Archive for October, 2011

The Blue Chip Stock, R.i.p

Have you ever heard of a “Bo Derek Stock?” Me neither. But it’s a term listed in the seventh edition of Barron’s Dictionary of Finance and Investment Terms. When I was in college, we had to buy this book, and I’m embarrassed to say that the early edition that I bought back then did not seem half as thick as the current version. And I think the reason for the bloat of the new edition is that many dated terms have yet to be deleted.

So, what’s a stock that meets the Bo Derek category? The dictionary says it’s a…

“Perfect stock with an exemplary record of earnings growth, product quality, and stock price appreciation. These stocks are named after the movie “10” in which Bo Derek was depicted as the perfect woman.”

I’m sorry, but I’ve been in this industry the better part of two decades and no one – no broker, institutional sales guy, or banker, has ever used this term. If I happen to run across one of these magical perfect investments in the next two years, I’ll be sure not to compare it to a 52-year old, albeit still attractive, actress…

The term is simply no longer relevant. Just like the term Blue Chip.

A Blue Chip, so says the dictionary, is “common stock of a nationally known company that has a long record of profit growth and or dividend payment and a reputation for quality management, products, and services…”

Have you seen any of these lately?

Constellation Energy? That fails on the management test, although there might be some redemption there. General Motors and Ford? They fail on the management test, too and, until recently, failed on reputation for quality products. AIG? Fannie and Freddie? Lehman? Just fail, period.

Beyond the definition of Blue Chip is a connotation that has developed over many decades, fostered by companies the likes of General Electric. The connotation is that Blue Chips = Safety.

The notion that there are safe places to invest in the domestic equities market is dead forever. It died when Bear Stearns collapsed over a weekend, and Lehman Brothers filed Chapter 11.     

The Blue Chip idea died along with those two companies. Take IBM, for example. It’s not the technology king it once was, granted, but Big Blue has been a classic Blue Chip ever since I got into this business. While its stock has taken a hit, the company has largely been above the fray – untarnished in the media by the digressions of the big financials and flawed business models of the domestic auto makers. But can anyone say IBM is a “safe” place to put your money? Not anymore. The collapse of 2008 will scare an entire generation away from investing.

From a capital markets sense, this could be the best thing that ever happened. No matter how polished a CEO is, no matter how much economic impact a company wields, and no matter how interwoven it is in American society, no company – public or private – is a no-brainer investment. This is the lesson… (cough – along with not over-leveraging yourself to buy assets you can’t afford)… that America needs to take from 2008.

So forget Blue-Chip stocks completely. Just forget the entire concept.

But do not forget about investing in the U.S. equity markets. And here’s why…

It’s true that U.S stocks got blasted in 2008. But of the 200 top stocks that actually appreciated in 2008, 196 of them have market values of $2 billion dollars or less. That means, of the top 200 best-performing stocks of 2008, 98% of them were small-caps. In a list like that, you do have to separate the bulletin board issues with no volume from the legitimate trades, but the fact remains that several small-caps performed tremendously in a horrid market. Below is a sample of the list:

Small, Micro, and Nano-Cap Stocks Fill the Top-200 List for 2008

So even in the worst market conditions most of us have ever lived through, small-cap investing shined. Looking back over the last 10 years, the Dow Jones Industrial Average has a 10-year annualized return of –0.45%. The S&P 500’s is –3.02%. Both indexes were decimated by 2008, contributing to the much talked about “lost decade” for investors. The Russell 2000, on the other hand, which is known as a small-cap index, has a 10-year annualized return of +1.72%. If you look back at any 20-year period in stocks back to 1926, small-caps did better than large-caps almost all of the time.

Is small-cap investing risky? Yes. It always has been and will continue to be. And so was a whole portfolio filled with shares of BSC…

Until next time,

Matt Mason
Analyst, Oxbury Research

Oxbury Research
http://www.articlesbase.com/investing-articles/the-blue-chip-stock-rip-722041.html

Are people having trouble grasping the severity of our debt crisis?

Imagine this 13 times

http://www.kk.org/thetechnium/one_trillion_A.jpg

Bush is irrelevant… why don’t you pay attention to what is going on, currently
Yes it’s $1 trillion compared to a football field
No Bush would just spend us into ruin at a slower pace

I think even you fail to grasp it.

Social Security withholding has been paying a surplus for decades and is one of the major holders of that national debt. So the interest is paid right back into the government. In the current economy, this year, it is slightly underfunded and will be collecting back it’s funds.

This increased the deficit of the general tax funded spending – and increases the external borrowing that must happen to both support the general spending and replace the loans that were taken from Social security.

So the portion of debt will increasingly become foreign and pay interest outside of our country as social security pays itself back..

Furthermore – there is not enough discretionary spending to make cuts that would balance the general-tax funded budget.

And the idiot American people and tea party think taxes should be cut, when in fact the tax rates are lower than they have been in decades.

How bad will America’s debt crisis be, when it finally arrives?

Bacon: Cheney said it, Obama did it.
McBragg: just make sure you take those profits in physical gold

The stock market will crash and people will lose all of their savings.
Bank will fail.
Paychecks will bounce.
The credit markets will freeze completely.
Fuel costs will skyrocket.
Food will be scarce as transportation shuts down.
Air and ground travel will come to a standstill.
People will become fearful, angry and desperate.
Violence will increase due to fear, anger and desperation.
People will look to the government to help them, but there will be no help.
The population will be enslaved as martial law is declared in order to stop the violence and anarchy.

Economic Collapse Preparation – Be A Ghost – Traveling

After the economic collapse many of us feel their will be a martial law type of government, or a full implementation of a New World Order one world government. This sub series on being a ghost is intended to help people dodge the one world government or a martial government.

Electric Bike going 41mph

Put the batteries in a backpack & the hub motor does not even look like a “moped”. You can pedal too!

Some electric bikes are even charged by solar.

use the youtube search engine for more vids on electric bikes.

Duration : 0:7:30

Read more…

Stiglitz Discusses U.S. Stimulus, Greece’s Debt Crisis: Video

Feb. 17 (Bloomberg) — Joseph Stiglitz, Nobel Prize-winning economist and a professor at Columbia University, talks with Bloomberg’s Margaret Brennan about the need for additional U.S. stimulus targeting job creation. Stiglitz also discusses the role of U.S. banks in the global financial crisis and Greece’s debt problems. (This is an excerpt of the full interview. Source: Bloomberg)

Duration : 0:8:17

Read more…

The future collapse of money?

Today’s monetary system uses ‘paper’ to make ‘money’. That is a manifest fraud! Artificial money is quite different from real money. Real money has intrinsic value, while paper money has none. Its only value is that conferred upon it by market forces. Its market value will last only for as long as, and to the extent that, there is public confidence in it and demand for it in the market. Demand is itself based on confidence, and confidence is something that can be manipulated (as Malaysia’s Prime Minister has now recognized, and as Indonesia has recognized too late). So long as governments controlled the so-called free-currency markets, they could intervene to protect public confidence.

If there is a collapse of paper money what will happen? is it possible for such an event to occur? will the banks benefit from such a dramatic event?

money came long after man ne will siuvive