Convincing Investors Not to Sell

September 16th, 2008

My favorite piece of stock market advice is a corollary to the first rule most people learn – buy low, sell high.

But then the question comes, What if the price doesn’t go up?

So my favorite piece of market advice is, In that case do not have bought. I understand the math.

I heard on NPR yesterday an investment adviser. What should an investor do? The reporter asked, Is it time to get out?

Before the stock adviser verbalized an answer, she privately laughed at the question. Some of the laugh leaked out, and it told a little story by itself.

She said, oh no, it already much too late to sell.

Did we hear the reporter swallow hard?

As for why it is too late, that is because you never know when the turn-around will come. That is what she said. She said that the market price anticipates the economic recovery by six months or so.

So if we accept that six month idea, and imagine that this is the bottom – then we would be thinking that recovery is set for about six months out from now. So we would buy now, low.

But, is the recovery six months out? I think that from the point of view of those who were sold on the idea that the poor economy is mostly the result of an image problem, that the idea that six months from now the economy will be recovering is looking, more and more, less promising.

Let’s look at the fundamentals, as they say. But, since looking at their idea of the fundamentals obviously hasn’t done a lot of them a lot of good, let’s look at a different set of fundamentals.

Since about 1970 the rich have been getting richer and the poor have been getting poorer. The social disparity between the position of the rich and that of the poor has been getting worse for over a generation. This is fundamental.

Another fundamental is the huge piece of our budget sucked up by the military-industrial-academic complex, in all its projects and intricacies. This after nearly everyone predicted that there would be a great peace dividend after the disintegration of the Soviet Union. I subscribed to several of their trade journals at the time, and distinctly remember a featured editorial pointing out the the impending peril to the aerospace electronics industry. Very matter of fact, with no trace of compassion for humanity at large.

Military production is not only production that produces none of humanity’s daily needs: It produces bads, not goods. (I am impervious to the idea that today’s military spending is in any measure some kind of actual defense. Today we need defense from the military related conglomerations and cohorts that have attached themselves to the public trough, claiming it as their own, pooping all over the place at the same time.)

Intelligent people see that what goes around comes around. There are natural principles involved. Einstein’s comment that we cannot at the same time prepare for nuclear war, and also prevent it, says it all. It goes for all levels. That’s why we teach our kids not to fight with each other. It is absolutely fundamental.

Now, in the highly industrialized society in which we live, as more and more people are drawn away from the forms of primary production that come naturally to the human race, into more highly elaborated social and cultural contrivances, with associated social niches, the whole thing becomes much more fragile as its complexity grows beyond human comprehension. It becomes unable to make an orderly retreat to more fundamental forms. The higher-order complexities of the social order decay. It stinks. That is what we are smelling these days as the radio issues reports on the economy.

Is globalization of industrial production viable? How does the recent wide-ranging integration of global economies factor into the current situation?

Can an empire gain full spectrum dominance of the globe? If it could, would that be a good thing? Some people want to know the answers to these questions. There is only one way to really find out, and they are trying their best to manifest an answer by trial and error.

Can a country founded upon constitutional democratic ideals be successfully converted to an imperial system? What degree of hypocrisy, sham, cynicism and irony must be present before someone mainstream dares to speak the obvious?

The media was told a year ago that to point out the crash is to cause the crash, so your middle-class investor, the one trusting investment advisers, does not appreciate the situation.

Are the advisers “in”? Do they wish to be out. “The queue for the lifeboat is forming behind me.” But she doesn’t have to say that, because the small investors didn’t get the message that the ship is sinking.

Among investment advisers, who really believes that next month will be better than this month?

Stop the damn wars. Stop manufacturing the means of warfare. Quit selling our kids’ future for filthy lucre. Then, or six months later, I’ll bet things start to pick up.

higher interest rates?

June 10th, 2008

The Federal Reserve is breaking clues that interest rates may be going up soon. This comes at the same time that there are fears that the (falling) dollar will be assisted off the oil denomination stage. But raising interest rates also would reduce the stimulating effect of having cheaper things to sell than the Rest of the World (RoW). Then add in the obvious negative political consequences from crashing mortgaged voters, families and friends, and we can’t justify this as part of a rebuilding effort.

It has an aspect to it of something of a fire sale, (further) plundering of the economy, in anticipation of reversed political fortunes of the corporate rich.

In other words, since the economy is doomed, drive the polarization between the rich and poor to the max, in order to maximize the advantages of controlling wealth during bad times.

Such an interpretation makes a certain sense. I am still having trouble understanding why anyone would want to raise interest rates during a growing realization of massive debt, much of it in default.

It seems impossible that anyone driving such a polarization would be accurately able to predict its outcome.

Wouldn’t this be a great time to focus on infrastructure and health care? To do so would be a way to inject money into the economy, and gain social cohesion at the same time. There is the matter of not being able to do so without taxing the rich.

But, if the money is going to come from the rich anyway (that’s where it is), wouldn’t it be better to take it by taxing them? Isn’t that how they should want it to be taken? It is better to be taxed than to be eaten.

convenient knowledge

June 1st, 2008

Yesterday Daniel Schorr was saying on NPR that the new book by Scott McClellan doesn’t say much we didn’t already know, i.e. we already knew Bush & Co. had lied us into a war. Ok, I admit, I did know it.

But who would have thought that the broadcast media knew it? Are you kidding? Forever they’ve been saying, “not really a lie, so much as a mistake.”

Remember the old days when they would fall on their swords?

And then for generations after it was a figure of speech, “to fall on one’s sword”, the trope.

But I knew things had changed when after 9-11 I suggested handing out swords, and everybody told me, oh, didn’t I know, it was just a joke now-a-days. Nobody really did that anymore.

Yes, I knew that. For another few generations Westerners just resigned from office, and kept the swords in the closets. No, the joke is that now they don’t even resign anymore.

Back to Bush & Co. lies. It is a whole topic in history by now. When did Daniel Schorr begin calling out our lying leaders?

Should he and oh so many others be falling upon their pencils?