Howdy,
Got a few moments right now as I have had to escape the foul Michigan weather today; having a strong northwest wind pushing the rain at a temp of 44 degrees.
Poop or get off the pot; for if you linger much longer your legs will lose blood flow and when you attempt to stand, you will indeed fall down !
Mr. Catch is a fairly patient person; and will not dismiss that the economic problems that came forth 3 years ago are very complex in their nature and will/do require correct and a slow process for repair of the problem(s). But, far too many folks in power positions and those who advise the same chased after misguided thinking for these same 3 years. I must presume misguided thinking that everything would self heal from the aspect of the state of the condition of the "public" and the massive jobs losses; and that from this, the president and those associated found no problem in the pursuit of a health care plan, and a very nasty cap and trade bill (which is dead for the time) and we should not forget the "green" programs and legislations thinking. Am I being nasty to these politicians for pushing these social programs, in the light of what they could not see crashing down around them? Yes, I am. I would not care to which political party was in power and still chose to travel into some other magical path of this or that. Heck, G.W. Bush wanted all of us to just go shopping after the trade centers fell to the ground. Give me a break, eh? So, Mr. Obama and company chose their path with their presumed power and chose to go the social and the greener earth programs route; and apparently chose not to see or smell the smoke from the burning economic fires.
For 3 years in this country and a full 2 1/2 years in Europe the battles rage about the economies. Again, I will note that these problems are not simple fixes; but I am afraid when "they" attempt to stand, they will fall down; cause they have been on the pot too long, and even without benefit of a good BM.
Meanwhile, the individual investor and pension funds; both of which have been badly damaged, and in the case of the pension funds, many negelected, poorly planned and managed and/or underfunded continue to "take a haircut and bleeding values." This fuels an ongoing lose of confidence from their observations of the political side of events, the economic damage; both personal and otherwise, and the inability of both individuals and companies to form a plan of action that is more than 3 months forward.
"If" the EuroZone is able to place a credible "fix" in place, one may suspect a very large equity rally; at least for a few weeks, months or perhaps longer.
The above leads this house to consider the most serious "rock and a hard place" that exists. The massive debt in place in many developed countries should be reduced. But, if the reduction also eliminates jobs in the government sectors and eliminates or reduces in place entitlements to many; the problem snowball continues to grow as there would be even less money for many citizens. The print more money solution is likely the best path for the central governments, as this will lead to more a "feel good" for the citizens. While the investment community and those who study the markets know the potential problems with this action; the "feel good" may be a better suited "plan" for the general public; for whom the majority do not understand the relationships of these actions. One should be able to predict the answer outcome with a poll at the local mall and asked at least 100 of the those who are unemployed the following question: "Would you prefer to have work and higher price inflation; or no work and some price inflation?"
Our Funds Boat has maintained a fairly conservative/moderate investment profile since the market melt. I/we most assuredly do not know the outcome of any policy plans for the U.S. or the EuroZone. But, we are slowly continuing a "haircut" and "blood letting" with our current mix of funds. We will let these funrs ride for the weekend coming, gather the numerous dividends that will be placed and attempt to determine a new path. The old boat is not taking on water; but there is too much now awashing upon the deck.
This house's few nibbles of thought above may not be reading things properly; and your input would be greatly appreciated by us and the board. I/we would prefer to write a more glowing report of our thoughts about the economic situation, as there is already enough thinking floating around that is not to the positive side of events.
I place this link for a SNL piece that found its recall in my brain this morning. Perhaps you too will be able to "substitute" some of the skit words and thinking into today's world of political and economic battles taking place here and in the EuroZone. Attempt to "convert" the medical problems and apparent solutions of medival medicine; to "see" the correlation with the economic problems of today; and the proposed solutions. Hopefully, you will be able to place the circumstances/problems and the some of the various characters related to the supposed solutions.
