Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice! As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.
With the market turning in an awful performance I felt it would be negligent if I didn't at least comment on this turn of events even if I cannot claim to have any sort of answer on how to deal with it.
Today the Dow dropped a little over 500 points representing an approximately 4% loss, and the NASDAQ did even worse dipping over 5%. This evening, the Asian Markets responded with 3-4% losses as I write.
For specifics on how I am responding to this correction, you can check out my Covestor Buy and Hold Model or my Covestor Healthcare Model that I have been utilizing to monitor my own holdings and to develop and document the results of my own strategy for investing. Although less than stellar, I have continued to sell portions of my holdings and even full positions at times as I have shifted from equities into cash based on the weakness of my own holdings. I have not been quite as disciplined regarding exact percentages to determine these sales. And in fact, have been whipsawed with yesterday's 'dead-cat bounce' into timidly putting my feet back into the water only to have my toes slammed shut on the door of the ongoing bear correction.
When dealing with an entire portfolio that is behaving poorly, as has been my experience, I have chosen to shave shares off of all of the individual holdings. When added to the sales of a couple of the weakest positions, this has moved me from under 5% cash to over 40% cash over the last two weeks.
In general I have avoided much political discussions on this blog, choosing rather to emphasize some investment rules for identifying stocks. However, with what appears to be such a poor result on the debt-ceiling extension as a result of intense efforts by Tea Party Congressmen to hold the line on the debt ceiling, I feel it necessary to add my own 2 cents to the mix.
First of all, the debt ceiling, which has been raised numerous times under both Democrat and Republican Administrations is not the place for a confrontation over the level of spending. The debt-ceiling is just an arbitrary 'credit limit' that limits the amount that this nation can borrow to pay off its current obligations. That is, this debt-ceiling represents an artificial limit that restricts out nation from borrowing by issuing bonds and other debt instruments to pay off the existing agreed upon spending.
The place to argue about spending is in appropriation bills not in debt-ceiling limits that just endanger our very economy and threaten default on our obligations.
Second, nobody likes paying taxes. Yet they represent the income that government incurs to go about its business whether it be in defending this nation with our military, or helping to make sure that our Seniors stay out of poverty with Social Security and Medicare payments. We can afford to take care of our elderly and our needy in this, one of the richest nations in the world.
As negotiations dragged on due to the apparent inability of Republicans to consider closing loopholes because one unelected Grover Norquist had convinced these Representatives to sign a pledge not to raise taxes, the fact seemed to escape most Americans that our tax burden was actually the lowest in sixty years. We were not a very heavily taxed nation when compared just to ourselves let alone other Western nations.
When our President proposed letting the Bush Tax Cuts expire for those earnign over $250,000, the cry rang out of "class warfare" against those who would target the wealthy. However, somehow nobody noticed that there has already been class warfare the past 25 years in America as wealth migrated from the lower and middle class to the top 1% and even to even smaller portions of the very wealthies of Americans.
Not only would taxation of the wealthy be a great source of income to help reduce our deficit, but funding infrastructure projects that provided jobs for the middle class would also fuel out economy and increase the chance of recovery.
Simply put, austerity in the midst of a deep recession is madness. It amounts to putting the patient on a calorie restricted diet when they are already starving to death.
Maybe I am naive, but I do not believe that once I have paid my taxes, a patriotic duty and responsibility, I am the victim of theft or that the government has 'my' money as President George W. Bush liked to state. Nor do I believe that "Government is the Problem" as President Reagan stated.
I do not believe as Grover Norquist has suggested that "Our goal is to shrink government to the size where we can drown it in a bathtub."
Instead I believe that in America, there is no other better vehicle for dealing with those without health care, those without jobs, those who are hungry or homeless, or those who cannot take care of themselves than the assistance of the government to deliver that help.
Keynes wasn't wrong. Our ability to emerge from this recession will take a strong stimulus that will also simultaneously address our crumbling infrastructure from bridges to highways, to schools and yes even to building high speed rail lines across America.
When instead of seeking to heal the ill patient that is the economy we discontinue our intervention and try to let nature run its course, we shall find that the course that nature directs us is not a pleasant or happy one. We shall once again scrape bottom in manufacturing, in job creation, and in delivering health care to the ill and the elderly.
Some have suggested that the GOP has chosen to undermine the economic recovery as a poor economy would improve their electoral chances in 2012. I refuse to be so cynical. I believe that they truly trust benign neglect to solve problems that require active intervention.
Thanks for bearing with me as I get this off my chest and review the injuries to my portfolio that I believe are due to a nation that has placed fiscal handcuffs on its leader in order to shelter the loopholes and tax liabilities of the wealthy, of the beneficiaries of wasteful largesse, and of the corporations who would prefer to operate without regulatory restaint regardless of what is best for individual Americans.
Yours in investing,