The New Dawning of the Age of Aquarius
As a student of history, I am not “moved” by the things that are happening in Washington…nor do I believe that the present programs that are being hailed by so many commentators and rabid fans of the new president (well, I repeat myself) will even work, except to drain more money and opportunity from the very people who are supposed to be helped by these programs.THE SECOND COMING…OF FDR
If you are listening to CNBC or any of the other networks that have commentators fawning over our new “rock star, hip President”, I caution you in the strongest terms to remain objective. Simply put, the belief that this trillion dollar money-printing job will work is tantamount to saying “2 + 2 = 5”. It’s just mathematically impossible make the kind of monetary changes currently being sold by the hucksters as “change” and avoid the irrefutable law of unintended consequences.
I’m being pragmatic here, folks. Pessimistic, sure. But it’s defensible pessimism.
Franklin D. Roosevelt was a product of affluence and privilege, attending private schools, including Harvard. Oh, he didn’t body surf in Hawaii, but he had a darned good life that was far better than most. Sound familiar? He began his career in politics in 1910 when he ran for the New York State Senate. Sound familiar? That year, the Democrats won big amidst a disillusioned populace that voted overwhelmingly Democratic…and FDR was elected. Sound familiar? Just 10 years after being elected to the State senate, and after losing in his bid to join the United States Senate after just 4 years in state government, FDR ran for national office (Vice-President of the United States). Sound familiar?
But alas, the Democratic ticket was defeated and FDR was denied the privilege of occupying the second most powerful position in the land after just 10 years of “public service.” Our current President-elect was more successful than FDR! He began his bid for his current office just 10 years after first being elected to the Illinois State Senate. He is now the most powerful guy on Earth.
Take that, FDR!!
FDR enacted the same kind of “shovel-ready” projects that Obama is now focusing on. It got FDR re-elected 3 times, so it makes sense to repeat a successful political strategy. Actually, FDR’s last successful bid for re-election was more due to global conflict than the economy, which was actually made worse in 1938 by all of his “efforts” to help the economy. Oh, and if you look at those who were advising FDR–all quite brilliant people–it is a virtual “Who’s Who” list of socialists who expressly disavowed capitalism and instead advocated “central planning” and government controlled business enterprises. Sound familiar? This is not my opinion; it is documented fact…and I wouldn’t even debate anyone on this point. Instead, I’d just refer them to the plethora of reference sources on the subject. You can start here.
As for the current push for “shovel ready” projects, here is a query: Are you going to pick up a shovel? Do you know anyone who will be picking up a shovel? The beneficiaries of this massive expenditure of phantom money will be a small group of folks with big lobbying budgets who are located in swing states. (And those that are publicly-traded will receive our continual attention so that we can indirectly make money off this impending fiasco. Specifically, I’m looking at the companies who transport the stuff to locations where other companies build the stuff that we are now spending money that we don’t have. Railroads, basic materials, etc. We can participate along with these folks as they capitalize on the government’s largesse).
SEPARATING ECONOMIC OUTLOOK FROM MARKET DIRECTION
But as I often say here, we’ve got to separate the market from policy. We will indeed make money off the economic stimulus package…but I seriously caution anybody who is buying into this hype and forming long-term investing decisions based on the promise that “this time will be different”. It won’t. As I write this, I hear the words “change, reform, accountability, new sense of responsibility” repeatedly bantered about in the latest “Presser”. But there is no evidence that these concepts have ever been adhered to by the person making those comments. Rather, there is simply this tacit acceptance of the media that “this time will be different.”
Right.
Just step back and think for a minute. If it were easy to fix the types of problems that face us, then why would the problems have arisen in the first place? None of these types of social programs have ever worked before. It’s fine to ruminate and muse about a new future where everyone gets along and all are prosperous, happy and satisfied.
Sigh. My heart is all aflutter. A new beginning! The new dawning of the Age of Aquarius!
Well, I hate to burst any bubbles, but the Fifth Dimension isn’t around anymore to sing that uplifting song that marked a generation of promiscuous deadbeats, drug users and loafers. (Ah, the good old days!) We’ve not got a new performer now singing slightly different lyrics — but the message is the largely the same.
EXPERIENCE? WE DON’T NEED NO STINKING EXPERIENCE!
Now, the rhetoric has morphed from “experience” to “change”. But here’s the problem — Mr. Obama has the same tools at his disposal. Nothing has changed because nothing is new under the sun. Do you really…really think that an entrenched Washington establishment is going to fold up its tents just because a charismatic Chicago thug is now in the White House? If so, I’ve got good news for you — there are only 351 days until Santa Clause comes down your chimney and leaves your new toys under the tree. Don’t forget to bake those cookies.
Our new President has the least amount of experience of any President in history (except George Washington, I guess). So it defies logic that an inexperienced Commander-in-Chief, irrespective of how hip he is, or how many magazine covers he has graced, will be able to address the most troubled economy and socio-political conflicts in our lifetime, if not in our nation’s history.
Contrary to the urgings of so many otherwise-intelligent people, this is not an issue of optimism. (“Oh Dan! Stop being so pessimistic! You’re just bitter because…whatever.”) I’m not bitter (I did not vote for the other guy either). I’m a patriot who is concerned and troubled about our collective inability to learn from history. Frankly, I sincerely hope that the Obama administration is wildly successful. After all, it is in my best interests–and in the best interests of everyone–to see Obama succeed. Simply put, I’m rooting for him…but I’m certainly not fawning over him as so many others do.