(6 minute runtime)
http://www.medicallessons.net/2010/10/classic-saturday-night-live-on-bloodletting-therapeutic-phlebotomy-and-barbarism/Or, perhaps my brain is really not functioning properly...:):):)
No spell check or reread....hope its readable!
I thank you for your time.
Respectfully,
Catch and Co.
Comments
You noted; "If you didn't get out, too late now. Asset allocation is most important. If the risk is getting too hard, perhaps less equity and more cash/fixed income will help."
I, of course; have no clue as to your current holdings or your holdings 3 years ago during that market melt. I also do not know whether you are near retirement or 20 years to retirement. This aspect usually contributes to one's view of risk and reward; among the many other variables.
As to the too late; how do you personally identify what is too late, and which sectors?
I watched this same market action from the very peak of value of our portfolio that topped out on Oct. 31, 2007. I/we then watched the gyrations and some losses and then dumped 87% of our equity holdings around June 15, 2008 and then continued to find those funds "kinda' hang in there until the "melt". We ended down -8% for 2008.
As to the too late....what if the broad markets have another -25% house cleaning over the next 6-12 months? That would not make today as a too late, eh?
I don't know whether you look at our weekly Funds Boat posting; but we already have a large portion dedicated too to a variety of bond funds.
Regards,
Catch
http://www.pbs.org/nbr/site/onair/transcripts/warren_buffett_visits_wall_street_110930/
I will say that he seemed downright (and increasingly) irritated at Andrew Ross Sorkin (who didn't say anything upsetting, remaining his usual bland self) on CNBC yesterday morning (at the end of the interview Sorkin asked if he could come to the dinner that Buffett was hosting for Obama and Buffett really seemed to snap as he walked away - I believe and am pretty sure he said "No, I'm selective.") I guess he was ticked that Becky Quick wasn't there.
I read through a bit of the NPR transcript; and I have also watched many WB interviews over the years. He is in a different monetary position vs this house; so, I guess how he views the markets and/or time frames will be different.
From part of the transcript:
"GHARIB: I know you don`t like to be asked about your outlook for the market. But what is your outlook? Are you bullish or bearish?
BUFFETT: I never had a view on that, Susie. I never will. I am enormously bullish on this country over time but I don`t have the faintest idea what the market is going to do in the next five minutes or the next five months. And I don`t pay any attention to it. We bought in the fourth quarter, $4 billion net, of common stocks. Not (INAUDIBLE) Bank of America (NYSE: BAC), $4 billion. I don`t know whether those stocks are going to go up or down next month and I don`t care. I`d like it better if they go down because we`re buying more of them all the time. I just don`t think about the market.
GHARIB: How do you feel about your big investment in Bank of America (NYSE: BAC)? The stock is lower than what it was when you bought it.
BUFFETT: I bought it to hold probably at least 10 years. So it just doesn`t make any difference"
Well, this house has to think about the market here and elsewhere; and the cost of healthcare going forward and all the other pieces of a retirement pie when there is no longer cash flow into the house from an employer/work; the time when one must rely upon their past abilities and means to save and grow money for use today and into the unknown length of one's live span.
Mr. Buffet does not have a monetary concern that would cause him to be "edgy" about the economy; but there sure are many millions in the country who are edgy. I most sincerely hope "things" become smoothed out a bit. The policio's are still sitt'in on their asses as far as I can determine; and there isn't time today for just sitt'in. The clock is a ticking................
Everyone who has a defined pension plan should sure as hell hope that whomever is running the plan knows what they are doing; lest the plan falls short of the ability to pay. At such a point, it obviously does not matter what any prior obligation to a retired employee may have been..........cause there ain't no more money, period. This happened recently in Falls Church, Rhode Island (if memory serves me well).
As I noted in the start of this thread; the issues are very complex for here and Europe, but the clocks keep on ticking away; whether Greenwich Mean Time or Pacific.
I/we too, sure would like to be a much happier camper.
