The first estimate for the third-quarter GDP was reported this morning at 3.5%. This was better than the 3.0% estimate and last quarter’s -.7%. Inflation also came in below expectations and this report has the stock market up sharply. The Dow is up 115 points.
Since I believe that the recession is over and that the recent modest correction in stock prices is only temporary, I took advantage of the current decline to move another 7% of my retirement portfolio into the stock market. I am now 78% in stocks, 5% in bonds, and 17% in short term interest rate accounts.
Last April, when I moved back into stocks, I invested only 45% of my portfolio into equities. All summer, I have been slowly transferring from interest rate funds to stocks whenever the market had a correction. I am now finished with my movement into stocks.
November starts the strongest up-seasonal for stocks and should last until the end of January. August through October is usually the number one seasonal downtrend for stocks but this year the correction came a bit earlier in June. The decline was a modest 8.8%. There has been little or no correction during the August/October eriod. This contrarian price movement has happened only twice before in the last 25 years. In those two years, the market had a strong rally into the end of the year and that’s what I’m looking for this year.
The Co/Lag ratio (my favorite economic indicator) has been predicting a September end to the recession since last May, and this morning’s better than expected GDP number plus the superior earnings quarter we’ve seen for corporations, gives me hope that the rally will continue. That’s why I’ve moved so aggressively towards the stock market.
Normally, the rule of thumb is that your portfolio should be the same percentage in bonds as your age and the rest in the stock market. Since I’m 63, that means I should have 63% of my portfolio in bonds and 37% in stocks. Given that I’m 78% in stocks shows you how aggressive I am currently investing in equities.
Starting in mid-January, I plan on pulling my stock portfolio back to around 40%. I’ll do it in pieces over a month or so on any big rally days, but for now I’m done adjusting and will let this mix ride until after the first of the year.
Thursday, October 29, 2009
Saturday, October 24, 2009
My Trip to Haiti; July 2009 - Part II
I hadn’t been back to Haiti since 1980 and Michele was curious as to how Haiti of today compared with the Haiti I knew 35 years ago. Sadly, there were mostly minuses in Port au Prince.
When I lived there, Port au Prince had a real charm. Yes the city was crowded and dirty, but the suburb of Petionville, which is where I lived, was a delightful place. There were some good restaurants, a few good hotels (the Olaffson was very eclectic with some strange and mysterious characters hanging out there including Graham Greene, author of the Comedians), and the people of Haiti were wonderful. Power, water, and telephone services were spotty but this only added to the sense that you were on a true tropical adventure.
Today, Port au Prince is teaming with people, far more than ever before. The crush of traffic is four times worse than it was. There is little or no zoning, so small offices sit amongst residences, and small ugly cinderblock buildings abutt the streets making it feel like the walls are closing in on you. There are motorcycles everywhere, where once there were none when I lived there.
Gone is the charm. I felt like I was in India where the overcrowding and pollution are notorious.
However, I did see one huge positive. What is still alive and well is the spirit of the Haitian people. They have always been and still are wonderful. And when I arrived in Port Salut, I found the charm I once knew in Port au Prince still existed; it had just moved to this remote rural part of Haiti.
The most gratifying reason for living in Haiti has always been the people. I am pleased to say that hasn’t changed. Haitians are the most hopeful group of people I have ever known, even when there appears to be no reason for hope. They are friendly and kind, and quick to laugh. They are industrious and very hard working. They value their communities to the point that many never leave, even to visit Port au Prince. They are family oriented and villages often form committees to help each other. For instance, often if someone dies, the village pitches in to pay for the funeral. If a road needs improving, scores of villagers volunteer their time and effort to make repairs.
Haitians are a proud people and they are especially proud of their independence as a country and their freedom from slavery which they won, in battle, from the French in 1804. They are keenly aware that they are the first independent black nation in the western hemisphere. In their culture, many of their traditions are deeply rooted in their African heritage.
