Overloaded with Debt and No Jobs to Be Had

Posted on May 3, 2013 by MN Gordon

Overloaded with Debt and No Jobs to Be HadThe Federal Open Market Committee met on Tuesday and Wednesday.  The masses waited with anticipation.  What did they talk about?

Generally, they talked about price controls.  More exactly, they talked about controlling the price of the economy’s most important and fundamental element…its money.  By controlling the price of money they can influence the price of every single good and service there is.

Some believe this is for the good of the people.  That it will somehow boost consumption and stimulate demand.  That it will create a new hiring boom.  We have our reservations.

When it comes to the Fed, they believe – or at least pretend to believe – that with just the right policy mix the economy will be restored to glory.  But what’s the right mix…and how can a handful of bureaucrats with a handful of charts ever know what it is?

After several days of belaboring they concluded they’d continue loaning out federal funds for practically free.  On top of that, they concluded they’d continue to borrow money into existence – roughly $85 billion a month – and use it to buy Treasuries and mortgage bonds until unemployment falls to 6.5 percent. Continue reading →

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Tend to Your Garden

Posted on April 30, 2013 by MN Gordon

Tomorrow’s the first day of May.  You know what that means…  If you follow the old adage, ‘sell in May and go away,’ you should sell your stocks.  It may be hard to believe, but this is more than just a catchy rhyme.  This advice actually has a good track record.

In fact, most years this has turned out to be a successful strategy.  According to the Stock Trader’s Almanac, if you invested $10,000 in the Dow in 1950 and held the money in stocks from November through April each year, you’d have had $684,073 by the end of 2011.  But if you’d invested that same $10,000 in the Dow in 1950 and held it from May through October each year, by the end of 2011, you’d have lost $1,024.

That’s quite a dramatic difference, wouldn’t you say?  Yet if you’re still not ready to sell, there are several other reasons for easing up on stocks you may want to consider…

Consumer sentiment, as measured by the Thomson Reuters/University of Michigan index, fell in April to a three-month low.  Remember, consumer spending accounts for 70 percent of the economy.  When consumers cut back on spending the GDP takes a hit. Continue reading →

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Seeing Through the Mirage

Posted on April 26, 2013 by MN Gordon

Buried far below the headline’s reporting Apple’s quarterly earning’s report Tuesday evening was a most curious headline…

“Lance Armstrong sued by U.S. for post office sponsorship funds.”  CNN.com offers the particulars…

“The Justice Department late Tuesday formally filed its case against Lance Armstrong and his company Tailwind Sports for millions of dollars that the U.S. Postal Service spent to sponsor the cycling team.

‘“The USPS paid approximately $40 million to sponsor the USPS cycling team from 1998 to 2004,’ the court document says.

“The government said it was intervening to recover triple the amount of the sponsorship funds under the False Claims Act, which could bring a total of more than $100 million in damages.  The complaint filed in U.S. District Court for the District of Columbia charges that the use of prohibited drugs constitutes a breach of contract with the Postal Service.”

Obviously, Armstrong shouldn’t have cheated by using performance enhancing drugs.  What’s more, he shouldn’t have lied about it all these years. Continue reading →

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Do You Have the Conviction to Get Rich?

Posted on April 23, 2013 by MN Gordon

The May edition of National Geographic magazine has the cover story headline, “This Baby Will Live to Be 120*.”  Pictured below the headline is an adorable baby.  The asterisk’s footnote to the right reads, “It’s not just hype.  New science could lead to very long lives.”

We don’t doubt the possibility.  Less than 100-years ago, before sanitary sewer separation and Alexander Fleming’s discovery of penicillin, lifespans were much shorter.  Bacteria and infections would commonly wipe people out before they turned 50.

According to National Geographic, the next bull market in life expectancy may be in gene mutations found in people who are genetically isolated.  Somehow these mutated genes prevent life shortening diseases.

For example, Ashkenazi Jews have mutations that limit high blood pressure and lower the risk of Alzheimer’s.  Amish, from Lancaster, Pennsylvania, have a mutation that lowers fat in the blood.  Gene mutations found in Japanese Americans lessen the chance of heart disease and cancer. Continue reading →

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