Street Speculator

The SPEC’s has just figured out the key to grow the U.S. economy. The U.S. needs to promote Engineering and Science disciplines to our students at a younger age. The promotion needs to be swift, focused, and calculated. And more important than anything else, the promoters need not be “failed lawyers” (We meant to say Politicians). Ironically, one of the SPEC’s happens to be an attorney!

What do they know anyhow. The last time we checked, and correct us if we are wrong, there are no former Medical Doctors, Engineers or Scientists (Any discipline in Engineering and Science)in either Congressional body. There are also no Economists either. Congressmen and women basically listen to whatever the lobbyists tell them, grab a microphone and disperse this information to the American public.

Get back to the fundamentals. Yes, the economy is not doing so well, BUT only in certain sectors (Financial, Retail, Automotive, and Airline industries). TECH, however, is booming.

Most U.S. based tech companies are investing billions of dollars into new Research & Development centers in Asian nations (Which nations also happen to graduate 60% more Science and Engineering degree disciplines than does the U.S.). These companies include Intel (Symbol: INTC), IBM (Symbol: IBM), Cisco Systems (Symbol: CSCO), GOOGLE (Symbol: GOOG) and Microsoft (Symbol: MSFT). When you get the opportunity, go to the website of these companies and look at the number of technical jobs they have available; positions they CANNOT fill because of a lack of qualified candidates.

The balance sheets of these companies are a dream come true to any active investor. Ignore the low stock prices. Stock prices always fluctuate. Plus, these companies would survive if their stock were trading at $1/share. Look at these balance sheet numbers:

Pharmaceutical/Medical Group:

Pfizer (Symbol: PFE)  $26 billion in cash

Johnson & Johnson (Symbol: JNJ)  $13 billion in cash

Merck & Co. (Symbol: MRK)  $9.9 billion in cash

Tech Companies:

eBay (Symbol: EBAY)  $4 billion in cash, NO DEBT

Google (Symbol: GOOG) $12 billion in cash, NO DEBT

Microsoft (Symbol: MSFT) $21 billion in cash, NO DEBT

Need we say more! Remember, these are not “DOT-COM” companies.

Not that it matters one bit but China will control more than our financial markets in the near future (The People’s Republic of China is one of the largest purchasers of U.S. Treasury Bonds). They have the power to also control a larger portion of the U.S. economy through innovation and production. With the high number of engineers, the number of U.S. patents from Chinese enterprises is sure to increase as well.

Conclusion: Science and Technology education needs to be taken seriously. The popular social networks and electronic products we all love were created by future SCIENTISTS and not solely Entrepreneurial minds.

9 more years before this economy will get back on track. This is just a prediction. I base this on current debt levels which are enormous and continue to grow. 2017 is the year after the next president would have served, if lucky, two full office terms. Neither McCain nor Obama will be able to do much about the fiscal problems facing this nation. Bailouts will only enhance the problem.

+ Companies are still loosing too much money and producing financial shenanigans:

Fannie Mae: $2.3 billion loss

Freddie Mac: $821 million loss

Merrill Lynch: sold their 20% stake in Bloomberg for about $4.4 billion. However, they received only $110 million in cash, and financed the balance in the form of a note, which means they are still owed about $4.3 billion.

ANOTHER STOCK MARKET BUBBLE:

The recent gains in the stock market is I believe, a big bubble. Housing continues to remain weak. Credit problems are now affecting the Commercial real estate sector. However, bank stocks have been steadily rising even as they report billion dollar losses.

There is a movie coming out this fall titled, “I.O.U.S.A.” which highlights the debt levels of government and consumers within this country. Here is a clip:

The stock market has become extremely predictable, which in my opinion does not bode well for investors. The current trend seems to go somewhat like this:

Monday + 100 points; Tuesday -80 points; Wednesday +220 points; Thursday -190 points; Friday +205 points.

The stock market has been displaying this trend for the past month. It becomes predictable which makes it difficult to make money for THE LONG TERM. I suggest you take your profits as soon as you can, conserve at least 75% of your gains, then plunge the other 25% back into the market.

CASH is the key. You should accumulate cash on a large scale. Start saving more than you put into your employer sponsored investment plans (401k, 403b, etc…). Since banks have basically “stopped lending” you need to have a large amount of capital reserves on hand as there may be no credit available in the event of an emergency. As long as the price of the U.S. dollar remains high as compared to the currency of other countries, you should be OK. The value of your dollars would remain high and stable.

When you do invest, consider companies who have a large amount of cash and little to no debt. Study their balance sheets as you would your personal financial statement. With cash, you have more options than if you were bloated with a lot of debt. Debt always keeps someone in control of your every move.

StreetSpeculators “Cash” Company Index:

Texas Instruments (Symbol: TXN):  $1.65 billion in cash (No Debt)

KBR Inc. (Symbol: KBR): $1.96 billion in cash (No Debt; former Halliburton subsidiary)

Apple (Symbol: AAPL): $20.77 billion in cash (No Debt)

eBay Inc. (Symbol: EBAY): $4.05 billion in cash (No Debt)

Microsoft (Symbol: MSFT): $21.17 billion in cash (No Debt)

Google Inc. (Symbol: GOOG): $19.61 billion in cash (No Debt)

These are a few choice companies with the optimum balance sheet. There are more and StreetSpeculators will provide names as our research continues.

Important: A good balance sheet provides the greatest potential of future growth. Take your profits immediately and do not hold for the long term. Last, do not invest in DINOSAURS.

DINOSAUR- any publicly traded company not started by a college dropout or anyone under the age of 27 yrs.