When I lived in Haiti, I remember making a trip to a rural area where I was approached by an old woman who implored me to ask my government and the Haitian government to provide them with schools and medical help. This is still true today, and is what I heard at the meetings I attended with Michele. Haitians aren’t looking for handouts nor are they looking for our pity. Instead the message I hear is: provide me with the health care so I can be productive – educate me so I can lift myself out of poverty.
I was happy to go back to Haiti and overjoyed to know that the spirit of Haiti still lives in the people I meet on this trip. These are hard working people who share the same values we hold dear. They are worthy of our investment in them because I know with a little help, they will one day lift themselves out of poverty, a poverty they had little to do in creating, but that story is for another column.
When I lived there, Port au Prince had a real charm. Yes the city was crowded and dirty, but the suburb of Petionville, which is where I lived, was a delightful place. There were some good restaurants, a few good hotels (the Olaffson was very eclectic with some strange and mysterious characters hanging out there including Graham Greene, author of the Comedians), and the people of Haiti were wonderful. Power, water, and telephone services were spotty but this only added to the sense that you were on a true tropical adventure.
Today, Port au Prince is teaming with people, far more than ever before. The crush of traffic is four times worse than it was. There is little or no zoning, so small offices sit amongst residences, and small ugly cinderblock buildings abutt the streets making it feel like the walls are closing in on you. There are motorcycles everywhere, where once there were none when I lived there.
Gone is the charm. I felt like I was in India where the overcrowding and pollution are notorious.
However, I did see one huge positive. What is still alive and well is the spirit of the Haitian people. They have always been and still are wonderful. And when I arrived in Port Salut, I found the charm I once knew in Port au Prince still existed; it had just moved to this remote rural part of Haiti.
The most gratifying reason for living in Haiti has always been the people. I am pleased to say that hasn’t changed. Haitians are the most hopeful group of people I have ever known, even when there appears to be no reason for hope. They are friendly and kind, and quick to laugh. They are industrious and very hard working. They value their communities to the point that many never leave, even to visit Port au Prince. They are family oriented and villages often form committees to help each other. For instance, often if someone dies, the village pitches in to pay for the funeral. If a road needs improving, scores of villagers volunteer their time and effort to make repairs.
Haitians are a proud people and they are especially proud of their independence as a country and their freedom from slavery which they won, in battle, from the French in 1804. They are keenly aware that they are the first independent black nation in the western hemisphere. In their culture, many of their traditions are deeply rooted in their African heritage.
When I lived in Haiti, I remember making a trip to a rural area where I was approached by an old woman who implored me to ask my government and the Haitian government to provide them with schools and medical help. This is still true today, and is what I heard at the meetings I attended with Michele. Haitians aren’t looking for handouts nor are they looking for our pity. Instead the message I hear is: provide me with the health care so I can be productive – educate me so I can lift myself out of poverty.
I was happy to go back to Haiti and overjoyed to know that the spirit of Haiti still lives in the people I meet on this trip. These are hard working people who share the same values we hold dear. They are worthy of our investment in them because I know with a little help, they will one day lift themselves out of poverty, a poverty they had little to do in creating, but that story is for another column.
My Trip to Haiti; July, 2009 - Part I
In 1971, three months after the death of Francois “Papa Doc” Duvalier, Haiti’s President for Life, I arrived in Haiti to live and work for the next two years. I built a bulk liquid storage facility and pier for my employer, the I.S. Joseph Co. We were importers of fats and oils, which I then sold to the local Haitian soap manufacturers and vegetable oil refiners.
Haiti was my first major job assignment after college and was one of the premier highlights of my career. It is because of this experience, and my ten-year tenure on Mount Sinai Hospital’s board of governors, where I was vice-chairman of the board, chairman of the strategic planning committee, and a member of the finance committee, that encouraged Michele Boston to ask me to join the board of No Time For Poverty.