This is beyond any pessimism. It is pragmatism. And pragmatism must be a part of your overall investment thesis if you wish to remain above the fray.
DO THE READING; DO THE WATCHING…THEN DO THE WORK!
Another aspect of pragmatism requires going back to something I said yesterday — that you’ve got to think for yourself and distrust everything you hear in the media–including this missive.
Do the work yourself! Do your own thinking; and then make a decision as to whether you believe the folks on TV and in print. Most are full of crap. Most are so enamored with themselves that they have completely lost objectivity — and ironically, most viewers/readers are looking for them to provide that objectivity that they so clearly lack.
And as you hear various commentators talking about returning to the prosperity of the 90’s, I’d urge you to consider three defining developments that trump any policies of the 90’s that supposedly contributed to our prosperity:
- The Pentium Chip;
- Microsoft Windows; and
- The Internet.
We have no such technological developments now. Battery powered cars and solar panels aren’t the panacea that most folks seek. Nor are new bridges and roads (unless you’re a bridge or road builder).
Focus on making money off this impending fiasco…but if you believe that it is going to hasten the economic recovery, then you are likely smoking something illegal and only occasionally used for medicinal purposes.
Is the market going to zero? No! Absolutely not. Perhaps we’ve even put in THE bottom. This year will be volatile, with ample opportunities to make plenty of money on the swings of the market. Be bullish during the despair-ridden pullbacks; Be skeptical during the enthusiasm-ridden ramps. As Buffett says: “Be greedy when others are fearful; be fearful when others are greedy.” Again, do your own work…do your own critical thinking. And believe in yourself rather than tacitly buying into what others (including me) are saying!
Markets anticipate economic cycles. The economic cycle will expand and contract as it always does. Things will get better. But all this sleight-of-hand stuff will not hasten that recovery. It is tantamount to standing on the beach in the afternoon and waving your hands while chanting “Tide! Come to me.” When the tide comes in, it’s not your accomplishment. It’s the work of the moon.
EXPECTATION MANAGEMENT: More than a Strategy; It’s a Lifestyle!
Also, the smartest thing Mr. Obama can do over the next year…or 2…or 3…is to continually look backward and disavow any responsibility for the problem and instead adopt the stance that the efforts of the new administration are devoted to cleaning up someone else’s mess. Then, finally, when the tide comes in, they can step back and take credit for fixing the problem. If I were a political advisor, that’s what I’d advise Obama to do. And I’d also advise him to immediately start running for re-election by saying that this “fix” will take at least two terms.
And by the way, if you aren’t on his email list, you can join here, where you will be privileged to get a constant barrage of email solicitations to give at least $5 for a chance to get the very Q-tip that Barack used to clean the wax from his ear on the day he was sworn in. And if you give $30, you get a nifty new T-shirt with the slogan “CHANGE Can Happen”. [The footer on the website says that it is “POWERED by HOPE”. Gosh, I’m in!]
Also, you can visit the Obama Store right here!! You should note that the “store” is actually an online store run by the Democratic National Committee. Surprised? Well it’s right there before your eyes, in 7.5 font!
Based on this brazen embracing of constant solicitations for small donations, my bet is that Obama’s re-election campaign will have more money than any campaign in history and that the political landscape will be irretrievably skewed in favor of those who want others to do the heavy lifting.
THE FREE LESSON IN GENERATING REVENUE
I know I’m learning from the brilliant tactics of Obama and the Democrats (I’m serious here!) and will soon be opening my own store on StockMarketMentor.com, where you’ll be able to buy a Dan Fitzpatrick coffee mug, a Stock Market Mentor water bottle, and for the toddlers, some jammies to wear at night with a cute little slogan on the front that says, “Trader in Training.”
Ah, but I digress.
WHERE DO WE GO FROM HERE? (We avoid the Obvious Mistake)
Continue to distinguish between the economic outlook and the market outlook. They are different. If you blend the two, you are destined for one of two fates: You could either be an analyst on Wall Street and lose other people’s money, or you could stay at home and lose all of your own.
THE REAL SOLUTION THAT WILL NEVER HAPPEN
Let’s cut to the chase in very simplistic and general terms. While this may be offensive to those of modest means who envy the rich, and to those who are rich and feel guilty about it, the best economic stimulus results from allowing more rich people to keep their money…not on giving poor people a $500 check so they can put it toward a big screen TV.
When rich people have more money, they get even greedier and expand their businesses to make even more money. This creates the very jobs that most folks are so concerned about.
When poor people have more money, they spend it. They do not save it. And that is why they are poor. Period. This may sound harsh, but most truisms are harsh. Poor people do not need free money; they need opportunities to make their own money. And rich people provide those opportunities through new businesses they start, or through tax-favorable expansions of existing business. That is why they are rich.
We are doing a disservice to the very people we are supposedly trying to help. By encouraging them to spend…they are doomed to a life of government dependency with little or no savings. At the same time, we are penalizing those who are in the best position to build businesses that provide the one thing everyone needs: a JOB!
KEEP YOUR CALENDAR OPEN FOR JANUARY 20TH!!!
Now get over to the Obama Inaugural Website, donate at least $5, and get a chance to be selected to attend the Inauguration on January 20th (ironically, my birthday) and witness the Second Coming of the Age of Aquarius.
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