The US Economy Has a Stimulus Hangover

 I fear the US economy is starting to feel the hangover effect, after binging on $13 Trillion, yes with a "T", trillion dollars of stimulus. I'm not going to argue whether it's needed or not because I previously said stimulus to main street America is definitely needed. But the hangover reminds me of how I felt after a Saturday night of partying in Chicago once we officially transitioned from winter to warm weather --- everyone was out drinking.

When I think about government stimulus, everyone this spring and summer was wasted off of stimulus. If you were unemployed you got an extra shot of stimulus in the form of $600 added to your unemployment pay. For small businesses and then surprisingly large business (remember my post on even the LA Lakers organization getting PPP funds), we benefitted from stimulus if we promised to bring workers back. We soon found out many of my business colleagues graciously took the money and then far too many decided NOT to bring workers back --- why because they were more concerned about tying the funds to when business would come back. But being in the RISK MANAGEMENT business, this is fundamentally flawed thinking. The PPP experiment as I call it was a social experiment to see if as a nation we could band together and do what's best for our neighbor financially. I'm sad to say, the experiment didn't work as business people fought it along the way, while cashing in the money. During a health pandemic where people SHOULD stay home quarantined, you cannot expect business to return back to normal --- use government taxpayer money to keep people afloat. 

Note to anyone reading -- What kept people going was the unemployment checks and the extra bump of $600, it caused an e-commerce boom. How do I know, well I am in the Cyber Risk Management business. I have been getting calls from all over the country to help people do more business across the internet. My most amazing story is a company that sells boats and luxury yachts in Florida. They called me and we discussed business. At the beginning of the pandemic, no business because their model was predicated on customers coming in. But they quickly learned they needed a robust web platform as they were getting boat and yacht orders left and right. It sounds like most of us in Corporate America could keep going as we could work from home and buy boats and yachts but I wonder about the front line worker who is exposed to the virus on a daily basis if you're driving a bus, riding the train, or working the grocery checkout system. No national quarantine holiday in my humble opinion was a bad risk management move.

Why do I think we're feeling a hangover let's look at the news:

Company Continue to Announce Layoffs - 

• Airlines - this industry announced 35K job cuts and some anticipate this number will top 100K
• Disney - announced 28K layoffs
• Salesforce - initial pledges were made to not layoff, well soon thereafter they announced 1K layoffs

Jobless Claims Continue to Rise

As an investor, how do I keep track of economy. I use one indicator called the Jobless Claims report from the US Labor Department. The data is staggering:

• As of September 30, 2020 25 million required jobless benefits 
• Last week (Oct 10, 2020), - 898,000 new persons applied for jobless benefit aid for the first time
• To put this data into context, during the 2008 Financial Crisis that I believe was the worth since the Great Depression, the number of first-time applicants peaked @ 665,000 

COVID-19 Continues to Spike 

• France noted that 40% of it's hospital beds are filled w/ COVID patients
• Europe cases are rising
• The rural US is now the leading source of new cases
• And unfortunately people are fatigued or bored with staying home

Like a patient addicted to stimulus, the stock market is calling for more. What happens if we don't get more --- a painful withdrawal??

The ride up has been nice if you bought into e-commerce and stay at home stocks: think ROKU, PELETON, AMAZON, FACEBOOK. Everything else hasn't moved much...need proof I believe the S&P500 is up only 4%. So my barbell approach is still working. My retirement funds are safe (not invested in the market) and my investments in ROKU and Collectors, Sprint, Alibaba Allergan and others have surprisingly made me a tidy fortune during the pandemic. Real Estate is the other area where I'm poking my nose in. 

A reminder to not drink the Kool-Aid --- you'll avoid a hangover. Stick to the pillars.

