– Reproductive Health and Rights Lobby Day
– Darryl noted the state senate passing the marriage equality bill. Andrew has more details including the roll call.
– And a couple bad bills fail to make it to the floor.
– In other states: Do not let the media silence fool you: Hoosiers are making noise.
– Republican Jesus supports Mitt Romney.
Well, American Airlines (AMR) announced the outlines of it’s restructuring plan, and it’s as bad as it could be expected.
Some 13,000 workers will lose their jobs, in large part due to the closing of maintenance facilities and operations, which will presumably be out-sourced. I’m guessing heavy maintenance will go overseas to places like Xiamen and Jianan, China. Which is rather funny because a high-ranking AMR executive gave a speach just a month ago talking about how rising wages in Asia had made such out-sourcing far less profitable than it was before.
I’m guessing that a lot of line maintenance folks (the guys who work at the airports) will lose their jobs as well, and a third-party like Menzies(sp?) Aviation will be brought in. It’s not that a third party could do it better of significantly cheaper, but it would allow them to do away with union workers. The results will be felt down the road, because out-sourced maintenance companies have no long-term stake in the aircraft or AMR itelf, and the company contracted to do the work’s primary focus will be on creating a profit, which means cost-cutting. The effects won’t be felt for a few years, but by then the guys making the decisions will have already collected their bonuses and moved on to lead other companies (or retired).
Speaking of management, the “across the board cuts” are pretty dis-proportionate, with only 140 of the 13,000 jobs eliminated being classified as “management or management support staff” related. I’m guessing these 140 are lower-level managers at the maintenance facilities, and if anything the higher management will end up with a higher headcount, including “support staff”.
AMR says it needs the cost savings to implement it’s fleet-improvement plan. God knows, they’ve needed to fix their fleet mix for a long time now. It includes almost every commercial aircraft manufactured in the western world, from Bombardier to Airbus to Boeing, some of which are serving the same routes. Moving to a single-manufacturer fleet would save AMR a ton of money in the long term in purchasing, maintenance, spares inventory, and pilot and mechanic certifications and expertise. But American seems to be intent on continuing the mixed-fleet strategy, only doing it with newer aircraft.
AMR will be lucky to last long enough to take delivery of very many of those aircraft. It wouldn’t have any value at all, except for it’s South American routes.
One of the most important aspects of the AMR reorganization plan, as far as those outside the industry are concerned, is that unfunded pension obligations will the transfered to the government insurer of such pensions, the Pension Gurantee Benefit Fund (I think I got that right). Since that fund is already exhausted due to other companies using it as a way to discard it’s underfunded pensions, that means the difference will be picked up by the taxpayer, to the tune of hundreds of millions of dollars.
It’s worth taking a moment to look at how those obligations became “underfunded”, in a general sense. (I’m not referring to AMR specifically, as I don’t know their details).
In regular contract negotiations, the company offered future benefits to employes (pensions, retiree health plans, etc.) in return for not paying the employees higher wages at the time. The union employees accepted the compromise. The company received the benefit of the lower wages in the short term, and made payments into the pension fund to pay for future benefits.
But later, company management decided it didn’t want to pay the future benefits as promised. More than that, it kept looking at the amount of money accumulated in the pension fund, being “saved” for future retirees, and it wanted to use that money for it’s own purposes. The way they did that was that they would wait for the stock market to reach a temporary high, and then claim the fund was “overfunded”, and then take out a substantional portion as a “refund of excess contributions”. That infusion of cash made the balance sheet look good, and allowed the company to make distributions of dividends to shareholders. The managers profited directly as they received bonuses and their own stock options profited on the rising company stock.
But the stock market goes up, and it goes down. You can’t just look at the stock market at it’s highest point and decide that the fund is “overfunded”. You have to make such decisions based on a floating average of fund performance over a term of several years – perhaps a decade or more, and keep sufficient funds so that you reach that “average”. But management doesn’t do that, they just took the cash and ran.
By the way, Romney doesn’t think anything is wrong with this approach, it’s been used by Romney at Baine Capital several times.
But on a smaller scale, it would be called theft, and anyone doing it would be thrown in jail.
For example, if I was a manager of a local branch bank, and I decided that the bank had more money in the vault than was needed to cover it’s deposits and loans, could I just take some out and use it? Does it make a difference if I say the bank doesn’t really need it, since it is insured against such loss?
“People have no problem paying $900 for an iPad,” Santorum said, “but paying $900 for a drug they have a problem with — it keeps you alive. Why? Because you’ve been conditioned to think health care is something you can get without having to pay for it.”
