Its November – but – Risk Off

November 12-2011

Normally, I begin to invest more aggressively at the start of November unless I see compelling technical or fundamental reasons to stay out of the market.

At this precise moment I consider the technical case neutral……BUT…. there are compelling fundamental reasons to be very risk adverse.

The markets don’t like uncertainty and on a global basis and USA basis there is plenty to worry about.

I know the Fed is being very accomodative on interest rates with the flip negative side being  investors   forced into the equity market for a better, but riskier, return.  AND, I know that its probably not smart to fight the Fed when it comes to interest rates. 

I also know, markets can climb a  “wall of worry” ,  BUT ….is this a normal wall ?!   To me, the ratio of sand to concrete seems way off and unsafe.  Maybe in this case,  how well  the market can climb is irrevelent. What is relevent is how much weight the worry wall will support.

As I see it, we are not in a normal expansion / recession cycle where the Fed can cook up a cure. This time the problems are global and systemic, ranging from how much Italian debt is being held by our banks to what perversions the Chinese are causing our economy by their refusal to revalue their currency…..to whether the European Union will actually end.

And then there are systemic problems in the USA which defy solution by Congress because Congress  has become so politicized.  ” Occupy Wall Street ” is signaling a need for systemic REFORM.   The signal is  that middle America has lost faith in the ability of our government and institutions to effect positive change for the vast majority of Americans.  The playing field is no longer level and people feel ripped off and powerless. 

The middle class has been dis-enfranchised by Congress, dis-enfranchised by Government Departments, dis-enfranchised by  Corporate America and dis-enfranchised by Wall Street.

Examples ? 

Congress and Government Departments have too many special interest groups thwarting the ability to effect change for the greater good of America.  Congressional staffs have been thoroughly infiltrated and corrupted by lobyists with gifts, freebees and promises of future employment.  This has made Congress non-responsive and incapable of courageous positive action. 

Government Departments ( example Defense ) are too cozy with contractors who have a vested interest in weapons…. a vested interest in war……..some war ………any war…….. the threat of war.  This is money that could be spent on improving our education system !    Industries, such as the pharmacutical industry ,  are too close to congressional  decisions such as how much the government pays for drugs.  There are many more examples of loss of control to government insiders with a personal agenda that doesn’t include what is best for America.  This ” what’s in it for me ” attitude is pervasive and brazen because it has become  too easy to get re-elected.

 When I was growing up,  I was told that more and more Americans were owning corporate stock and that we were evolving   into a nation of  employee capitalists.  The only problem is that somewhere along the way corporate managers have hijacked the corporations we own. Its as if they created a separate class of stock with rights and privileges not available to holders of common stock.  As individual shareholders we lack the concentrated strength of a CEO led management team which can suround itself  with a  layer of compliant  Board Members who appoint  committees  to decide on executive compensation which may very well include ridiculous  options and severance windfalls.   

When I get a proxy I throw it away because its a travesty to think I have any say in how MY EMPLOYEE…. the CEO …and his team perform and get paid.  All I can do is sell my shares if I don’t like it.  That’s why there are so many big caps which represent dead investments for you and me.  The list includes names like Cisco, Intel and Microsoft where cash is being hoarded instead of being put to visionary use. 

I find this situation similar to the 1930s when workers had to unionize to concentrate employee power to offset the power of management. What we need now are two or three larrge Investor Cooperatives where sufficient shares are accumulated by the Cooperative to acquire a seat on Corporate Boards to protect shareholder  interest……… with  implementation of a  system of  protection and rewards for whistleblowers.

Wall Street – I knew it was a very bad sign when partnerships began to incorporate.  That meant if things went bad  partners wouldn’t be losing their personal  capital.   As a corporation , if things didn’t work out, it would be the individual investors in the Corporation ( you and me ) who would take the loss while the former partner was protected. incentivized and rewarded as an employee Manager.  Is it any wonder that in some cases risk leverage increased from the low teens to over forty times capital.  Would you take the risk of borrowing to invest 40 times your personal net worth ?  A decline of 2.5% would wipe you out !  BUT, you would if  you thought you had an insider’s edge and your gamble carried the potential of  mega million performance bonus. And  the worst case scenario for the former partner … a big separation package with  no risk whatsoever to his personal net worth. 

