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  1. Economics and Incorporation with Strategy

    Today's retail sales were horrible, but that was known before today when companies reported same-store sales.

    The economic metrics are still bad: unemployment is climbing, retail sales are falling, and credit is contracting.

    It still remains difficult to me to see how companies will be able to grow earnings over the next few years. Many companies loaded up on debt in the last few years, using the modern day American way of doing business -- which is to borrow as much ...
  2. 857 or bust

    Stocks were mixed yesterday as the Dow lost 25-points, the S&P500 (C-fund) and small caps (S-fund) were up, and the I-fund dropped over 2% with the help of a strong dollar.

    The S&P 500 tested the lows made in late December (857) and held so far as yesterday's low was 862. 857 is the next do or die level. If that can not hold I think the odds would rise dramatically that a test of the November lows will be in our future.

  3. The Imaginary Sideline Cash

    I keep hearing people on TV talking about how there is so much cash on the sidelines, and once that cash come back into the market, stock prices will zoom upward.

    This is nonsense. The amount of cash on the sidelines is the same amount of cash that has always been on the sidelines.

    For every stock trade, there is a buyer and a seller. The buyer takes his cash and gives it to the owner of the stock (seller). The owner of the stock (seller) gives his stock to the buyer ...
  4. Breakdown?

    Sorry, I forgot to copy this to the blog this morning...

    Stocks followed through on Friday's sell off with another round of selling yesterday. The TSP stock funds dropped between 2% and 3% and bonds saw another modest rally as the F-fund picked up 0.27%.

    The poor jobs report, which was actually in line with estimates, seems to have been a dagger in the newly bullish investors' hearts who had been buying into the recent rally. Sure, we could see an optimistic rally leading ...
  5. FOMC Chair Discusses Actions, Exit Plan

    FOMC Chairman Bernanke gave a speech this morning in London to outline the policy response to the current credit crisis. It seems obvious t the cause of the turn in the housing cycle was the extension of credit to unworthy borrowers under a system designed to reward short term commissions instead of a long-term focus on underwriting loans. This process was encouraged by the institution Chairman Bernanke currently heads.

    The rest of the speech is a documentation of current policies ...
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