A candid meeting of minds about subjects varying from making money in the markets to the vagaries of the human psyche to the philosophical aspects of man and much more...
As you all know, we've been meeting up for a while now, for several years. But in addition to growing tremendously from each other and learning from each other, maybe our conversations have made us famous as well. If you search the words 'Scarlet Kings' on Bing or Google today - we are #1 on Bing and #2 on Google! Basically that means that we are more popular, more searched than a country music band by the same name. Below are screenshots:
(Click above for larger image)
Thank you all for making this group a successful one!
We had a
wonderful meeting today at The Olive Garden! We had a total of 4 attendees: (from left to right) VJ Arjan,
Kevin Day, and another who chooses to remain anonymous. Ry Zamora also joined us later on as well.
Eurozone Drama
We
started off the meeting by remarking how the Eurozone crisis as been sidelined
of late and investor sentiment regarding the issue can be described as mild
apathy. This is probably due to a
variety of reasons:
·Ry
mentioned how August is a vacation month (or Ghost-month, according to the
investor world), not to mention that the world is still coming off of Olympic
fever
·It
was mentioned that it is in Germany's best interest to preserve the Union and
continue to benefit from various free trade agreements it has with the other
countries in the Union, being a primarily export-driven economy
However,
Kevin mentioned how Europe is still a grave concern and although it may not
provide for a source of heart ache at the moment, its problems can only be
stuffed under the rug for so long until a critical mass is reached.
Even
the ECB's recent promise to ultimately sign over a blank check for buying up
sovereign debt of the PIIGS can and will only work if the sovereign nations put
through severe austerity measures, which are a strict condition of the ECB's
blank check policy. Otherwise, the
inevitable collapse is merely being delayed.
Ry
mentioned that an important date to keep in mind regarding the Eurozone is September
12th, which serves for the general election for the Netherlands and also the
deadline on policy regarding Euro member economic integration.
Obamacare
Kevin
explained that if it was any doubt what the doctors in the state of Texas feel
about Obamacare, they are decidedly against it.
He recently went to his doctor and it seemed that the subject of the oppressive
measures put into place by Obamacare seemed to pop up no matter what the topic.
As
for the rest of the country, it is evenly divided - contested and approved:
As
a real-life example of the "might makes right" allegory first
expounded in the legend of King Arthur, the reality of being the lone
super-power in the world is quite a different story altogether, one which adds
to the mix the human emotions of envy and jealously.
Kevin
Day, who has lived in the United States since the 1950s explained how during
the last half century, the United States has increasingly taken on the role of "big
brother" in some cases, and "big bully" in other ones.
The
result is that today due to President Bush's foreign policy foible of invading
Iraq, we have a scenario in which a Great White Shark is in the midst of a
multitude of hungry pirahnas. It is quite clear that much of the world would
prefer that we first are able to take care of ourselves before being bold
enough to take care of others.
However,
this is also much more easier said than done.
In a world where, Russia and China, want to involve the U.S. in a war
that can distract their attention away from their "spheres of
influence" and one in which America's enemies forge alliances, like the
one recently forged between Iran and North Korea to share information on
military technology, in the new world order, the United States must carefully
pick and choose its battles.
VJ
brought up that if history is any guide, any empire in the last began its
decline when it ceased to recognize that it simply could not sustain its place
in the world any longer. Often times
like in the Roman Empire, the abuse of credit led rapidly to its fall. This is especially the case when the empire
in question has to uphold its empire, while engaged in wars. This was the fatal flaw of the British
Empire, which by the end of World War I had instilled into place the foundation
that would lead to the unwinding of its colonialist and mercantilist presence.
Bush Tax Cuts
Kevin
mentioned that the feed from the grapevine suggests that the Bush tax cuts,
which are due to expire at the end of this year, will be extended, but only in
regards to the policy regarding the taxation of long-term capital gains tax,
which will be kept at 15%. The
modification of the policy will demand a more hefty tax on corporate
taxes. It is still ultimately
detrimental to the investor, but indirectly so.
The Negotiator President
We
discussed in length the GOP convention and what effect it made upon the
election, if any at all.
Kevin
suggested that picking Paul Ryan as his VP was beneficial to Mr. Romney's
ticket. His emphasis on the reduction of
the fiscal debt and also in rolling back entitlement programs, like Social
Security and Medicaid, programs that will balloon to be bigger than any amount
of political rhetoric in the future,
will curry favor to the fiscally conservative Independents, who will largely
decide the election this year. As is the
case generally in every major election, each party will support their candidate
in the election.
That
being said, we also discussed Mr. Romney's greatest setback, which is the
impression that voters have of him as being "out of touch", or at
least "less in touch with the common man". His ticket will largely depend on whether or
not he is able to broaden his base to appeal to many more groups of people. He is, however, becoming a much better speech
maker and has gotten progressively better as the election has rolled on.
