Author Archive

Derivative Action?

November 5th, 2009

DonQuixoteWindmillDerivative action is a legal process that would seem tailor-made to combat the wolves that have invaded our corporate boardrooms and have so outrageously ravaged the companies we shareholders entrust to their stewardship.

There are already some signs of restlessness on the part of some of the natives in the corporate jungle. Some of the institutional shareholders are no longer sitting still while the boards of the companies they own shares in betray those whose interests they’re supposed to protect.

But what about us little guys? I, for one, don’t think it’s enough to rely on this apathetic nation of shareholders to patiently wait for their proxy statements to arrive and check the boxes necessary to throw out the offending directors. Something more immediate and effective is in order. And, by definition, a derivative action suit should be just the ticket. But…

Reminder: Join me on Take Stock with Ellis Traub, Thursday evenings at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. Dial "1" to join the conversation.
This week: Let’s talk about how long to hold the stock in a faltering company.

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Thinking Bigger

November 3rd, 2009

buggy-whip Have you ever thought about what happens to the people who run, or who work in, industries like the buggy whip business, when they succumb to technological evolution?

I mean, look at what happened to the railroads, soon it will be the oil companies, and maybe the automotive industry. And, there will be lots more, as technology relentlessly spawns new products, services, and the industries to produce them.

The toll taken on loyal and productive employees who have unstintingly done all their employers ever asked of them is heartbreaking. And it provides an understandable incentive for organized labor to dig in its heels and demand some kind of security for such employees—at a tremendous cost to their industries.

Reminder: Join me on Take Stock with Ellis Traub, Thursday evenings at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. Dial "1" to join the conversation.

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Asset Allocation: Is it Necessary or Effective?

October 29th, 2009

Asset_allocation Asset allocation is a device used by investors and financial planners to populate a portfolio with an appropriate mix of investment vehicles selected from a smorgasbord of stocks, bonds, and occasionally other investments, each deemed to carry with it a uniquely predictable degree of risk.

Its goal is to optimize the return on the portfolio while taking into account  that investor’s tolerance for risk. And, risk aversion is analyzed using such factors as the point the client has reached in her life cycle, her current and future responsibilities, her earning capacity—as well as the nuances of his or her character and personality.

The assumption is that there is an inverse relationship between risk and return; and, the more aggressive the portfolio—one invested primarily in common stocks—the more risky it is.

Few amateur investors have the experience or know-how to apply asset allocation without the help of a professional. And, considering the view that most amateurs have of “investing,” the expense of such a professional might easily be justified. But….

Reminder: Join me on Take Stock with Ellis Traub, Thursday evening at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. Dial “1″ to join the conversation.
This week: What’s your portfolio really worth?

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Guess Who?

October 21st, 2009

GuessWho Here’s a multiple guess quiz for you:

What well-known public figure said “Nobody, no individual nor country, can indefinitely spend more than she or he earns. Two plus two always adds up to four, never five.

  1. Senator Barry Goldwater
  2. President Ronald Reagan
  3. Columnist Cal Thomas
  4. President Barrack Obama
  5. Cuban President Raul Castro

Given their political proclivities, it could certainly have been a comment from any of the first three. That view is fundamental to conservative thought.

President Obama might have said it in a moment of lucidity, because he’s a bright fellow with a penchant for speaking publicly with more candor than we are sometimes comfortable with.

But, if you guessed any of these, you would have been wrong. It was Raul Castro, in a very public forum, who then went on to say, “Within the conditions of our imperfect socialism, due to our own shortcomings, two plus two often adds up to three.

That would seem to put House Speaker, Nancy Pelosi, and Senate Majority Leader, Harry Reid, somewhere to the left of Mr. Castro, wouldn’t it?

Reminder: Join me on Take Stock with Ellis Traub, Thursday evening at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. Dial "1" to chat.
This week we’ll talk about the benefits (?) of Technical Analysis. (Looking for a debate!)

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About Healthcare: Redux

October 20th, 2009

family_doctor Back in June, I posted a message—a rant, actually—about healthcare. This was before the issue had stirred up as much of a hornets’ nest it has around the country in recent weeks.

My premise was that we got along just fine before an entire new industry inserted itself between providers and patients, ostensibly to make the healthcare process more efficient and to serve as a watchdog on behalf of the public. Its charter was to prevent you and me from being taken advantage of by the “greedy” doctors, hospitals, and others who serve the sick.