Banking  –   The convenient  ” One Stop Shopping ” concept is  now  pervasive in our financial system.  All it does is allow banks to hide the negative performance of any one activity and create an overall lack of transparency.  That’s the real convenience ….the convenience to hide the truth from you. 

I’m for allowing  Bank Holding Companies to create separately reporting subsidiaries for every money business channel.   Proprietary trading results would be reported separately by a separate  trading subsidiary whose  funding would be from outside investors and be totally segregated from Bank deposits. 

I can remember during the summer of 1959 having lunch on the 52nd floor of 20 Exchange Place, NYC .  The lunch was hosted by George Moore, President of First National City Bank, the predessor of Citibank.  There were about 20 of us…new graduate school recruits to the elite Citibank  Overseas Division Training Program. I suppose in an attempt to tease our imaginations, President Moore asked if any of us could name the bank’s chief competitor.  All the obvious answers came forth.. Chase, Bank of America, Chemical Bank, etc.  Nope !  According to President Moore our main competitor was Sears Roebuck ! ??  Yes even in 1959 Citibank saw itself in the credit card lending business. And, that was an insiders preview of the Bank’s mission to become  the  one stop financial powerhouse it became .  Too bad the lines between activities within the bank became so blurred and too bad the barrier  between commercial and investment activities was viewed as an obstacle.

Even now, we don’t know how much Italian debt is on USA bank books.  Do the banks want us to know ?  No.  How many questionable mortgages are our major banks holding ?  The Fed is keeping rates low to allow Banks to slowly repair their balance sheets by borrowing at zero and lending to you and me at 19%.  So, yes,  you can be certain there will be balance sheet repair.  BUT,  you can be equally certain that there will be  sufficient profit via this artificial situation  to fund  huge  year end performance rewards for bank senior managements.  Wait and see !

All of the above systemic issues are being papered over and shoved into a corner while your attention is being directed elsewhere … to a Congressional tug of war over the budget with hope that there will be an 11th hour compromise.  Talk about shell games !

Do you think an 11th hour compromise  will solve our systemic economic problems?

Honestly, I don’t think the market can sustain a climb up such a steep and crumbling wall .  If the technicals turn positive there will  be opportunities to lock in profits on short term daily and weekly  trades but that will require close  attention and fast response .   This is not a market for the individual risk adverse investor.  At the moment the market  is undulating higher in a way to seduce  so called ”  investors “.  I think its a head fake and that there will be lots of thrills and spills just around the next bend.

Richard – Richie – RMG – Smiley from Woodlawn.

93 Responses to “Its November – but – Risk Off”

  1. tabletki na odchudzanie Says:

    You should participate in a contest for the most effective blogs on the web. I will advocate this web site!Kind regards from Belgium.

  2. Verdunkelndes Plissee Says:

    As I site possessor I believe the content material here is rattling great , appreciate it for your efforts. You should keep it up forever! Good Luck.

  3. Free MLB Picks Says:

    Once again another fine blog piece, it’s going right in my favorite’s folder.

  4. ultrasound technician Says:

    Oh wat a good post. I will keep visiting this blog very often. Keep up the good works. Thanks for this wonderful post

  5. Jason Roose Says:

    Hello from Russia . Great Work . Keep Posting Awesome Articles Like This .

  6. Business forum Says:

    Do you mind if I quote a few of your articles as long as I provide credit and sources back to your site? My blog is in the very same area of interest as yours and my users would certainly benefit from some of the information you present here. Please let me know if this ok with you. Thanks!

  7. Free Baseball Picks Says:

    I just added this blog to my Fav’s. Very well written blog piece!

