How Traders Make 28% Returns In A Day

Friday's stock market had a distinct sense of deja vu about it. Even though it was down overal, I was reminded of the crazy dotcom days in late 1999 when any tech stock could rally 25-50% in a single day!

One of my friend's subscribes to a stock newsletter. Periodically he gets an email alert informing him when a stock is about to make a significant jump. He often sends them to me and I usually look at them and then ignore them. Yesterday he sent me an email about a China Clean Energy Inc (CCGY.OB).

By the time I got the email, it had already jumped 30% that day, but I really liked the chart. It had retreated about 15% from the highs of the day and looked like it was ready to make a move back up to the $2 range.

This is what the chart that I follow looks like.


The image is bit hard to understand since they're aren't any notations on it. The first chart is the intra-day stock price of CCGY.OB for September 28th 2007 using Candlesticks. It also has the bollinger bands and exponential moving average lines.

The 2nd chart with red and blue vertical lines denotes the volumne. The 3rd chart is the Relative Strength Index (or RSI) with oversold and overbought indicators.

The 4th chart is the Moving Average Convergence/Divergence indicator orMACD.

The last chart is the Slow Stochastic.

From these charts I felt that there was sufficient momentum in the stock to carry it higher, despite it having already jumped 30%. I was able to buy in at $1.73 around 12 pm EST (which was 9 am for me) and sure enough it continued higher throughout the day.

It closed the day at the highest price of $2.23, for a stunning 28.9% one day gain! Although the stock was up ~60% for the entire day, I was very happy with my 28%. Made me feel like I was reliving the good old dotcom (or dotbomb) days.

Here's a much better daily chart.


Very rarely do I buy stocks based on tips and without looking at any underlying fundamentals. Usually, the newsletters that I subscribe to, will recommend a stock based on good, solid fundamentals and I will use the charts to determine the market sentiment for that stock and a good entry point. Recently, Freight Car America (RAIL) was recommended, but the chart looked terrible and I didn't buy it. Sure enough it dropped from it's recommended price of $48 and is now trading at $38. Here what the chart looks like. I'll wait until the technicals improve before I jump in on that one.

Sometimes this strategy will backfire because some breaking news will come out that will send the stock shooting the opposite direction than expected, but it doesn't happen often enough. And unexpected news can make value investors look like fools too!

Most traders use some form of technical analysis. Many investors believe that technical analysis is rubbish and doesn't work, but they probably feel that way because they don't understand it. Its basically a representation of the current market sentiment based on price and volume action.

Most traders use some from of it and it can get fairly complex. Studies have shown that currency traders use it a lot (or atleast the successful ones!). I've attended several currency traders meetup sessions and they all use some sort of technical analysis to trade in and out of their positions. That and proper money management is the key to succesful trading.

I strongly recommend at least learning the basics and deciding for yourself whether to use it or not. Getting Started In Technical Analysis is a really good book that's fairly easy to read.

If you're interested in learning about trading, I strongly, strongly recommend Trading for a Living: Psychology, Trading Tactics, Money Management. By far one of the best introductory books on the subjects. You'll get more out of it than a $5,000 seminar!

If you like to day (or swing) trade, you'll also enjoy An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund. A fascinating story about Timothy Sykes, a college student who made a million dollars day trading and started his own hedge fund.

PetroChina & BHP Rock

PetroChina (PTR) has been on a tear recently. Since bottoming around $125 a month ago, its risen exponentially to $175 today. That's a 40% in about 30 days! And thats despite the news that the 2nd largest shareholder Warren Buffett has been busy liquidating small amounts of his holdings. Its up solely on the news of its IPO in China.

BHP Billiton (BHP) has also jumped recently on news that its Olympic Dam site is the world's largest resource for uranium, the fourth-largest deposit for copper, and ranks among top-producing Australian mines in gold and silver production. Its currently at 27 year highs. Its also up 45% in the past month and nearly 100% in the past year.

While I didn't panic and sell liquidate my holdings during the sell off in July, I did use that opportunity to buy more of my favorite Canroys. Most of them are flat to barely up since then. But they're still paying dividends so I expect them to continue to chugg along.

Most of my porfolio is heavily wieghted towards oil/gas and commodity stocks. One of the few exceptions is SRS which I been trading in and out of and FXA which is an Australian currency ETF that also yields just over 5%.