I didn’t know what world Santorum lives in ,but I’m not out there buying a $900 iPad.
I don’t know anyone who buys $900 iPads every month.
How come nobody is calling HIM on “Class Warfare”?
It’s easy for Santorum to say what he says about health care because he and his family get free government health care. Must be nice.
@2, @3 You’ve just explained in rather concise and elegant fashion why so many private pension funds are broke, but Social Security (in spite of the right’s continous and tiresome chanting of the same lie) is not.
Pensions only worked when people remember to die on time. The problem AMR and other private companies face is that the firms simply can’t put away enough money to pay for the promised benefits because of rising life expectancy..
Government, on the other hand, can just borrow money or ask Uncle Ben to print-up some more cash to fund benefits. Eventually, without sound financial management, Social Security will not live up to its obligations. However, the far worse program is Medicare. It’s unfunded liabilities make Social Security’s problems look like a minor inconvenience.
For the young people out there who be wasting their time on this blog, start a Roth IRA and participate in whatever your employer has for retirement, particularly if the company has any matching of your defined contributions. Remember, pensions are disappearing, particularly in the private sector, and you will be responsible for your retirement funding.
Voting matters: AA owed 97 million to the pension funds last month. It paid 6 million. Obama’s PBGC Director just attached 91 million in liens to AA’s South American assets (not subject to the bankruptcy proceedings).
Contrast that with United under the Village Idiot…
# 5, Yep, and the whole reason the right wing keeps repeating the lie is that the financial elites keep looking at the big pile of money in Social Security, and they want it for themselves. If they can convince enough people that Social Security is a “broken” system and the money needs to be disbursed, then they will try every scheme and artifice to get that money out of people, either as fees for “managing” their money or by directly stealing it (think Global Financial).
Remember that most Wall Street financiers get to their position by learning to discard certain morals and look upon the world differently than the rest of us. We see an elderly widow who’s savings are sufficient for a modest retirement, and consider her thrifty and self-sufficient. They, however, see her money as “their” money, and as long as they can talk her out of it, then it’s rightfully theirs. If she’s too stupid to see behind their con job, then that’s all the more reason why they are entitled to the money, and she isn’t. Sure, they will try to avoid breaking the law if they think they might get caught, and will employ all sorts of fees and charges to slowly empty her account, rather than use outright theft. But her account will be emptied before it’s time, that’s for sure.
You may object that I’m being unfair, that only a small proportion of Wall Street folks think this way. But if you’ve ever been exposed to those who have been through the apprenticeship programs at major brokerage firms, you know otherwise. Their mentors teach these lessons to them, and they are graded entirely upon how much money they can talk people into allowing them to handle. Nothing else matters. Those who accept these principles and take them to heart move upwards. Those who can’t, or won’t, are out.
Seriously, who knew? Christian Porn! Some featured selections:
@6 Oh geez, now we have a troll blaming pension collapses on workers for living too long!!!
Here’s a clue, numbnuts: Life expectancies increase gradually, not overnight, and actuaries can readily take changes in average life expectancy into account when calculating pension funding requirements.
In fact, the future life expectancies of retirees are a hell of a lot more predictable than future interest rates are.
@7 Good! Grab their foreign assets before the bandits in the executive suite make off with them.
Here’s another clue for idiot trolls: The problem is caused by Bush’s changes to the bankruptcy code, not by workers living too long.
I suspect that argument is a prelude to some future GOP proposal calling for the mandatory liquidation of workers on the day C-suite greedheads can no longer get any cheap labor out of them.
@8 Fortunately, that kind of theft works both ways. For some strange reason beyond my understanding, Wall Street allowed me to buy coal company stocks last month for a third of what they recently sold for. One month later, my paper profit on a $10,000 “investment” is $1,500. Sure beats the interest banks pay! I figure to flip these stocks for three times what I paid for them in less than a year. Then, when they tank again, I’ll rinse and repeat. Three-quarters of all stocks are owned by institutional investors, so I’m probably robbing some pension fund or insurance company. It almost makes me feel dishonest. Almost — but not quite. If they want to give me their money, I’ll take it!
@10,
OK, so tell me what the actuarial community is doing to “readily” make changes when the interest rate on “safe” investments is nearly zero? Then tell me how the government plans to fund Medicare under the same conditions.
Romney Speak With Forked Tongue
We already know the putative GOP nominee is a liar, and now we’re learning how massive a liar he is:
“During his presidential campaign in 2007, … Romney promised that a trust overseeing his financial portfolio would shed any investments that conflicted with GOP positions toward Iran, China, stem cell research and other issues.