  8. Free Baseball Picks Says:

    I never realized how much work it takes to start a blog. I just tried making one myself, not very easy! Keep up the good work.

  9. MLB Picks Says:

    I guess I’m with you on this one! Nice read!

  10. Free Baseball Picks Says:

    Good stuff here! Well written and nicely explained.

  11. zakłady bukmacherskie Says:

    Thank you very much for another helpful post. I have been a big fan for a few months, and I have been enjoying ever second of it With so many autogenerated blogs out there, its refreshing to find a real one. I run a blog that is very similar, is there any way you would write a guest post on it? Shoot me an email if you are interested!

  12. vanliga frågor massage Says:

    vanliga frågor massage…

    […]b I do enjoy the way you have framed this situation plus it does provide me a cp[…]…

  13. more information Says:

    more information…

    […]u Well written post. I have added it witout a doubt. Have a nice sunday! bf[…]…

  14. webrazzi vizesi Says:

    Wuuu I love you i love you… very perfect document.. Hey admin this sharing is better and most of the world vizemgentr

  15. San Diego Immigration Lawyer Says:

    Hey, thanks for the blog post.Really looking forward to read more. Want more.

  16. San Diego skin care Says:

    Thanks so much for the post. Fantastic.

  17. fsc teak Says:

    A round of applause for your blog. Great.

  18. Therapist San Diego Says:

    Awesome blog.Really looking forward to read more. Really Great.

  19. Vada Brine Says:

    Thanks-a-mundo for the post. Great.

  20. MLB Picks Says:

    I just added this blog site to my bookmarks. I look forward to more insightful posts.

  21. Free MLB Picks Says:

    I appreciate you taking the time to write this blog, it was very interesting.

  22. Free MLB Picks Says:

    Well… I was very intrigued by this blog. I found this very informative. I look forward to hearing your opinions soon.

  23. Johnny Salerno Says:

    Greetings! I’ve been reading your blog for some time now and finally got the courage to go ahead and give you a shout out from Austin Tx! Just wanted to say keep up the excellent work!

  24. Pok Flemmings Says:

    I really like the style of this post! Keep it up!

  25. Painting San Diego Says:

    Thank you for your blog post. Fantastic.

  26. Eliotte Says:

    Enormement de personne n’ose pas parier en Bourse. Le monde des options binaires leur semblent trop difficile et peu savent que les probabilités de succés avoisinent les 50%. C’est la raison pour laquel les Traders et Brokers du monde entier s’en mettent plein les poche souvent avec la Bourse en ligne. Si Trader vous interesse : Jouer sur les Options Binaires

  27. Maya Lecomte Says:

    Genuinely educational thanks, It is my opinion your trusty readers could quite possibly want considerably more articles similar to this carry on the excellent content.

  28. tips for wordpress Says:

    I like the valuable info you provide in your articles. I’ll bookmark your blog and check again here regularly. I’m quite certain I’ll learn many new stuff right here! Best of luck for the next! 😉

  29. San Diego Hardwood Floors Says:

    I think this is a real great article post.Thanks Again. Awesome.

  30. Roofer San Diego Says:

    Very good post.Really looking forward to read more. Keep writing.

  31. uslugi it Says:

    Heya i’m for the first time here. I found this board and I find It really useful & it helped me out much. I hope to give something back and aid others like you aided me.

  32. teak wood Says:

    Great, thanks for sharing this blog article.Really thank you! Really Cool.

  33. puls stacja Says:

    I really like your writing style, fantastic info , thankyou for putting up : D.

  34. automobile extended warranty Says:

    Very informative and superb body structure of articles , now that’s user friendly (:.

  35. top fat burners Says:

    Hi There is obviously a lot to know about this. I think you made some good points in Features also.Keep working ,great job!Best regards from Ireland.

  36. orange county auto accident attorney Says:

    Only wanna input that you have a very nice site, I enjoy the style it really stands out.