What Coronavirus Risk --- The Markets Have Roared Back

What Coronavirus Risk --- The Markets Have Roared Back

First I want to say WOW, the markets have bounced back in a loud way. Louder than my Cross Colours 👚clothes back in the 90s. I have been on a number of enlightening calls in the last few weeks to gauge the pulse of the us --- the people --- the consumers. I keep my ears to the streets to see what real people are doing and if it’s in line with what I hear in the news --- I do this because I am wary of Headline Risk. One hot topic is Real Estate and I’ve been very surprised to hear what people are doing in this space. Of course job security has been a frequent discussion as well. For example, bankruptcies are occurring as companies navigate the crisis. And stimulus oh my – it seems that the Federal Reserve and Congress have somewhat been on the same page and don’t care about debt, inflation, or the next generation because they have pumped a record 4 Trillion Dollars into the economy. It’s much harder to invest during a crisis because there is so much news and information flowing -- Headline Risk. The amount of texts I get and send about breaking news and events is way up. So I usually like to keep things simple and you got a glimpse of that last month:

Contagious Health Pandemic à BAD 👎

Administration Response to Pandemic à BAD + SLOW👎👎

Stimulus from Fed Reserve + Congress à Very Good (Rollout of Stimulus Checks – slow; PPP – well let’s just say the LA Lakers, a Billionaire’s holding company, and a rich Florida Homeowner’s association all got a $$Million$$ dollar checks before small businesses on main street did. Changing from Very Good to Good 👍👍

News of Re-openings à Risky (Again unorganized but I understand the need to get people back to work) 😬

News of Treatments à Very Positive as I wrote about Gilead and Remdesivir very early on 👍

News of Vaccines  à Nothings seems imminent until 2021 w/ one big exception the Oxford vaccine out of London I believe could be promising as they were already working on a coronavirus vaccine and are using those building blocks to fight COVID-19. 👎

You do the math from what I’ve listed out and you’ll see why I split my investment strategy.  Without a vaccine, a contagious health pandemic is very dangerous and now cities have run the numbers and can’t stomach the shut-downs any longer…even if it means deaths tick up higher.  But 4 Trillion of Stimulus will make some of us temporarily forget we are in a crisis – but will everyone get a piece of this helicopter money strategy.  So my calculation is this:

• I need my retirement income protected – Retirement Funds out of the market ✅
• I need some exposure to Stimulus induced rally – Personal Investment Account (very active and I’m looking for big gains and possible exits) - Teladoc, Uber, Match, Roku, Gold ✅✅
• I need to cut costs and stockpile cash – Refinance, apply for stimulus funds, cut costs in my family budget ✅ (Comcast and Insurance cos I still owe you a call)

Headlines Versus Real Life

Headline -- Mortgage rates near record lows — and green shoots emerges as Americans prep a move back into home-buying

Real-Life – In the last few weeks, I’ve heard people are putting in offers, closing, and trying to move from being renters to owners. If the price is right, go for it because rates are low. Still a little surprised at the pent up demand here.

Headline – Banks are requiring HIGHER down payments (often 20%) and higher credit scores; JP Morgan and Wells Fargo have stopped Cash Out Refinances / HELOCs

Real-Life – Back in March, I told you to refinance and get cheap cash while you can. The Banks are sleepy and slow but are they are finally tightening the screws. I know of a Cash-Out Refinance recently closed and I got instructions to lock my regular refinance rate a few weeks back. Normal refi’s will still be occurring but look for more scrutiny because of the jobs landscape due to COVID-19.  As far as Cash-Out Refis, if you were slow this source of cheap cash may be narrowing.  

Headline -- Mortgage forbearance (program allowing people to NOT pay mortgage) has ballooned up to 4.1 million borrowers/ Over 7.5% of home loans

Real-Life – I have heard real stories of mid to large sized landlords saying their tenants have lost their jobs and their rental income is impacted. Do you fault the tenants for not diversifying their tenants or simply forgive tenants and renters because this is an act of God. What about this -- how long will eviction moratoriums be in place by cities AND will people pay – back rent and back loans may be too much for people to pay plus their normal rent when the economy picks up. This is the area that concerns me the most especially since I’m hearing of people buying homes NOW. Is this the tale of the halves and have nots or are people a little too early into a looming crisis?

Headline -- In roughly 6 weeks, unemployment claims have jumped to 30 Million people and projections of roughly 47 Million are being forecasted as the peak (by the Federal Reserve St. Louis)

Real-Life – Over the past few weeks, I’ve heard about management changes at corporations, bankruptcies, and mainly furloughs. Thanks to some courageous leaders many companies are pledging to NOT layoff but I’ve seen the layoffs in the restaurant, hospitality, entertainment, and travel industries. For example, United Airlines which accepted “stimulus” money will keep employees on the payroll until the money runs out. It’s April and they have already told staff to take 20 unpaid days off before October AND will lay off 30%.

