I am retired and take educated guesses on all things financial.

April 30, 2009

April 30, 2009: Sell Ford, Because of Ford

I am hard pressed to find a company chairman who is a progressive socialist whose company stock warrants a bet. Bill Ford, the Chairman of Ford (F) appears to be genuflecting towards Big Government and the left fringe by calling for a hefty tax on gasoline to push Americans into what the government thinks they should own - and Big Government knows best, according to Bill Ford.

Mr. Ford stated this week that taxes to push up the cost of $2.00 gasoline by 70% were needed to change Americans' car buying habits and usher in a new generation of fuel efficient vehicles.

"We clearly need (the tax)- whether it's a gasoline tax or cap and trade, it's something we do need because with gasoline at $2.00 (a gallon),customer behavior is not driving the direction that the government would like", he said. Asked how high the gasoline price should be set, Ford stated:"I don't know what the magic number is, somewhere around $3.50. We've seen behavior go back now that it's around $2.00. We don't want that, we don't think society wants that. We think price certainly is a better way to go." Ford is a declared environmentalist.

Perhaps like his great-grandfather, who was a raging anti-Semite and had profitable dealings with Hitler, Bill Ford carries a diabolical gene that permits profit while "gassing" others.

Of course, there may be a perfectly rationale reason why Bill Ford wants to force prices higher. Ford and all other American auto makers have never made worthwhile profits on small, cheap cars. Perhaps Ford wants to force the sale of cheaply made cars at a premium price to justify his investment in green technology. This would be a good thing for the Ford Motor Company.

My belief is that Ford is,in reality, sticking it to the less than blue-blood class by driving down the resale of their present vehicle, raising the cost of business across the board and thus diminishing the standard of consumption and living standards of those making modest wages. In other words, Ford wins selling new too-small and "coffin" ready cars at a higher price.The blue collar customer who has been Ford's lifeblood since the early 20th century loses, and loses big.

Bill Ford's mindset is narrow, unsustainable and not in the best interest of the Ford Motor Company. He should resign.His grandfather's company needs to hold true towards providing solid transport from trucks to autos through producing products that people want to buy - not what Big Government thinks they should buy through economic coercion. If green cars are a part of the mix to be sold at a good profit margin, fine.

Shame on you, Bill Ford, and shame on those who prefer socialism and high taxation as a way to dictate philosophy. It has never worked, thus the Ford Motor Company will ultimately not work. Sell the stock, or gift it to the Sierra Club.

F stock has made a nice run up recently and will likely avoid the fate of GM and Chrysler. I'll call it a dead cat bounce, with the company not being able to compete with others down the road unless a new Chairman is of a different ilk.

April 26, 2009

April 26, 2009: An (almost) Final Visit to Chicagoland

The old saying goes, "you can never go home". There is some truth to it, especially as maturity and careers expand. I took time out to drive alone back to the old neighborhoods of my youth and forefather's neighborhoods the past three days. Living in the Berwyn-Cicero enclave (those that know Chicago understand my choice of term) gave rise to several life-long relationships which I deeply cherish. Meeting these few friends and breaking bread over a great meal of pork, dumplings and sauerkraut with liver dumpling soup,Czech desert and coffee included (that's a Bohemian meal!)starting just where we left off a long time ago was priceless. Eating the ethnic eastern European foods of my culture at the Riverside Restaurant, Bohemian Crystal and a family favorite since the 1930s, Russells Bar-B-Que in Elmwood Park, then shopping at Veseckys Czech bakery on Cermak Road, Crawford Sausage Company on Pulaski, Josie's Czech Dumpling Factory (best fruit dumplings in the world) on Pershing and Bobaks, a more recent addition for great homemade sausage on Archer Ave., reinforced the notion that food tastes of youth evoke strong memories. Many other establishments have had their day and closed, but these and a few other culinary remnants remain after many decades or longer of existence. Their days, sadly, are numbered. Si?

I also performed a family ritual and visited the graves of close relatives, especially my father's. As my parents came from large families, we had a very close, clan-like family relationship - nothing like that which presently exists as a rule in our society. It was interesting to see that Bohemian National Cemetery (a national historical landmark - relative's pictures are on their tombstones as per custom of the culture and period)- now has a special Chicago Cub Section where fans can actually be buried facing a mock ivy wall replica of Wrigley Field.

A high point was being able to thank my 92-year old Band Director for modeling me for success and for many other things which will remain private. He is frail and we spoke by phone. He is in a nursing home at this time but his memory was sharp as a hawk. I expected nothing less. And being able slowly drive by the family homestead and other important locations from my youth in the 1950s and 60s made my adventure complete.

