Religulous – A Review
Bill Maher recently released a new documentary called Religulous . Religulous is a new word that he created as a mix of religion and ridiculous and in many ways is very fitting the movie.
The documentary proves that religion is now the best way for dried up comedians to make money.
That might’ve sounded a bit harsh so I want you to know that I actually liked the movie.
Bill Maher is entertaining and comedic without being over the top.
He takes a questioning look at all religions in this movie.
He proposes that his view on religion is “I don’t know”, and tries to get religious people to convince him of the truth in the various in-congruences in their beliefs.
Being a comedian, Bill does not exclude things that most people will find funny such as interviewing a reverend of the religion, Cantheism.
During that interview, Bill smokes a few joints with Reverend Ferre van Beveren and laughs at his gullibility when he convinces him that his hair is on fire.
Some of the more high profile interviews are of a US senator, a pastor who claims to be the second coming of Jesus, an actor who plays Jesus in re-enactments of biblical events and more.
The results of this movie are entertainment and a down-to-Earth practical look at religion without the strong bias posed by Richard Dawkins in The God Delusion.
It isn’t a movie that will make you angry if you’re a religious person with unwavering beliefs but if you can’t take a joke, don’t watch it.
Otherwise, enjoy this movie because it is quite amusing.
7 steps to becoming a proactive investor
We have all heard the self help advice telling us to be proactive in our lives instead of reacting to our lives.
Proactive people are generally ahead of the curve and are more likely to be “lucky” because they are better prepared for any opportunities that arise.
The same can be said of investors. Many of them tend to take a reactive approach to investing.
They buy stocks after analysts upgrade them, they hear news on the TV to form trading ideas and they always miss the big moves.
Does this sound like you?
Here are 7 easy to do things that will get you ahead of the curve and turn you into a proactive investor.
- Know the trend
- Know the big players
- Watch the government
- Keep track of the rates
- Keep an eye on commodities
- Use technical analysis
- Mark down important dates
This many sound very simple, but it is dreadfully important to keep the market trend in mind at all times, otherwise you may fall victim to a bad trade.
In today’s deflationary markets, the primary trend is down. Even if a stock does rally during this market, the gains are short-lived.
For example, take a look at HP, (symbol HPQ). Here is a company that has an amazing balance sheet, some of the best management, a steady dividend but can’t seem to get off the ground with any of its rallies.
Over the past few months, it has experienced many short term corrections, but in this environment – it could not keep it up for long.
If you took a long position in HP after it was given a $111 million contract with the US government, or after it expanded its notebook lineup or any of its other good news, you’re probably sitting in the red.
Who else is buying / selling your stocks?
Is the institutional ownership of the stock high and are the hedge funds still liquidating? If so, maybe now is not the best time to go long.
What are Buffet, Soros, Templeton or any of your other favorite big players buying? Can you invest along side of them?
Are the insiders buying up the stock? They may know that the prices are too good to pass up.
This may be a great indicator to help you keep ahead of the markets.
Even back in the day when the governments weren’t acting as a giant hedge fund, it still paid to watch what the government was doing.
Under George Bush, defense spending was high and that led to many defense suppliers having amazing years of growth.
When congress enacts a new tax, you can bet retailers will feel the hit as disposable income is reduced.
So stay aware of government actions such as the development of Obama’s infrastructure plan and the growing debt of municipalities to be proactive.
Which rates am I talking about? All of them.
You should know the Fed funds rate, LIBOR, prime lending rates in your area, the yield on T-bills and 10 year bonds, tax rates, etc off the top of your head.
You don’t have to be an expert on the many ways each of those effect the current environment but even knowing that the current yield on T-bills is less than your local FDIC / CDIC insured savings account can save you money.
There is a direct relationship between commodities and currencies and stocks. If you keep up to date with the prices of various commodities, you may be able to get the jump on stock markets.
For example, as crude prices go up, so does the stock of many energy companies. That can damper the prices of airlines and solar companies. Sometimes the damper on solar companies overseas is not as quick to occur as it is in the US. That can make for a profitable arbitrage trade.
If you see the price of gold edging upwards as it is these days, that can put downward pressure on the US $ because it is seen as a hedge against inflation. That may be a good time to invest in TIPS.
