I am not sure how spending money on anything but Research and Development or infrastructure is going to stimulate the economy. I would love to see something that proves me wrong, but as it stands, I believe the govt is wasting a whole lot of money...our money.
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Interesting, I wonder if we will start to see more articles like this as time progresses and Obama turns out to be just another politician and the current "recession" doesn't turn out to be just a recession.
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What the global recession has done so far to values. I imagine this is a conservative estimate since most companies self evaluate. Generally speaking companies will either value their assets as high as they can, or will try to keep values growing consistently with little fluctuation. Either of these cases points to inflated internal values during an economic period such as the one we are in.
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A great classic article explaining the fundamentals of investing:
Bob Farrell was the head of Merrill Lynch Research for decades, and during that time he established himself as one of the premier market analysts on Wall Street. His insights on technical analysis and general market tendencies were later canonized as "10 Market Rules to Remember" and have been distributed widely ever since. Let's take a look at these timeless rules and how they can help you achieve better returns.
No.1. Markets tend to return to the mean over time.
In layman's terms, this means that periods of market insanity never last forever. Whether it's extreme optimism or pessimism, markets eventually revert to saner, long-term valuation levels. For individual investors, the lesson is clear: Make a plan and stick to it. Don't get thrown by the daily squawk and turmoil of the marketplace. (You can learn more about how stocks behave in Forces That Move Stock Prices.)
No.2. Excesses in one direction will lead to an opposite excess in the other direction.
Like a swerving automobile driven by an inexperienced youth, overcorrection is to be expected when markets overshoot. Fear gives way to greed, which gives way to fear. Tuned-in investors will be wary of this and will possess the patience and know-how to take measured action to safeguard their capital. (Read more about fear and an omen that predicts sharp corrections in Be Aware Of The Hindenburg and When Fear And Greed Take Over.)
No.3. There are no new eras, so excesses are never permanent.
The tendency among even the most successful investors is to believe that when things are moving in their favor, profits are limitless and towers can be built to the heavens. Alas, as in the ancient
No.4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.
The big money knows to hold on while a steeply profitable move is in effect (as seen in the trader saying, "let profits run") and to patiently stay in cash in the grip of a market panic ("don't attempt to catch a falling knife"). Moreover, these types of sharply moving markets tend to correct equally sharply, preventing investors from contemplating their next move in tranquility. The lesson: be decisive in trading fast-moving markets. And always place stops on your trades to avoid emotional responses. (You can see more about using limit orders to protect you from yourself at A Logical Method Of Stop Placement.)
No.5. The public buys the most at the top and the least at the bottom.
This is the sad truth of the average John Q. Investor. He's incurably impressionable - and innocent to boot. He reads the newspapers, watches market programs on television and believes what he's told. Unfortunately, by the time the financial press has gotten around to reporting on a given price move - up or down - the move is complete and a reversion is usually in progress: precisely the moment when Johnny Q. decides to buy (at the top) or sell (at the bottom). (Read more about stock news in Mad Money ... Mad Market?)
The need to be a contrarian is underlined by rule No. 5. Independent thinking will always outperform the herd mentality. (For more on contrarian investing, see Buy When There's Blood In The Streets.)
No.6. Fear and greed are stronger than long-term resolve.
Basic human emotion is perhaps the greatest enemy of successful investing. By contrast, a disciplined approach to trading - whether you're a long-term investor or a day trader - is absolutely key to profits. You must have a trading plan with every trade. You must know exactly at what level you are a seller of your stock - on the upside and down. Better still, place stops with each buy order, because once the market begins to move, the world becomes a very different place. (To keep reading on this subject, see Buying Fear, Neuroeconomics And The Science Of Investing Fear and Master Your Trading Mindtraps.)
Knowing when to get out of a trade is far more difficult than knowing when to get in. Knowing when to take a profit or cut a loss is very easy to figure in the abstract, but when you're holding a security that's on a quick move, fear and greed will quickly act to separate you from reality - and your money.
No.7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.
Many investors are "Dow-obsessed," following with trance-like concentration every zig and zag of that particular market average. And while there's much to be gained from a focus on the popular averages, the strength of a market move is determined by the underlying strength of the market as a whole. Broader averages offer a better take on the strength of the market. Instead, consider watching the Wilshire 5000 or some of the Russell indexes to get a better appreciation of the health of any market move. (Get to know the most important indexes in our tutorial on Index Investing.)
No.8. Bear markets have three stages - sharp down, reflexive rebound and a drawn-out fundamental downtrend.
Market technicians find common patterns in both bull and bear market action. The typical bear pattern, as described here, involves a sharp selloff, a "sucker's rally", and a final, torturous grind down to levels where valuations are more reasonable; a general state of depression prevails regarding investments in general. (Learn about how your portfolio should evolve in bad times at Adapt To A Bear Market.)