I did my analysis back in March so I would not suffer from analysis paralysis today. You can easily get caught up with ALL of the changing headlines. I am preparing for the long winter like in the Game of Thrones. United Airlines is a big and resourceful company – if they have enough information in their crystal ball in May to a) take the stimulus money and b) still announce layoffs of 30% in October what does that mean for the economy, stock market and jobs picture. I always want to have optionality – you see I’m setup like United to ride the stock market being fueled by a) stimulus.  I’m only roughly 10% away from my all-time portfolio highs (4 Trillion in stimulus will do that I guess) but I’m slowly exiting winning positions AND my retirement funds are now not moving until I understand what United sees coming in October. Maybe they see reality sinking in once the stimulus wears off that we all must come together – stringent distancing, an effective treatment, bountiful productions of a vaccine, and less fear in the air.   If NOT it will be a long cold winter.

Keep On Pushing - Q2 Market Outlook Amid Coronavirus Pandemic

With Quarter 1 2020 in the books, I wanted to capture a few of the headlines coming across my screen that I'm paying close attention too:

What you Should Know:

1. Unemployment numbers are on the rise
2. The Federal Reserve is printing money an unprecedented levels - rates have lowered as they help unfreeze the mortgage markets
3. Shelter-In Place is sparking a rise in internet companies
4. Deals are being lost but the big ones are going through
5. SBA Loan Details

Jobs Number:
- A record 3.3 million Americans applied for unemployment benefits last week (Labor Department).  Last week saw the biggest jump in new jobless claims in history, surpassing the record of 695,000 set in 1982. Many economists say this is the beginning of a massive spike in unemployment that could result in over 40 million Americans losing their jobs by April.

Interest Rates:

- 30 Year Mortgage are at lowest levels of: 3.4%

- Mortgage Applications up 15.3% 

- Refinance up 26%

Note: One company said they received 8K refinance requests day

Investment Themes:

Invest in Internet Related Companies:

- Match Group disclosed that Tinder interactions are up. But it is not resulting in a large number of  new customer adds just yet

- Zoom Media (NASDAQ: ZM) is winning the marketing war. Everyone thinks Zoom and Slack (NYSE: WORK) are the only telework software out there. There are many but Microsoft Teams (Microsoft: MSFT), Go To Meeting, are go to collaboration and communication tools.

- Also cyber security software is in high demand. To help my client with the Coronavirus crisis, I manned the call support line and took calls from all over the world for the first time in my life. Every major client was working remote and more importantly I listened to the name of the software being used: Zscaler and many remote authentication and identity management tools are needed NOW more than ever.

Deal or No Deal

Madison Square Garden (NYSE: MSG)  – The owner of the NY Knicks just recently spun off their restaurants business. Hmmm I think someone may be separating the good assets from the bad assets.

Xerox (NYSE: X) – Some Mergers are no longer being pursued. HP is no longer being courted by Xerox.

Sprint (now merged under T-Mobile TMUS) - Some Mergers were pushed through. One of my biggest wins was Sprint and this deal closed today!!! T-Mobile required their 16 banking partners to come through with the funding --- Deal Closed

Helicopter Money - The last line of defense for the capital system under stress is to bail everyone out. I sh!t you not in economics its called the helicopter money strategy. Well for anyone looking to get a Small Business Loan, I captured some of the details here:

SBA Loan Details:

• Small Business Administration (SBA) Loans are available beginning Friday
• All existing SBA-certified lenders are eligible
• All FDIC-insured banks and Credit Unions are eligible
• The SBA is developing a portal for borrowers without existing relationships to find local lenders

      SBA Loan Terms:

• 0.5 interest rate with 2- year term
• Payments are being deferred for 6 months
• Partial or full loan forgiveness avail depending on layoffs (not happening) and certain qualified expenses
• The loans are 100% guaranteed by SBA
• The loans are administered by individual lenders