“But Romney’s family trusts kept some of those stocks and repeatedly bought new investments in similar holdings as recently as 2010, when they were sold in advance of his latest White House campaign, a detailed review of Romney’s financial records by The Associated Press shows.”
http://www.cnbc.com/id/46234886
Roger Rabbit Commentary: Man, if you think GOPers don’t trust him — and 75% of them don’t — wait ’til you see what happens with the swing vote!
@8,
You should take a look at the latest Reason Magazine. There’s a good article about old, grand-fatherly Warren Buffett. Turns out he’s a crony capitalist on the largest scale, but he’s managed to endear himself to the Democrats by publicly saying all rich people should pay more taxes. If there was a Department of Crony Capitalism at the University of Nebraska, he’d be the Dean of the school.
I agree with Buffet that he should pay more taxes for his crony capitalist activities: he’s helped himself to billions while pretending he’s for the middle class!
One thing you can be sure Romney is not buying is “Romney for President” buttons, bumper stickers, tee shirts, and paraphernalia. Twenty years from now, you won’t be able to give that stuff away on eBay. At least I can get 25 cents for my “Goldwater ’64” button.
Note to young people: start a Roth IRA. Social Security may be around for another million years, but it won’t pay very much. You need to start planning for the fact that Social Security is a lousy retirement system that will be kept alive because the government won’t let it fail. But don’t expect much for SS at the end of your careers.
If the government’s actuaries would have made any necessary changes to SS to reflect increased life expectancy, then the “normal” retirment age for SS benefits would be something like 78 or 79 now. I suppose the smart actuaries tried to advise the government of the need to raise the SS retirement age, but that isn’t a message people in govnerment want to hear.
Really, in order to continue Social Security as a meaningful retirement vehicle, the age needs to be increased to reflect increased longevity. I’ve mentioned this before, but I would suggest we raise the age one year for those born in 1950, 2 years for those born in 1951, 3 years for those born in 1952, and so on until the “normal” retirement age for SS gets to something like 75 or 80.
@13 Medicare doesn’t have a damn thing to do with actuarial computations of how much money (present and future) a pension fund needs to meet its future obligations. Actuaries can easily and readily work into their computational models a gradual increase in expected lifespans. They can also mathematically deal with an expectation that interest rates will be near-zero for another three years. Once the formulas are worked out — which is what actuaries get paid to do — any teenager could do this on a spreadsheet.
@18 Congress, not actuaries, decides what the Social Security retirement age is. I assumed you knew that. You’re not doing well in this thread, PI — you’re coming across as an unschooled clown — but we all know you’re smarter than that, so why are you trying so hard to make yourself look bad?
@18 Raising the retirement age in increments, as you propose, is one option for meeting SS’s future obligations. The problem with this idea is that the fact people are living longer doesn’t necessarily mean they can work longer. Older workers don’t always have a choice to keep working. Employer hiring preferences and/or health problems push many of them out of the workforce.
Other options for achieving a better match between SS’s expected revenue streams and expected benefits payments include:
1) Raising payroll taxes,
2) Freezing or reducing benefits,
3) Tightening eligibility requirements, and — here’s one I’m surprised everyone isn’t jumping on —
4) Letting millions of illegals come into our country to work, make them pay Social Security and Medicare taxes, and don’t give them a damn thing in benefits in return.
In fact, Option (4) is exactly what we’ve been doing and only a damn fool would throw away that gravy train in furtherance of some stupid ideological purity.
@15 Buffet was a crony of Democrats long before he stated what was already obvious to everyone anyway: That when a billionaire pays a lower tax rate than his secretary or janitor, something is out of whack in the tax code that Republicans have constructed over the last 30 years.
@17 From its beginning, Social Security was never intended to be anyone’s sole source of retirement income, and still isn’t.
# 18: AS RR said, the actuarial adjustments based on increased life expectancy has already been taken into account for the Social Security retirement fund. They’ve known for a long time what was needed: either an older retirement age, or higher contributions (payroll taxes) into the system. It was up to Congress to decide which one to do, or which combination of each to do.
Of course, getting Congress to agree on anything of the sort is nearly impossible. We did see at least one increase in payroll taxes some twenty years ago, I think, either during the Reagan or George H.W. Bush administration. But for the most part Republicans jump on any such proposal for even the most modest tax increase and use it as a political football.
This leaves only changing the retirement age, which has it’s own problems because it’s related to other issues.
* In an economic situation like the one we’ve faced since 2007, increasing the retirement age only places more burdens on older workers who got laid off while in their 60’s, and struggle to find jobs against younger workers.