I'm thinking of buying some Berskhire Hathway B shares (BRK-B) since they're looking a bit week technically right now. I've been watching them for a while. The last time I was going to pull the trigger they shot up 10% so I'm waiting for a slight pullback.

Did any of you make a killing in a stock you've purchased in the past month? Let me know.

What Would Your Last Words Be?

Here's an inspiring story about Prof. Randy Pausch. At 46, Dr Pausch has pancreatic cancer and only a few months left to live. He gave a speech about achieving his childhood dreams.

Why are we all concerned with making money? So that we can get out of the rat race and achieve all the dreams we had as kids.



I believe its not the quantity of life but the quality that matters. Dr Pausch has definitely lived a great life, fulfilling all of his childhood fantasies.

Make sure you achieve yours!

Here's the full article at WSJ.com

Greenspan On Comedy Central

Jon Stewart interviews Alan Greenspan on The Daily Show. Greenspan has been busy promoting his new book, The Age of Turbulence, and has been talking to anyone willing to listen.

Here's an excerpt from the interview:

Stewart: So they've made a choice, we would like to favor those who invest in the stock market and not those who invest in the bank; that helps us.

Greenspan: That's the way it comes out but that's not the way to think about it.

Stewart: It seems to me that we favor investment but we don't favor work. The vast majority of people work and they pay payroll taxes and they use banks. And then there's this whole other world of hedge funds and short betting and...it seems like craps. And they keep saying, "No no no, don't worry about it, it's free market, that's why we live in much bigger houses. But it really isn't, it's the fed, or some other thing, no?"

Greenspan also goes on to admit that quality of forecasting hasn't improved in the past 50 years and that basically they're clueless about preventing economic bubbles and human nature is to blame for that!

Anyway, check out the video. It's pretty good.



Also check out Minyanville's opinion on the rate cut.

Investing In Oil

I spent most of Saturday listening to an investment presentation by some oil guys from Texas and Oklahoma. I come in contact with them on a previous deal. At that time I had shown their investment presentation to my CPA (who usually turns down every investment I show him) and he was so impressed, he decided to fly out and meet them. He's become their accountant and is investing heavily in their current deal.

Incidentally, in the previous deal where I came across the oil guys, they were also investors like me in a gas pipeline deal in Texas. It was a pretty sweet deal and we should've gotten cashed out with a 30% profit after a year. Unfortunately our partner, Grant Wilson III, decided to swindle us out of the profits. After spending over a year with this jackass, subsidizing his travel and living expenses he just decided that he deserved all the profits and he's disappeared. Luckily we got all our principle back.

We talked to a lawyer about our legal options. Apparently it'll cost $25,000 to get a judgment against this crook and if he's spent the profits, we won't be able to collect anything. Spending $25,000 to maybe get around $60,000 doesn't sound very appealing. Anyway, if you come across anyone called Grant Wilson III in Houston, who's lived in Southern California and is originally from Boston, you should definitely keep your hand on your wallet at all times! The only positive thing in the whole deal is that I learnt a very important lesson about trust in business, and luckily it didn't cost me much money.

But back to the original discussion about the oil men. Unlike Grant, who's background is swindling people, oops, I meant to he was a lobbyist in Washington, these people actually have worked for decades in the oil industry. One of the principals has several patents and they all are extremely knowledgeable in various aspects of off-shore and on-land drilling and exploration.

They've basically put together a partnership deal where they find under-valued oil & gas producing properties with at least 10-12 years of production left. Usually its a distressed situation like an estate sale, lawsuit or defect in the title where the production has been stopped.

In the current "fund" (its called a fund but its really a partnership), they have 19 producing wells and will drill 2 more infill wells.

In normal deals that are "securitized" (sold as a security and governed by the SEC), dealer-brokers are involved and usually 30% of your investment goes to overheads like commissions, fees and marketing. Since only 70% of your investment actually gets invested you typically get low returns - in the range of 7-10%.

However, if you get an opportunity to invest directly with in a fund like this, where they aren't paying any broker commissions, you can get a much better return. Assuming oil stays at $65 and gas stays at $6, my CPA thinks we can get a 24% annual return. If oil goes up, our returns go up too! And since about 40% of the return is considered return of principle, its not taxable. (Although it does lower your basis in the investment).

