Sunday, October 05, 2008
Bill Engvall
Caught Bill at the Silver Legacy in Reno over the weekend. Not only is he side-splittingly funny in person, but it's all suitable for regular TV, too. One fine show.
Labels: Reviews
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Tuesday, September 30, 2008
Burn After Reading
If you liked Fargo and O Brother, Where Art Thou? you may find yourself, like I was, wondering where the heck this movie was going.
Labels: Reviews
Sunday, September 28, 2008
Securities Analysis
Economics in college starts with a course numbered 101. Since apparently those in charge of some of our largest financial institutions never had that course, I offer herewith a short overview of the topic. And no, economics isn't really dismal at all. It's fairly simple. I give you Economics 001.
The link under the title of this post takes you to the Amazon listing for the newest edition of the famous book Securities Analysis, by Benjamin Graham and David Dodd. There was no field called "Securities Analysis" before this book appeared. That there now is speaks volumes for how influential this volume has been. (Amazon has special re-issues of older editions for collectors, by the way.)
The book includes a long-term analysis of real value increase for various types of investment, tracked over a period of seventy-five years. This is real increase in value, not simply stuff that costs more dollars to buy.
Hey, you'll say, real estate, right? No, sorry. Real Estate, long term, appreciates a teensy-tiny bit, but not very much.
Oh, then bonds and other debt, right? No, actually, over the long term, if you want to lose money, then debt is the way to go. Not giving other people loans directly, like a bank, but investing in debt securities, like Wall Street has been doing so much of the recent decades. In a word, neither debt securities or real estate will do much for you long term.
Real estate will preserve value, but not increase it. Debt won't even do that.
What has been going on during this wonderful "Ownership" decade? Speculation in real estate and debt! Wowie! Can there be a connection between that fact and our current economic problems? Maybe? Could be? The book Securities Analysis came out in 1940. Maybe the war took people's mind off of the simple facts it presents. I couldn't say, but obviously the business schools aren't using this volume for anything more serious than a doorstop these days.
I'm not entirely kidding when I say we should consider shutting down Harvard and Yale and other prominent business colleges. Just look at the damage they do!
But, back to the topic at hand, you might ask, "What does appreciate in terms of real value over the long term?" The answer is productive industries. That is, factories that make things that people want to buy. Automobiles, for instance, or steel, or lines notebook paper, or corn chips or any thing that someone is willing to pay for. How much do stocks in manufacturing appreciate? Over seventy-five years the total gain in value was twenty-five percent. Put another way, over three-quarters of a century, making things people want to buy returned 125% of the investment it took to start the enterprise in the first place.
[That may sound like a small amount, but remember that over those decades many, many people made a good living producing the manufactured goods.]
So, if you want to make money and keep on making money, the thing to do is to produce something that people want to buy and keep selling it to them. Great googley-moogley, General Motors can't even seem to figure out how to make an automobile that people want to buy! How in heck can we expect to make money off of General Motor's debt? We can't, that's how. There's no way, no how, nada to be gotten from a company that has forgotten how to make items of value.
Oh, they can sell them. The automakers convinced Americans to buy SUVs because the SUVs are cheaper to make (fewer regulations for safety and fuel economy) and more profitable. Unfortunately, compared to most foreign automotive products, the average US-made SUV is like a poor cousin that looks like a car, but is so poorly put together that, sooner or later, and these days it's sooner, people are going to quit buying them. Still, the success of marketing SUVs and other products of, really, questionable value, led GM and others to put money into marketing and promotion that should have gone into making the product better and better. That, in short, is why GM is in trouble, and why Toyota sells so many pickup trucks these days.
GM's troubles are a part of the larger problem of not sticking to the fundamentals of a sound economy. Those fundamentals are, according to the guys who literally wrote the book, producing things of value and selling them for more than it cost you to produce them. All the slick marketing in the world won't overcome a cheaply made truck. And, all the wishful thinking in the world won't turn a debt security into a good investment.
Got all that? Okay, then.
Class dismissed!
The link under the title of this post takes you to the Amazon listing for the newest edition of the famous book Securities Analysis, by Benjamin Graham and David Dodd. There was no field called "Securities Analysis" before this book appeared. That there now is speaks volumes for how influential this volume has been. (Amazon has special re-issues of older editions for collectors, by the way.)
