StockbrokerPro.com NOTES Wednesday,
May 28, 2003
There are some new links on the
site. In the "Miscellaneous" section there are now "Motivational
Sites"; "Gardening"; and "Cooking Schools"
links. Enjoy.
- U.S. bond yields are at 45 year lows,
and if deflation does in fact exist, will go lower.
- Gold info.: the market capitalization
of the gold mining sector of the stock market is a relatively small
$50 to $60 billion, while the market cap of physical gold (excluding
central bank holdings) is about $1 trillion, with central banks, about
$1.4 trillion. Comparatively, world stock and bond markets totals more
than $50 trillion.
- Strange! Natural gas, oil, gold, stock
and bond markets are rallying in unison. Can they all be "right"?
- Taxes on dividends have been reduced
to 15% from the maximum rate of 38.6%; this applies to any dividend
earned since Jan. 1. The reduction of the tax on capital gains from
20% to 15% is on investments held for at least one year and realized
on or after May 6th. Short-term gains continue to be taxed as ordinary
income. The child-tax credit will increase from $600 to $1000 (for this
year and 2004). Rebate checks of up to $400 per child will be sent to
families as early as this summer. The cap on deductions for small business
capital investments was raised to $100,000 (until 2005).
- More on capital gains: The good news
on this cut is what it can mean for the stock market. Between 1969 and
1972, Congress raised the capital gains rate from 27% to 45%. What followed
was the worst bear market since the Great Depression (it was raised
even higher, to 49% by 1977). Then the reductions. It fell to 28% in
1979 and down to 20% by 1982. Then came the great bull market. Certainly
capital gains rate reductions were not the only reason for the bull
market, nor the raising of them the only reason for the market crashing,
but they were a factor in both cases.
- April sales of new homes rose 1.7% from
March to a 1.03 million unit annual rate, the most since December and
the third highest on record. Existing home sales rose 5.6% to a 5.84
million rate, the fifth best showing ever.
- Call me crazy, but lately I have been
noticing more and more how the big newspapers (those clearly with a
liberal bent) have been promoting France and French things. Articles
on French food, French wine, traveling in France, etc., are in the papers
almost daily. For example, today, in USA Today there is a full page
article entitled "Feasting 'comme les Gascons'" about the
good life in Gascony; in the NY Times there is a half-page article titled
"Its Reputation and Its Odor Precede It" about a French cheese
called Epoisses, made in Burgundy: also in the NY Times today, its Art
section is headlined by an article entitled "Picasso in Paris…"
Hey, maybe it's my active imagination running wild! Just keep an eye
out. You'll see what I mean.
- For the past year I've been telling
anyone who'd listen that coming into the next Presidential election
you will see newspaper headlines (those with a liberal bias) using the
big D word. D for Depression!!!!! Well, it started today. The headline
article for USA Today's Money section is entitled Depression. Believe
me, this is just the beginning. Take advantage of this. See it as an
opportunity to invest in those vehicles which do well in such an environment.
Keep in mind that markets are reflexive (a concept theorized by the
great trader, George Soros), which means that if enough people (especially
the influential) believe that something is true and act as if it were,
then it becomes self-fulfilling. It happens all the time in markets.
So if you start seeing the words deflation and depression starting to
take root, act as if it were so in your investing. You will be rewarded
for doing so. Those types of investments that do well in such an environment
will be discussed in a future NOTES. In the meantime, pay attention
to what is being said around you. Your financial future depends on it.
- Consider the North Korean crisis over!
From now on whatever is heard from that arrogant, little North Korean
dictator is just noise. Why do I make such a bold statement? Well, last
Friday, President Bush met with Japan Prime Minister, Junichiro Koizumi
at the President's Crawford, Texas ranch. In a press conference with
the Prime Minister, Bush issued his warnings to North Korea, which were
strong, valid and just. But then Mr. Koizumi made his statement simply
and without any diplomatic double-speak, "We will not at all tolerate
the possession, the development, or the transfer of nuclear weapons
by North Korea." Touchdown, ball game over! The last thing that
North Korea wants is to get Japan going again. The same goes for China.
Both Korea and China have a long history of being whooped by the little
island nation of Japan. Neither North Korea nor China want a nuclear
armed Japan on their tails. Such world-class diplomatic display at the
ranch was shear brilliance on Bush's part. He played a brilliant poker
hand. This crisis is over. Just watch.
- Germany (Europe's largest economy) is
mired in its second recession (two consecutive quarters of negative
growth) in two years. This is what's called that feared "double-dip."
It may spread to other European nations. This is not good.
- Downtown Boston's commercial vacancy
rate is approaching 20%, and going up. Plans to build any high rises
may be delayed for ten years. There is about 6 or 7 million square feet
of empty office space across the Hub. In a good year about a million
square feet is filled. There is a good 5 or 6 year overhang. Certainly
a good time to cut deals for the entrepreneurial bold.
- PLEASE tell your friends and associates
about StockbrokerPro.com. Please urge people to sign up for these NOTES.
Use the Tell A Friend tab on the site. Thank you so much.
