This past Saturday’s Wall Street Journal contained an article entitled “‘Hindenburg Omen’ Flashes.” Although it wasn’t offered as tongue in cheek satire, it just has to be! How else can one explain such a respected publication giving space to Wall Street’s equivalent of “Chicken Little”?

For me, the article is priceless, because it so articulately describes the kind of thinking that surrounds the herd and its minions.
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Ellis Current Events, Food for Thought, Fundamental Investment Views, Investment Concepts, Stock Market Shams

When it comes to the stock market, you’re either a gambler or an investor. You simply can’t be both. Gambling and investing are two entirely different things. And, they’re mutually exclusive.

You either think like most folks do, that investing is betting on the stock market—with, at best unpredictable, at worst disastrous, results. Or you understand that it’s putting your money to work for you in successful businesses—letting it earn more for you with little or no risk. You just can’t have it both ways.

In fact, as it happens, one group usually buys from, or sells to, the other.

Over the past 25 years, I’ve had the joy of knowing a whole lot of folks who not only “got it,” but were eager to share their convictions and their knowledge with others. So grateful were they to have learned from other willing mentors, they took pleasure in passing it on. But I can no longer find them. No longer does there seem to be anyone whose convictions—that they were right and the rest of the world wrong—move them to stand up and be counted.

It would be tragic if this commonsense, simple and successful approach to investing were to be lost to the world! But it will be, unless those of us who know what we know have enough conviction go out of our way to take sides and speak up.

It’s well past time we screamed bloody murder because a greedy and unscrupulous securities industry continues to get away with enticing the public into thinking they can get something for nothing—which is exactly what trading and buying stocks for the short term is, and what the whole business of derivatives and other speculative activity involves.

What’s as important, is convincing the public that there is a better way, and that there are some of us who are ready, willing, and able to show them how.

Ellis Food for Thought, Fundamental Investment Views, How to Invest, Investment Concepts, Successful Investing gambling, investing, stock market, teaching

Our nation’s founders were wise to constitutionally prohibit our country’s endorsement of any church. They were also very wise to have infused religious principles deeply into the covenants governing our nation’s founding.

The distinction between “religion” and “church” is one most of us miss. The former is a set of principles—a philosophical common denominator among all faiths that represents “best practices” for man to live with man. The latter is man’s imperfect effort to document, offer some divine authority for, teach, and enforce those principles.

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Ellis Current Events, Food for Thought church and state, Constitution, ethics, principles in government, religion, ten commandments

General Stanley McCrystal is an accomplished warrior, a great pick for the job he was charged with. And, as a former Marine, I gotta believe that his allowing the most radical of media access to his inner thoughts and his staff’s was deliberate and not simply careless or stupid. He was just too good an officer for that!

That scenario never would have happened, had either of the Commanders-in-Chief following the attack on the WTC on 9/11 shown the wisdom and courage that a former Missouri clothing salesman once had when in their shoes. President Bush should have made it clear to those hostile tribes that our enemy is anyone who so easily sacrifices innocent lives—including their own. Especially when they use themselves, their women, and their children as weapons of mass destruction. And he should have given his theater commander the go-ahead to act accordingly. Read more…

Ellis Current Events, Food for Thought Iraq, McCrystal, our enemy, public policy, terrorists, war on terror

Now comes our Congress, eager to feed the public’s lust for punishing the banks for having done our economy so much damage, and ready to impose a new bunch of regulations on that industry so as to protect the consumer from…. From what?

Here’s what the public really needs protection from:

1. Its own ignorance. This is certainly number one! Had the public been at all intelligent or educated about borrowing, they would have known better than to expect either the government or the lenders to protect them against borrowing beyond their means for homes they couldn’t afford. The first issue is financial literacy, which is sadly lacking in our society, our schools—and especially our Congress to begin with! Read more…

Ellis Current Events, Food for Thought, Stock Market Shams banks, congress, financial literacy, protective legislation, securities industry

Watching and listening to the Congressional inquisitions this past week, I had to believe that the Academy Awards needs to add a new category called Best Congressional Performances. Of course it would be difficult to decide whether the performances should be considered under Comedy or the Drama categories.