Recently, I accompanied Michele, along with Sara, Jeff and Sydney on a trip to Haiti where Michele met with numerous groups of elders and civic leaders from the Port Salut area and its surrounding villages. Our typical day started out with a visit to one of the remote villages to view possible sites for the NTFP health outreach programs.
Our guide was the very able and well connected Giles Felix who is a very valuable friend to the NTFP project. Giles knows everyone. He is well respected by the community and an ardent supporter of ours. Michele would not be able to move as fast as she is in networking with the various interest groups and communities if it weren’t for Giles.
Also accompanying us was Nixon, whose background is a worthy story in and of itself, who did the interpreting for Michele at the meetings. Nixon’s English is superb, and he will soon be trained as a nurse here in St. Paul before returning to Haiti to live in Port Salut and work at the Timoun Nou Yo clinic.
Henry, our engineering student and former mayor of Port Salut, was also with us and provided additional translating assistance, along with driving support over some very rough and treacherous turrain.
After our village visits, we would then meet various groups at local restaurants and clubs to explain the project and ask for their input and support. Among the various groups that Michele presented to were the local village councils and administrators, the police, court, and customs officials, local healers and mid-wives (some of which are men), and religious groups, including the Catholics, the Protestants, and the Vodou priests.
Overwhelmingly, each of these diverse groups where very enthusiastic about the coming clinic. Many of them told us that NTFP was the first group to come to their community and ask for their input first before building the clinic. They appreciated the respect we were showing them in considering their views and they all pledged their support to do what ever was necessary to make this project work.
The only lament that was heard was that the clinic would not be serving adults as well. Michele’s quick response that brought a chuckle from the crowd was that if this project helped make their children healthier, they would be able to support them in their old age.
However, she was quick to follow up on a serious note, since health and education issues are two of the most important priorities of nearly all Haitian communities, to let them know that NTFP would be bringing in American physician teams (like we did in May 2009) who would be able to see people of all ages and in some cases be able to perform surgery in our clinic. This made everyone very happy.
Prior to my arrival in Haiti, Michele, Lori, and Sara traveled to Jeremie, which is north of Port Salut but cut off from direct travel due to a mountain range. The three of them spent five days with the Haitian Health Foundation, a Connecticut based health organization that for twenty years has successfully operated a clinic and health outreach program in Jeremie. Michele is partially using their program as a model for our Port Salut project.
After realizing how serious and dedicated NTFP is about its commitment to Haiti, HHF opened its doors to them and has offered to help train our nurses at their clinic, and to also send personnel to Port Salut to help train our health agents in the field.
Because Michele has spent the past four years developing relationships first and listening to the advice of the Haitian leaders in Port Salut, she has made strides that the HHF people said took them much longer to accomplish. It was a real tribute to the dedication and insight Michele has shown.
Haiti was my first major job assignment after college and was one of the premier highlights of my career. It is because of this experience, and my ten-year tenure on Mount Sinai Hospital’s board of governors, where I was vice-chairman of the board, chairman of the strategic planning committee, and a member of the finance committee, that encouraged Michele Boston to ask me to join the board of No Time For Poverty.
Recently, I accompanied Michele, along with Sara, Jeff and Sydney on a trip to Haiti where Michele met with numerous groups of elders and civic leaders from the Port Salut area and its surrounding villages. Our typical day started out with a visit to one of the remote villages to view possible sites for the NTFP health outreach programs.
Our guide was the very able and well connected Giles Felix who is a very valuable friend to the NTFP project. Giles knows everyone. He is well respected by the community and an ardent supporter of ours. Michele would not be able to move as fast as she is in networking with the various interest groups and communities if it weren’t for Giles.
Also accompanying us was Nixon, whose background is a worthy story in and of itself, who did the interpreting for Michele at the meetings. Nixon’s English is superb, and he will soon be trained as a nurse here in St. Paul before returning to Haiti to live in Port Salut and work at the Timoun Nou Yo clinic.
Henry, our engineering student and former mayor of Port Salut, was also with us and provided additional translating assistance, along with driving support over some very rough and treacherous turrain.
