Wednesday, April 16, 2014

RUSSIA - A NATION ON A MISSION...

Gorbachev dismantled the Russian Federation.  Putin is going to rebuild it.

There are 140 million people in Russia.  Putin knows population counts.  Atomic weapons aren't going to be used therefore you need, in Putin's view, a powerful armed forces.

Ukraine has over 40 million people. Controlling the Ukraine would increase Russia's population significantly.

China doesn't care.  India doesn't care.  Europe is impotent.  We have developed a similar proclivity.

Most Americans don't serve in the Armed Forces.  It wouldn't be too difficult to make the leap into believing that we are served by a mercenary hired Armed Forces.

Europe and other countries in close proximity to Russia will have increasing fear of Russian aggression.  Our middle eastern allies will have an increased tendency to look East.

The West didn't lend help to the Ukraines...the consequences should be clear.  Weakened influence around the entire globe. 

Thursday, April 10, 2014

METAL DETECTORS NO, BUT KNIVES OKAY..(TODAY'S HEADLINES) ORIGINALLY PUBLISHED JANUARY 2013

As they woke in the morning they turned off the house alarm and said good morning to Fido, then proceeded to breakfast.  On the way to work they pass either the superintendent, a doorman, a guard or a concierge or may open twenty different locking systems before proceeding out the door of their building.  There probably will be a cop on the corner or the next corner and they might pass a sheriff on the road and in smaller cities many often pass the police station.

Arriving at the office there is a bank branch in the lobby with a guard standing out in front. Security cameras are everywhere including the red lights on the road and the elevators in their office building and parking garage.  As it is Christmas time they may go to the local shopping center where signs immediately greet them "Patrolling Security".  The next day they may leave for vacation at the bus terminal or airport and security is extensive.  Everywhere the hypothetical person turns there is one form of advanced security or another. Everywhere but...

THEN THEY WENT TO THEIR CHILDREN'S SCHOOL.  THERE WERE FIFTY DIFFERENT WAYS TO ENTER THE SCHOOL, THERE WERE NO PANIC BUTTONS IN THE CLASSROOMS AND NONE IN THE HALLWAYS.  ANY ADULT COULD HAVE ENTERED, THERE WERE NO METAL DETECTORS, THERE WAS NEXT TO NOTHING KEEPING THE CHILDREN SAFE FROM INTRUDERS OR HARM. THERE WAS NO SECURITY...

Back in the day, schools were considered sacred ground.  The horror of that no longer being true.  Can you imagine the "horror" of using our children in political brinkmanship on the matter of guns? What type of security is required at schools is not only about guns but about many other issues.

Can you imagine the stupidity of President Obamas' proposal that you can have a ten bullet gun but not an automatic weapon.  I suppose that would allow a crazy person to sneak into the school with 5 handguns but not an automatic weapon.  What will this really accomplish?

Thursday, April 3, 2014

HIGH FREQUENCY TRADING...UNINTENDED LONG TERM CONSEQUENCES.

Back in the day brokerage firms were owned by partners. If the firm lost money, the partners were personally liable. Commission charges to buy and sell stocks and bonds were extremely high but no one forced anyone to buy and sell stocks and pay those fees. When I was originally a broker at E.F. Hutton and Company and I wanted to get a quote on a stock, I walked up to the front of the room, stood in a long line, picked up the phone and was able to request one quote and only one. I then had to find my way back to the desk through the throngs of other brokers, I would give my customer the quote which really wasn't current anymore, I would write out the order on what was called a trade ticket, I would put it in a vacuum tube, it would travel a long distance and about an hour later I would know if we bought the stock or not. Times have changed.

Somewheres along the line the powers that be decided that fixed and high commission rates were not the way to grow a hearty participation in American Capitalism among the people. Rates were then lowered, then lowered, then lowered, and then lowered. It also came to pass that "money management for a fee" began its monumental growth. We now can trade billions of shares a day explained by the cult of the necessity for a liquid market. The liquidity is well out of balance with the actual need and has turned stocks into the semblance of a gambling casino with all the rules and regulations of such activity very much in place within our markets. Research is superficial and shoddy at best, but thinking, fortunately, keeps evolving through higher and higher levels.

About the same time,Donaldson, Lufkin and Jenrette found a way to pierce the wall of the New York Stock Exchange prohibition requiring all member firms to be private. The cry became "the road to growth requires public capital and we as partners can no longer foresee having enough capital to sustain significant growth". The members of the exchange tried to maintain their historical rules of private companies but the opportunity for making the existing partners wealthy men controlled the outcome. So the door was opened and privately owned firms were able to create great wealth for their owners by selling shares in their privately owned companies. There is no question that I personally benefited from this "time in history". The combination of much lower commissions and the loss of the future money management asset growth, made the traditional brokerage business a heck of lot less profitable, even with the ancillary interest income.

This is the story of what really led to the breakdown of the investment arena into a gambling casino.


Monday, March 31, 2014

HIGH FREQUENCY TRADING...(ORIGINAL POSTING 8/6/11)



When the housing boom was taking place it developed huge vested interest in the continuation of the housing bubble. A voice in the dark could point out the absurdities of what was happening but the enjoyment of inflated prices and profits overwhelmed sanity, logic, discipline and history.