The Government Makes It Rain --- Stimulus To the Rescue

Coronavirus Update – Shutdown Has Finally Started

Thanks to the great leadership exhibited from New York, California, and Chicago the nation is slowly shutting down city by city --- and state by state. While unbelievable, this is very necessary to starve the virus. There will be debates on how long and I remind people to look to China’s recovery and the timeline they used. For example, Wuhan the epicenter of this crisis will remove the lockdown on April 8th. SO the reality is the longer the better for the hotspots. Why I demanded leadership --- one voice, one plan. Providing risk consultation to large corporations puts you in a position to see some amazing dynamics. People will not do thing unless they know the order has come from the top…it appears countries are no different. The shutdown should be federal because if we all go into shelter at the same time, you hope we can plan to exit strategically around the same time. Let me give you an example, if you have a missing child, technology (like the Amber Alert) has allowed for us to receive notification all at the same time rather than piecemeal.  This speeds up the likelihood of finding the child much better than sending it to one police department at a time. If the coronavirus shutdown does not come from the top, when one state recovers my question is: “Does that state allow you to travel or accept visitors from states that did not shutdown at all or that shutdown much later than your state did. Essentially this recovery could drag on longer than needed if we cannot move in a cohesive manner as a country. There could be a lack of trust in the air which is why I believe countries like Italy, China, S. Korea and others when into lockdowns all at once. Make It Rain – Last Resort to Inflate the Economy I am hoping for better coordination so we can begin to recover quicker and get the economy going.  The importance of the pillars we work on so hard here is to help you during these exact moments. If you have savings, you have some cushion during these bad times. See these articles, ripped from the news headlines: “Many Americans Biggest Worry is April 1st Rent and Mortgage Payments”  -- Washington Post “Real Estate Billionaire Barrack says Commercial Mortgages on a brink of Collapse” – Bloomberg “Jobless Claims Soar Past 3 Million to Record High” -- CNBC  “Mortgage Rates Surge to Highest Level Since January” – Marketwatch “2 Trillion Dollar Stimulus Package” --- See below These are just a few of the necessary reasons why the Federal Reserve is making it rain. It’s basically a blank check to shore up the economy until we can get a handle on the COVID-19.  Like in 2008, the market has responded with a rally since a “handshake deal” was announced just a few days ago. This rally will likely continue into the actual signing of the bill. Use this an opportune time to trade in the relief rally that is not uncommon. But when the dust settles, I am still not risking my individual retirement account funds at the moment because we know there is more to come. Mortgages need to be paid, the rent is due, businesses are asking for a bailout and jobs are being shuttered. Hopefully all this is temporary but it is a big risk. I don’t see an all clear sign, just yet. Urb Lesson of the Day:  Account Diversification · Savings Accounts – Gets you through the rough patches in life · Investment Accounts – Allows you to take risks when others are NOT – like today · Individual Retirement Accounts – This is truly for your future, why NOT wait for a sign that the recovery is strong

Thanksgiving - Plenty to Be Thankful For

First, I would like to apologize for the pause in posting of my thoughts, articles, and trades. The last month has been very fast paced with lots going on. I was in Vegas for training and learned the latest developments in the banking industry. Then I was off to London to actually do some work.  I did get some time to enjoy the weekend in Vegas and celebrate my birthday...let's hope I'm getting wiser with age.  Here is a rundown of what's going on and specifically what to be thankful for:

My Take On Things

My goal today for posting is similar to Nike’s slogan of “Just Do It”. I am just going to write and pretty much relay what’s on my mind. As you can tell from the gap in my postings, this has been a busy last few months. I have been impacted by many of the things that all Americans are facing with the downturn in the economy. Job loss has hit close to home and impacted my family members, I am working more hours and seem to be stressed out more, and time seems to keep ticking in the back of my head like one of those old grandfather clocks. Literally (because I reside in the Midwest) and figuratively, its grey outside and it appears that a year ago I was looking into the abyss of what I truly believe is the closest thing that we will experience in our lifetimes to an economic depression. And my goal is not to be depressing, but to keep it real. So I am going to flashback and flashforward in this posting on where I believe our economy WAS and where I truly believe things stand TODAY as it relates to my life. This hopefully will hit home to you and help you understand how all of the things that we hear, read, and see…such as the big Wall Street bonuses, TARP, cash for clunkers and the homebuyer’s tax credit are ALL RELATED but from a regular guy’s perspective like mine (and yours).