The book includes a long-term analysis of real value increase for various types of investment, tracked over a period of seventy-five years. This is real increase in value, not simply stuff that costs more dollars to buy.
Hey, you'll say, real estate, right? No, sorry. Real Estate, long term, appreciates a teensy-tiny bit, but not very much.
Oh, then bonds and other debt, right? No, actually, over the long term, if you want to lose money, then debt is the way to go. Not giving other people loans directly, like a bank, but investing in debt securities, like Wall Street has been doing so much of the recent decades. In a word, neither debt securities or real estate will do much for you long term.
Real estate will preserve value, but not increase it. Debt won't even do that.
What has been going on during this wonderful "Ownership" decade? Speculation in real estate and debt! Wowie! Can there be a connection between that fact and our current economic problems? Maybe? Could be? The book Securities Analysis came out in 1940. Maybe the war took people's mind off of the simple facts it presents. I couldn't say, but obviously the business schools aren't using this volume for anything more serious than a doorstop these days.
I'm not entirely kidding when I say we should consider shutting down Harvard and Yale and other prominent business colleges. Just look at the damage they do!
But, back to the topic at hand, you might ask, "What does appreciate in terms of real value over the long term?" The answer is productive industries. That is, factories that make things that people want to buy. Automobiles, for instance, or steel, or lines notebook paper, or corn chips or any thing that someone is willing to pay for. How much do stocks in manufacturing appreciate? Over seventy-five years the total gain in value was twenty-five percent. Put another way, over three-quarters of a century, making things people want to buy returned 125% of the investment it took to start the enterprise in the first place.
[That may sound like a small amount, but remember that over those decades many, many people made a good living producing the manufactured goods.]
So, if you want to make money and keep on making money, the thing to do is to produce something that people want to buy and keep selling it to them. Great googley-moogley, General Motors can't even seem to figure out how to make an automobile that people want to buy! How in heck can we expect to make money off of General Motor's debt? We can't, that's how. There's no way, no how, nada to be gotten from a company that has forgotten how to make items of value.
Oh, they can sell them. The automakers convinced Americans to buy SUVs because the SUVs are cheaper to make (fewer regulations for safety and fuel economy) and more profitable. Unfortunately, compared to most foreign automotive products, the average US-made SUV is like a poor cousin that looks like a car, but is so poorly put together that, sooner or later, and these days it's sooner, people are going to quit buying them. Still, the success of marketing SUVs and other products of, really, questionable value, led GM and others to put money into marketing and promotion that should have gone into making the product better and better. That, in short, is why GM is in trouble, and why Toyota sells so many pickup trucks these days.
GM's troubles are a part of the larger problem of not sticking to the fundamentals of a sound economy. Those fundamentals are, according to the guys who literally wrote the book, producing things of value and selling them for more than it cost you to produce them. All the slick marketing in the world won't overcome a cheaply made truck. And, all the wishful thinking in the world won't turn a debt security into a good investment.
Got all that? Okay, then.
Class dismissed!
Labels: Politics, Reviews, Social Commentary
Wednesday, September 24, 2008
Sexist Attacks on Palin Must End!
I'd love to do this rant myself, but instead, just click here and read a better writer's take on this issue.
S.
S.
Labels: Politics, Social Commentary
Sunday, September 21, 2008
Tina Fey Does Sarah Palin
Believe it or not, I'm not Tina Fey's biggest fan. We might even be related for all I know, but there are comedians I like better. However, I did watch her portrayal of Sarah Palin on SNL, and I was amazed at how well she channeled the appearance and mannerisms of the Governor.
As for the commentary from both sides, screw 'em. It's really funny, and for the record it hits Hillary just as hard. "I didn't want a woman to be president, I wanted me to be president!"
The link in the title is a Google search. There are many places to view this video. Pick one. You'll be glad you did.
Steve
As for the commentary from both sides, screw 'em. It's really funny, and for the record it hits Hillary just as hard. "I didn't want a woman to be president, I wanted me to be president!"
The link in the title is a Google search. There are many places to view this video. Pick one. You'll be glad you did.
Steve
Put an Economy in Your Tank?
The US economy is a pretty hot topic right now. Recent events have given a boost to Obama and caused McCain to scramble. Well, that's all well and good for the game they're playing, but it doesn't get at any solutions.