Unlike my other investments which have taken quite a while to start producing, this is supposed to start generating income with 60 days. Of course, I'm not holding my breath. But the fact that my CPA is investing alongside me and I felt I could definitely trust them gives me a lot of confidence.

I let you know how it goes.

Canadian Dollar Hits Parity With US Dollar

Today the Loonie achieved parity with the US dollar for the first time in 30 years. Five years ago, 65 cents could buy you 1 Canadian Dollar. Since then the Dollar has devalued 50% against the CAD and nearly 100% against Gold. This has been partly due to a massive increase in the number of Dollars floating around, and partly because of the low interest rates which no longer attract much foreign interest.



The 50 basis point cut in the Federal Funds rate isn't going to save us from recession. What it definitely did do is weaken the dollar further against all major currencies.

How are you going to Hedge against a weakening dollar?

I been a strong advocate of investing in Gold and Silver for 2 years. Today Gold hit $735 after trading around around the $665 mark for the past year.

I realized that the Feds were going to drop the rate last week and put in an order to buy FXA. FXA is the CurrencyShares Australian Dollar Trust, an ETF that tracks the price of the Australian Dollar. Immediately after the Fed rate cut it jumped 3% and is up 4% for the week. It also pays an annual yield of approximately 5% on a monthly basis.

As the Dollar continues to weaken, I expect FXA to keep on appreciating. The question is how low do you think the Dollar will go?

Can't Stop Global Warming!

From the Yahoo message boards for James River Coal Company (JRCC), which I had sold some naked puts on a few months ago, by some poster named Ross_Perot4President

I just farted a real loud wet one.....I just contributed to global warming....

Whoops, I just barbecued some ribs.....more global warming...

I just opened up a beer (i.e. a carbonated beverage), I just contributed to global warming.

I just let out a big friggin belch (methane gas -- holy @#$%, I just killed a tribe of pygmies tied to global warming)

I turned on the faucet to run water, the water treatment plant runs a generator which emits carbon fumes.....

I just turned on the lights which in turn comes from the electricity plants which spew carbon stuff

I just watched that Fat Bitch Rosie ODonnell on TV, her Fat mouth just spews greenhouse emmissions as well as rancid spew

I just watched Hillary Clinton on TV, the clothes she wears come from farm animals which intoxicate the atmosphere with methane gas and toxic emmissions, and her face comes from Satan's bunghole.

I guess its safe to say anything you do in American life spews some form of carbon dioxide. Maybe if we stop killing the rain forest and stop ugly people from breeding we can stop carbon from spewing onto the planetary surface

Until then, I will burp, fart, barbecue, run my water, heat my house, use electricity, and hate stupid liberals who think they know what's best for me -- they can shove it up their methane spewing asses.

Of course, if you're Al Gore, you might think you can solve the problem by taxing various businesses. Of course, Al Gore doesn't want to solve the issue, he only wants to profit from it.

Japanese Housewives Burned By Forex Trading

The New York Times has an interesting article, Japanese Housewives Sweat in Secret as Markets Reel about housewives losing a lot of money in trading forex.

Since the credit crisis started shaking the world financial markets this summer, many professional traders have taken big losses. Another, less likely group of investors has, too: middle-class Japanese homemakers who moonlight as amateur currency speculators.

Ms. Itoh is one of them. Ms. Itoh, a homemaker in the central city of Nagoya, did not want her full name used because her husband still does not know. After cleaning the dinner dishes, she would spend her evenings buying and selling British pounds and Australian dollars.

When the turmoil struck the currency markets last month, Ms. Itoh spent a sleepless week as market losses wiped out her holdings. She lost nearly all her family’s $100,000 in savings.

While a lot of people have made fortunes trading forex (like George Soros), when a large number of housewives enter the market, its a sure signal that the market top is in. The lay people are always the last people to enter any bull market and like we saw in the internet bubble in 2000, mark the last phase of speculators to rush to profit from quick, easy money.

Apparently this greed-driven mania manifests itself regularly, prompting Alan Greenspan to observe that humans might never be able to protect themselves from bubbles. The history of manias has been well documented going back hundreds of years in Extraordinary Popular Delusions & the Madness of Crowds. If you haven't read it I strongly recommend you pick up a copy at your local library. Another new book on the subject is Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics, which is on my long and never-ending list of books to read and has come highly recommended.

Related Readings:
1. How the carry trade really works.
2. Turning Japanese.

The Rich Are The New Disenfranchised Segment Of America!

