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We have finally reached a point where all denial is gone and we are ready to admit the error of our ways. Sure, there were plenty of folks ringing the alarm bells years ago, but universal acceptance of the fundamental economic calamity that faces us from every corner of the world, and every person with two cents to rub together, has just now taken hold.I wrote quite some time ago that the turning point in the economy cannot come about until President Bush admits there is a problem and that he will be the last person to do so. While I do not have a high opinion of President Bush, the facts speak for themselves as I wrote one year ago. (See Is Bush giving the country away without knowing it?)
The storm is not over, but we are coming to grips with it at very great expense. Admitting our errors is only the start; now we will have to spend years fixing problems and making many compromises. Unfortunately many people may lose their homes, jobs or both before we see significant growth.
We have had temporary relief from record high oil prices and commodities prices. However, I would emphasize "temporary" because the developing world will not stop expanding and the quick remedies to our world wide financial crises, started here in the United States (see: The George W. Bush economic plan?) has the potential to cause crippling inflation.
This is not something that I fear in 2009. In 2009 we will be trying to get back on our feet. Hopefully in 2010 and beyond we are not knocked down again by the increased money supply and lack of equivalent production. That is the key, and I hope the next administration understands that. I fear neither party gets it -- Serious Money: Stimulate productivity not consumption.
In the meantime, the Dow Jones Industrial Average rose a shocking 936 points today to close at 9,388. Clearly, major investors are back playing in their giant sandbox. It would be foolish to think that this is any more than a sigh of relief stemming from the treasury departments of every nation propping up their weak financial institutions over the weekend.
I would use this occasion to clear the junk out of your portfolios and then run to quality. There are plenty of first class companies beaten down recently that are bargains right now. I have listed six of my favorites. Here are some important factors they have in common. They all have strong balance sheets, pay a dividend, good cash flow, a back log of business and strong management. Three of them remain Triple-A rated, including one financial institution.
- General Electric (NYSE: GE) AAA rated
- Johnson and Johnson (NYSE: JNJ) AAArated
- Merck and Co (NYSE: MRK)
- Procter and Gamble (NYSE: PG)
- Raytheon Company (NYSE: RTN)
- Wells Fargo (NYSE: WFC) AAA rated
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of GE, JNJ, MRK, & WFC.
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Reader Comments (Page 2 of 2)
10-14-2008 @ 4:03PM
gumbo koontz said...
All that money swipes was possbile because no stock certificates was ever issued to shareholders...Stock certificates can be electroinic and obtainable online, but brokers have no interest in that as it is not profitable for them.. Brokers want to play with shareholders money for themselves as well as lending long shares to short sellers on the side... Stock certificates will prevent brokers from lending shares to short sellers.. Why?? you will see that your 100 GE shares on your broker statement will disappear when you get a stock certificate.. your broker will no longer have your 100 GE shares to fool around with ... You will be free to go to different broker to sell your 100 GE shares... without having to open an account.. Lack of stock certificates gave too much freedom to MBAs and drunk brokers and traders!!!
10-14-2008 @ 4:06PM
gumbo koontz said...
stock certificates may not matter much to you if you are an austute picker ... Most stocks would be helped greatly by shareholders who hold stock certificates as the capital pool would be locked up and free of abuse by short sellers and derivates traders ,etcetra!! Stock certificates is like tamper proof stocks... Would you drink a tampered Coke?
10-14-2008 @ 4:11PM
gumbo koontz said...
Billioins of real dollars are traded at Wall Street at the same time drunk traders are abusing those money . As long as the drunk traders are managing ok, your money is ok at best.. Most of your money are down and wasted away because you never asked for stock certificates... If you agree with me that stock certificates is important, please be sure to ask around why stock certificates cannot be issued online if asked for convenience's sake... Mutual fund managers should be asking for stock certificates, but I doubt they ever bothered to. That is probably the chief reason your mutual fund is not doing well... The managers are either too lazy or hoodwinking with drunk traders for favors..
10-14-2008 @ 4:13PM
gumbo koontz said...
Sheldon
You have no idea how critical stock certificates is to the stock market !! If you dont have stock certificates, then your broker might as well be your tax collector without any representation!! Like the bloody British before the revolutionary war!! We won the lousy Revolutionary War , yet there is stlll tax collectors of all colors crawling all over America !!
10-21-2008 @ 4:40AM
tune said...
1 bail out money should be directly to the people with cashchecks in
direct ratio to tax they paid in the last five years or zero tax zero
welfare for five years - zero tax will take care of zero welfare in
spending & jobs. zero middle-man-governments/corporations -
spending/waste/redistribution. no need to have so many gov/corp army
maning the tax/redistribute inefficent unnecessarily created posts
that gets in the way of a decent life. mr-harvard-mba-bush can put
that in place today. see the economy boom like magic. global golden
years.
2 we are not electing a debate/plan/promise/speech - that's all talks
& by lawyers too. we are electing a
president/person/character/experience/record - mccain 08.
3 only black man can freepass to harvard/wealth/whitehouse.
freepass/affirmativeaction/blackracecard makes this housing/financial
crisis - jail them - treason.