Where the Economy Was ~
Depending on how far we go back (let’s say 2.5 years ago), there was jubilation amongst everyone. I seemed to be eating out everyday, throwing bring your own booze ‘BYOB’ events at different restaurants and traveling to either Vegas or South Beach at least twice a year. And I never thought to ask why but before it used to be a small trip between me and my friends that managed their finances well (fiscally conservative) and then it blossomed to the guys that didn’t always manage their finances but who could now make the trip. And I never thought much about the phenomenon but our trip of almost 10 people for a sun filled trip to Miami could have been an indicator of things to come. Where did everyone get the money (steady jobs, bonuses, easy credit) to be able to go all of a sudden…especially when a round of Patron in S. Beach cost each person over 80 bucks??? I didn’t think about that at the time but the other event I did find strange was home buying activities in Chicago. I recall a few years back that everyone was asking me when I was going to buy. So I stuck my toe in the water and found out that buying a home in Chicago was easily going to cost me almost 3x as much as it did in Indiana. And on my average joe salary the numbers didn’t match up??? So what did I do…I BLOGGED about this phenomenon over and over and some people got it, while many others didn’t (see http://urbanomics.blogspot.com/2006/02/huff-puff-blow-houses-down.html . My only mistake with housing was assuming that most of the inventory was being bought by speculative investors with deep pockets, but read on because the investors were average people like you and I caught up in the frenzy…of flipping houses and retiring early. But what I didn’t see was the tsunami effect that was to come of too much easy debt to buy houses and obtain loans, credit cards, etc. I didn’t watch TV outside of sports and the occasional Law and Order episode. If I would have clicked a little bit further I would have known that there were new shows cropping about how to “FLIP That House”, “Buying Tons of Property with Lines of Credit”, and I appreciate Suze Orman’s segment of “Can I Afford It”. I wasn’t in tune to the fact that the nation was building a culture of people that were just buying things with no regards as to whether they could afford it. My rule of thumb is if you have to call into a show to ask whether you can afford something then you probably should not be buying it! And to be fair these tv shows should show both sides by doing a “Where are They Know” segment: helping us understand how long those flippers had to hold that property before they ran out of money or were foreclosed on and their dreams where swept away. That would have been Real TV and not just the happy story of flip every home and make a minimum of $35-50K of each flip in no time.

I don’t know what kicked things off but the house of cards crumbled. Was it finally that the market ran out of easy buyers and found the one’s like me that asked “How Can I Afford This” or “Why Are You Giving Me So Much Debt”? There must have been a peak when the banks realized that the uninformed buyers were running out OR that we had stretched them too thin. Who could keep up with inflated mortgages, debt to furnish this gigantic house, and debt to finance their new life of upgrades (i.e., cars, clothes, dinners, vacations). I am guessing the first realization came as banks began HALTING credit lines à No more borrowing against your home (Home Equity Lines of Credit) and no more extensions for your credit card which has reached it limits. So guess what this halting of initial credit does, it crimps our lifestyles and people stop making extravagant purchases. My first clue was the Recreational Vehicle (RV) market and their predictions of a slowdown. Think this is the ultimate purchase for people with excess money a lavish vehicle to travel around in and still feel at home. Then most people stopped spending on themselves and stopped buying clothing, jewelry, cars, and holiday trips to warm places. This pullback caused all these industries – Retail, RV, auto, transportation to start to cut jobs to match the lack of demand. And hell breaks loose when anyone (but especially overextended people) starts to loose a job. Why, because there is a mountain above your head of things to pay. Let’s start naming them: mortgage/rent, car bills, utilities, credit card, school loans, insurance, and medical bills. And when jobs are cut across entire social classes you begin to realize that even rich people have huge mortgages, autos, boats, vacation properties to keep up with.

For me and my family, the downturn in the economy hit hard and hit fast. It rattled our conservative little family because our family’s employment history represents the entire workforce via construction, legal, business, technology, healthcare, and education. And the first shoe to drop was the construction section and we had a member of our family unemployed. I began writing even further that this wasn’t your normal recession and not to drink the Kool-Aid from all the people on Wall Street like Larry Kudlow who told you to keep waiting for the goldilocks rally that never came as the Dow Jones Industrials dropped from 10K to below 7K. This recession was hitting college educated people in growth fields like construction. And I didn’t believe the hype when they were telling you that this is where capitalism kicks in and the great trickle down effect of rich people spending money would bring us back see http://urbanomics.blogspot.com/2008/03/hey-i-cant-swimand-neither-can-wall.html . This time I wrote it seems different, because this was not like other bubbles and it wasn’t just people on the lower end of the social spectrum being hit with job losses or their dollar not stretching as far. But what they didn’t realize what that the folks of every class where being impacted because everyone was trying to keep up with the next level up.