Many memories and duties to perform in three short days to an area where I may, or may not, return.

I think that many readers would like very much to return to their roots,on personal terms and a personal schedule. It reminds one of a past much different from today, and an appreciation for the trials and tribulations of growing into adulthood. I, for one, wonder how in the hell I actually managed to do it.

April 22, 2009

April 22, 2009: Earth Day, An Interesting Perspective

As readers know, I am an avid reader of contrary views that, while out of favor with the politically correct crowd now, may be in retrospect an intellectually valid position that may be honored as insightful and true later.

One such viewpoint is that of Harry Browne on Saving The Environment From Political Destruction. Shortly before his death a few years ago, Harry penned a lenghty piece that shattered many environmental stands and pinpointed criticism on many facets of this topic. Although you (and I) may disagree with him, all points of view should be available for consumption and open debate. You may find his complete work an interesting read.

As follows is a brief excerpt:

"The supposed struggle to save the planet is really a struggle for power - power over your life. So politicians and environmental extremists never wait for their claims to be proven before demanding to turn your life upside down.

They tell us we can't afford to wait for proof; we must do something right now - even if no one is sure what the problem is, even if no one knows whether the changes they demand really will help, and even if a single solution might be discovered tomorrow that wouldn't require upsetting everyone's life.


"Everything you do, every move you make, each step, each breath affects the environment in some way.

That's why so many politicians and environmentalists (reformers) are enthusiastic about saving the environment. Virtually the entire crusade is about you.

Conserving resources means taking them from you and putting them under political control.

Ending global warming means forcing you to pay higher taxes for gas, oil and electricity.

Recycling means vast power for those who will decide what you must recycle and what you'll be allowed to throw away.

Protecting endangered species means the power to seize you land.

Controlling pollution means controlling you.

For the politicians, the environment is the perfect issue. They can use it to gain more power while appealing to your desire for health, to your appreciation for the natural beauty around you, and to your concern for your children and future generations.

No problems will be solved by the people who gave us the US Postal Service and the Savings and Loan Crisis (note: if Mr. Browne was alive today, he would have a much longer list). But a great deal will be improved by getting the (environmental issues) out of the hands of politicians, reducing the federal government to its Constitutional limits, telling the politicians to stop playing junior scientist and letting motivated individuals (through the free market and in their self-interest) deal with the problems society discovers."

Harry Browne's complete piece can be found at

Now, time to drink a nice tall glass of organic tea.

April 20, 2009

April 21, 2009: Jimmy-ing Up To Commodities

I admit to having a negligible position in commodities for many months. Over the past few weeks I have been watching all four of the Jim Rogers-inspired commodity funds, kick starting my portfolios out of some bonds (especially Treasury Bonds) and leaning towards purchase of two of Jim's creations: RJI (AB Svensk International Commodity Index) and RJZ (AB Svensk Ekportkredit Commodity Index (metals sub-sector).

Years ago, when I began my initial portfolios, commodity investment was eclectic and generally reserved for a relatively select few high net worth blue bloods - such as Anderson Cooper's "360" genetic forefathers, the Vanderbilts. Now, commodity investment is considered by many financial experts to be an essential part of a balanced, diversified portfolio. A good example is the rule of thumb declaring 10% gold to be portfolio smart. I don't subscribe to that percentage nonsense, but informed readers get my point.

I selected RJI because of its diverse allocation and percentage weight of grains and the overall percentage directed towards a light exposure to fossil fuels. RJI is trading at at $5.94/share with very good daily volume (Monday it was over 477,000 shares). Near its 52-week low of $5.26 and well off the June 2008 high of $14.33, the fund appears to have limited downside risk on a valuation basis. Seeing as the world has to eat and produce products calling for metal, one has international exposure to vital commodities that are unlikely to undergo extreme taxation or regulation. No villains for the politicians to crucify in this bunch. RJI is a relatively safe bet regardless of the economic scenario, given the current price.

My second selection, RJZ, is to a large degree an extraction of the metals sub-sector found in RJI. This fund is trading at $6.72/share with decent volume of about 35,000 shares/daily. The 52-week low to high spread is $5.17-11.24. This fund gives the investor excellent exposure to a variety of metals both precious and industrial. RJZ can be viewed as a mild bet against the dollar and a strong bet for emerging economic giants such as China and India's thirst for metals in this fund.

