StockbrokerPro.com NOTES, Sunday, July 20, 2003
· The market is getting tired here
(the Dow has been playing around the 9000-9300 levels). Expect it to
pull back soon (to the tune of at least 500-600 points on the Dow to
the 8400-8500 area). Be patient and selective in your stock purchases.
You will not miss the boat. There is plenty of time to build positions
that will make a lot of money on the next bull move. Again, patience
and selectivity will be rewarded here.
· New Links. For the political
junkies out there, I have added the websites for all of the 2004 presidential
candidates: George Bush, Howard Dean, John Edwards, Dick Gephardt, Bob
Graham, John Kerry, Dennis Kucinich, Joe Lieberman, Carol Moseley Braun,
and Al Sharpton. They are in the MISCELLANEOUS section under "Presidential
Candidates."
· Given the monetary and fiscal
policies in place, the risks of deflation have been ameliorated (for
the voters in Palm Beach County, that means: improved, remedied, cured,
alleviated), and the conditions are in place to produce the biggest
economic boom in America since World War II.
· The stock market is NOT just
a rich person's game. Nationwide, one of every two families are investors.
Nearly 100 million people! That is quite a prospect list for brokers,
and one that will only grow in the next bull market!
· The House Ways and Means Committee
approved a bill that would raise the limit on annual contributions to
401(k)s to $15,000 and would change the formula for pension funding
by employers. Hopefully this will be made law. It would provide lots
of new cash to the investment-funds pool.
· Wall Street Research. Two-thirds
of public companies have no Wall Street research following. Of about
17,000 companies that are publicly traded in the U.S., only about 6,000
are followed regularly by Wall Street analysts. For those who do their
own investment research, that means that there are many diamonds in
the rough waiting to be discovered!
· Bank branches are booming! U.S.
bank branches grew 29% in the last decade to 87,209, according to the
FDIC. Bank of America alone will add 550 branches in the next three
years, a 13% increase. Washington Mutual, the seventh largest bank,
will open 250 this year alone, increasing its branches 17%. What's going
on? The Internet-age pundits told us that bank branches were obsolete!
Here's why branches are booming: Branch banking is profitable; 95% +
of new customers come through branches; branches are more sales driven
for investment products like annuities, mutual funds and CDs; and small-business
customers use branches four to five times more often than consumers
do, they need branches for cash deposits and payroll withdrawals. Even
niche banks are growing. Union Commercial Bank, the largest bank serving
the Asian-American community has 42 branches, thirteen of which were
acquired in the past year.
· Although the U.S. trade deficit
with China is still at high levels that will change. Last year's U.S.
investment in China was $50 billion. It has fallen to a $20 billion
annual pace this spring. It is now at approximately ZERO. This will
affect the trade deficit at some point and have a positive impact in
job growth here in the U.S.
· The Federal Reserve is creating
money at a rate of $20 billion a week. This is powerful and will turn
this economy and stock market around in a BIG way. Always keep in mind
one of the most brilliant things that Alan Greenspan has ever said:
"Money governs events."
· New shareholder rules. The Sarbanes-Oxley
Act is much talked about in corporate governance circles, as well it
should be. However, it may go too far in its regulatory bite in that
it could have a dampening effect on managers taking legitimate business
risks. An SEC ruling requiring shareholder approval for equity plans
(including options compensation plans) is a good step in empowering
shareholders and has been much talked about. Somewhat less talked about
and just as important if not more so, is the new rules that prevent
brokers who hold shares for clients in Street name from voting on equity
compensation for management unless they receive instructions from the
stocks' actual owners. In the past, the ability to vote clients' shares
gave brokers a large and important voice in corporate governance. The
New York Stock Exchange allowed brokers to vote Street-name shares any
way they wished if they didn't hear from the owners 10 days before the
annual meeting. It's no surprise that the broker votes were typically
a rubber stamp for management. This will no longer be the case. Bravo!
· The whole controversy is over
16 words! The president is being accused by some of misleading the American
people and is being called an outright liar by others. Is it because
we are in a presidential election cycle? Of course. This is political
grandstanding at its worst. The incredible thing is that all of this
media noise is being caused by these 16 words that the president said
in his State if the Union speech: "The British government has learned
that Saddam Hussein recently sought significant quantities of uranium
from Africa." That's it my friends! All of the whining and shrieking
you hear in the media is about this sentence. First of all, it was British
intelligence, NOT U.S. intelligence that is cited here (why the U.S.
intelligence community is being blamed for this is insane). British
Prime Minister Tony Blair (keep in mind he is a liberal and is a Clinton
buddy) said this week that in regard to those 16 words, the British
intelligence mentioned is genuine, was true then and is true now. This
noise and nonsense is partly the Whitehouse's fault. They should have
never addressed it, let alone apologize for it. It is another presidential-election
non-issue attack on the president that the Democrats are becoming famous
for. So far all have failed to bring this president down, and this one
will fail as well.