After our village visits, we would then meet various groups at local restaurants and clubs to explain the project and ask for their input and support. Among the various groups that Michele presented to were the local village councils and administrators, the police, court, and customs officials, local healers and mid-wives (some of which are men), and religious groups, including the Catholics, the Protestants, and the Vodou priests.
Overwhelmingly, each of these diverse groups where very enthusiastic about the coming clinic. Many of them told us that NTFP was the first group to come to their community and ask for their input first before building the clinic. They appreciated the respect we were showing them in considering their views and they all pledged their support to do what ever was necessary to make this project work.
The only lament that was heard was that the clinic would not be serving adults as well. Michele’s quick response that brought a chuckle from the crowd was that if this project helped make their children healthier, they would be able to support them in their old age.
However, she was quick to follow up on a serious note, since health and education issues are two of the most important priorities of nearly all Haitian communities, to let them know that NTFP would be bringing in American physician teams (like we did in May 2009) who would be able to see people of all ages and in some cases be able to perform surgery in our clinic. This made everyone very happy.
Prior to my arrival in Haiti, Michele, Lori, and Sara traveled to Jeremie, which is north of Port Salut but cut off from direct travel due to a mountain range. The three of them spent five days with the Haitian Health Foundation, a Connecticut based health organization that for twenty years has successfully operated a clinic and health outreach program in Jeremie. Michele is partially using their program as a model for our Port Salut project.
After realizing how serious and dedicated NTFP is about its commitment to Haiti, HHF opened its doors to them and has offered to help train our nurses at their clinic, and to also send personnel to Port Salut to help train our health agents in the field.
Because Michele has spent the past four years developing relationships first and listening to the advice of the Haitian leaders in Port Salut, she has made strides that the HHF people said took them much longer to accomplish. It was a real tribute to the dedication and insight Michele has shown.
Friday, October 23, 2009
Economic News Comments
Existing home sales were out this morning and they were up 9.4%. However, almost all of the sales were confined to homes selling for less than $250,000. Dwellings above that price point are not moving at all.
The third quarter earnings season is one-third over and most companies are reporting better than expected numbers. This is something I said would happen last spring, especially for banks because of the record spread margin between long and short term interest rates. It is one reason the stock market has not had the typical September/October seasonal selloff.
I predicted that would happen in early June. It is only the third time in twenty-five years that we have failed to correct off the summer highs during the fall.
The other driving force has been the amount of money that is sitting on the sidelines waiting for a correction. Most market bottoms tend to be in the form of a W. After the March lows, many traders expected a retest of that price level. It never happened. We ended up with a V-shaped bottom instead and all those waiting for the other shoe to drop are still waiting. Thus, every time a small correction occurs, the market sees strong latecomer buying support prices.
November, December, and January are the strongest up-seasonal months of the year. I expect to see the stock market continue to rise through year end. Starting in January, I plan to pull some of my money back out of the stock market. At some point, companies are going to have to show top end revenue growth instead of increased profits from cost cutting which is where most of the earnings growth is currently coming from. By the first quarter of 2010 it should become clear that this rising revenue scenario is going to be slow to realize and this will finally cause a solid correction in the market as we hit the March/April down-seasonal.
My favorite ratio, the Co/Lag Economic Indicator has been rising steadily for months now. This six month lead indicator predicted an end to the recession in September/October 2009 and it appears to have been a spot on forecast.
The third quarter earnings season is one-third over and most companies are reporting better than expected numbers. This is something I said would happen last spring, especially for banks because of the record spread margin between long and short term interest rates. It is one reason the stock market has not had the typical September/October seasonal selloff.
I predicted that would happen in early June. It is only the third time in twenty-five years that we have failed to correct off the summer highs during the fall.
The other driving force has been the amount of money that is sitting on the sidelines waiting for a correction. Most market bottoms tend to be in the form of a W. After the March lows, many traders expected a retest of that price level. It never happened. We ended up with a V-shaped bottom instead and all those waiting for the other shoe to drop are still waiting. Thus, every time a small correction occurs, the market sees strong latecomer buying support prices.