Neither fund pays a dividend. I will probably purchase roughly 80% RJI for my Permanent Portfolio and 20% RJZ for my Speculative Portfolio, gradually. I remain suspect of government solutions to bail out the world economies.I am confident that taxes and other confiscatory revenue enhancement schemes are going to whittle down gains for many investments, especially hitting dividend-rich stocks.Commodity funds may be a nice fit for the "New World Order" within your portfolio.

For those interested, the other two Rogers commodity funds are RJA (agriculture) and RJN (energy). AB Svensk, the marketing agent for the funds, may not have the same level of transparency as do mainstay funds in the United States, so don't "buy it and forget it".

April 17, 2009

April 17, 2009: Thirty Biggest Bankuptcy Risks - Buyer Beware

The following companies are listed in order, based upon the credit-default swap spreads on five-year corporate bonds as of early April. The list is compiled from research provided publicly through MSN Money.

AbitibiBowater (declared bankruptcy yesterday)
R. H Donnelly (RHDC)
Visteon (VSTN)
General Motors (GM)
Six Flags (SIX)
Financial Guaranty Insurance
Hawker Beechcraft
Ineos Group
NXP Semiconductors
McClatchy (MNI)
Unisys (UIS)
CC Media
Beazer Homes USA (BZH)
YRC Worldwide (YRCW)
Hellas Telecommunications II
Lear (LEA)
Ono Finance
American Axle and Manufacturing (AXL)
Harrah's Entertainment
Truvo Subsidiary
Ford Motor (F)
Rite Aid (RAD)
Freescale Semiconductor
Univision Communications
Arvin Motor (ARM)
Pioneer Electronics

A very interesting, prioritized list of companies that may not be on any list one year hence.

April 13, 2009

April 14, 2009: Current, Timeless Ideas For The Novice Investor

Occasionally I receive an e-mail from a reader of my blog requesting advice on where to begin an investment program. Many renters whom I have known over the years have requested advice on this matter as well. After my disclaimer that inevitably after I recommend a specific stock it declines in value, and to seek a financial professional for another viewpoint, I will assist.

Over the past few days, I have received several requests on this matter.Here is my broad advice for investors just getting started.

1. If you are married, work as a team to invest your funds. No secrets.

2. Buy a home you can afford in a close, safe location to your job(s) with good private schools nearby. Public schools are not going to get any better over time. If you qualify for an 80/20 mortgage of less than 5.25%, take it for 30 years. If you have children, invest in a 529 program after deciding which state is best for you to enroll (don't overdo the 529, as it appears a college education may be paid in large part by the government in future years).A balanced fund within the 529 is my recommendation.

3. Improve your job skills through continuing education or trade school enhancement. Your income is your largest investment.Save 20% of your gross income, which means living beneath your means. PS - there is nothing wrong with online skills enhancement programs leading to diplomas or certificates with one exception: networking.

4. Have adequate insurance for you and your possessions, including liability.


For the beginning investor, it is easy to be too smart by half. Read about investing in Forbes, Fortune, the Wall Street Journal, online at, and a few other sites that will perk your curiosity over time. Remember that a lot of advice in retrospect will appear foolish if read in the rear view mirror a year hence.

Here is my advice for a basic portfolio now that's easy to follow and easy to adjust in today's economic environment.

10% checking account for current expenses/emergencies
15% one year cd ( for a great selection)or Vanguard Short Term Corporate Bond Fund (BSV)
20% iShares moderately speculative iShares'iBoxx$ Investment Grade Corporate Bond ETF (LQD)
15% government inflation protected securities through Treasury Direct or
iShares' Inflation Protected Treasury Bonds ETF (TIP)
10% iShares' U.S Preferred Stock ETF (PFF)
10% iShares' EAFE BRIC (Brazil,Russia,China and India) ETF (BKF)or iShares' MSCI Emerging Markets ETF (EEM)
10% iShares'Russell 1000 Growth ETF (IWF)
10% iShares' GSCI Commodity-Indexed Trust (GSG)

This is not a diversified portfolio, just a starter. As the novice investor matures in knowledge with increased financial resources, I strongly believe in maintaining two portfolios, a Permanent Portfolio for longer term investments holding monies that are precious to you, and a Speculative Portfolio for individual stocks and other securities funded by monies you can afford to lose.

In addition to securities, I think that rental real estate with income, tax benefits and political encouragement from historically bi-partisan voting patterns should be in every suitable investor's portfolio. Think holistically away from paper investments.