The New York Times had an article about the working class millionaires living in San Francisco. According to WSJ, "you know a media-generated controversy has reached it's peak when it lampooned by The Onion".

Here's a spoof segment from the Onion News Network. Apparently the gap between the rich and the super-rich is widening and they're feeling disenfranchised.

“The average investment banker is only able to afford one boat. But the super-rich family will have upwards of five, six, seven boats. You have to have a decent yacht.”

“If the rich were just a little bit more motivated,” one says, “they wouldn’t be such a drain on society.”

The 17 Year Old Adsense Millionaire!

Here's another depressing story of some 17 year old millionaire who makes $70,000 per month selling myspace templates. Did I say depressing? I meant inspiring!

Ashley Qualls, founder/CEO of Whateverlife.com doesn't actually make money from the templates, but rather from adsense ads! Apparently her first adsense check from Google was for $2800, which is more money than Google EVER sent me. Of course, I haven't filled a need (which she obviously did extremely well) but atleast I'm getting some remuneration (if you consider minimum wage to be any form of remuneration) for voicing my irreverent & often irrelevant opinions.

You can read the entire article online at Fast Company. She's a pretty amazing teenager.

Homes For Everyday Heroes?

According to the FirstHomebuilders.com, based out of florida, they're selling homes to everyday heroes. You can buy one of their brand new homes with $500 down and as little as $795 per month.

Considering that the cheapest homes are in $150,000 range, thats sounds like 102% financing with an Interest-only payment and it probably an adjustable interest rate too.

That sounds like a loan program they've been advertising for the past 4 years to people who can't afford a home in the first place? Since when did we start calling these people "everyday heroes"?

New Coin Purchase

I recently mentioned that I made $500 dollars last month from online advertising. Rather than use that money to expand or improve my lifestyle (also knows as "buying crap"), I decided to invest it in something that has intrinsic value.

The US Dollar has losing value over the past 2 years. Just today the Dollar index dropped to its lowest recorded value of 77 and I think its going to keep on dropping. Typically precious metals like Gold, Silver and Platinum do well in times of a weak currecny.

Why do I think the Dollar will continue to weaken?
Because the economy sucks and is being manipulated in wierd ways. To quote someone quoting the late Dr. Richebacher, a smart and wealthy economist,

"All this emphasis on statistics and calculations.," he went on, rapping his silver-handled cane on the table for emphasis, "without a proper theory, it is all nonsense. And your economists seem to have no theory at all.they just think they can manipulate the system in order to get whatever outcome they want. They think economic growth comes from consumer spending and that they can control consumer spending by adjusting lending rates. It is unbelievable that anyone takes this seriously. It is capital formation that really matters. A rich society is one with a great stock of capital. One that builds capital and puts it to work to create more capital. A rich society is not one where people consume. Just the opposite. It is not what is consumed that creates wealth; it is what is NOT consumed. Yet, all the Anglo-Saxons focus on motivating consumers to consume. And now they are consuming more than they make. I tell you, in 70 years of studying economics, I have never seen such nonsense."

And in order to "save the economy" the FED is going to cut the interest rates, which will increase inflation and weaken the dollar. Even the Governor of the Bank of England, Gov. King said yesterday that "If central banks cut interest rates in the current environment, they run the moral risk of rekindling speculative risk-seeking, i.e. supporting the very behavior that caused the current market crisis, namely the underestimation of risk."

A country's currency is an indicator of its economy. If the country has a good balance sheet, positive flow of funds, a good business plan, strong leadership the currency will be strong. Right now the US has none of those qualities.

Anyway, I spent the $500 on some silver coins. Regular readers already know I like buying gold and silver coins. I bought about a dozen each of the perth mint silver tigers, 1920s Peace silver dollars & 2007 silver eagles. They're beautiful coins, make good gifts and hopefully will continue to appreciate as the Dollar keeps losing value.

Russians get the day off to make babies

The Russian government is sponsoring a "Day of Conception" today. Officials in the Volga River region (a demographically deficient zone about 550 miles east of Moscow) are giving couples a half day today to go home and make babies. Couples that give birth to a child nine months from
today, a Russian national holiday, are eligible to win cars, cash & even a shiny new refrigerator.

Since the Soviet collapse in 1991, population has been in steady decline thanks to lower birth rates, shorter life expectancies, emigration surges and a truly horrible health care system.

