Next Meeting of the Scarlet Kings

Greetings to All,

The next meeting of the Scarlet Kings will be held on

Sunday, September 5th, 2010 at 12:30PM.

Location: La Madeleine (5290 Belt Line Road, Addison, TX)

Please join us for a fruitful and lucrative discussion!

Very Sincerely,

VJ

Meeting Minutes

We had an insightful meeting today at one of our favorite spots, Romano’s Macaroni Grill! We had a total of 6 attendees: (from left to right) Tommy Schultz, Kevin Day, Jeff Harrington, VJ Arjan, Rashi Dhanak, and Andrew Whatley.

The Vegas of the Middle East and the Arab Identity Crisis

We had a very interesting guest today, Rashi Dhanak, who is visiting from Dubai. The first 40 minutes of our meeting were focused on her first-hand account of living there including, lifestyle and viewpoints.

Rashi confirmed what Kevin Day had expressed was his viewpoint when he went to Dubai and that is most of the residents there were focused principally on the pursuit of wealth. Not surprisingly, 85% of its inhabitants are expatriates from India, Pakistan, Bangladesh, and the Phillipines who are there principally to make a living.

This increased focus on the accumulation of wealth has led to an identity crisis for the Arabs in the region. The young, many of whom are educated abroad, bring something back from there and so change what the Arabs in the region would like to keep. Foreigners can be dealt with harshly if they refuse to abide by the rules in Dubai.

Kevin Day recalled an incident of involuntary house arrest on a British national who had gone there for vacation, whose passport was seized and reportedly had to bribe some officials to get it back and be sneaked from the country.

In addition, Dubai, which has recently survived a financial crisis of its own has been forced to sell some of its prized possessions, like the Burj Dubai (subsequently named Burj Khalifa), to its neighbor, the oil-rich emirates of Abu Dhabi. The names on the buildings are literally scratched out and written over further expounding the “foreign influence.”

Not surprisingly, Rashi continued, the Arab sentiment toward the United States is not very favorable, but this may be more so due to its anti-foreign sentiment as there are many who want to and do leave Dubai to come live in the United States.

Hilary Clinton

Kevin Day, in a rare display of sympathy and exaltation toward the Democratic party, reaffirmed his view that Hilary would become President in 2012 and also extolled her abilities as Secretary of State. He remarked that in this world of turmoil and a great need for diplomacy toward the U.S. world relations, she has done a spectacular job in preserving the peace.

He continued that there were plenty of chances for her to go into countries and bully them around and further entrenching the “might is right” belief that many countries hold toward America, but she has not and instead has provided a soundboard for compromise and facilitation of good relations.

Jeff Harrington remarked on Bill’s role if this was to occur, and he believes that Hilary will be very independent in how she governs. Bill may be a “flea in the ear” every now and then, but nothing more.

The Taxation of Dividends

There is talk from Congress of introducing a tax on dividends that would approach 44%. This is an incredulous way to redistribute the wealth from the rich to the poor, a sort of Robin Hood legislation.

Jeff Harrington predicted that if this were to happen, corporations would very likely slash dividends completely. What would be the point if it were to be taxed 44%?

This would also change, Jeff continued, how analysts value companies, who are valued principally on the dividend model. This could mean valuations being done by the free cash flow to equity model or economic value added (EVA).

Disconnected Michelle Obama

We talked about the expenses being racked up the current first lady, Michelle Obama. Currently she is in Spain, her eighth vacation, since President Obama took office a year and a half ago. Each vacation requires her to book 60 rooms due to secret service and other personnel – this can add up very quickly, to several million dollars. She is also noted to sport the very best thousand dollar dresses and $500 shoes at public events; all this while the country is suffering tremendously financially. Kevin Day and Jeff Harrington were discussing her attitude as “I’ve got my one shot and let them eat cake.”

A Lesson From Japan

Above is the chart of the Nikkei 225. VJ Arjan explained how in the beginning of the 1990s the Japanese central banks following the asset price bubble from 1986 to 1991 decided to prop up their large “zombie businesses” who were on the brink of default. Interestingly enough, this lead to Japan’s lost decade where the stock indices basically traded within a range, essentially going nowhere, while economic growth (according to government statistics) still continued. This may very well be the predicament of the American stock market as well.

But Kevin Day was apt to point out that this is always a market of stocks and not a stock market. There will continue to be opportunities despite what the overall market does.

Is President Obama going to be the Jimmy Carter of the Age?

“Carter was a harmless, bumbling fool.” – Kevin Day

VJ Arjan posed to the group the analogy posed in the press recently comparing President Obama to Jimmy Carter. Suffice it to say, President Obama is not a Jimmy Carter, besides the fact that each have a Nobel prize that is debatable as well.

Kevin Day believes that Obama is truly determined upon creating a more socialistic society and is taking out precise actions to this goal. Carter was a poor president due to his tendency toward inaction and thus a very ineffective president.

Where the Market is Headed

Any good technician can see that there is great resistance at the $10,700 level on the Dow Index. If there is a break downwards, and we assume that we are in a downtrend, then the next level of support is past $10,000 towards $8,500 (higher highs, and lower lows).

The next meeting will be on Sunday, September 5^th, 2010. For those who have not attended a meeting, but would like to attend, please email your wish to VJ Arjan at scarletkings@gmail.com

Next Meeting of the Scarlet Kings

Greetings to All,

The next meeting of the Scarlet Kings will be held on

Sunday, August 8th, 2010 at 12:30PM.

Location: Romano's Macaroni Grill (4535 Belt Line Road, Addison, TX)

Please join us for a fruitful and lucrative discussion!

Very Sincerely,

VJ