· The new buggy whip! Sales this
year for personal computers will be nearly 50 million at prices averaging
$1,200. Sales for typewriters this year will be about 550,000, with
most priced below $150 (mostly used for forms, labels and envelopes).
· Earlier this month, New Jersey
lawmakers voted to eliminate the position of poet laureate for their
state. The effort began after the current poet laureate Amiri Baraka
wrote a poem suggesting Israel had advance knowledge of the September
11 terrorist attacks. The poem "Somebody Blew Up America"
consisted of 60 stanzas. It included the lines: "Who knew the World
Trade Center was gonna get bombed?/Who told 4,000 Israeli workers at
the Twin Towers to stay home that day?/Why did Sharon stay away?"
Baraka was asked to resign and refused. Abolishing the position was
the only way to remove him since neither the Governor nor the legislature
could fire him. Philistines!
· Italians Rock! Under the rules
of the European Union (EU), its presidency rotates among its members
every six months. From now until the end of the year is Italy's turn.
As the head of the Italian government, Prime Minister Silvio Berlusconi
is the current president of the EU. After his inaugural speech, Berlusconi,
referring to an Italian-produced film about Germany in World II, suggested
that German politician, Herr Martin Shultz, should be cast as a concentration
camp guard in the movie. The German people were highly insulted. Berlusconi's
response (hardly an apology) was that Herr Shultz' "gestures and
tone of voice reminded him of Sergeant Schultz of Hogan's Heroes."
Oy! You gotta love Berlusconi, at least for the fact that there is no
apparent editorial filter between his brain and his mouth. His gaffes
are numerable. Many jokes about his insensitive comments are currently
circulating Europe. Such as: Two Martians arrive on a devastated earth.
One asks, "What happened here?" He is told, "Negotiations
with the Taliban were going well until Berlusconi decided to tell the
one about the Imam and the stripper." According to the BBC, a junior
Italian minister (of tourism) decided to throw in his two cents to heal
this European rift. He described Germans as "uniform supernationalistic
blonds" who "loudly invade" Italy's beaches each summer."
And we're worried about economic competition from the EU!!!!!
· Can you even imagine how interesting
joint press conferences would be between Berlusconi and Boston's Mayor
Tom Menino? Viva Italia!
· Deficit Crisis!! Don't believe
it. It's political demagoguery. Yes the deficit will jump to $450-500
billion this year but that number is meaningless unless put into a correct
historical and economic perspective. People claim that this is a "record"
deficit. Far from it. It's about 4.2% of the GDP (Gross Domestic Product),
which is the best way to measure the scope of a deficit. At 4.2%, the
current deficit doesn't even make the top five biggest since 1980. We're
continuously told how deficits will drive up interest rates. There is
NO evidence of a correlation here. The 80's started with the 10-year
note yields at 15%, yet with a series of "record" deficits
the decade ended with the 10-year note yield down to 8%. The rate continued
to fall in the 90's. By 2000, with a record surplus, the 10-year note
was still over 6%. Since then, with deficits soaring the rates have
fallen below 4%. The claim that higher deficits leads to higher interest
rates just doesn't hold water. What DOES always prove to be true is
the fact that with an economic downturn deficits are produced and are
reduced and surpluses created during economic growth. That's it. It
IS that simple. A growing economy produces more tax revenues which pay
off the deficits created during an economic downturn. Since 1980, the
deficit has averaged 4.5% of GDP in the year after the economy has bottomed:
about where we are now. By the way, if you want to talk about "record"
deficits, look to 1943, during World War II, when the deficit hit 30.3%
of GDP!
· Given the rulings by judges and
the ambiguity of Wall Street firms' settlement admissions in relation
to bogus Wall Street research, it appears that clients that are pursuing
arbitration for collecting lost money in the technology stock meltdown,
will have to prove to arbitrators (security industry-savy professionals)
that they are idiots, or at least severely ignorant. Good news for brokers.
So-so news for idiots (they still have a steep legal hill to climb).
Not so good news for intelligent investors.
· Speaking of idiots! Okay, maybe
I'm being too crass here. I mean "idiot" statements. Whatever.
I just can't seem to forget Senator Ted Kennedy's son, Congressman (Democrat-Rhode
Island) Patrick Kennedy's statement he made last month at a Democratic
function where he said "I don't need a Bush tax cut. I have never
worked a (bleeping) day in my life!" Well, the Congressman (who
received treatment for cocaine addiction as a teen and has also revealed
that he suffers from depression and uses prescription medicine for his
illness) tried backpedaling out of the situation to no avail. I say
phooey on backpedaling. Stand tall. At least your honest. Give 'em hell
Pat. Dammit, with your resume and philosophies you should be on the
same national stage with Kerry, Dean, Edwards, Sharpton, et al.
