Greetings to All,
The next meeting of the Scarlet Kings will be held on
Sunday, August 7th, 2011 at 12:30PM.
Location: La Madeleine (5290 Belt Line Road, Addison, TX)
Please join us for a fruitful and lucrative discussion!
Very Sincerely,
VJ
Sunday, July 31, 2011
Thursday, July 14, 2011
Meeting Minutes
We had a lively meeting at Chili’s! We had a total of 7 attendees: (from left to right) Earl Landry, Kevin Day, Jeff Harrington, Elena Swindull, VJ Arjan, and there were 2 others who out of respect for their privacy wish remain anonymous.
Dismal Employment Numbers
During the past week, the Department of Labor released the official employment numbers, which were very disappointing and give cause for worry to investors about the economic slump we are still crawling out of. The report stated 18,000 jobs created; the expectation was in the vicinity of 175,000.
As the days tick by to Election 2012, these employment numbers will become increasingly more and more important for the current President, who is the front-runner Democrat seeking re-election.
The Market Euphoria and the 4th of July Rally
During the past two weeks, the Dow Jones Index rose 800 points. The question is ‘What are investors really that excited about to cause such a rally?’ Kevin Day reminded us that the market is also a human animal that experiences frenzies and psychological euphoria. The long-term recovery will take a long time; today’s large institutional investors, for the most part, are still scared and not euphoric about the market. The rally has also coincided with the famous Independence Day rally, which is a psychological metric as well.
As for the future direction of the marketplace, there is much uncertainty. Will the U.S. economy climb on past this crisis shortly or will it remain in a bear market for the next decade? Kevin believes that the U.S. economy has shown much resiliency in past crises and that the American people will ultimately decide to put through austerity measures that will lead to a balanced budget and a stable economy.
From a chartist’s perspective, the market looks like it is heading for a correction for at least the near-term. But at the end of the day, fundamentals will always lead the economy over the long-term. It is on these that we’ll continue to focus: unemployment rate, housing, interest rates, etc.
The GOP Contenders
Mitt Romney seems like he is the front-runner candidate for the GOP. A former governor and successful businessman, he is someone who can seem Presidential. His Mormonism may or may not be a deciding factor for him, we will have to wait and see how it plays out.
He has been receiving competition from Michele Bachmann, who seems like a more moderate Sarah Palin, but who nonetheless panders to the extreme wings of the Republican party, the Tea Party Movement. Her radical views may ostracize her appeal, while Romney seems to maintain a good balance.
Kevin Day explained his view that it could certainly get more interesting if Rick Perry threw his hat in the ring. He is also a successful governor, generally liked by his state, and has served this role for more than a decade. The key stumbling block for him is if he can in a limited amount of time get his name out there quickly and win the votes from other states. He probably has another 60 days before it’s too late.
The Economic New World Order
We had a spirited conversation about the new world economy, which is, instead of being single nation-states who are mass producer of goods and services, is becoming individual economic hubs of specialty.
For instance, previously state-centrist countries like China, who isolated itself from the world economy until 1973, had produced everything from automobiles to infrastructure for the state. Now, the automobiles are being imported from Daimler and the GM and infrastructure from General Electric are being imported while China focuses on non-durable manufactured goods like clothes, textiles, etc.
The Germans also provide for the world cloud computing and enterprise management software solution through SAP. The Japanese provide consumer electronics for the entire world. The United States underwrites global military security and healthcare research. Each country is no longer trying to be jack of all trades, but a master of just a few.
Man vs. Country
VJ Arjan discussed a terrible paradigm the world is shifting to based on the book ‘Latitudes and Attitudes’ by Thomas Friedman. It talks about the first war in history that a country has gone to war over, not another country or even a nation-state, but an angry individual empowered with the capacity for great destruction. In the late 1990s, the late Osama Bin Laden’s al-Qaeda destroyed two American embassies in Africa. One week later, the President and the CIA authorized 75 cruise missile weapon strikes toward the alleged hideout of Bin Laden in Afghanistan. Each missile cost $1 million dollars apiece. How much did the U.S. spend in that strike alone in one week against one individual: you can do the math.