Finally, with increased taxes being a reality for the indefinite future, use tax advantaged investment strategies at all times to pay your fair share to Uncle Sam and not a penny more. If you use a financial advisor instead of a discount brokerage such as Schwab or Scottrade, and they do not present you with a legal tax avoidance strategy, fire them.

April 09, 2009

April 9, 2009: Timely Quotes from Those Who Knew...

My focus has been to recoup, reposition and forge ahead using a variety of investment and income streams to make sure that 2008 will forever be in the rear view mirror. To date, I am pleased with initial efforts while continuing to stay light in the market.

Titans of business have faced similar - and worse - situations. Here are some quotes that may give you both respite and a smile today:

"I don't care half so much about making money as I do about making my point, and coming out ahead." - Cornelius Vanderbilt

"I have been insane on the subject of moneymaking all my life." - Cornelius Vanderbilt

"You have undertaken to cheat me. I won't sue you, for the law is too slow. I will destroy you." - Cornelius Vanderbilt

"We can't cross that bridge until we come to it, but I always like to lay down a pontoon ahead of time." - Bernard Baruch

"Most of the successful people I've known are the ones who do more listening than talking." - Bernard Baruch

"The main purpose of the stock market is to make fools of as many men as possible." Bernard Baruch

"Always do one less thing than you think you can do." - Bernard Baruch

"In the last analysis, our only freedom is the freedom to discipline ourselves." -Bernard Baruch

"During my seventy-eight years I have witnessed a whole succession of technological revolutions. But none of them has done away with the need for character in the individual or the ability to think." - Bernard Baruch

"Vote for the man who promises least; he'll be the least disappointing." - Bernard Baruch

"We did not come over on the same ship. but we are all in the same boat." - Bernard Baruch

"I've got to keep breathing. It'll be my worst business mistake if I don't." - Sir Nathan Rothschild

"Give me control of a nation's money and I care not who makes her laws." - Mayer Amschel Rothschild

"Anyone without a sense of humor is at the mercy of everyone else." - William E. Rothschild

April 03, 2009

April 3, 2009: G-20 Summary, Good-bye to Tax Havens?

The concluded G-20 meetings have produced a set of ambitions that investors should begin to digest.

In broad summary:


A new Financial Stability Board, with a strong mandate, will replace the Financial Stability Forum.

Financial regulation and oversight will be extended to all financial institutions, instruments and markets. This includes bringing hedge funds within the global regulatory net for the first time.

Members are committed to implement stringent new rules on pay and bonuses at a global level.

International accounting standards will be set.

Credit rating agencies will be regulated in order to remove their conflicts of interest.

A common approach to cleaning up bank "toxic assets" has been agreed upon.


There will be sanctions against tax havens that do not transfer information upon request.

The Organization for Economic Cooperation and Development has published a list of countries assessed by the Global Forum as acting against the international standards for exchange of tax information. The OCED has placed Costa Rica, Malaysia, the Philippines and Uruguay on its "black" list of non-cooperative tax havens. The "grey" list that are showing some cooperation include Luxembourg, Switzerland, Austria, Belgium, Singapore, Chile, the Cayman Islands, Liechtenstein and Monaco. China is on a "white" list that indicates a substantive, improved transparency, although it is apparent that Hong Kong and Macau remain in the minds of experts to be "black" list worthy.


Resources available to the IMF will be increased 300% to $750 billion. This includes a new overdraft facility, or special drawing rights allocation of $250 billion. An additional $6 billion from agreed IMF gold sales will be made available for lending to the poorest countries.

A statement of support to increase lending to the world's poorest countries of at least $100 billion by multilateral development banks.


There will be a commitment of $250 billion of support for trade finance made over the next two years. This will be made available through export credit and investment agencies, as well as through multilateral development banks.

National regulators will be asked to make use of available flexibility in capital requirements for trade finance.


The G20 has pledged to resist protectionism.

There is a commitment to naming and shaming countries that breach free trade rules.

The G20 will notify the World Trade Organization (WTO) of any measures that constrain worldwide capital flows.

The WTO has been called upon to monitor and report publicly on these undertakings on a quarterly basis.


Although there is no new stimulus, the G20 stated that countries are already implementing the largest macroeconomic stimulus the world has ever seen, amounting to over $5 trillion by the end of 2010.

Times are changing. If the summary is implemented in full or in part, it is my belief that the climate for investing will significantly change. If history is an indicator, selective implementation based upon each country's self-interest will keep investors from launching too many long term speculative bets. We are not one world, yet.