* Workers with physical problems might be able to hang on until age 65, 66, or even 67, but it’s unrealistic to think they can do so to age 70 and beyond.
Now, iff you also delay Medicare benefits until age 70 or beyond, you have the potential for a few million elderly people, unable to work, not covered by their employer’s insurance, with medical conditions and inelgible for most federal benefits for a period of up to five years or so. Retirement savings which were expected to supplement social security benefits could be exhausted before they even qualify for SS payments. That’s a bid hole in the “social safety net”.
Now, Social Security isn’t bankrupt. It’s still got a surplus, although this last rescession made it a lot smaller than it should have been. We don’t get into trouble for a few more years, when more retirees claim benefits. The best thing we can do is:
(a) get the economy going again, so older workers don’t get laid off or can find work if they do get laid off, and their payrolls will provide increased revenues into the Social Security Trust Fund;
(b) Provide for increased revenues into the Social Security Fund, preferably by eliminating the income limit beyond which payroll is free from social security taxes.
Oh, and be careful when discussing Social Security – a lot of people treat the retirement fund, Medicaire, and Medicaid as if they are interchangeable – they are very different from one another.
Speaking of savings for retirement: today my 401(k) finally recovered to the high it was at in Jan. 2011, one year ago. Of course, that’s not all savings: I also put in 15% of my income during that time, plus the 3% of my income which was my employer’s match. You could argue that I made poor investment choices, but my investments ended up being the best choices among those available in my plan.
Clearly, my only hope of ever retiring is to reduce my 401(k) contributions and put it into an IRA (traditional or Roth). I’ll have to figure out how to spend the time to invest in learning how to trade stocks for myself, by-passing the mutual fund sinkhole, as RR has advised previously.
@4 “People have no problem paying $900 for an iPad,” Santorum said, “but paying $900 for a drug they have a problem with — it keeps you alive. Why? Because you’ve been conditioned to think health care is something you can get without having to pay for it.”
It looks like that woman’s child has been condemned to die by a corporate death panel for lack of bringing them a profit. But that’s OK, just so long as the gubmint isn’t involved. Will a child live or die? We’ll let the markets decide from now on.
Dr. Jonas Salk, who had no desire for fame or profit for discovering the vaccine for polio, would have no place in today’s world. The likes of Dr. Salk would be scorned and loathed by today’s wingnuts.
Things that can and can not screen for breast cancer.
http://lianamaris.tumblr.com/p.....cancer-and
“I’ve mentioned this before, but I would suggest we raise the age one year for those born in 1950, 2 years for those born in 1951, 3 years for those born in 1952, and so on until the “normal” retirement age for SS gets to something like 75 or 80.”
Great idea. Move the goalposts on me just as I’m reaching retirement and instead keep me working for a few more years. Better that than raising the max-income limit a nudge or introduce means testing. Here’s what I say to say about that.
Do not even think of fucking with me and my SS check.
By the way, Romney’s been proclaiming President Obama is a “failed President”, and that after three years he is completely responsible for the performance of the economy.
Now, aside from the fact that the Republicans have been agressively attempting to prevent any economoimc recovery, let’s take Romney at his word, for argument’s sake, and look at how the stock market has done under President Obama, for starters.
Under the last eight years of Republican George W. Bush’s reign as President, the DJIA lost $2,306.37 points, or 21.78% of it’s value. Since he was in office for eight years, during which at least five of those years the Republicans had complete control of both the House and the Senate, it’s fair to say that he is fairly accountable for that performance. The DJIA was at 8,281.22 the last full day of his presidency.
President Obama took office in the midst of the worse economic crisis since the Great Depression. Since he has been in office, the DJIA has risen to 12,705.41 (today’s closing). That’s an increase of 4,424.19 points, or 53.42%. And he still has a year left before his first term ends.
Comparing the DJIA performance under President Obama to the DJIA performance under other presidents, he beats every other President since Ford, with the exception of Reagan and Clinton. He even beats Reagan’s first term (32.72%). The only terms of office which he hasn’t beat (yet) is Reagan’s second term (77.16%) and both of Clinton’s terms. (I would have looked further back, except I couldn’t find starting and closing DJIA numbers for Pres. Ford and those before him).
So aside from Romney’s blatantly dishonest attempts to “merge” the performance of the economy during George W. Bush’s Presidency with that of President Obama, the facts are clear that the DJIA shows Obama has done pretty well as President – despite every effort of the Republicans to sabatoge his efforts.
@24 “I’ll have to figure out how to spend the time to invest in learning how to trade stocks for myself, by-passing the mutual fund sinkhole, as RR has advised previously.”
