"Alan Greenspan quote"

"Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient."

(Alan Greenspan, 2004)

Yeah..tell me about it...!

"Bird and Fortune - Subprime Crisis"

John Bird and John Fortune (the Long Johns) brilliantly, and accurately, describing the mindset of the investment banking community in this satirical interview.

URL: http://www.youtube.com/watch?v=mzJmTCYmo9g

/A

"Finally Brezhnev was right..."

Inspired from the recent crisis...

The story starts with Leonid Brezhnev on the reviewing stand at Lenin's Tomb, surrounded by underlings, watching the May Day parade. The Soviet Union's full military might is there on display. First come battalions of elite troops, impressive soldiers, all six foot two, marching in absolute lockstep. Right behind them are phalanxes of state-of-the-art artillery and tanks. Then come the nuclear missiles-it's an awesome show of strength. But after the missiles comes a straggle of six or seven civilians, unkempt, shabbily dressed, utterly out of place. An aide rushes up to Brezhnev and begs forgiveness. "Comrade Secretary, my apologies, i do not know who these people are or how they've come into our parade".

"Do not be concerned, Comrade," replies Brezhnev. "I am responsible for them. They are our economists, and you have no idea how much damage they can do."

(Greenspan, A., The Age of Turbulence, 2007)


Finally Brezhnev was right...

"Government is not the solution to our problem; government is the problem..."

Dear friends,

Stocks Have Actually Done Better Under Democrats

Today Sunday, October 19, 2008, is the 21st anniversary of Black Monday, October 19, 1987, when the stock market (NYSE: New York Stock Exchange, is what we usually mean by "stock market") took, to be polite, a dip.

Since the whole world is waiting for the US elections on November 4, 2008 we found some useful assumptions from the past...

The Stock Market under Democratic & Republican administrations:

President Party Date Months in Office Annualized Stock Return

Truman D 11/48-10/52 48 18.28%
Eisenhower R 11/52-10/60 96 14.96%
Kennedy D 11/60-10/63 36 15.15%
Johnson D 11/63-10/68 60 10.39%
Nixon R 11/68-7/74 69 -1.32%
Ford R 8/74-10/76 27 17.21%
Carter D 11/76-10/80 48 11.04%
Reagan R 11/80-10/88 96 15.18%
Bush R 11/88-10/92 48 14.44%
Clinton D 11/92-10/00 96 19%
Bush, G.W. R 11/00-2/06 63 -0.92%

Average from 1948 to Feb. 2006

Democrat 42.8% 15.26%
Republican 57.2% 9.53%
Overall 100% 11.95%

To read the whole article, press here.

Big government is staging a comeback.

When Ronald Reagan entered the White House in 1981, he famously declared, "Government is not the solution to our problem; government is the problem."

...If Barack Obama is elected president and Democrats strengthen their grip on Congress, the period could be transformative. Democrats would enact a series of programs that they believe would boost economic growth and improve middle-class living standards.

To read the whole article, press here.

The conclusion is yours...

/A

Time to buy some bargains?

Dear friends,

What's next?

"Buy American. I Am."

On Friday 17, Warren E. Buffet, a legendary investor, made an interesting contribution under a column in N.Y Times. To read the whole article, press here.

Buffet's tips:

-Be fearful when others are greedy, and be greedy when others are fearful.
-Bad news is an investor's best friend. It let's you buy a slice of America's
future at a marked-down price.
-Equities will almost certainly outperform cash over the next decade.
-Today my money and my mouth both say equities.

At almost the same time, debated whether consumer staples should be our next bet, John Dorfman (Dorfman Value Fund) and Marc Pado (Cantor Fitzgerald) stated on CNBC's panel their own advices to investors. In the same channel Pado stated that if you hung in this long continue to hung on and stay invested.

Pado's sector favorites:
-Consumer staples
-Defensive names: Healthcare, Food, Tobacco, Alcohol

Dorfman's sector favorites:
-Pharmaceuticals
-Energy
-Metals
-Select financial&defense

Except from that, I would like to add sth regarding the recent crisis.............and actually Dr. Marc's Faber words that the object out all of these bailout plans in the western world is that they do not address the fundamental problem. And the fundamental problem is overleverage. This leverage has not been only under the supervision of Federal Reserve and Treasury by it has also been encouraged by them.

With banks making plenty of money putting [mortgage-backed securities] out on the marketplace...FED and other central banks are trying to pull them out without considering the troubled toxic assets that keep standing out there! ...and finally the question is: Who is going to pay the bill?

For more, press here.

Until the next time...

/A