Regards,
Catch
Here is the transcript from that CNBC interview:
http://www.cnbc.com/id/44730157//
Kevin
This was the best part:
ANDREW: I have not been invited. Warren has not invited me. Am I invited to the dinner tonight?
BUFFETT: No.
_____________________________________
Now, I hate CNBC, but Sorkin is harmless (bland and dweeby, yes, but not particularly irritating), but that "No" from Buffett was hilariously blunt. The "No" came about half a micro-second after the question and he looked like he would have added another word before the "No" had he not been on TV.
Back to the interview...
_____________________________________
ANDREW: I don't know how much that plate costs, though. That's a pricey plate.
BUFFETT: Let's— get out your wallet.
ANDREW: Yeah, I've got to get my wallet out, so. Anyway, back to you guys.
_____________________________________________________
At this point, Sorkin has started to realize the interview has gone completely off the reservation and turned real, real awkward. "Anyway, back to you guys" = Priceless, especially because Sorkin actually thought he could end the interview here. Oooops.
More interview....
_____________________________________________________
BUFFETT: We're very selective.
HOBBS: Wow.
____________________________________________
Yeah, Ol' Uncle Warren, "Man of the People" is very selective, you see. I also said "wow" at this moment, although, more "Wow, who pissed off Buffett this morning?"
One hilarious word:
____________________________________________
TAMRAZ: Oh.
______________
Roughly translated: Oh s..... I mean, "Oh." WTF.
_____________________________
BUFFETT: All you have to have is $1,000 or...(unintelligible).
HOBBS: Andrew Ross Sorkin with Warren Buffett.
____________________________________
Gotta love those unintelligibles. Hobbs finally bails out Sorkin.
+++++++++++++++++++++++++++
Sorkin's brilliant interview skillz:
ANDREW: You own some German bonds?
BUFFETT: We own German bonds.
ANDREW: German bonds.
BUFFETT: Yeah.
ANDREW: What kind of haircut do you want to take on those?
BUFFETT: On German, no...
ANDREW: You think you're OK.
_________________________________________
You know, I didn't think Sorkin really did anything, but upon reflection, the "You think you're okay?" line probably did not sit well with Grandpa Buffett.
The German bonds bit is classic, it's like CNBC's "Who's On First?"
ANDREW: "You have some investments?"
BUFFETT: "We have some investments."
Not as good as CNBC's thought-provoking interview with Chubby Checker on his thoughts regarding Operation Twist, but up there.
Ooooh oooh, this was also funny:
ANDREW: Well, I know that, but in terms of moving money into your own stock, does it mean that you're not finding the same kind of opportunities right now, given the markets?
"ANDREW: So there's still— there's still— we should still see you make a big deal.
BUFFETT: You...
ANDREW: And this is not...
BUFFETT: I sure hope so.
ANDREW: And the buyback is not an announcement that you're taking...
BUFFETT: Oh no.
ANDREW: ...money into your own stock.
BUFFETT: No."
_______________
Well, at least that's clear.
I'm 47.3% in bonds: PREMX and a zero-coupon instrument which amounts to 6% of that 47.3% I just quoted.
I'm 13.82% in Pfizer, my only USA holding, for the time being. My other equities are all in Asia: MACSX and MAPIX, which comes to 38.89% of portfolio.
I'll be holding on to the Matthews stuff until hell freezes over, and will re-deploy that 6% thing I referred to upon maturity, into a good HY bond fund, in '13. The new work-position I found is with a not-for-profit, so taxes will be considerably lower under the arrangement I'm being offered. If I lived in Mississippi, I'd not even be taxed on my monthly pension checks. But this is Taxachusetts, not much difference from Taxylvania.
The world macro economic view I'm looking at is bland, untasty, undesirable and indefinite as to the length of time we will have to trudge through this waist-deep doo-doo. The secular tectonic shift already begun is clearly toward Asia, however.