In my opinion, we are now being faced with a "time bomb" that will far exceed long term capital management, the insurance protection decline of the 1980s and the financial collapse of 2008. This huge "Black Swan", huge beyond comprehension, will hit when least expected and we will wonder why it wasn't dealt with before. The answer will be found underneath the rubble of certain greedy Wall Street types and vested political interests.

We cannot permit automated machine type trading, with no relationship to companies outlook, etc. to dominate the volume of trades in the stock market. There is no excuse, none whatsoever, for creating a machine driven gambling casino mentality in order to justify the existence of capitalism.

Here is what's going to happen. A computer driven decline will occur and the brakes will fail due to human error or whatever causing the equity wealth of the country to be sharply cut again. Because there will be something happening in the world at that time, recovery will not be as fast as it was in the late 2000's. All computerized trading, of the type we are referring to, should be made illegal and stopped before its too late.

The vested interest will tell you otherwise and make their case. Just like in the long term capital case they are mostly using other people's money and are more concerned with their chance of winning than losing. The monies not theirs anyhow and there is no concern for the system, only their own profits.

Look at the erratic swings in the stock market that have occurred in the last few weeks. We draw this as a small example, a very small example, of what is coming if we don't stop this type of computerized trading.

CAPITALISM WILL FAIL IF THIS IS HOW IT'S CONDUCTED.
P.S. Please remember that I am a very strong supporter of capitalism and many of the activities that our financial firms participate in. The probably isn't a better system than ours.

Friday, March 28, 2014

OIL, RUSSIA AND UNINTENDED CONSEQUENCES...

Its been said by some psychologists that opposites attract.  Its been said by others that common interests attract.

Is it possible that what we are seeing in international relations is a "tipping point"?

Those countries that have oil will be entering into an era of diminishing common interests with the oil consuming nations.  In its place will begin a second OPEC, more concerned about maintaining the price of a barrel of oil than their fear of having their governments replaced by radical elements within their own societies.  Russia, Iran, Saudi Arabia, Iraq, Kuwait, Venezuela, Brazil, etc. will strengthen their connections and alliances.

The message that will be sent is that you will not force the price of oil substantially lower by rhetoric of climate change and the need for alternative energies.

This will incrementally increase the reliance on oil suppliers.  We are in no position to have the revenues of oil supplying nations substantially reduced by policies of reducing oil consumption.

Too much tax revenue is collected from oil consumption, too many people feed their families due to oil production and the simplistic appeasement of Russia will reduce the loyalty of several significant producers towards the United States.

Wednesday, March 19, 2014

RUSSIA - THE PROBLEM IS WE REFUSE TO BELIEVE IT...

Russia provides arms to Hamas, Hezbollah, Iran, Taliban, Syrians, Al Qaeda, and almost every other anti-western military organization.

President Obama has actually believed that our "disengagement" would cause the opposition to retreat.  Thousands of years of world history has shown retreat becomes an endless process, where at best you are left with the choices of the aggressor.

A recent New York City newspaper editorial wrote about weakening the Russian expansion by building our energy independence.  This editorial actually talked in some whimsical way about President Obama capturing the moment by setting us on a decades long rebirth of our nation.

Russia has slowly but surely cemented an increasing share of the energy supply.  As I wrote in a blog a while back, it would have been alot easier to solve the Syrian situation if we would have done what had to be done at the beginning of this murderous catastrophe.

It has been forgotten in the press that up until recently a Russian battleship was stationed in Cuba. As far I know, it may still be there.  If Russia will not back down when we stand up to them, its only a matter of time when we reach the point that they will never back down and guess what, we will.

Just as the IPad changed the outlook for the PC Industry, Russia's long term plan seems to be the resurrection of the Russian Empire, especially under the Obama administration.


Wednesday, February 26, 2014

ICAHN HOPE - SCHNEIDERMAN'S SOCIALISM???

For those of you that are interested in the stock market I'm sure you read about the advantages of investing in low cost market index funds.  As the expectations for hedge fund rate of returns continue to decline, more and more money will head toward the indexes.  Whether this is good or bad is entirely another story.

For lack of being able to put it in a better context, I draw your attention to the liberal Attorney General of New York State.  A "lightweight" according to Donald Trump, and probably a light weight in reality.

Recently the Attorney General of New York State made some kind of agreement that asset management firms had to change the way they solicit information from Wall Street analysts.  First of all there is some serious question of whether most information solicited from analysts, on a repetitive basis, adds over time to the performance of equity portfolios.  I venture to say that it doesn't.

But this is not the point.  Our economic system is predicated on the hope that one can rise from the ashes to the top of the heap.  When someone has money to invest, it is human nature to try to make the best possible investment they can.  If they give their money to a "professional" they expect that professional will seek and evaluate information to give the investor some hope of outperforming the returns from the indexes.  It is hope that creates excitement in life.

What the Attorney General of NY is trying to do is a typical liberal ploy of intimating to the public that they are somehow being taken advantage of by money managers seeking to increase the value  of their clients investments.  According to his liberal left wing policy, everyone should be on a a so called "level" playing field.  There can never be such a thing  as a "level" playing field in the world of equity investing, because there is no such thing.

The result of the Attorney Generals' actions will have absolutely no impact on the performance of portfolios. What it will do is take away hope, reduce incentive and move everyone to becoming more and more of a robot.