November, December, and January are the strongest up-seasonal months of the year. I expect to see the stock market continue to rise through year end. Starting in January, I plan to pull some of my money back out of the stock market. At some point, companies are going to have to show top end revenue growth instead of increased profits from cost cutting which is where most of the earnings growth is currently coming from. By the first quarter of 2010 it should become clear that this rising revenue scenario is going to be slow to realize and this will finally cause a solid correction in the market as we hit the March/April down-seasonal.
My favorite ratio, the Co/Lag Economic Indicator has been rising steadily for months now. This six month lead indicator predicted an end to the recession in September/October 2009 and it appears to have been a spot on forecast.
Wednesday, October 21, 2009
My First Posting – What I have been doing since I retired June 5, 2009
So far, I have joined the board of No Time For Poverty, a 501c3 nonprofit organization that is building a pediatric clinic in Haiti. I traveled to Haiti in July to view the remote site of Port Salut where the clinic is currently being built. Haiti is where I lived from 1971 to 1973 at the beginning of my primary career in the agribusiness and commodity investment industries. It was exciting to go back, but sad to see all the work that still needs to be done to help lift these wonderful people out of poverty.
During my visit to Haiti, I met Nixon Fleurissaint who had a most fascinating story of surviving poverty in an economy where the average wage is $1.00 per day. His is an inspirational story about picking oneself up and finding a way to improve his lot in life.
I was so touched by his story and his incredible effort to succeed that my wife Judy and I decided to help Nixon achieve his dream of going to school in the U.S. His true benefactors are Michele and Jeff Boston, the founders of the No Time For Poverty foundation, who are paying for his schooling. Judy and I, along with several of our friends, are helping Nixon with his room and board expenses while he attends Century College in St. Paul Minnesota to obtain his nursing degree. When he graduates he will return to Haiti to be one of the nurses at the clinic in Port Salut.
For several years now, I have been investigating finding solutions for infrastructure problems in the areas of clean water, sanitation, green power, and nutrition for third world countries. This is an area of great interest to me and I am looking into several projects ideas that I will share with you as they develop.
I have also started gathering thoughts and developing an outline for a book I want to write. The book will be an anecdotal self-help response to the wonderful little book written by my good friend Joachim De Posada called - Don’t Eat the Marshmallow Yet!
Joachim’s book is a fun read. It is based on a study done by Michael Mischel of Stanford University in the 1960s. The enclosed link gives a summary of the study and its findings. After you read this you will understand the title of his book. http://www.sybervision.com/Discipline/marshmallow.htm
I’m thinking of calling my book, Confessions of a Marshmallow Eater (How to Survive the Instant Gratification Itch). I’ll keep you posted when the rough draft is finished.
I am doing some personal trading in the S&P futures index and I’m managing my own retirement portfolio. Since I was one of the few who were able to manage around the collapse of the stock market last year, without suffering a decline in portfolio value, and have since caught a good chunk of the rally from last spring, a number of my friends and former clients want to know what my next move will be. I’ll use this blog to keep you and they informed.
Since I stopped writing my nightly economic and commodity newsletter there have been times when I’ve seen some news item that I wanted to write about to my friends and former clients but no longer had the forum to do so. This blog will allow me to offer my thoughts, from time to time, on the economy and what I think will be happening in the future. For those of you who followed my former newsletter, The Daily Trade Blaster, you will recognize the similarity of my research and commentary style.
The goal of this blog is to share ideas about how we can continue to be productive, prosperous, happy, and fulfilled people in the years after we finish our primary career. Some of you may so enjoy the work you do that you may never retire. There is nothing wrong with doing what you love to do.
Whatever your choice, I would like to see us begin a back and forth dialogue about what gives us fun and fulfillment. You don’t have to be retired to share your ideas. I hope this blog also becomes a forum for finding answers to some of the problems of the world, even if our solutions are only small incremental steps. I also want to know what you are doing to help the world become a better place to live. Your ideas may help guide me in my own pursuits.