These Pancho Villa-like renegades may be our future. It is not the country who declares war upon us, but the madman who decides to strap a bomb to his chest and enters a restaurant that we will have to protect ourselves against.
Undoubtedly, the greatest and most effective remedy to combat terrorism is to encourage prosperity and participation in the global economy. It is not a coincidence that many of these jihadis are unemployed and disaffected economically. More times than not, people will put down their guns and grenades if they’re making money and living comfortably.
What The West Does Not Hear
Too often, in the West, in the conflict in Jerusalem, Israel is portrayed as the good guy and the Palestinians as the bad guy. This is not the case. One of our members explained how Israel, although on the surface, can be compromising, they have abused their military superiority to the detriment of the Palestinians multiple times as well. Take a look at changing borders of Israel:
Does this mean the Israeli’s are the only ones to blame. No, the Palestinians too often have taken on the victim role and served up impossible negotiations to the Israelis. Frankly, they do not have much to bargain with, as their military is, fortunately or unfortunately, nowhere near as powerful as Israel’s.
EQ vs. IQ
We had a discussion about the determining factors of the person who attains success: is it EQ (Emotional Quotient) or IQ (Intelligence Quotient). Well, it certainly can be both, but the conclusion we came to is that EQ is more important than IQ. There are plenty of people with high IQs that because they do not know how to manage their emotions or the relationships they have with others end up not seizing the success they could have.
On the other hand, there are plenty of examples of people with high EQ who end up creating empires, who also had little IQ. The founders of Pilgrims Pride Chicken and the Weir Brothers Construction Company are two examples. These people are centi-millionaires and billionaires and yet they have a difficult time speaking or spelling correctly.
It turns out that people with high IQ end up working for people with high EQ. The ability to deal with yourself emotionally and to deal with people effectively is by far the greatest asset a person can have.
As legendary titan of industry John D. Rockefeller Sr. said,
“The ability to deal with people is as purchasable a commodity as sugar or coffee and I will pay more for that ability than for any other under the sun.”
The world is increasingly becoming less adept at social skills. Earl Landry was relaying an experience of a recent wedding he went to where no one on his table took the basic courtesy of introducing himself or herself to the others. He thinks that many people have holed themselves up into a bubble of technology and that limits and numbs their social skills.
New Simulated Portfolio
If you recall, we have a simulated portfolio that was created in November 2008 and was tracked for the Scarlet Kings every quarter. It may be time to re-examine if there are any changes to be made, additions or otherwise. We can discuss them at the next meeting.
July 2011
| Security | Entry (Oct 08) | Current Price | Profit/Loss |
| FXI (iShares FTSE/Xinhua China25 Index | $25.16 | $41.20 | $1,604 |
| ILF(iShares S&P Latin America 40 Index) | $26.60 | $49.62 | $2,302 |
| EWZ(iShares MSCIBrazilIndex) | $37.69 | $69.54 | $3,185 |
| PBJ(PowerShares Dynamic Food & Beverage) | $13.27 | $20.13 | $686 |
| GUR (SPDR S&P Emerging Europe) | $29.74 | $50.67 | $2,093 |
| FCX (Freeport-McMoRan Copper & Gold Inc.) | $14.53 | $54.25 | $5,038 |
| WLT (Walter Industries – metallurgical coal) | $38.75 | $109.63 | $7,088 |
| VALE (Companhia Vale do Rio Doce – gold mining) | $13.12 | $32.23 | $1,909 |
| GVA (Granite Construction Inc.) | $35.67 | $24.72 | -$1,095 |
| MT (Arcelor-Mittal ADR) | $26.25 | $32.11 | $586 |
The next meeting will be on Sunday, August 7th, 2011. For those who have not attended a meeting, but would like to attend, please email your wish scarletkings@gmail.com
Sunday, July 3, 2011
Next Meeting of the Scarlet Kings
Greetings to All,
The next meeting of the Scarlet Kings will be held on
Sunday, July 10th, 2011 at 12:30PM.
Location: Chili's (4500 Belt Line Road, Addison, TX)
Please join us for a fruitful and lucrative discussion!
Very Sincerely,
VJ
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