No.9. When all the experts and forecasts agree, something else is going to happen.
This is not magic. When everyone who wants to buy has bought, there are no more buyers. At this point, the market must turn lower and vice versa.
No.10. Bull markets are more fun than bear markets.
This true for most investors - unless you're a short seller. (If you want to enjoy the bear markets by short selling, check out our Short Selling Tutorial.)
Conclusion
Many investors fail to see the forest for the trees and lose perspective (and money) unnecessarily. The above listed rules should help investors steer a more focused path through the market's vicissitudes.
by Aryeh Katz,
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A good article with Warren Buffett. Eventually the economy will turn around; however, yes this recession/depression is a bad one. The best thing the govt can do is make clear decisions, and then stick with them.
"Buffett said the nation needs a clear message from the government about what the problem is in the economy and what will be done. He said all 535 members of Congress should set aside partisan bickering to deal with what Buffett has called an economic Pearl Harbor."
"Fear and confusion has been driving much of consumer and investor behavior in recent months, Buffett said. The nation's leaders need to clear up the confusion about the economy before anyone will become more confident, he said."
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Rat #1: National Healthcare Hype: But instead of focusing on the problems that lead to healthcare issues, you dumb humans are working on the wrong end of the problem. You're trying to cobble up a money solution to something that is fundamentally an education and habit change you're too lazy to make.
The way I have it figured is simple: The sociocrats will keep thrashing and trashing the economy (and the automakers) until they can roll in a national healthcare plan which - like the banks - will keep the profitable companies in private hands and which will take the dogs (and you know my feelings on dogs, right?) and sick'em onto the public.
And if crashing the banks and the automakers doesn't do it, I look for the airlines to be the next big things to be semi-nationalized after that.
Rat #2: Hugo Chavez:
You saw the headline this morning over on the Drudge Report that "Chavez calls on Obama to follow the path of socialism"?
Minor Mice
The White House is seeking economic advice from Twitter? You mean like responding to the needs of a target market?
"Never waste a good crisis, Clinton says on Climate" reminds me that we cats can't be herded. You humans on the other hand...well, it's a joke.
The report that "CBS may have to borrow to pay off maturing debt" sure reads like a third-part harmony to Fed buying Treasury securities. Does it take a cat to point out that borrowing to pay debt is not really paying down debt?
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Then too, the reports that the World Bank has a 'dire forecast' about the whole world's economy doesn't mean that the Second/Greater Depression is here -- yet. It just means that for the first time since World War II the global economy will actually shrink in 2009. But again, it just seems bad.
Have I been touched by a chemically induced bout of optimism, or something? No. I just recognize that at some point, the market will make a bottom and we should get a bounce. It's just the timing of the bounce that seems fuzzy.
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I will try to tread the middle ground, and attempt to temper overly excitable extremist points of view both on the far left and the far right. That said, here is what some are thinking:
"For ten years I have been warning about a thousand fires coming to New York City. It will engulf the whole megaplex, including areas of New Jersey and Connecticut. Major cities all across America will experience riots and blazing fires—such as we saw in Watts, Los Angeles, years ago.
There will be riots and fires in cities worldwide. There will be looting—including Times Square, New York City. What we are experiencing now is not a recession, not even a depression. We are under God’s wrath. In Psalm 11 it is written"
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I will have to read into this blog and what it has to say:
One of the best brains out there in the investment world today (besides Jim Rog3ers) is Dr. Marc Faber who writes the Gloom, Boom, and Doom report. In an appearance on Bloomberg this morning, Faber has a couple of interesting points to make:
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Gold exploration outfits may become good investments. He figures look for the exploration outfits that have deep pockets behind them (backers).
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Faber thinks ex-government global GDP is probably already down 10% - or more.
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Healthcare, education, and food prices haven't gone down are still pushing and so as money-printing continues, the foundation is being laid for future inflation.
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Faber reckons that some industrial commodities will do well going forward.
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Faber thinks that the dollar will begin to fall and that stocks will be in rally mode by the end of April
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In 1938, the federal government held a series of hearings into the causes of the Great Depression of the 1930's. And, no surprise, the outcome of the hearings that made it into the history books was the Keynesian version of things which in effect said that "more government intervention and better intervention" was the 'right' course for government. Of course, since telling an already big government that more government was needed, this was very much like pushing drinks at a drunk. In case you haven't noticed, the 'bailouts' that have been passed have about zero job creation power; 3.5 million admits the Obama administration, of of these, some will be counted if jobs are just 'saved' - making accountability all but impossible. But, in case you haven't noticed, the "more government mantra" of the 1930's is being replayed in spades today.
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