The world's largest country by land mass is inhabited by only 141 million people. AP predicts that number could shrink to 100 million by 2050.

Putin has already installed cash subsidies for couples giving birth to more than one child. Last year, he went on record saying this demographic crisis is the country's most severe predicament.

Funny Kitty Video

Here's a funny video. Make sure you've turned up your speakers or you won't fully enjoy it.

Linkworth's New Referral Program

Linkworth is a site that offers bloggers and website owners the opportunity to monetize their site via paid ads.

Originally they only offered referral commissions for advertisers, but since July they've been tracking publisher referrals and will pay you for those too!

Advertiser Account Referrals
>> $25 payout once the advertiser spends a minimum of $100.00
>>5% payout on all recurring charges for the life of the advertiser account

Partner Account Referrals
>> $25 payout once the partner earns a minimum of $100.00

Combo Account Referrals
>> $25 payout once the advertiser side spends a minimum of $100.00
>> 5% payout on all recurring advertising charges for life of account
>> $25 payout once the partner side earns a minimum of $100.00

I made $144 last month from Linkworth, which is about 1/4th of my monthly online revenue, which I discussed here. If you haven't signed up for it already, you can do so via this link.

How To Make An Easy $25 & Other Blog Monetizing Tips

AuctionAds is running a promotion. Just sign up to display Auction ads on your site and you'll get $25. Not only that, if you refer anyone, you get 5% of their income for the first 6 months too.

It takes less than 5 minutes to sign up and you can modify the code to suite the layout of your site. You can also mention which keywords you'd like to target so that you get relevant ads (Note: this does NOT interfere with Google Ads). Somehow it integrates with Ebay's affiliate program and you earn a referral fee anytime you sign up a new user or someone wins an auction after clicking on your link.

If you sign up a new ebay user, you get $25. If you generate a sale, you get 50% or more of the commission that Ebay makes. Since ebay has increased its fees and commission structure in the past year, this bodes well for publishers like us.

So what are you waiting for? If you haven't already signed up, claim your free $25 right now!

AuctionAds is actually a sub-division of Text Link Ads, which also offers bloggers an opportunity to make money by selling ads on their site. If you haven't signed up for Text Link Ads, I suggest that you do that as well. [continued below ad]





You might be wondering if its worth putting up all these ads? After all, your site might not be attracting a lot of traffic and you may not feel the income is worth the effort.

I actually do not get a lot of traffic (less than 10,000 hits per month), especially compared to entertainment-related blogs or blogs about getting out of debt, but the traffic that I do get is highly targeted and results in high dollar-value conversions. As a result I'm still currently pulling in between $400-500 per month.

I'm making money from various different sources so that if the guidelines change for one, it doesn't completely stop the income. Also, over 50% of my traffic is organic in nature, coming mostly from Google.com searches.

Here are the various programs (in no particular order)

• Google Adsense

Not only do you make money when people click on the sites, but you also get $5 per publisher who signs up. If they earn $100 in the first 6 months, you get an bonus $250! If you're lucky enough to sign up 25 such publishers in a year, you get an extra $2,000!





• Linkworth

Linkworth enables you to get sponsors who pay a flat fee to host ads on your ads. They have 2 programs, one with a 50-50 split and another with a 70-30 split. I'd recommend going with the 70-30 split. Get your own sponsors here.


• Text Link Ads

Similar to Linkworth, they also let you sell ad space. The also allow a post-level sponsorship, but this is difficult to incorporate into Blogger.com. If however, you're using wordpress then you're in luck and this might be a better option for you. For advertisers, they're running a promotion where you get $100 in FREE Links.


• Amazon's Affiliate Program

This is a pretty good program since a lot of people use it anyway. I make enough to buy myself a few books every month myself! So this effectively subsidizes my voracious reading habit. And by setting up an my online bookstore, I don't have to repeatedly send people a list of my favorite books, plus I get a referral if they actually buy any of my recommendations.


• Prosper.com

This is a new and somewhat temporary referral program. If a new lender signs up, you both get $25. If a new borrower joins, you get $125! I've made nearly $200 bucks from this referral program (which I haven't included in my total, since its a temporary program).