The reason that government can't get at the solution is that government isn't the root of the problem, whatever "I fight Republicans" McCain might say. The enemy, as a famous cartoonist once liked to say, is us.
Economics is all voodoo, really. If everybody thinks things are going well, then things are going well. If money is circulating freely, then it's easy to think things are going well. When the flow of money gets interrupted, it gets harder to believe in prosperity. Money, in case you didn't know, has to move around to be of any use, which is a tenet of Economics 101. What happened recently was that there was a bubble in real estate prices, caused, as are all bubbles, by unbridled enthusiasm causing undue speculation. The government can hardly be expected to tell people how to feel, so getting a bubble under control is a problem. In fact, bubbles, like the dot com bubble in the nineties, and like the real estate bubble in the, what are these years, two-thousands maybe, tend to expand until they burst. Then sometimes the government is called in to clean up the mess.
In the current case, you'll note that the agencies set up to help people buy houses, which had worked well for decades, suddenly found themselves overburdened. Prior to those agencies being created, it was almost impossible for a would-be homeowner to get a mortgage, and if you did it had a huge balloon payment after five or ten years. Essentially, you had five to ten years to pay off the place, or you were out the door. How much better it has been for everyone after Fannie Mae and Freddie Mac were created during the Great Depression. Home ownership has become the norm, and quite a few people, as I read today, actually pay off their mortgages and own their homes outright. Over thirty percent, according to an article in today's paper. That's fantastic, compared to the way things used to be.
Unfortunately, the people, always a dicey group when it comes to common sense, managed to find a way to abuse the system set up to help people buy homes. When it worked for a few the ideas on how to do it spread until too many people were abusing the system, buying things they really never would be able to pay off. Lately we've seen the results.
My point, then, is that McCain and Obama are having a good time saying nasty things about each other over the credit crisis. ("Worst financial crisis since the Depression!") But that's all it is, just two guys who for some pathological reason want the world's worst job, sniping at each other. The truth, while less glamorous, is that we all caused the current financial mess, and we'll all have to fix it. That is the case no matter who wins this upcoming election.
I guess that moving seven-hundred billion dollars all of a sudden should have some sort of effect, huh?
S.
The reason that government can't get at the solution is that government isn't the root of the problem, whatever "I fight Republicans" McCain might say. The enemy, as a famous cartoonist once liked to say, is us.
Economics is all voodoo, really. If everybody thinks things are going well, then things are going well. If money is circulating freely, then it's easy to think things are going well. When the flow of money gets interrupted, it gets harder to believe in prosperity. Money, in case you didn't know, has to move around to be of any use, which is a tenet of Economics 101. What happened recently was that there was a bubble in real estate prices, caused, as are all bubbles, by unbridled enthusiasm causing undue speculation. The government can hardly be expected to tell people how to feel, so getting a bubble under control is a problem. In fact, bubbles, like the dot com bubble in the nineties, and like the real estate bubble in the, what are these years, two-thousands maybe, tend to expand until they burst. Then sometimes the government is called in to clean up the mess.
In the current case, you'll note that the agencies set up to help people buy houses, which had worked well for decades, suddenly found themselves overburdened. Prior to those agencies being created, it was almost impossible for a would-be homeowner to get a mortgage, and if you did it had a huge balloon payment after five or ten years. Essentially, you had five to ten years to pay off the place, or you were out the door. How much better it has been for everyone after Fannie Mae and Freddie Mac were created during the Great Depression. Home ownership has become the norm, and quite a few people, as I read today, actually pay off their mortgages and own their homes outright. Over thirty percent, according to an article in today's paper. That's fantastic, compared to the way things used to be.
Unfortunately, the people, always a dicey group when it comes to common sense, managed to find a way to abuse the system set up to help people buy homes. When it worked for a few the ideas on how to do it spread until too many people were abusing the system, buying things they really never would be able to pay off. Lately we've seen the results.
My point, then, is that McCain and Obama are having a good time saying nasty things about each other over the credit crisis. ("Worst financial crisis since the Depression!") But that's all it is, just two guys who for some pathological reason want the world's worst job, sniping at each other. The truth, while less glamorous, is that we all caused the current financial mess, and we'll all have to fix it. That is the case no matter who wins this upcoming election.
I guess that moving seven-hundred billion dollars all of a sudden should have some sort of effect, huh?
S.
Labels: Politics, Social Commentary