Technical analysis is looked down on by many investors because they don’t see its real benefit to them.
Technical analysis can be used to make a good investment a great one.
If a stock looks attractive based on fundamentals, an investor can be proactive by using simple support / resistance trend lines to get the best entry and exit points.
Use stock alerts, available through Yahoo Finance, to inform you if a stock has broken through resistance, a very bullish sign or if a 50 day moving average was broken or any number of other technical signals to avoid spending too much time with the charts.
You should know when your stock’s ex-dividend date is, when the company will issue conference calls, earnings release dates, what dates it re-purchases shares et al.
Along side of those dates, you should have a pretty accurate prediction of the announcements. If the company is releasing earnings next week, get to know what the analysts are expecting and what the company projected for this quarter. Does the company have a history of beating expectations? Can you reasonably assume that the economic downturn has hurt the company and is that already priced into the stock?
All of these things will help you get one up on the market making you a more pro-active investor.
If you follow the tips above you will have a better grasp of the market as a whole and be able to make better decisions.
Malcolm Gladwell, in his book Blink, wrote that time wasting research can sometimes be less effective than a knowledgeable mind’s intuition.
So take that to heart and be as well prepared as you can be to take on the many opportunities in the markets.
Christmas at work
I was just reading a few interesting posts by Penelope Trunk of Brazen Careerist.
She is a very gifted writer who posts interesting articles about work and life.
Near this time of the year, every year, she posts a little rant about Christmas holidays and work.
I happen to agree with her when she says:
Given the nothingness of Christmas to most Jews, it is absurd how much Christmas cheer that Jews partake in just to fit in at the office.
Vendors send Christmas cards, co-workers say “Happy Holidays,” clients expect Christmas gifts. Jews partake in all these moments because the best way to succeed at work is to fit in. The bottom line is that Jews are forced to be what they are not in order to fit in, and that is never good when you’re trying to promote the diverse expression of ideas.
I am not Jewish, but you can substitute any other religion its place with the same effect.
It is true that people of religions other than Christianity feel outcast in the workplace during this time of the year. We receive gifts and cards reading anything from “Merry Christmas” to “Happy holidays” – both of which are generally un-inclusive for us, and we grin and bear it.
This year, I received small gifts and cards from my coworkers and even though the gesture was plesant and it created some kinship, I felt inclined to purchase something for them in return.
I ended up giving everyone a small gift, but I delivered them un-wrapped and without a “Happy Holidays” card, because I wanted them to be accepted as tokens of reciprocity and generosity instead of as “Christmas gifts”.
It was not a great feeling having done that because it was almost as if I had been thrown in a melting pot. I felt that being who I am, by not celebrating Christmas, would have alienated me and interfered with my career.
Another negative aspect of Christmas at work is that all employees have paid holidays during Christmas, but have to take a vacation day to celebrate our own religious holidays. Sounds a little unfair doesn’t it?
A good work-around and more indepth coverage of this issue is covered in Penelope’s articles.
Take a read through her three articles about Christmas at work here:
http://blog.penelopetrunk.com/2008/12/24/my-annual-rant-about-christmas-at-work/
http://blog.penelopetrunk.com/2007/12/03/five-things-people-say-about-christmas-that-drive-me-nuts/
http://blog.penelopetrunk.com/2006/12/14/christmas-at-the-office-is-bad-for-diversity-2/
P.S. only constructive criticism as comments please, I have read all the comments on Penelope’s blog and since most of them are not friendly, so you can be certain that I have heard it all.
Are successful entrepreneurs really just Business Engineers?
The word engineering is thrown around a lot these days. It is used in every context to try to exaggerate the purposefulness of a subject. A few examples of this are social engineering and political engineering. Does it not also make sense that there would be an application in business with which the principles of engineering could be applied usefully?
“Professional art of applying science to the optimum conversion of the resources of nature to the uses of humankind.” – Britannica
By this definition, a business person that applies the very general and logical scientific method to solve their problems is an engineer.
Where is this leading? Well recently, I saw a special hour long show on CNBC about Harvard Business School. It dealt with issues of admissions, costs and most importantly – curriculum.