On
the other hand, the Democratic conventions, appear to have nailed this piece. VJ explained that although the Republicans
will make it difficult for Mr. Obama to secure his second term, Mr. Obama sheer
presidential charisma may lead him, albeit unfortunately, to a victory.
As
voters take sides, the next great challenge ahead for both candidates are the 3
debates in October - 2 Presidential candidate debates, and 1 for the
Vice-President candidates.
We
all discussed what exactly Mr. Obama's shortcomings were as President and we
all agreed that his greatest shortcoming was his inability to get both parties
together to lead them to a compromise.
In this regard, President Clinton and President Reagan were able to do
this effectively during their tenure.
However,
the greatest negotiator of them all, may have been President Thomas
Jefferson. During his day, if there were
ever a point of contention between the parties, or a highly bi-partisan
attidude regarding an urgent issue, Mr. Jefferson would literally call the more
extreme fringe elements into a room, close the doors and they would literally
stay there together until there was a compromise agreed upon. Not only would he close the doors, he would
close the windows as well so that the stuffy environment would lead to a swift
conclusion. In one word,
leadership.
No
doubt, today, we also have individuals on both sides that are taking on extreme
views. The rolling in of many Tea Party
candidates during the last Congressional elections has not lead to forward
progress but a virtual stagnation in policy making. In fact, the majority of the public's
disillusionment is not as much with the President than it is with Congress, the
former of which currently has a 45-50% approval, while the latter has a 15-20%
approval rating.
VJ
mentioned that at times like these, it would be helpful for our Congressional
leaders to remember the words of Nelson Mandela, who advocating the attitude of
having the "brain dominate the blood". The logical conclusions of one's actions must
take precedence over the emotional ones.
Greed
(Hetty Green, Witch of Wall Street)
"Greed is good." - Gordon Gekko, Wall Street
Recently
an inherited Australian billionaire, Gina Rinehart, made the comment
that poor people should "spend less time drinking, or smoking and
socializing and more time working" and also advocated a $2-a-day wage for
Australian mine workers.
For
such a statement to come from someone who perhaps hasn't had to work in her
lifetime, is a real tragedy. It is
possible that there is a great inner insecurity for such people who complain
about the wages being given to workers while they themselves have been give so
much.
It
reminded VJ of Hetty Green, the "Witch of Wall Street" who during the
Gilded Age of the late 1800's made a fortune of $100 million from American
railroad bonds. For your amusement, here
were some curious quirks of hers:
·Despite
being a multi millionaire, she never turned on the heat or used hot water
·She
wore one black dress and undergarments that she changed only after they had
been worn out
·She
did not wash her hands and ate pies that cost 15 cents
·The
rumor goes that she once spent a whole night looking for a stamp that cost 2
cents
Market Bias and Investments
The
meeting minutes would not be complete without a mention of the economic
environment yet to come.
Here were some
points and some investment opportunities that were brought up:
·VJ
noted that the Dow has been unable to break the 13,200 level 4 times since
April. It serves as a key resistance
point at the moment.
·The
Federal Reserve hinted in its recent minutes that more easing would come
"fairly soon" giving investors a harbinger of the anticipated QE3.
·The
housing market is showing signs of a recovery as median home prices were up
9.4% from 12 months ago.
·There
is an evident slowdown in the emerging markets.
China's Producer Manufacuring Index is now flat to down from over a year
ago. However, Kevin believes that the
slowdown will be merely that and that a collapse will not ensue.
Potential
Investments
·GEJ
- General Electric Preferred Shares
·GJM
- GMAC Long-term Notes (7.5% yield)
·CII
- BlackRock Enhanced Capital and Income (9.5% yield)
·TLT
- iShares 20+ Year Treasury Bond (short candidate)
·SAIA
- Saia Inc. (trucking company with healthy operating margin and low debt)
·SGC
- Superior Uniform Group (no debt, 4.5% yield)
·NFLX - Netflix ·GOOG - Google ·V - Visa ·MC - Mastercard ·CRR - Carbo Ceramics
NASA Curiosity
Mars Landing
It
is amazing to see how the rocket scientists and astrophysicists at NASA can
display the excitement of the avid football fan, but here it is and it is a
real pleasure to watch. Enjoy!
The
next meeting will be on Sunday, October 7th, 2012.
For
those who have not attended a meeting, but would like to attend, please email
your wish to VJ Arjan at scarletkings@gmail.com
Also I find that there are many domestic and
international readers who are following our blog posts not only in the United
States but all over the world including Europe, Latin America, and Asia. If you
wish to be added to our email list, please email at scarletkings@gmail.com
