Wednesday, October 15, 2008

Even Spew

I know I have been slow on ranting lately. I can't apologise enough. Who wants to air their BS every day anyway? I simply can't do it. I think it is wrong to sit and think up topics to write about when they don't simply emerge automatically. The topics get boring and one dimensional after a while. I find that life has its ups and downs and when the "down times" start rising up out of the dung, the fodder spews a little more evenly. There is reflection, clarity, motivation to vent. That is when the best writing comes.

I haven't really had too many down turns in the past months, other than the market dropping out. I am disgusted with the system, blah, blah, blah. Ah yes, here we go...

I still have 15 years to go before I get out and (for now) I am stuck in the prison of our countries investment culture. This is due to my prior belief and/or confidence in the investment system--doled out by the wisdom of experts, investment heroes, family members, legacies etc. How was I was stupid enough to believe these people, my father, father in law, just about every "got their shit together" know-it-all banker and/or money manager of every generation before me--that investing in mutual funds and the market, indexing, diversification, if you do it right will yield a nice return. Yes, there are ups and downs. Don't look at those, think long term...hello? kuh-chick...Boom!

I want to know just one thing...Who gets my money when the market turns downward? Where did it go? It started as cash, turned into paper and now the value is lower and I am out everything that I have gained and a chunk of what I have put in. The cash is still somewhere. Where the hell is it? Was it spent by poor business managers investing in more money making enterprises? Yes-- but somebody still has the cash, no?

The cash is still cash; money that has already been dispensed/expensed through typical rampant overhead general ledger accounts within most of our top 500 publicly traded companys. Those who's inability to handle inflation, creeping costs and lack of diversification has lead them to the "down time". The money has been systematically paid out to the employees working in these large corporate cultures--the companies who's inefficiencies are so great that perspective can only be brought to the attention by expensive outside consultants. The money is lost on these people, bad loans, poor inventory management, declining sales and lost leading ventures in attempts to build markets. The money sits in cash, dispensed away to the bottom feeders.

The cash sits in every bank account of every employee of every horribly run big business out there--the executive employees and "tick-bird" vendors of these business (neither likely capable of cash flowing their own lifestyles) sit pretty good as long as more cash is raised. These people, the executives and vendors of entities who go to the ceiling on raising capital in order to feed the machine--the "big ship" operators who, with one slight mis-navigation off course, run aground. These guys, the fat cat executives and executives of the vendor supported companies, have my money. The bastards with the golden parachutes.


Roll up 500 of these big ship operators and hand them over to the investment companies with their hands into everything including the lending market. These are professionals at raising cash with fancy catalogs and marketing materials. Let them make money on the money they raise, spend it doing whatever they want to encourage investment. By all means, lets let them pay themselves a lot of money.

Let them enhance the governments opinion with some of that cash through special interest, lobbying, buying off the feds in order to get a government agency to loosen controls, restrictions, to feed the lending machine. Let people really think the investment system is working, lots of money lending and then some, lowering the standards, the economy is intact, looking good as long as it is open sea. Hey, while things are sailing good, lets let the politicians fight over power with some of that money, because there is much to be lost if power is lost. Lets derail the system in order to get control during an election year and blame it on ambiguity. Lets point fingers at the political powers, the greater of two evils. Those who continue to get the money from special interest have a lot to lose-- those who want it have a lot to gain. A portion of my money sits in the pocket of every politician on the take.

I think it is all bullshit, we have all been taken, the government is to blame and I will not put one more penny in the market, ever. Instead, I will invest in my business, what I have control over--what I can form daily opinions on, have influence over, make changes to and get immediate results, because I SAY SO. This is what I plan to do. How can we really trust anyone investing our dollars when greed plays such a role? I will earn cash and buy and sell stuff for a margin greater than what money managers can make for themselves. The system is bullshit, don't get caught up in it. Start a small business and earn cash.

Oh, don't think it ends there. You get cash, the government takes it. More later.


Rich Pierce said...

We all liked it when it was working. The market, when successful, is a bandwagon people want to jump on while the parade is in full swing, the beer is flowing the pretty young baton-twirlers are strutting their stuff. People forget that parades end and somebody has to clean up the mess and get ordinary traffic flowing again. Many believed the dream, that we all had a future of retirement involving world travel, a luxury home or two somewhere populated only by the beautiful and successful people, plenty of leisure time and money to spend on fine dining overlooking enchanting scenery. It was going to work for US, and that was what mattered.

The information age has made it possible for us all to digest exactly how each fund or company is doing now, over the last quarter, over the past five years. Stockholders will make investment decisions based on THIS QUARTER, to leverage their futures. Companies don't dare look long-term because folks will sell if the dividends don't continue or the stock falls a little. The bubble is bound to burst in such circumstances.

Now we need new skillsets. New opportunities.

James Nelson said...

Your guys thoughts are too deep for

Ralph Pfremmer said...

Good Stuff Rich. Couldn't agree with you more. A new sheriff is in town, it is called "I don't trust your ass".

The politicians are now whittled down to nothing more than bobbing heads.

Lynchmob said...

Ralph - Great post. I am going to order you a bumper sticker - "I love my job. I love my boss...... I'm self-employed."

Unfortunately, as we invest more and more into our own businesses, Obama (democrat) and McCain (democrat disguised as a republican) are going to be taking more & more of our profits to run big gov't.

I agree with almost everything you have said except that as each of our small businesses continue to grow (small business is indeed the backbone of our economy), McCain and Obama are coming after us. How did the bank robber respond on why he robbed the bank???? "Because that is where the money is!"

I am afraid that some portion of our hard earned cash is going to have to go back into the market during this correction (if nothing more than to just dollar cost average or diversify). I think you and I will look back in 10 years and wonder why we didn't invest more. GE is at $20!!! I think they could sell off all there plant & equipment and it would be worth $20/share.

Yes, while the economy has tanked (and may continue to tank), the people like us that have been plugging away and making it happen month after month, year after year need to take advantage of this major correction.

And hopefully, there will be some time left over to ride the bike a little.

Ethan said...

Ralph, good stuff. We all rely on "experts" that have their own agendas, and I think we all too easily relinquish control to them. Letting them make decisions for us, that is what we are paying them for right? They should know best. Do I really need to read the prospectus? That will take too long and I won't understand it anyway. We have all be sold a bill of goods. Mega companies "to big to fail" devising complex accounting schemes to sell a big turd to the next guy. With no accountability because big brother will bail them out at our expense. Not really governments role, but that is a whole other topic. If companies engage in practices that cause them to collapse under their own weight, by all means let them collapse.

We rely on others opinions and invest in things we do not understand AND have a completely skewed time frame within which we expect results. (thanks Rich). Read a few lines from Warren Buffet. (this is no way a claim that I have any idea how to invest in the market, or an endorsement of WB)

I'm with Ralph, keep grinding away at something you know and understand and have a least a tiny bit of control over.

Pete Schepis said...

I agree with every thing you said, but I will add "there is nobody standing behind me ready to bail me out if I make bad decisions"
But they used my money to bail out AIG and then they went on vacation!

Pete Schepis