· How do we cut ourselves loose
from self-destructive situations? When we get close to doing so, don't
we find ourselves getting fearful, holding on even tighter? Don't we
try to dominate our fears? We knock ourselves out doing so, don't we?
How do we get past these fears? How do we find freedom from our fears?
From the book The Secret of Letting Go by Guy Finley, he writes:
"To flatten your fears once and for all, you must forget about
the idea of domination and start thinking about illumination."
"Illumination? What do you mean?"
"I mean self-illumination: The miracle that happens within us whenever
we dare place the wish to understand what is frightening us before our
certainty that there is no other choice but to feel afraid."
"I like the sound of what you're saying, but tell me, how can what
I understand cancel the fear I feel?"
"Because if you will dare to go ahead and be just as frightened
as you really are, but at the same time agree to meet these fears consciously,
you will actually see that what is so shaky is not you!"
"Please, I would like to know more about this new understanding."
"The seemingly scary condition, whatever it may be, is not the
problem. It is your reaction that is fearful. This is why if you will
become conscious of your condition instead of afraid of it, you will
change forever your relationship with fear. It is only within this special
kind of inner-relationship that there is real safety, because now you
are interacting with fear in an entirely new way. You are no longer
letting it dictate to you how to act or what to do. Instead, you are
aware of the fear. You are studying it, and as each day you discover
something new about the strange and shaky nature of your own fearful
reactions, they begin to lose their power over you.
Why? Because you are last seeing them for what they have always been:
Unintelligent mechanical forces. You are slowly becoming stronger than
they are because by seeing them as they are, not as they would have
you see them, you have helped yourself to climb above and outside between
trembling through your life and being in command of it.
To be consciously afraid means that you know you are frightened, but
at the same time you know that these very fears, as real as they may
seem, are not you. And no wrong reaction can keep you captive once you
begin to see it for what it is. Fear is, and has always been, nothing
but a self-limiting reaction that we cling to in the darkness of our
present life-level, having mistaken it for a shield of self-protection.
But, just as the faintest of early morning sunlight can dispel the night-long
darkness, so does the smallest of insights into a persistent fear to
letting it go.
You can prove this powerful principle to yourself anytime you want.
Just dare to proceed even while being afraid. But remember, your new
aim isn't to be courageous or to try and act strong in the face of fear.
No. We've seen that this won't work. You simply want to be more curious
about your frightened thoughts and feelings than you want to believe
them. If you will follow this simple but Higher Instruction, not only
will you start to see these habitual reactions that have been keeping
you scared and running, you'll actually start seeing through them. This
is where the real miracle occurs. Each new insight into the actual nature
of these negative reactions removes some of their power over you. And
their loss is your gain. You are stronger now and you know it. You also
know this strength will never fail you because it isn't just the temporary
appearance of a bold opposite. This new strength of your is the absence
of an old weakness.
************************************************************************
From Broker Coach, David McKee (603)598-3794
www.simpleintellection.com
Market factors are in process for the next step. Opportunities will
be evident to those of you who can manage frequent visits to the present.
When I say "market factors" I am referring to retail, real
estate, energy, health care, finance, transportation and government.
To optimally take advantage of the changes happening as we speak, you
must thoroughly understand these factors.
You must pursue diligent study of "the probabilities with which
chance events may occur", how these sectors of the economy cause
effects and how they are effected. You must pursue diligent study of
your clients' opinions, attitudes and fixed ideas. If you were to graph
the number of questions asked and answered with regard to the "market
factors" in question, as well as your clients' attitudes, considerations
and fixed ideas, you would see a corollary between those answersand
your gross income.
Why aren't your clients taking action? Would you act on your self-serving,
partially understood ideas?
You see, responsibility is defined as "the willingness and ability
to admit having caused." With knowledge comes responsibility. If
this isn't the case, if your responsibility doesn't expand, you will
find all manner of ways to make sure your clients remain inactive. Only
you can answer the question, "If I were client X, why wouldn't
I take action?" It's risky asking the question because you might
get an answer that you aren't prepared to respond effectively. And that's
the point. Your competence will be a point of exchange, this is what
clients need you for, not the explanations, but the diligently studied
situations presented.
I leave you this week with one of the great all-time understatements:
"That's why the financial market hold such fascination, because
of the breadth of the causes and effects." Anonymous.
Email me at alidade@tellink.net
Thank you.