Good luck with that…and more power to you if it works out. Please take note, though, that Roger by his own admission is a pretty sharp cookie, has put in an incredible amount of time and effort since his early retirement tending his financial garden, and on top of that has been just plain damn lucky. The real point there is that if a lot of us “little people” tried to do that, no matter how hard we worked at it, most of us would be dooomed to failure. The entire securities market is jiggered just like the Las Vegas casinos, so a few of the rubes are allowed jackpots but the house wins most of the time. If the people who are running it all weren’t doing that they’d be idiots. Well, maybe they’re idiots anyway, but they’re greedy idiots, and they get to make the rules of the game.
From what I’ve seen of it, I’d have to give that statement in bold a “well sort of” on the truth meter. It’s certainly true that some anti-abortion folks were delighted by SGK pulling their funding from Planned Parenthood. But, SGK never funded abortions, their funding went to provide cancer screenings for women. Mostly low income and working class women. So SGK pulling funding from Planned Parenthood doesn’t stop abortions from taking place, it stops cancer screenings from taking place. The pro-choice crowd seems to understand this, the anti crowd seems not too.
What this really says is that SGK and the anti-abortion crowd don’t give a shit about low income and working class people. We already knew that about the anti-choice crowd, I’d like to thank the folks from Susan G. Komen for the Cure for making it clear that they too don’t give a shit about low income and working class people.
It’s nice to know where people stand on things.
KOMO-TV is flogging a story today about some “Christian Pastor” who’s calling on a nationwide boycott of Starbuck’s because Howard Schultz is in favor of gay marriage.
Out of curiosity, I followed the link to this guy’s “US Christian Ministries” Web site, and did my best to ignore all the bile and hatred expressed therein whilst for contact information. The “Contact Us” page was no help–it’s just a Web form. Finally I located a snail-mail address, which a quick check of Google Maps showed to be a rental box in a UPS store in a seedy part of San Jose.
Make of that what you will.
@24, 29
I have a handful of “buy and hold” stocks. Safe stuff that pays out a dividend, mostly railroads and utilities. Including these folks:
http://en.wikipedia.org/wiki/C.....al_Railway
If I tried to mess with anything more that that, I’d probably lose my shirt and it’s not something I find enjoyable anyway.
# 25: I had an interesting discussion with a doctor who treats diabetes patients (I can’t think of the name of the specialty right now). He said there was some very promising research which could lead to a cure within the next five years or so. “But”, he sighed, “it’s never going to get funded”.
Why? Because there’s not enough profit in a cure. Drug companies make billions of dollars in selling diabetic drugs, testing devices, pen needles, etc. to diabetics. They have to take them daily without fail or bad things start to happen very soon. Even with these drugs, it’s not uncommon for diabetics to still suffer the side-effects of diabetes (loss of circulation, amputations, heart disease, liver & kidney failure, etc.). The cost just to keep a diabetic alive for as long as possible can range from $50.00 per month to several hundred dollars a month, primarily in medicine, test strips, etc. – most of it received by the drug companies as profits.
So even if a cure cost thousands of dollars, it wouldn’t match the profits the drug companies would expect to receive over the next five years just trying to keep a diabetic “stabilized”.
# 31: I’ve read some of his quotes in the news media. He’s one of those pastors who says, in effect, “If you disagree with me (on any subject), you are in league with Satan”. Those guys usually end up running people off from the church, they can’t keep a following beyond a handful of people, often mostly made up of those related to them.
You can’t even discuss the color of the chalk to use on the chalkboard without those guys accusing you of trying to sabatoge their ministry and create a cabal to work against them.
That’s why they sometimes try to make outlandish comments and turn it into a press release. They are desperate for more attention and people into their church. The guy in Florida who wanted to burn the Koran was one of those types. Unfortunately, the news media eats this stuff up.
29: I’m not planning on flipping stocks, as RR does from time-to-time. I’m going to take Michael’s route, of buying and holding stocks paying reliable dividends. Considering the performance of my 401(k) over the past fifteen years, I’d have been better off putting the money in my mattress. Heck, even if the stock market didn’t do anything last year, I should have considerbly more money in there based on my contributions last year alone.
What really sticks in my craw is that when they send their annual statements, they brag about the percentage of money they say your fund has increased under their management. But they include your contributions for the year in that number. Then at the end of the year, each of the mutual funds deducts between .75% an 1.02% OF THE BALANCE for the priviledge of “managing” my account for the year – which as far as I can tell, amounts to them sending me a statement at the end of each year.