It described HBS as a place that teaches would-be business leaders skills such as problem solving, creative thinking and data analysis. The workload is described as very rigorous.
The students are assigned case studies which feature real life business problems faced by real companies. They are asked to identify the problem, and basically solve it. The difficulty in this is the plethora of information they receive and ambiguity of the problem. With large amounts of data and no clear problem statement, a business person can be left up creek without a paddle. The ability to create a problem statement, analyze data and create a solution that meets some criteria is engineering, and that is what business schools are teaching.
Now, I don’t want to flatter those business students by calling them engineers, but one can quickly see the resemblance between their curriculum and that of any engineer. The key difference that many of you may point out is that engineering deals with physical/chemical/electrical things and business doesn’t. It is a good point, but not one with much solidity. An engineer learns the relationships between things. There are variables in the world such as weight and speed and there are equations linking those. In school, engineers learn to identify the variables in a situation and the equations to manipulate them. For example, when trying to figure out how fast an egg falls to the floor, the variables are the height off the floor and the weight of the egg, and the relationship is how far does something with the weight of an egg drop per unit of time.
The same method can be said to be applied by schools such as HBS. When trying to determine a sales forecast, for example, variables such as consumer demand, price and availability are put together in an equation. A good business person can identify all the key variables involved in a situation, and because of their previous training, can use the relationships between those variables well enough to accurately make a conclusion. The purpose of their training then is that through case studies they learn to identify the variables involved in many situations and the relationships between those variables. Are engineers any different? They take classes to learn the variables and relationships between electrical or thermal or environmental components. The principles are basically the same.
So when can we expect to start seeing Business Engineering programs pop up at colleges across the country?
My guess is that the professional engineering societies of the US or Canada will not issue certificates to economists anytime soon, but I hope that the colleges and univertisites might see the benefit to their students of having to complete an engineering design course or two as part of their business curriculum.
Full Disclosure
The person who wrote this article, me, is an engineer.
Amazing tool for investing
I spend a lot of time on the Internet looking better ways to quickly gauge the markets. Today I discovered a tool that some people probably know about but it awed me.
I am speaking about FINVIZ.com of course.
FINVIZ offers a very cool heat map of the market with separated sectors and stocks. They offer lots of information about any stock on one screen, which isn’t the easiest to look at but it offers any piece of data that you might need.
Their daily with technical indicators pre-drawn charts are a nice change from the simple Yahoo and Google finance charts.
They also offer a very functional screener with many built in screens.
I could go on about the up to the minute insider trading lists and news and the many other features of the website but I suggest that you visit the site for yourself and watch their introductory video for yourself at http://www.finviz.com/help_guidedtour.ashx
Enjoy this one.
Why are the GOP senators being soo hard on the automakers?
Now I don’t want to speculate and say that every member of the GOP is a wolf in sheep’s clothing, but their reluctance to help the automakers is really harsh. Even the “man” in Washington is trying to help but nobody wants to be like Bush this time.
Enjoy the comic by Pat Bagley.
Will GM’s and Ford’s new CEO compensation packages affect their performance?
The CEOs for Ford, GM, and Chrysler agreed to forgo their bonuses and accepted salaries of $1 each in order to qualify for the government bailout money. Will their sacrifice affect their performance?
Lets find out.
Richard Wagoner has been the CEO of GM since October 1998. The price of the common stock over this period has gone from $45.87 on October 2, 2008 to $4.70 as of December 10, a loss of 89.975% for anyone that’s been holding the stock since then. The data I was able to collect from AOL Money (revenue history) and Yahoo Finance (stock price history) dated back to 2003 so that’s the data that will be used for this analysis.
The graph on the left shows the revenue of GM vs. Richard Wagoner’s total compensation. The correlation for this graph is low, 13.62%. To compare, a correlation of 100% would be two lines that move exactly together. What this means is that Wagoner’s salary was largely independent of the GM’s revenue. This is not unexpected, read on to find out why.
Part of a CEO’s job is to keep the value of their stock high and their compensation should reflect how well they achieve that result. The second graph to the left here shows a comparison of Richard Wagoner’s compensation and the closing stock price for that year. What is clearly visible in this graph is that Richard Wagoner’s compensation is largely dependent on the market value of GM. The correlation for these two curves is: 98%.
