that have been made on the backs of others - others who never received a dime for their inventions or intellectual property. Hans Rosenfeld is one such artist. 20th Century Fox stole his script for the movie Robots. Please help me correct this unjustice.

Copyright infringement (theft)

As I was saying, my friend Hans Rosenfeld - theatre producer, artist, and inventor - wrote the script for a fabulous theatre production. He created all the characters - all of them robots. He called the production by another name (which I will reveal later). Then, along come some smart people from Hollywood who proclaim to be very interested in the production. The fundraising begins in earnest. The project is sidelined by 911 events. Next thing you know - the movie ROBOTS comes out - almost an exact replica of Mr Rosenfeld's project. What is he to do????