By the way, in “entertainment news”, Donald Trump endorsed Romney. That’s not a huge surprise, Trump and Romney have nearly identical interest in keeping taxes low on weath and ensuring that their priviledged lifestyle continues unabated.
Of course, don’t expect that endorsement will prevent Trump from continuing to make noise about running as an independent. Not that he really wants to make a serious run, it’s just that he can’t stand to not see his name and face on the news for more than 48 hours at a time.
@35 There used to be a lot of big, stable “blue-chip” corporations who paid rather generous dividends from which you could make more than you would speculating on the comparatively small fluctuations in their share price. There are a few left (such as the railroad you mention) but over the years a great many others have reduced or abandoned their dividends and adopted riskier business practices that have made them more volatile–because that’s what all the big investors wanted. I remember when financial advisors started prattling about how “today’s blue chips will be tomorrow’s buffalo chips”–and in so doing scared investors away. (Of course, this helped the brokers make a lot more money by “churning” their customers.) The same process is what prompted a lot of big insurance companies to “demutualize” about 20 years ago–which is one of the reasons the health insurance industry’s so screwed up and may eventually doom the life insurance industry as well.
The Susan G. Komen Foundation really, really fucked up. Not another dime will it receive from my family.
@18
who the hell is going to 1) hire somebody who is 75-80 years old or 2) keep someone employed who is at that age?
answer: nobody.
many people that age are not physically able to perform the same job they had during their career….
ever seen a 77 year old steel worker or brick mason?
I havent.
just keeping it real….
@35
A couple of my friends are professional photographers and one of them had invested in a small, local, company where she lives when it went public. When she got her first yearly prospectus (that is what they call those things, isn’t it?) she flipped it open and found a big picture of hers that they’d used without her permission on page three. Oops. She let them off the hook with the payment of a few more shares of stock and a stern lecture about using copywrited material without permission.
Had they just asked if they could use the shot she would have been flattered and let them use it for free.
39
We have a client who, at 78, bicycles to union headquarters everyday to see if he gets called to a construction job. And, he often does get called.
@27
Steve, we need you to retire so that younger folks can have your job. It’s going to seriously fuck with things if boomers never retire.
@41
of course there will always be exceptions to the norm…
your example proves refutes nothing I said.
@38
My sister’s a stage 3 ovarian cancer survivor, having helped nurse my sister though that cancer stuff is pretty near and dear to my heart.
Siri’s having a wee bit of trouble in Scotland.
http://www.youtube.com/watch?v=SGxKhUuZ0Rc
@28 Never confuse a Republican with facts.
@29 The stock market is rigged, all right — against the professional money managers who have to find someplace to park tens of billions of dollars at a profit. There’s only a few dozen stocks with enough float to absorb that kind of money, so the pros have no choice but to trade those stocks among themselves.
And here’s another problem — a great big one — fund managers have: The BEST time to buy stocks is when everyone else is scared. But that’s when money is flowing out of investment funds like a waterfall. When that happens, fund managers have no choice but to sell stocks to raise cash to meet redemptions and withdrawals. So they’re selling when they should be buying. And I’m out there snapping up the stocks they’re forced to sell.
One of my tactics is to look for volatile stocks with a fairly wide trading range, then cycle in and out of them. Let’s create a hypothetical example for illustration purposes.
XYZ Company sells for about $40. It goes up and down like a yo-yo. If its pendulum swings are at least $10 wide, XYZ has interesting possibiliies. Let’s say you’ve noticed that XYZ never seems to go up permanently, but has a history of repetitively trading in a range of about $35 to $45. You set your alarm clock to wake you up when it approaches $35. Let’s say it sinks to $36. At that point — instead of diversifying your portfolio like a good little boy, as all the financial planners and brokers tell you to do — you shove ALL the cash in your IRA or Roth into XYZ. Let’s say you buy 500 shares at $36 = $18,000.
(You just broke one of the cardinal rules of investing, but trust me, sinners make out like bandits in this evil world, and the bigger a sinner you are, the better you’re going to make out!)
Now you sit back and wait. After a while, XYZ again does what it has never failed to do before … it goes back up to $45. But you chickened out and sold at $43 because you weren’t entirely sure it would. (Are you starting to see why you need $10 of swing?) So you made $7 x 500 shares = $3,500 profit on your $18,000. If it took six months, congratulations, you just made an annualized return of 40%. I don’t know about you, but in a zero-interest environment, I’ll take a 40% return on investment any day.