The righteous indignation and wrath displayed by the key players was great theater, of course, and played well to those political populists who still don’t understand that it was this very same Congress that forced these institutions go into the sub-prime mortgage business against their wills in the first place! Read more…

Ellis Current Events, Food for Thought blame where it belongs, congress, executives, Goldman Sachs, responsibility for meltdown

As you’ve noticed, occasionally I drift off topic (investing, lest you forget) and indulge myself in writing about things that may touch on my core interest but are only indirectly related to it: current events, the economy, politics, etc.—things about which I have strong feelings and which current events compel me to comment.

As you know, I’m disgusted with the obvious absence of financial literacy, responsibility, and just plain common sense that’s displayed by so many in elected office, from the top of our government institutions to the bottom. And I’ve railed about it time and again, wishing that some able folks would get off their duffs, take the bull by the horns, and give up their comfortable complacency to act instead of just talk.  Read more…

Ellis Current Events, Food for Thought, NAIC Veterans' Lounge

The Herald, South Florida’s major newspaper, headlined the unthinkable this past week: Jackson Halts Dialysis of Poor Patients .  One of the nation’s top-rated hospitals, Miami’s Jackson Health System had to adopt a policy that would deprive some 175 indigent patients of critical, life-saving care because it could no longer afford to provide it.

Hardly a decision taken lightly by the hospital administration, the financially strapped institution finally had to draw the line on life. Fortunately for those patients , some of the other area hospitals volunteered to take up the slack for all but about 4o. These would have to seek care in the city’s emergency rooms, where the law requires the hospitals to provide critical care regardless of the financial condition of the patient—or the hospital!

This, to me, is a tragic and stunning case in point that illustrates a simple fact: no matter how humane and compassionate the issue, the ultimate truth is that there simply ain’t no free lunch. As much as we would like to characterize medical care as a right rather than a privilege, without the funds to provide it, it vanishes.

Ellis Current Events, Food for Thought entrepreneurialism, health care, healthcare, no free lunch, right or privilege

I just wanted to take quick note of a comment that I heard on a talk show as I was surfing the stations while driving. Unfortunately I don’t even remember the fellow’s name or the position he held—not even the station I was listening to.

The purpose of my doing so is not to suggest that this is the position of our government. It’s only to take issue with the remark and suggest that anyone who thinks this way is wrong-headed.

In any case, the offending phrase was that the financial industry is the backbone of our economy!

There are far too many people who don’t really understand what the “backbone of our economy” really is. This parallels the notion that investing in diamonds, bonds, art, etc. is productive when it’s not. The “backbone of our economy” is truly anything that adds value or creates something of value out of something that had less value before. Read more…

Ellis Current Events, Food for Thought, Investment Concepts brokerages, economy, entrepreneurs, financial institutions, success

Did you ever watch a school of dolphin or porpoise as they follow closely beside a boat? Of course, no single one can stay two feet in the air all the time; but, each rises from the water, arches gracefully above it for as far as he can propel himself, and then knifes back into the sea. Shortly after the first emerges, another does the same, and then another. And so on. The effect is that, at any one moment, a number of the graceful animals are above the surface, glistening in the sun, and there is a constant presence there.

We buy shares of quality companies to hold until we want or need the money. The “rule of five” tells us that, of every five companies we select, we can expect four to do as well or better than expected, but one is likely to disappoint us. And, occasionally, the herd will bid up the price of one or another of our companies to a point where we can no longer expect as healthy a return going forward as we did because we have already enjoyed much of the appreciation. In any of those cases, we will need to replace our companies with others that will better meet our requirements.

Ellis Food for Thought, Fundamental Investment Views, Investment Concepts, NAIC Veterans' Lounge porpoises, portfolio management, rule of five, save the best, when to sell