Financial topics

[John]

Interesting story on Iran and Israel.

http://rockcenter.msnbc.msn.com/_news/2 ... l-nbc-news

I feel strongly that we'll see some interesting developments over the next few weeks.

That's quite a story. It looks like Ahmadinejad's accusations were right.

John

[aedens]

http://www.entrepreneur.com/article/200104

[John]

http://www.entrepreneur.com/article/200104 Every day stuff but nobody has a clue.

Generational red flags

You might have a generational conflict brewing if you're noticing
these problems in your workplace:

• Cliques are forming.
• You see competing ringleaders emerging with different viewpoints
  on how to get the work done.
• Employees come into your office to complain about their
  colleagues.
• You have employees who don't want to work with each other on
  various projects.
• You're seeing stops, starts and dead ends in projects.
• Workers complain that they aren't getting what they need from each
  other.
• Work quality is suffering.
• Employees argue openly.
• There are uncomfortable silences or facial gestures when someone
  from another generation speaks.

[OLD1953]

Decent map from CNN on the unrest in the Mid East.

http://www.cnn.com/SPECIALS/2011/arab.unrest/index.html

Aedens, do you know of any ranking of fortune 500 or 1000 companies that ranks profits vs age of the CEO? Forcing the use of the more immersive technologies may well be a profitable business strategy in times that shift as rapidly as these. OTOH, a heavy hand may alienate the older workers.

[aedens]

http://www.verisi.com/resources/us-ceo-compensation.htm
http://faculty.chicagobooth.edu/steven. ... rch/km.pdf

[OLD1953]

John, I think I'd add at least a couple more to that list.

* Proposed projects are studied repeatedly until they are either dropped or dismissed as too expensive.

This is the norm for many corporations and government agencies now, and it is really just a way for the Boomers to avoid making a decision.

Another one might be:

* Projects are suggested without any forethought or analysis, buy in is demanded before any information as to scope or expense is made available.

Which is the reaction to the first issue, as the younger people try to force project buy in before the endless study phase is initiated.

I also see a lot of rather gleeful "spiking" of the other generations perceived needs in network blocks and so forth, even in cases where access to certain items has been approved at the highest levels. The military is a bad example of course, it's pretty much impossible for anyone under 45 to have any real influence overall.

I did have the question come up in a short meeting with a project manager as to why there was so much friction over what was appropriate use of bandwidth. I asked him if he remembered the excitement and the discussions of how the internet was going to be used when we were first building it, and how we all knew the important uses would be unexpected. He remembered all that, so I told him, "The younger people have figured out how they want to use it, and they do use the internet and rapid communications in their daily lives, they expect to be a text or a tweet away from their circle of acquaintances, and they naturally resent it when they aren't". Ignoring those perceived needs is equivalent to an officer born in 1880 saying "no soldier needs a car" in 1930. And I'm sure there were some saying exactly that. That cars had become the main tool for courtship and meeting with friends/family and so forth was just as lost to this guy as the need for facebook is lost on a 50 year old general today.

[Higgenbotham]

Presently, there seems to be an unusually wide gap between hindsight and foresight, both in the financial markets and in the economy. In both cases, forward-looking evidence suggests weak outcomes, but recent trends encourage optimism and risk-taking. Rather than sugar-coat these uncertainties and minimize the messy divergences in the data, I think the best approach is to review the evidence, warts and all, including economic risks, market conditions, and the strengths and limitations of our own investment approach.

Last week, Treasury bill yields and 10-year Treasury yields both advanced, compounding the existing exhaustion syndrome with an overvalued, overbought, overbullish, rising yields syndrome, and not far from generating another rigidly hostile set of conditions outlined in the July 2007 comment A Who's Who of Awful Times to Invest . The fact that numerous Aunt Minnies are converging here is indicative that market risks are unusually high even if we ignore concurrent economic risks.

Given the convergence of a number of nasty Aunt Minnies here, it's difficult to keep from crossing the line between our usual "on average" language to outright "warning" language - simply because the typical outcomes are ultimately so disproportionately bad. Still, it's important to remember that even these syndromes don't necessarily resolve into immediate risks, and those slight new highs are often so highly celebrated that it's tempting to join the party if the process drags out for any length of time. Even here, it's not entirely certain that market conditions won't shift in a way that allows for some modest amount of market exposure, but at present, we would characterize conditions as very unfavorable for long-term investors, and speculative even for speculators.

http://www.hussman.net/wmc/wmc120206.htm

Most notable this week is the bulls are screaming ever more loudly and, at the same time, the bears are increasing their warnings.

Hussman doesn't hone in on the generational dangers, though, and I am wondering if the present environment isn't more dangerous than 2007 or the other time periods he cites.

While the market seemed somewhat dangerous early in January, at just 1% off the 2011 peak in the S&P 500 and with many other averages exceeding the 2011 peak, we are looking at 1929 prices in a 1930 economy so to speak. Not exactly, but the comparison is probably at least somewhat relevant.

Hussman talks about the wiiiiiide potential for imprecision in the employment statistics and notes the good weather is leading to a lack of layoffs in construction and other weather related jobs. I noticed today that the unemployment claims were down and the futures market spiked for a bit on the release of the data, then sold off and ended the day below the point at which that data was released. Sometimes when that type of activity is seen, the market is saying, in essence, this is as good as it gets. At least until something that looks better comes along, if it does.

[Trevor]

we saw this kind of hysteria before back when the DJIA hit 14,000. Don't forget what happened after that; the stock market will go down again. it's just a question of when.

What's kind of interesting is that even if the unemployment rate has dropped (well, the official unemployment rate) most people still aren't feeling very confident.

[OLD1953]

Hussman has the logical but unpopular response to overvalued markets, don't invest. Logic takes a back seat to speculation in most cases, because hindsight is so tempting.

His goat rodeo reference was funny to me given I've been to a goat rodeo, while they can be fun, they probably aren't something you want to sink your money into.

http://millington.wmctv.com/news/commun ... -goat-days

[Trevor]

Second, even among the investors who know that the market will make another major downturn, you have some who believe that they can get in while the going's good and get out before everything goes to hell. Some may even succeed in doing so, but many more will end up hurt and lose a lot of money.

Outside the economy, I'm just waiting to see what China's military budget will be for this year; should come out in about a month.