The observable effect of this compensation package is that Wagoner has an incentive to keep stock prices high. Let’s see if Alan Mulally at Ford had the same incentives.
At Ford, CEO Alan Mulally has seen the stock price decline from $8.13 to $3.33 as of December 10, a decline of 59%. The revenue during his tenure has seen a lot of fluctuation but was only moderately lower in 2006 than it was in 2003. His compensation vs revenue curves had a correlation of: 69% and his compensation vs stock price had a correlation of: 17%.
In stark contrast to Richard Wagoner, Alan Mulally had more incentive to keep Ford’s revenue up by selling more cars than he did of keeping the stock price high. Perhaps this would explain why Ford is less needy than GM during this crisis.
Looking forward, we will see no correlation between the stock price or the revenue in the CEOs compensation. Their performance will be solely dictated by how much they care about the company’s future. These CEOs are not used to working for free. At the peaks of their compensation within the analyzed time period, the Richard Wagoner was earning above $25 mil per year and Alan Mulally earned just shy of $45 million in his highest paying year. Will it be difficult for them to adjust and thrive without salary incentives?
Economics teaches us that everything is done because of incentives and without easily quantifiable incentives such as compensation, we must use subjective analysis methods such as psychology and behavioral economics to determine if their performance will deteriorate on a $1 salary.
Were the CEOs in it just for the money?
Do the CEOs have any incentive to revive the company?
Does the fact that the CEOs had to be forced to accept $1 salaries make them resentful and less trustworthy?
Those are questions that need to be answered by insiders before we can determine whether this change will affect their performance.
I’m willing to bet that the odds of them increasing their performance while losing their incentives is almost nil. It’s probably time for the boards of those companies to post their want ads on Monster.
Update (Dec 12): I am still hopeful that the auto companies will get their bailout money, unless the senate can come up with a better way to use $14 billion quickly to employ 2.5 million people, I think that they should approve the loans.
Tribune declares bankruptcy
The Tribune is one of America’s biggest media companies and has filed for Chapter 11 bankruptcy. This news does not bode well for its competitors who should now be reminded of their own mortality in a medium which is quickly going from being the norm to becoming the niche.
Stocks to watch because of this: NYT & WPO
S&P Performance in 2008
“As of the week of November 16 stock losses in United States markets during 2008 as measured by the S&P 500 were equivalent to those suffered in 1931, over 50%. Total losses during the Great Depression exceeded 80% but that was over a three year period.”
The histogram on the left shows the relative performance of the S&P 500 year over year since 1925. The current year is running with a bad crowd – 1931, when there were between 4 and 5 million people unemployed in the US.
As for today, we saw a lot of resistance in the S&P 500 at the 900 level. The bulls were pushing it to higher lows but the bears (and those covering their positions) refused to let it go above that magic number. If you were looking at an intra-day chart you saw that the lows were getting higher and a market move on the upside or a breakdown on the downside was imminent.
I was surprised that there was even a challenge to the bears today, after all the bad news which was released. Higher unemployment, lower export and import prices, worse than expected trade balance and a lag of the auto bailout in the senate did not seem to discourage the market. I almost thought that the market had priced all of that in already.
In the end, the bulls succumbed to the bad news and left the battlefield. I would like to thank them for their efforts, but my short investments thank them for laying down.
There are a lot of juicy numbers coming out tomorrow. Be prepared for a bearish day in the markets.
For a list of all the economic releases I use Yahoo Economic Calendar, a part of Yahoo Finance – their only profitable product.
P.S. Watch out for Yahoo, it seems to be shedding its clothing and taking off its chastity belt trying to lure a buyer – one might just give them second look.
The graph was original posted on: http://www.dailykos.com/storyonly/2008/12/2/102214/940/743/668445
Poll: How Much Money Do You Need to Feel Rich?
How much money do you need to have to consider yourself rich?
Here is an interesting article about how much people require to feel rich: http://financialfellow.com/2008/12/06/poll-how-much-money-do-you-need-to-feel-rich/
Check it out.