If you recall, I wrote about conservation and a prudent evaluation of your entire financial landscape. Reassess everything and get rid of excess debt (see http://urbanomics.blogspot.com/2008/07/mystery-market.html & http://urbanomics.blogspot.com/2008/05/hot-topics-oil-housing-economy.html ). For me, I had caught the bug slightly and often bought stocks on margin…what a mistake that was. When you use someone else’s money and the value of your investment goes down, not only do you have to pay them back in full but with interest. So in some ways I felt want the homeowner or credit card borrower was going through. I don’t want to sell while the value was dropping and ohhh great…money has to come out of my bank account to get rid of this extra debt. This prompted me to start taking my lunch to work, and going out less, and shopping less…and buying groceries. There were no vacations this year except for weddings and family get togethers. And that’s when I thought about what would turn this economy around…I didn’t know then but I summed up my hunch saying that it would take a mix of things to stimulate people from “pulling back” (see http://urbanomics.blogspot.com/2008/10/bailout-what-this-means-to-you-plus.html) And I remember saying let’s help the people that have pulled back on spending and can pull no further and need help with daily responsibilities. And while I was right then, I missed the fact that all the temporary band-aids (tax cuts, clunker) only work for so long… and the ultimate area of assistance has always been with JOBS. If there are no jobs, this pull back continues…because while again others may use the phrase “90% of Americans are still working and therefore consuming” they may be a little bit out of touch with the real world. The real world knows that its more that 10% unemployment and it also knows that many of the “90%” are like me and don’t and won’t consume much until things start looking better for the people around us.

And for my flashforward ~ To be continued

Wall Street - The PULSE

Hey everybody I am back to hit you with a quick post to keep you in the loop with what's going on in the stock market. By now, I know the average person is paying attention on a daily basis because I get a weekly call from my sister asking me about why things are falling or more importantly what should I be doing with my money. And if you recall when you don't hear much from me I am usually doing one thing and that's reading. I am constantly reading about what everyone has to write and listening to what everyone has to say...to get a feel of the market's temperature. How can you do this?!?! Well simply start by tuning in here as often as you can to get a pulse, not always daily but a frequent pulse as to what may be changing out there. And if you get tired of reading, check out CNBC's homepage and select the VIDEO tab for very frequent video posting of their on air show.

Wall Street's Pulse - Awhile back I compared Wall Street to a prized fighter that was down and out, maybe like one of my favorite fighters Roy Jones Jr. The latest prognosis is still not that good...the patient needs help getting up in the ring right now and the count keeps going to about 8 (get to 10 and the fight is over). For those of you that don't know what a knockout blow is for Wall Street, well its would be a depression. And the trainers right now are the Obama Administration, The Treasury Department, and The Federal Reserve. They are constantly looking at the fighter, checking its vitals, and assessing how to help him keep fighting. But right now the vitals of Wall Street do not look good:

• Unemployment numbers continue to rise and have now been estimated to reach over 10% within the next year or so.
• Companies continue to cut jobs left and right and give not so rosy outlooks for the rest of 2009
• Consumer Savings rates were above 5%, which is at levels that we haven't seen in a long time!
• Retail Sales numbers are barely off their lows, which means people ain't buying!
• The consumer and companies are still having difficulty getting access to capital.

Investors (who are like the fans in the stands) have sobered up to these realities and almost given up on the fighter, but the trainers keep working. And their work seems to be helping the fighter get a little bit better:

• Banks are receiving more and more capital
• The stimulus plan and housing bills are aimed at helping home owners and generating jobs
• There is talk about adjusting mark to market (how banks place a value on assets they own)

What this has done is given the investors a little bit of hope that the fighter may come through and still win the fight. So they have started cheering louder and louder and the fighter has responded. The stock market has rebounded off of its March 9th lows and the banks have come back roaring. But its almost as if the crowd (investors) forgot that the fighter is still hurt and hurt badly. That's why may believe that the stock market is in a BEAR RALLY. This means alot of people think the fighter is healthy but in reality he's not. And soon those cheering fans will see the fighter get knocked down again and they will not cheer as loud.