• Direct Sponsors

I'm often contacted directly by sponsors wanting to put up ads. Many bloggers don't make it easy for sponsors to contact them by not having comments enabled and not having any email address or website-ownership info visible. They're missing out on potential revenue. I've had internet marketing companies as far away as the UK and Israel send me money via paypal for text ads. If you're interested, you can send me an email at emptyspacesinc@gmail.com

While $500 isn't enough to live on (atleast not in the US), its one of several income streams that I'm trying to develop. I'll try to post a monthly update on the passive income growth in future.

Are Recessions A Good Thing?

Today's post is a follow-up to yesterday's, Recession on the horizon?. Saving Diva asks if a recession is necessary for the economy? And Lazy Man isn't entirely convinced we'll see a recession.

I think a recession is a normal part of the business cycle. Messing with the business cycle in 2001 is what caused the huge housing bubble. When I say messing with the business cycle, I mean manipulating the interest rates to keep them artifically low and pumping the economy full of excess and easy liquidity (which is another way of saying cheap and easy-to-qualify-for loans).

Asset prices shot through the roof (i.e. houses, investments and businesses became insanely expensive to buy) and lending criteria dropped to historical record-breaking lows. (Did you hear about dogs getting credit cards?)

Americans stopped saving money because there wasn't any incentive to (with savings accounts yielding under 2%) and kept refinancing their homes to pay for new cars, vacations and home improvements.

If you've been reading the news, this has already come to an end.

Lax lending standards have caused a flight to safety and a global liquidity crunch. A few hedge funds that speculated in mortgage-backed securities went under which sparked a slew of redemptions causing most hedge funds to sell off major holding and triggered a stock market meltdown.

With over 50 lenders going out of business this year, there have been a lot of layoffs, however the Federal Reserve has largely ignored these numbers. Today's unemployment numbers which were pretty dismal came as a shock to wall street (which leads me to think people actually believe the lies coming out of the Fed). The Bureau for Labor Statistics quietly revised July job growth number down to 68,000 from 95,000. That's a HUGE revision, don't you think?

Countrywide also announced 12,000 layoffs or 20% of their workforce. How exactly are they going to 'gain marketshare' when their market is atleast 25% smaller is beyond me.

Almost a year ago today, I posted an article from Businessweek, saying that "Shilling expects house prices to drop by at least 20%, which will cause a major recession".
There have been record foreclosures in the past few months, "driven by two factors heavy job losses in the Midwest states of Ohio, Michigan and Indiana and the collapse of previously booming housing markets in California, Florida, Nevada and Arizona.

The Midwest has been hit hard by a heavy loss of jobs in manufacturing, especially in autos and related industries".

Auto sales and retail sales are down sharply too.

The only positive aspect right now is that oil at the pump is pretty cheap. But this is an anomaly, since the cost of oil per barrel is near all times highs. Milk, and other basic food items have definitely become more expensive where I live (even the items at Carl's Jr, my favorite fast-food place).


I think we're already in a recession. It just won't be reported for another 6-8 months.

And now we consider if recession is a good thing? Frankly I don't know, but here's what an editor of a newsletter I subscribe to had to say.

When house prices come down, it sets off a whole chain reaction of
explosions – in the financial industry...the homebuilding
industry...the retail industry...and ultimately, even the
manufacturing sector! The result is recession...lower consumer
spending...lower asset prices...less speculation...more fear/less
greed.

Is that a bad thing?

"Sometimes it sounds as though you WANT stocks to crash...it sounds as
though you'd be happy if a recession were to hit," writes a concerned
Dear Reader. "Isn't that a little mean spirited?"

Yes, we would like to see a real crash on Wall Street. And yes, we
would like to see a real recession. Is that mean spirited? Not at all.
Au contraire, it comes from the deepest, most public-minded, most
generous impulses of our entire idealistic nature.

This boom is a fraud, we keep saying. The sooner it ends, the better.
It is a fraud because it is not based – at least not in America – on
greater output, capital formation or wealth creation. Instead, it is a
wealth destroying boom...one that rests on consumption, speculation
and debt. Speculators and Wall Street itself get rich. But most people
merely go deeper in debt...and become poorer.

What's worse, the longer this humbug boom goes on, the more popular
attitudes and habits are shaped by it. "Prices always go up," say the
lumpen, "so buy now." "You can't go wrong in stocks and real estate,"
say the turnips. "A nice young man just offered to refinance our
house," say the homeowners. "Don't worry...Ben Bernanke is not going
to let us lose money," say the speculators. "Deficits don't matter,"
says the Vice President.