Now pull that $3,500 out of the pot and put it in a nice safe stock you won’t lose sleep over, and invest the $18,000 in something paying 1% or 2% until you need it again. You may have to wait another six months, but eventually XYZ stock does what it always has done before, namely, it sinks to $36 again. So guess what you do? You buy it back, all 500 shares, and wait for it go back up to $43 or $44, then sell it again and suck another $3,500 to $4,000 out of the market and buy another nice safe stock for your retirement with it.
By now you’re probably saying, “This can’t possibly work. Nobody is stupid enough to sell you a stock for $36, then buy it back from you for $43, then sell it to you for $36 and buy it back again for $44.”
Well, yes and no. Believe me, this does work, I’ve cycled in and out of the same stock half a dozen times over less than three years, making a shitload of money each time. Why does it work? Because, for one thing, you humans are, well, human. But I think the main reason it works is because 75% of the world’s entire float is owned by big institutional investors and they’re selling it to you cheap because they have to and they’re buying it back from you because they have to. When people pull their money out of mutual funds or ETFs, they have to sell. When money gushes back into mutual funds and ETFs, they have to buy, because they can’t leave that money in cash. So, the professionals who manage mutual funds and ETFs are selling cheap and buying dear. This works very neatly for those of us who prefer to buy cheap and sell dear, and unlike them, are in a position to do so.
@48 I’m doing this right now with coal stocks. I bought Peabody Coal, which was selling for $72 last April, for $33 on Dec. 30. I bought Arch Coal, which was selling for $35 last April, for $13.50 on Jan. 17. Both of those stocks jumped over 5% today. I already have $1,500 profit on a $10,000 investment, and based on their past trading history, there’s a good chance I’ll double my money in less than 12 months.
Whether you want to jump into these stocks now is up to you. I’m not saying you should. It’s your decision. All I’m doing here is pasting numbers into my comment.
What’s going on is investors think our huge new supply of shale gas will put coal plants out of business. That’s nonsense. Right now, 50% of America’s electricity comes from coal. It’ll take decades to convert all of that power production to gas. Meanwhile, China is building 2,000 coal plants over the next few years — at a rate of 1 per day — and both of these companies are building up their export trade. In addition, coal inventories at U.S. plants are low right now, so demand is picking up and both of these companies are boosting their top lines very rapidly. Not only that, but coal is also used to make steel, and with China and India transitioning from agricultural economies to urban economies, those countries need enormous amounts of steel for buildings, highways, railroads, infrastructure, shipbuilding, and producing all the products that use steel as a component (e.g. cars). These are not dying companies.
I’m just sayin’, the Efficient Market Hypothesis is bullshit, the market misprices stocks all the time and sometimes misprices the same stocks over and over.
@42 I’m already retired, unless you want to call the time and effort I spend squeezing blood out of Wall Street leeches “work,” but I think of that as “fun.”
I see on MSNBC that some folks are suing law school placement offices for misrepresenting what the job prospects are after graduating from law school with a mountain of debt. It’s about time someone did that.
There’s just too damn many lawyers. We have millions of ’em — about 1 of every 300 Americans is a lawyer.
Why do colleges and universities pump out far more law graduates than the job market can absorb? They’ve been doing this for decades. The reason is simple.
A law school makes almost as much money as a medical school, but has about a fifth of the costs. In short, law schools are tremendous cash cows for the schools. It’s about making money, pure and simple.
And if they’re attracting prospective students by lying about what percentage of their law students get legal jobs after graduation, they deserve to be sued.
http://www.ianwelsh.net/the-bl.....and-so-on/
Watching Lawrence O’Donnell tonight, I got inspired. I have long been “proud leftist.” Might I also say I am a liberal. Those of us on the left, who are, of course, correct, need to quit shying away from being tagged as liberals. The GOP candidates for president all argue about who is the most “conservative.” When will we who are on the left recapture the magnificence of calling ourselves liberals? Liberals have driven this nation to its best. Let’s fucking quit apologizing for all the good we’ve done and quit pretending that we’re “conservatives.” That’s all I have to say about that.
@53 Can’t speak for others, but I’ve never shied away from calling myself a “liberal” or apologized for liberal accomplishments like child liberal laws, minimum wage, universal free public education, workplace safety regulations, the Clean Air and Clean Water acts, consumer protection laws, etc.
I’m a shameless liberal propagandist and an unreconstructed Democratic party hack — and proud of it!!!
Oh, and one more thing, the stock market is up today on strong jobs data, and I made $2,700 this morning before geting out of bed and without lifting a paw. Ain’t capitalism grand? And the idiot trolls call us “socialists” … little do they know …
# 51: One of the more frequent scams used by for-profit schools is to play fast and loose with the definition of what constitutes a job after graduation.