Now onto what I believe and what I'm doing:

I believe the fighter is still hurt badly which means don't cheer (or buy stocks just yet). I truly believe that safer alternatives are out there and should be evaluated for your portfolio. I still like OWNING CASH, and not doing a whole lot especially in your retirement portfolios...don't be the hero or the only one cheering when the fighter just got knocked down again. Invest in safer alternatives:

Cash
Gold (GLD)
High Yield Corporate Debt (LQD)
Municipal Bonds (TFI)

And if you feel like you need to be in the markets, be careful and be a bottom feeder...the nastiest thing out there. Wait until things gets really bad and nibble on the most beaten down sectors. For instance I do this when the banks look really bad, like when everyone though Citigroup was going out of business and I buy just a little bit of the bank stocks ETF on steroids (FAS)...it gives me 3X the returns of bank stocks, but I bite just a little. And when things start to look like they are on a roll I sell. I don't panic about selling to early because in a few days I start to look for a point to be a top feeder and bet that things will come back down and buy the FAZ, which bets the banks will fall...TIMES 3X! But don't stick around to long in these trades or else you'll be writing me with heartburn as I have often had, but irrational fans sober up eventually.

Stimulus Bill and How it Helps U...

I wrote a previous post describing my thoughts on the overall bill. But I know most of us out there are saying if we are a bailout nation, what contents of the bill will assist me. I have attached two links that detail the main points of the bill that affect most Americans:

http://www.cnbc.com/id/29179184

Highlights: Tax Incentives, Unemployment, Insurance, Social Security, Auto Tax Deduction, Education Tax Credits, 1st Time Home Buyer Credits

First Time Home Buyer Tax Credit

I have been following this development of the bill very closely and as a potential first time home buyer I believe that this will provide an incentive for me to do my part in reviving the economy. I know many others are very interested in the developments of this part of the bill so here are some important details:

http://www.savingtoinvest.com/2009/02/15000-first-home-buyer-tax-credit-in.html

Twist And Shout...

The reason why I call this post twist and shout is because I am definitely about to throw my readers for a twist. The twist goes a little something like this:

I have recommended since last September/October that we MOVE all of our positions into Cash, and Cash-like assets (Treasurys,etc). And I mentioned we would hold those positions until we hit a relevant level that may help form a bottom. At this point, with the new Treasury secretary (Tim Geithner) delivering his plan for the banks TOMORROW...AND the Senate finalizing the vote on the stimulus plan TODAY I am under the assumption, that any hint of news (as minimal as it might be), may cause the market to start rallying in anticipation of both announcements. I would increase your exposure to the market however incrementally. At this point no more that MAYBE 25% of your CASH position should be used to take advantage of this situation.

Now here is the TWIST, I am resigned to say that we are purely taking advantage of what will probably go down as a BEAR MARKET RALLY. This simply means that there are pockets, during an economic downturn where the markets need a breather and goes in the opposite direction. And that direction would be UP.

But this will be short-lived and the hard part to determine is how long this BEAR MARKET RALLY will last. I will go out on a limb and say it the market top 9000 to head for the hills as I believe that it will be trading in a range for a long time. I know I continue to deliver news that you may not want to hear but I believe that once we hit those levels the markets will continue to decline until critical things are addressed such as unemployment, foreclosure, and failing banks.

A House of Cards...

where the numbers keep falling:

The sobering forecasts for the housing foreclosures in the next few years is over roughly 8 million homes. And to give validity to these numbers, the source is as close to the problem as possible...the FDIC, whose responsibility is regulating the nations federal banks. The response from top officials at the FDIC is that programs to reduce the epidemic have been frequently discussed for the last year. However, they have pretty honest in their assessment of these programs so far by admitting that the problem continues to get worse.

The next dilemma is a large number of people, who are staying in their houses, are seeing the prices from that investment sharply dropping. Take the Standard & Poor's/Case-Shiller housing index. This measure the price movements of the 20 largest city and it describes a record 18.2 percent drop in November when compared to the previous year.

As the housing numbers fall, the unemployment numbers rise:

The housing numbers become even more sobering when you take into account that The Labor Department stated that unemployment rates across the states rose sharply in December, and leading the way was Indiana (my home state) and South Carolina with the largest monthly gains.

Now I have receive a few questions that range from:

~ Where does the economy go from here?

~ Will the government stimilus bill work?

~ What does this mean for the stock market, my city, or my job?

I will try to do my best to tackle the problem in a way that is easy to understand in my next few posts. Stay tuned!