Well, 2008 is finally coming to a close, and there were definitely some fireworks this year, although not the kind that most businesses were happy to see.One year ago, we noted several financial commentators who were predicting a recession in 2008, and why we felt their assumptions were incorrect. We agreed with the obvious assessment of the state...
Monday, December 29, 2008
Lessons from the Madoff Scandal, part two
The discussion of the Ponzi scheme perpetrated by Bernard Madoff is likely to continue for a long time, and it raises several issues that are worth discussing, including many important issues concerning regulation and the SEC.However, there are at least two issues that the Madoff scandal exposes that are absolutely vital for all investors to understand,...
Tuesday, December 23, 2008
Seasons Greetings -- including to Mr. Grinch
Here for your holiday listening pleasure is the delightful 1966 song "Mr. Grinch," sung by Thurl Ravenscroft (also the original voice of Tony the Tiger until his death in 2005). Due to its creative metaphors, the song never seems to get old (who can resist "You're a three-decker sauerkraut-and-toadstool sandwich, with arsenic sauce"?).Lest anyone...
Thursday, December 18, 2008
The best perspective comes from a business focus
Many pundits are arguing over how far in to the economic crisis we are and what is the correct direction for investors to take. Many are predicting far worse catastrophes yet to come, while others believe a bottom has been put in and things are beginning to turn.If there is a central point to all the posts we make on the Taylor Frigon Advisor, it...
Tuesday, December 16, 2008
Lessons from Madoff and his Ponzi scheme
With last week's announcement of the largest Ponzi scheme of all time it is important for investors to understand that for a Ponzi scheme to work, the operator has to take the money from one investor and give it out to another.In order to do that, the first investor must lose visibility of his money. In other words, he must be unable to see what...
Monday, December 15, 2008
Beware of the witch doctors of modern finance
In 1974, towards the end of the biggest and most sustained bear market since the Great Depression up to that point (see this chart for historical perspective), something very significant happened in the world of portfolio management.Theories that had been developing for two decades in academia were widely adopted by many investment management professionals...
Wednesday, December 10, 2008
Understanding the uptick rule can help you see the big picture on the current economy
Yesterday, Charles Schwab, the founder and CEO of financial services firm and broker/dealer Charles Schwab & Company*, published an opinion in the Wall Street Journal entitled "Restore the uptick rule, restore confidence."In it, he argues that it is time to restore the uptick rule, which prevents selling stock short until after the price of a...
Monday, December 08, 2008
Thoughts on the NBER's identification of a current recession
The National Bureau of Economic Research declared last week that the US has been in a recession since December 2007.Real GDP is the broadest measure of economic activity, but the GDP is not measured on a monthly basis, and the NBER has clearly based their dating of a recession on employment numbers. The graph above from the Bureau of Labor Statistics...
Monday, December 01, 2008
"Stock Market Guessing"
Today, the American Institute for Economic Research published a Research Report entitled "A Persistent Delusion," which contained selected quotations from an earlier bulletin that the AIER had published in 1962.The AIER was founded during the depths of the Great Depression in 1933 by Colonel E. C. Harwood (1900 - 1980), a graduate of the West Point...
Wednesday, November 26, 2008
Happy Thanksgiving to All
This year, Thanksgiving comes during a time of economic fear and uncertainty.Market drops have been as brutal as any in the past hundred years, and dire economic commentary can be heard on the news around the clock.Bearish commentators are having their day, taking credit for predicting the current crisis. Now many are using their media platform to...
Tuesday, November 25, 2008
Stimulus package, revisited
Today in the Wall Street Journal, Stanford University economist John Taylor explains why the first "stimulus package" didn't work, and why a new and larger one won't either. John Taylor is the author of the so-called "Taylor Rule" for fiscal policy which is cited in virtually any economic textbook you can find.In an opinion piece called "Why permanent...
Thursday, November 20, 2008
Change -- The Investor's Only Certainty
The markets have been going through a protracted and agonizing testing of the lows they reached in October 2008. On an intraday basis the S&P 500 today broke those lows and briefly touched the closing lows of the previous bear market reached on October 9, 2002: S&P 776.There are few investors alive today who have gone through markets as ugly...
Thursday, November 13, 2008
Some perspective during gut-wrenching markets
The stock market is going through a grim period, with market declines that have rivaled those of any bear market since World War II (see the chart of bear markets in this blog post, and click on the chart to enlarge).As the markets test the lows that they reached about a month ago, many investors are understandably dismayed. It seems there is little...
Monday, November 10, 2008
Gerry Frigon on Peninsula TV's "The Game"
Taylor Frigon Capital Management's President and Chief Investment Officer Gerry Frigon was recently asked to be a guest on the San Francisco Bay Area's Peninsula TV show "The Game." Here are three segments from that show.Part two:Part three:Video services courtesy of Gallagher Video, Paso Robles, CA.For later posts dealing with the same subject, see...
Monday, November 10, 2008
Your portfolio recovery plan
In our most recent posts, we have noted that the current bear market has revealed the deep problems in the existing structure of "wealth management" that we have long been aware of and warned about (long before we ever started a blog).We have noted articles appearing which give evidence of the damage that the "intermediary" system can give rise to,...
