Merry Christmas Eddie Lampert!

Posted on December 21, 2018 by MN Gordon

Heading into the final weekend before Christmas we’ll take a brief hiatus from the economy and markets.  We do so, however, with intent and purpose.  Our principal objective is to offer peace and joy as you go about your merry way.

Who wants to contemplate the unemployment rate or the consumer price index while singing Silent Night at a candlelight Christmas Eve service?  Who wants to chat about Fed policy or what exactly composes a high yield ETF over an Old Fashioned with their father-in-law?

A word to the wise: politics and religion at the dinner table should always be eschewed for NCAA football and new fishing gear.  You may dislike Nick Saban.  But everyone can agree that Tua Tagovailoa was outright robbed of the Heisman Trophy.  Similarly, everyone can agree that freshwater fishing takes much greater skill than deep sea fishing.

But we won’t stop with just two innocuous conversation topics.  We’ll go several steps further and do you a grand favor.  For everyone likes a story about bigtime blunders involving possible improprieties.  This is especially so when the characters travel within select inner circles, and the lines between heroes and villains are blurred beyond all recognition. Continue reading →

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How Faux Capitalism Works in America

Posted on December 14, 2018 by MN Gordon

The U.S. stock market’s recent zigs and zags have provoked much squawking and screeching.  Wall Street pros, private money managers, and Millennial index fund enthusiasts all find themselves on the wrong side of the market’s swift movements.  Even the best and brightest can’t escape President Trump’s tweet precipitated short squeezes.

The short-term significance of the DJIA’s 8 percent decline since early-October is uncertain.  For all we know, stocks could run up through the end of the year.  Stranger things have happened.

What’s also uncertain is the nature of this purge: Is this another soft decline like that of mid-2015 to early-2016, where the DJIA fell 12 percent before quickly resuming its uptrend?  Or is this the start of a brutal bear market – the kind that wipes out portfolios and blows up investment funds?

The stars in the night’s sky tell us this is the latter.  For example, when peering out into the night’s sky even the most untrained eye can identify the three ominous stars that are lining up with mechanical precision. Continue reading →

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Paper Lanterns

Posted on December 7, 2018 by MN Gordon

There are numerous explanations for just what in the heck is going on with the economy.  Some are good.  Many are bad.  Today we’ll do our part to bring clarity to disorder…

Several backward looking economic fundamentals show all is well.  Third quarter gross domestic product increased at an annual rate of 3.5 percent.  And the unemployment rate, if you exclude something called discouraged workers, is just 3.7 percent – a near 50 year low.  By these metrics, the economy’s never been better.

Still, it doesn’t take much snooping around to uncover what’s really going on.  For cracks in the economy’s foundation are transforming from minor hairline fissures to full blown surface fractures at about double the rate that Imperial Valley mud volcanoes are consuming Union Pacific Railroad tracks.  These full blown surface fractures will further multiply as the planet approaches the next financial crisis.

At the moment, for example, the auto manufacturing and housing sectors are breaking down.  Last week, General Motors announced they plan to cut 14,000 jobs and close five factories.  What in the world’s going on? Continue reading →

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The Zealous Pursuit of State Sponsored Wealth Destruction

Posted on November 30, 2018 by MN Gordon

The lifecycle of capital follows a wide-ranging succession.  It is imagined, produced, consumed, and destroyed.  How exactly this all takes place involves varying and infinite undulations.

One generation may produce wealth.  While the next generation burns through it.  Various facets of a person’s capabilities, understanding, industry, and character can determine if they’re producers or consumers.  The most determinant facet of this, however, is how one approaches their unique circumstances.

The July 21, 2014, edition of Forbes Magazine documented the Stroh family’s methodical rise and swift disappearance from the beer brewing business.  The print edition of the article titled, How to Blow $9 Billion, began with the following summation:

“It took the Stroh family over a century to build the largest private beer fortune in America.  And it took just a few bad decisions to lose the entire thing.”

What worked for the Stroh family was taking a long time horizon.  Wealth was built by incrementally acquiring and growing a loyal and devoted regional customer base.  What didn’t work for the Stroh family was its debt financed acquisitions of Schaefer and Schlitz, and the costly bid to become a national brand. Continue reading →

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