Street Speculator

One question:

If you were an investor, residing outside of the United States, would you invest any of your dollars into this country?

My answer would be NO. Many U.S. politicians like to give the appearance of U.S. superiority in many industries and areas (Education, Banking, Finance, etc….). But, none would ever dare state that the U.S. is also responsible for the current GLOBAL ECONOMIC CRISIS.

This week, Saudi Price Alwaleed’s investment company had reported losses in the BILLIONS (Specifically, $7.2 billion). This number is how much his company reported in losses for the entire ‘08 fiscal year.

Now a Billionaire is a Billionaire and a Billion is a Billion. I believe Price Alwaleed is the listed within the top 20 of the Richest People in the World (according to FORBES). But a $7.8 Billion Dollar lost will hurt anyone.

His losses are a result of his investments in, but not limited to Citigroup (Symbol:C), Time Warner (Symbol: TWX), News Corporation (Symbol: NWS), and eBAY (Symbol: EBAY).

So, we again ask the question. Why would anyone want to invest in the U.S.? The regulatory environment is non-existent when it comes to protection of Financial Crimes (Ex. Bernie Madoff). Businesses, Government, and Consumers alike are very UNDISCIPLINED when it comes to spending (DEBt, DEBT, debt). There is an abundance of greed (The FOOLS who fall for Ponzi Schemes and those who peddle them). The word NO is non-existent in some peoples vocabulary.

Foreign Investors, keep your domestic home until we here in the U.S. prove our, if any, FISCAL Responsibility.

Everyone knows that with some people in the U.S., SPORTS is like a 2nd religion. Some SPECs cannot conduct a normal conversation with some people unless SPORTS is the topic (SAD, Sad Commentary).

About 1 to 2 years ago, the U.S. Congress even held hearings regarding “The Use of Steroids in Major League Baseball.” This hearing was conducted while the economy was in the beginning stages of its subsequent demise, a seemingly unwinnable war in IRAQ was in place, and achievement gaps in educational system continued to increase. But for some reason, SPORTS seemed to be a top priority for U.S. lawmakers and took precedent.

Reggie Williams provides an illustration showing what his participation in SPORTS, as a player in the National Football League (NFL), has done to his body.

Before After

PRESENT DAY

Reggie Williams is a smart guy and not your stereotypical JOCK!! He is a Dartmouth graduate, former NFL Man of the Year, and former Vice-President of Disney Wide World of Sports.  Williams spent 14 years in the NFL as a linebacker for the Cincinnati Bengals. The wear & tear of the game has taken a toll on his knees (As evident in the pictures above).

Jerry Jones has been the owner of the Dallas Cowboys for over 14 years. His knees are fine (YOUR POINT?).

When it comes to SPORTS, think practically. It is better to OWN the team than play for one (Mentally, Physically, Emotionally, and Financially). Players are not decision makers, the owners are. Also, SPORTS Team ownership normally lasts more than 3+ years (The average career of a NFL player).

PARENTS: Stop living your fantasies through your children, especially with your sons. The SPECs will be thrilled to see the day when we can approach a parent, inquire about their children, and the response is something other than Athletic Achievements. Athletics can only carry you but so far.

Ask yourself: Would you rather see you sons grow up to be like these guys–

or like this one:

It seems as though the HIGH GAS prices we experienced this past spring and summer was not the result of Supply and Demand after all. A 60 minutes report detailed the reason for those high oil prices.

Watch CBS Videos Online
It was all due to, you guessed it, SPECULATORS!!. Oil is a publicly traded commodity where trading in the U.S. is regulated by the CFTC (Commodities Futures Trading Commission). Oil is traded in Futures Contracts, where the buyer buys the contract for one price hoping to sell the contract in the FUTURE for a higher price. The difference is the investors profit.

Exxon Mobil (Symbol: XOM) was the main scapegoat along with other oil companies during the high oil price bonanza. This was due to their incredible profits during the time consumers experienced high oil prices. However, the Hedge Funds and Wall Street Investment Banks were the largest purchasers of Oil Futures contracts, which subsequently drove up the price.

These entities are more than welcome, like you and I, to purchase any publicly traded investment product. But, when investing in oil, a purchaser has the option of taking physical possession of the oil or either sell their contracts for a “higher” price in the future.

What would  J.P. Morgan (Symbol:JPM) or Morgan Stanley (Symbol: MS) do with a barrel of oil? Nothing!! But, they could make a nice ROI in buying and selling Oil Futures contracts. Plus, as so-called market analysts peddling rationales for the reason of price run-ups and future price targets, they kind of manipulated the oil market. Remember, analysts from these banks as well as Goldman Sachs (Symbol: GS) all told us they felt the price of oil would go to between $150/barrel & $200/barrel.