  37. Jake Drury Says:

    Normally I don’t read post on blogs, but I would like to say that this write-up very forced me to try and do it! Your writing taste has been amazed me. Thanks, quite great post.

  38. engine repair dallas Says:

    I reckon something genuinely special in this site.

  39. Ray Deshotel Says:

    Post very interesting and informative, thanks.
    Miami Computer Repair

  40. business coaching Says:

    Appreciate it for this wonderful post, I am glad I found this site on yahoo.

  41. electric chain saw Says:

    Some times its a pain in the ass to read what blog owners wrote but this site is rattling user pleasant! .

  42. best marketing videos Says:

    Its good as your other content : D, appreciate it for posting .

  43. www.firearms-training.info Says:

    Some really wonderful blog posts on this internet site , thanks for contribution.

  44. mudjacking milwaukee wi Says:

    Lovely just what I was looking for.Thanks to the author for taking his time on this one.

  45. postcards Says:

    My spouse and I absolutely love your blog and find nearly all of your post’s to be what precisely I’m looking for. Would you offer guest writers to write content available for you? I wouldn’t mind writing a post or elaborating on a lot of the subjects you write in relation to here. Again, awesome website!

  46. Derrick Tomassi Says:

    Great, thanks for sharing this article. Cool.

  47. privacy Says:

    Perfectly composed content , Really enjoyed examining .

  48. http://www.eg-forex.com/ Says:

    Thanks for all your efforts that you have put in this. very interesting info .

  49. retail architect Says:

    Yeah bookmaking this wasn’t a high risk decision great post! .

  50. house clearances Says:

    so much excellent information on here, : D.

  51. all casino bonuses Says:

    Woh I like your articles , saved to fav! .

  52. get houses cheap for investing Says:

    Lovely just what I was looking for.Thanks to the author for taking his clock time on this one.

  53. website here Says:

    Nice Website , guys! Great Information aswell. I bookmarked your site

  54. mini video camcorder Says:

    Thanks on your marvelous posting! I truly enjoyed reading it, you can be a great author.I will ensure that I bookmark your blog and will eventually come back down the road. I want to encourage that you continue your great posts, have a nice evening!

  55. my tia lopes Says:

    I see something really special in this website .

  56. bullying assemblies Says:

    Its fantastic as your other articles : D, thanks for putting up.

  57. cialis Says:

    Youre so cool!…

    Spot on with this write-up, I truly think this website needs much more consideration. I’ll probably be again to read much more, thanks for that info….

  58. portable oxygen concentrators comparison Says:

    I enjoy your writing style truly enjoying this web site .

  59. small business insurance brokers Says:

    Exactly what I was searching for, regards for posting .

  60. investment software Says:

    Yeah bookmaking this wasn’t a bad decision great post! .

  61. gas pipeline companies Says:

    I reckon something truly special in this site.

  62. skin care salon San Diego Says:

    Very neat post.Thanks Again. Want more.

  63. Trade Show Display Says:

    Thanks for sharing, this is a fantastic blog article. Awesome.

  64. www.mydentisthuntsville.com Says:

    Enjoyed examining this, very good stuff, thanks .

  65. chiropractor boise Says:

    Regards for helping out, great info .

  66. click here for more Says:

    Lucy Dipierro…

    I could not resist commenting. Well written!…

  67. no title Says:

    Hey! Someone in my Myspace group shared this website with us so I came to look it over. I’m definitely enjoying the information. I’m book-marking and will be tweeting this to my followers! Wonderful blog and fantastic design and style.

  68. study video script Says:

    Woh I like your articles , saved to fav! .

  69. Home Care Los Angeles Says:

    Fantastic post.Thanks Again. Really Cool.

  70. read about brisbane painters Says:

    I am not very wonderful with English but I find this real easy to understand .

  71. Alba Cale Says:

    A great article, I really enjoyed it, be sure to visit other pages on this site and e-mail it to friends!