But that burgeoning industry has grown like a cancer, taking more and more money from both provider and patient in order to satisfy its voracious appetite for funds to pay its minions and satisfy its shareholders. And it has become more the problem than the solution.

At the end, I asked for some suggestions to resolve this “healthcare problem.”

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Yes, Virginia…

October 17th, 2009

santobama In this cynical age, it’s refreshing to read something like the New York Sun editorial, written many years ago in response to an 8 year-old child’s query about Santa Claus.

Today’s cynics see human life as a cycle that has us passing from drooling infancy and childhood dependence through self-reliant adulthood, and back into drooling, senile dependence.

So I suppose, on that basis, there might be some justification for our father who art in Washington to hope to restore aging Americans’ belief in Santa Claus. The only other explanation I can come up with for that new $250 “gift” would be to buy seniors’ votes, and to pump up the retail economy in time for the Christmas season! (I suppose that would make him a “department store Santa.”)

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The End of Capitalism?

October 15th, 2009

PogoGeez! The notion that our government is going to become so powerful and intrusive that we lose our freedom—and that capitalism is about to give way to socialism, or even communism—seems to frighten the daylights out of a lot of my conservative brethren!

I’m afraid it’s not the socialists or communists that are going to be our undoing. As Walt Kelly, through his engaging character, Pogo, once said, “We have met the enemy and he is us!”

Freedom vanishes when we require our government to protect us from ourselves.

We lose it, for example, when greed in the boardrooms becomes rampant—shareholders having abdicated their responsibility to demand their companies’ directors’ control executive compensation. And the government has to threaten to step in and do it for them. Eventually they’ll have to do it if we don’t take charge! 

Reminder: Join me on Take Stock with Ellis Traub, this evening at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. Dial "1" to chat.
This week we’re going to talk about "risk" and how we can invest without any.

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Ten Ways to Tell if an “Investor” Belongs to The Herd

October 13th, 2009


First of all, let me make it clear that I absolutely love the herd!

They are those wonderful gamblers who provide us with most of the bargains we come across when we actually invest. So, while I’ve chosen to dedicate myself to trying to convert as many herd-members as possible to become solid and successful investors, I would hate to think of what this investing arena would be like without them!

Before I say anything, you’ve got to know that I was once very much the herd-member. So I can speak with some authority.

That said, here are ten ways you can tell if someone runs with the herd:

Reminder: Join me on Take Stock with Ellis Traub, Thursday evenings at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. Dial "1" to chat. This week we’re going to talk about "risk," and why there should be none.

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Food for Thought, Fundamental Investment Views, How to Invest, NAIC Veterans' Lounge, Successful Investing , , , ,

Do we have a right to know?

October 8th, 2009

Loose lipsBoy, this war is waaay different from the ones I remember as a young fella! Even as a teenager, I heard things once in a while from the older guys back from the fighting that I was scared to tell anyone. It would have sickened me to think I might risk someone’s life because I couldn’t keep a secret.

Far-fetched in retrospect, of course! I mean, what could I have been privy to that could be that critical? And who among my circle of friends could be a spy? But we learned to have a healthy respect for the need to keep things to ourselves because the side that had the best intelligence was the winner. And I devoured enough spy stories to know that it wasn’t the big scoop the enemy relied on; it was the superabundance of seemingly trivial information that, put together, told them what they wanted and needed to know.

Reminder: Join me on Take Stock with Ellis Traub, Thursday evenings at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. Dial "1" to chat.

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Robbing Marvin to Pay Horace

October 6th, 2009

pickpocket~s600x600 The truth is I don’t know any Marvin or Horace. I just used their names because robbing Peter to pay Paul is so commonplace it doesn’t attract any attention any more.

But I’m thoroughly confused at this point. Perhaps someone out there can help me out.

Didn’t we suffer the economic Tsunami we did in large measure because the government (meaning “those folks we sent to Washington because they’d make the tough decisions for us that we wouldn’t”)—in the interest of giving the less fortunate a break—put pressure on the lending institutions to lend money to those folks who couldn’t afford homes that weren’t worth what they were borrowing on them and were obligating themselves to make payments they could barely afford even before the rates they accepted were adjusted to make them totally unaffordable? Or did I miss something? [Yes, I know it’s a run-on sentence! I did it for effect.]

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