Boone Pickens was also making the $150/barrel oil predictions. One of his investment funds through BP Capital lost about $1 billion and many of his limited partners/investors made capital calls. At one point BP Capital attempted, we believe (Don’t quote us) to halt all withdrawal requests in order to conserve cash. They subsequently provided this option to any investor whom wanted to move in this direction.

What these SPECULATORS did not anticipate was the magnitude this Global Credit Crunch. When the credit crunch started to spread, these companies (Investment Banks, Hedge Funds, etc….) were getting capital calls from their investors. In order to fulfill these investor requests , they had to sell most of their Oil Futures Contracts in order to raise capital. This is one reason why the price of Oil & Gas is so cheap now.

The airline industry is one industry whom actually purchases Oil Future contracts and then take the physical commodity to use for its business.

IMP: In ‘09, take whatever you hear from an analyst or Investment Adviser with a grain of salt. You cannot possibly know what conflicts-of-interest they have underlying their statements and the reasons for “pushing” certain market conditions. Conserve your cash and pay off debt.

It will happen, trust us. Don’t be surprised if you start to see public service announcements followed by new legislation at the state and federal levels of government.

The reason? The recent flooding activity that is keeping certain cities in Washington State very busy. News outlets state that the flooding is the result of warm temperatures and heavy rains, both of which melted snow that formed over the Cascade Mountains.

Question: What’s the Global Warming and Insurance Industry correlation? MONEY

Looking at photos and videos of the water damage, you can further SPECULATE that the insurance industry will have millions of dollars in claims coming due. When disasters like this occur, the industry moves and very swiftly.

These events in Washington state can easily happen in another part of the country, especially those in mountainous areas. The insurance industry is not in the business of loosing money. Their mission is to invest well and HOPE a claim never produces.

Why do you think seat-belt laws are in place? Your state and local government does not care that much about your well-being. They were probably lobbied by the insurance industry to make driving without a seat-belt a crime or some kind of municipal violation. THINK ABOUT IT? Who stands to loose the most if people don’t wear seat-belts and are in accidents? INSURANCE COMPANIES. Why? Your hospital bill (Medical expenses covered by insurance) will PROBABLY be much cheaper for a seat-belt wearer (Low probability of injury) than would people who don’t.  Just SPECULATING, but probably some truth in this.

Global Warming and flooding are no different. Water damage is extremely harmful. The usual damage includes affects items that have to be replaced instead of repaired. If replaced, the insurance companies pay a higher premium. This is because items put under an insurance policy are given a value to the company by the owner. And you know we usually put a higher value on an insured item than what it is actually worth. Plus, the value we place on the item determines the premium we pay the insurance company.

If another flooding incident similar to this occurs within the next month (Don’t forget we are in still officially in the Winter season), watch for new “Global Warming Public Service Announcements” and a renewed call to invest in alternative methods of energy.

StreetSpeculators.com audience, start with your first ‘09 paycheck and subsequently take $100 out each time you get paid. Set aside this money in a savings account so you can draw interest (IMP: Banks/Credit Unions insure deposits up to $250,000/account).

Another strategy, if manageable is to open 3 separate accounts (For couples). This way you can get protection for each account in the event the bank fails, which we hope will not happen. Ex. Husband opens an account in his name alone, the Wife does the same, then both open a Joint Account. If disciplined enough to implement this strategy, you should have at least a few thousand dollars cash by mid-summer.

DEBTS

Pay off the small account balances 1st. Get them out of the way and then close them. Your goal is to have enough cash in the bank to cover any unexpected emergencies instead of credit. Debt however continues hangs over you and prevents upward mobility and movement financially.

401K

Put the minimum in your employer account this year. Use the previous payroll deduction amounts to fund your “Cash” fund. What we hate about employee retirement accounts are the losses incurred. Some of these fund managers SPECULATE more than we do at this site. Also many companies are reducing their contributions to their employer accounts in order to conserve cash as the credit markets are still not moving.

Last, and we will continue to repeat this, don’t listen to Stock Pickers & Analysts. No one knows who will become a growth company in ‘09. These TV entertainers usually start off the year positive about a certain sector then turn negative before years end. Utilize the Business News Channels (CNBC, Bloomberg, FoxBusiness) only for the “News” element and not for stock picking. Your goal in ‘09 needs to be Cash Preservation.