  72. medical spa Says:

    Thanks a lot for the article.Really thank you! Fantastic.

  73. monogram necklace Says:

    Thanks for a marvelous posting! I genuinely enjoyed reading it, you’re a great author.I will always bookmark your blog and will come back later on. I want to encourage yourself to continue your great posts, have a nice evening!

  74. psychic chat rooms Says:

    Appreciating the commitment you put into your website and detailed information you present. It’s good to come across a blog every once in a while that isn’t the same unwanted rehashed information. Wonderful read! I’ve saved your site and I’m adding your RSS feeds to my Google account.

  75. fitness Says:

    I was looking through some of your articles on this site and I think this internet site is real instructive! Keep on putting up.

  76. take a look at the site here Says:

    Thanks for a marvelous posting! I really enjoyed reading it, you’re a great author.I will ensure that I bookmark your blog and will come back someday. I want to encourage you to definitely continue your great work, have a nice day!

  77. britax marathon 65 replacement cover Says:

    Thanks for a marvelous posting! I definitely enjoyed reading it, you may be a great author.I will remember to bookmark your blog and will eventually come back later on. I want to encourage you to ultimately continue your great writing, have a nice afternoon!

  78. cialis Says:

    ativan…

    Simply Super Duper!…

  79. Home Care Los Angeles Says:

    Thanks again for the blog post.Really looking forward to read more. Much obliged.

  80. International Health Insurance Says:

    Thanks so much for the blog article. Really Great.

  81. nuwave 20322 pro digital controlled Says:

    Hey! This post couldn’t be written any better! Reading through this post reminds me of my previous room mate! He always kept talking about this. I will forward this post to him. Fairly certain he will have a good read. Thank you for sharing!

  82. Chet Casilla Says:

    Hey There. I found your blog using msn. This is a really well written article. I’ll be sure to bookmark it and return to read more of your useful info. Thanks for the post. I will certainly comeback.

  83. pa-1500-02c1 Says:

    I regard something genuinely interesting about your weblog so I saved to my bookmarks .

  84. Painting San Diego Says:

    Great, thanks for sharing this blog.

  85. San Diego Residential Painting Says:

    Muchos Gracias for your blog post.Really thank you! Want more.

  86. Felipa Suttin Says:

    This is one awesome article.Really thank you! Cool.

  87. International Health Insurance Says:

    wow, awesome blog post.

  88. omnipak poly bags packaging materials Says:

    I am very happy to read this. This is the kind of manual that needs to be given and not the random misinformation that’s at the other blogs. Appreciate your sharing this best doc.

  89. bissell 86t3 big green Says:

    Thanks on your marvelous posting! I seriously enjoyed reading it, you could be a great author.I will remember to bookmark your blog and will come back very soon. I want to encourage that you continue your great work, have a nice evening!

  90. http://www.findinsurancetoday.com/ Says:

    This іs the гight webpage for everyone whο hopes to unԁerstand this tоpiс.
    You realize a whοle lot its аlmost tough to argue
    with you (nοt that I reаlly ωoulԁ
    want to…HaHa). You ԁefinіtely put a fresh spin οn a topiс that’s been written about for many years. Excellent stuff, just great!

    Also visit my web page http://www.findinsurancetoday.com/

  91. tumblr bimbo Says:

    richardmgore.com is genius, i love it

    [url=http://bimbomaker.tumblr.com/]bimbo pictures
    [/url]

  92. dck211s2 Says:

    Appreciating the persistence you put into your blog and in depth information you present. It’s awesome to come across a blog every once in a while that isn’t the same outdated rehashed information. Wonderful read! I’ve bookmarked your site and I’m adding your RSS feeds to my Google account.

  93. escort Toulouse Says:

    I discovered your blog using yahoo and I must say, this is certainly one of the best well prepared articles I have viewed in a long time. I have bookmarked your site for additional posts.

Leave a Reply