For example, there is a local trade school which promises to make people “licensed massage therapists” within a couple of years. They dangle the retail rates for an hour of massage therepy in front of the prospective students, tell them how much they actually make depends upon how hard they are willing to work and whether they will make the effort to “market themselves”. They can take jobs in hospitals, nursing homes, or physical therapy clinics, or “determine their own hours” with an out-patient practice.
In short, prospective students are left with the impression that they can make well over a hundred thousand dollars a year, that jobs are there just for the picking, and if they don’t do well it’s only because they are too lazy or not smart enough to market themselves.
Now, taking into account all the local campuses of this school, they graduate a few thousand massage thereapists each and every year, pumping these people into the existing jobs market. They report their “employment after graduation rate” as provided by law. But included in those numbers as “employed” are anyone who gave a single paid massage therapy session within a year after graduation. The greater majority of those find that jobs in physical therapy clinics, hospitals, and nursing homes are few and far between, and most spend their time trying to “market” themselves with little result.
Ha, ha. Spank. Everything I’ve seen online seems to point towards people still not trusting or wanting to donate to Komen.
@57 That whole Komen thing was engineered by a high-ranking Komen executive who was a failed GOP gubernatorial candidate. The “investigation” by a House Republican that triggered the defunding of PP probably was a setup arranged for exactly that purpose. Another rightwing conspiracy. Even though public pressure forced Komen to reverse course, the organization has lost credibility, and won’t regain credibility until they fire that executive, purge any other plotters, and establish procedures to make sure something like this doesn’t happen again.
Or maybe Komen just needs to go away …
“Komen has also been caught up in the controversy over ‘pinkwashing’ — the use of breast cancer and the pink ribbon by corporate marketers, especially to promote products that might be unhealthful—in return for a donation to the cause. Komen benefits greatly from these corporate partnerships, receiving over $55 million a year from them. However, critics say many of these promotions are deceptive to consumers and benefit the companies more than the charity.”
“In 2007, the organization changed its name to Susan G. Komen for the Cure and trademarked the running ribbon as part of its new branding strategy. Komen has come under fire for legal action against other nonprofits or organizations using the phrase ‘for the cure’ within their names. An August 2010 article in the Wall Street Journal detailed a case in which the organization Uniting Against Lung Cancer was told in a letter from Komen that they should no longer use the name ‘Kites for the Cure’ for their annual fundraising event. Komen also wrote to the organization to warn them ‘against any use of pink in conjunction with “cure.”‘ More than 100 small charities have received legal opposition from Komen regarding various uses of the words ‘for the cure’ in their names, at a cost of nearly $1 million per year in donor funds. Among the offending charitable organizations and events were ‘Par for the Cure,’ ‘Surfing for a Cure,’ ‘Cupcakes for a Cure’ and ‘Mush for the Cure’. Komen says that the organization protects its trademarks as a matter of financial stewardship and that they want to prevent confusion among donors. According to Komen general counsel Jonathan Blum, a mixup could result in a donation being inadvertently sent to another charity. Others suggest that the trademark issue is more about dominating the pink ribbon marketplace.”
http://en.wikipedia.org/wiki/S.....Parenthood
Roger Rabbit Commentary: This sure looks like a predatory organization to me. I’ll bet a good lawyer could break that “trademark” in court — trademark law doesn’t allow you to keep other people from using common words and phrases of the English language. In other words, the word “cure” isn’t trademarkable. But it takes money to litigate a court case, and small charities don’t have that kind of money.
@57, @58, etc. Nancy Brinker herself was appointed by George W. Bush as Ambassador to Hungary, and subsequently became his Director of Protocol (i. e. the person responsible for reminding him not do do stupid things like molesting the German Chancellor). She and her (very wealthy) former husband were big contributors to a variety of Republican causes.
@59
Probably. You can give your money directly to every organization that they give money too, why not just give it straight to where you want your cash to go?
Incase (encase?) you’ve every wondered what a herd of Saint Bernard’s looks and sounds like.
http://www.youtube.com/watch?v.....r_embedded
Nothing to see here. No sirree..
http://www.imdb.com/video/imdb/vi3032785177/
It’s cold outside, say the tools, err. the trolls..
Apparently, bike lanes are an insidious plot to take your rights away.
Across the country, activists with ties to the Tea Party are railing against all sorts of local and state efforts to control sprawl and conserve energy. They brand government action for things like expanding public transportation routes and preserving open space as part of a United Nations-led conspiracy to deny property rights and herd citizens toward cities.
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Oops here’s the link for #64
http://www.nytimes.com/2012/02.....=1&hp