What will guide me in my search to serve humanity in a meaningful way is my belief that what goes around comes around and that you get what you give. If we give love, tolerance, kindness, fairness and laughter, then that is what we get in return. If we give hate, criticism, hurtfulness, and violence, then that is what will come back to us. It is how I have lived my life. I want to be more of the former and will always strive to push the later from my life.
While this blog is about my journey, I hope it will quickly become our journey and that the give and take from your comments to my postings will help us all find a true sense of shared achievement for the good of humankind.
During my visit to Haiti, I met Nixon Fleurissaint who had a most fascinating story of surviving poverty in an economy where the average wage is $1.00 per day. His is an inspirational story about picking oneself up and finding a way to improve his lot in life.
I was so touched by his story and his incredible effort to succeed that my wife Judy and I decided to help Nixon achieve his dream of going to school in the U.S. His true benefactors are Michele and Jeff Boston, the founders of the No Time For Poverty foundation, who are paying for his schooling. Judy and I, along with several of our friends, are helping Nixon with his room and board expenses while he attends Century College in St. Paul Minnesota to obtain his nursing degree. When he graduates he will return to Haiti to be one of the nurses at the clinic in Port Salut.
For several years now, I have been investigating finding solutions for infrastructure problems in the areas of clean water, sanitation, green power, and nutrition for third world countries. This is an area of great interest to me and I am looking into several projects ideas that I will share with you as they develop.
I have also started gathering thoughts and developing an outline for a book I want to write. The book will be an anecdotal self-help response to the wonderful little book written by my good friend Joachim De Posada called - Don’t Eat the Marshmallow Yet!
Joachim’s book is a fun read. It is based on a study done by Michael Mischel of Stanford University in the 1960s. The enclosed link gives a summary of the study and its findings. After you read this you will understand the title of his book. http://www.sybervision.com/Discipline/marshmallow.htm
I’m thinking of calling my book, Confessions of a Marshmallow Eater (How to Survive the Instant Gratification Itch). I’ll keep you posted when the rough draft is finished.
I am doing some personal trading in the S&P futures index and I’m managing my own retirement portfolio. Since I was one of the few who were able to manage around the collapse of the stock market last year, without suffering a decline in portfolio value, and have since caught a good chunk of the rally from last spring, a number of my friends and former clients want to know what my next move will be. I’ll use this blog to keep you and they informed.
Since I stopped writing my nightly economic and commodity newsletter there have been times when I’ve seen some news item that I wanted to write about to my friends and former clients but no longer had the forum to do so. This blog will allow me to offer my thoughts, from time to time, on the economy and what I think will be happening in the future. For those of you who followed my former newsletter, The Daily Trade Blaster, you will recognize the similarity of my research and commentary style.
The goal of this blog is to share ideas about how we can continue to be productive, prosperous, happy, and fulfilled people in the years after we finish our primary career. Some of you may so enjoy the work you do that you may never retire. There is nothing wrong with doing what you love to do.
Whatever your choice, I would like to see us begin a back and forth dialogue about what gives us fun and fulfillment. You don’t have to be retired to share your ideas. I hope this blog also becomes a forum for finding answers to some of the problems of the world, even if our solutions are only small incremental steps. I also want to know what you are doing to help the world become a better place to live. Your ideas may help guide me in my own pursuits.
What will guide me in my search to serve humanity in a meaningful way is my belief that what goes around comes around and that you get what you give. If we give love, tolerance, kindness, fairness and laughter, then that is what we get in return. If we give hate, criticism, hurtfulness, and violence, then that is what will come back to us. It is how I have lived my life. I want to be more of the former and will always strive to push the later from my life.
While this blog is about my journey, I hope it will quickly become our journey and that the give and take from your comments to my postings will help us all find a true sense of shared achievement for the good of humankind.
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