Corrections, like revolutions, confessions and forest fires, are
unpleasant. But they are often necessary. They clear away the dead
wood.

Recession On The Horizon?

Despite what Bush & Bernanke say to reassure us that the economy is doing well, I don't believe it is. Here are some news stories that support this belief.

The first is from Newsweek.

Because home sales and moves stimulate purchases of appliances, electronics and furniture, the giant chains that catered to house flippers and renovators have reported recession-like results. In the second quarter, same-store sales were down 5.2 percent at Home Depot and 4.3 percent at Sears.

Americans who were living high by taking out home-equity loans during the boom have watched their equity drop, and are now faint of heart when it comes to big-ticket discretionary purchases.

The National Marine Manufacturers Association said it expects pleasure-boat sales, down 6 percent in 2006, to fall 10 percent more in 2007, largely due to the housing woes. Boatarama in Ft. Lauderdale, Fla., had to consolidate from four locations to one, and it now sells only used boats.

Brunswick Corp., which makes Sea Ray boats, said in July that it was slashing production due to the housing situation "in Florida and California, which are two of the nation's largest boating markets."

And this snippet from Bloomberg.com which basically says food is going to get more expensive.

Wheat rose the maximum allowed by the Chicago Board of Trade on rising
purchases of the grain by India, the second-biggest consumer, and forecasts for a drop in global supplies to their lowest in 26 years.

Global supplies are expected to decline to 114.8 million metric tons by the end of the marketing year May 31, 2008, the lowest since 1982, the U.S. Department of Agriculture said last month. Unusual weather has hurt crops in several regions, including Europe, the U.S., Canada and Australia.

I had previously voiced my concern over whether we were going to go through an inflationary period or a recession. Looks like we're now scheduled to have both!

American's Better Off Than Ever Before? Yeah Right!

Prof. Perry of economics at the school of Management, University of Michigan has an interesting blog on economics called Carpe Diem, which roughly translated means seize the day. In a recent post, he claims "that despite what many people think, our standard of living is higher now than ever before".

The evidence he cites is that we're spending less on food, clothing and shelter than in 1901, and we're spending less than citizens of "developing countries" like India or China.

We might have a better standard of living than someone in India, a country where nearly 30% of the population currently lives in poverty. Thats nearly 400 million people or MORE than the US's entire population!!!! How is that comparison relevant? Don't we measure up to the Canadians, British, French, Swiss, Australian, German or Japanese that we have to resort to comparing ourselves to countries that were either socialist or communist-dictatorships for the past several decades. (Incidentally, India has the only democratically elected communist-party in the world).

Also, I would be highly skeptical of anything the Federal Reserve publishes. Their assertion that the average person spends 18% of their income of housing sounds too small. I think the average person in the US spends about 25-30% on housing (although houses have become bigger and much more comfortable from 1901!).

And another factor to consider is that the average family had only 1 working member in 1901 - the male head of household.

Today you have most family with 2 income earners. So two people are now working, but they're not living twice as well.

That doesn't sound like an improvement to me.

However, I do agree on thing, we most undoubted have a better standard of living of anyone who lived in 1901, even maybe robber barons. But I don't think we're living better than ever before.

I think the late 1950s was when Americans were the richest. That was when we had a lot of manufacturing jobs and the government wasn't wasting money on fighting wars in remote places. And the dollar was backed by a precious metal, not just an empty promise.

Paris Paid To Attend Own Birthday Party

Its not enough that celebrities people get paid for guest appearances at night clubs and public events. They now are getting paid to host their own birthday parties!

Paris Hilton was reportedly given $200,000 to celebrate her 24th birthday party at "Pure" in Las Vegas. She spent the last 3 at "Light" at the Bellagio, but they were too cheap. They only provided her a free private jet, a free luxury suite, free dinner and free booze. If they didn't pay me $200,000 to celebrate my birthday, I wouldn't go there either ;-)

Apparently its very profitable for the nightclubs to have celebs. One such club paid Brittany Spears a lousy $83,000 to attend a new years party. They then sold 3,000 tickets to the event at $250 a pop, which means they grossed $750,000 and probably netted around $500,000.

Pure nightclub is estimated to gross $53 million this year!!!! Sounds like a great business to be in.

If any of you are interested in getting your own bar, nightclub or gentleman's club here's a list of such businesses for sale.