MONEY AND POLITICS
I promised I'd try to not get so personal (read mean) when it comes to the liberal governing class. I'll try, yes but that's all I can do. This new so-called jobs bill is a joke. Okay, so my new-found attitude almost last a paragraph. No, seriously what are they smoking?
Henry R. Nothhaft, writhing in the Wall Street Journal weighed in with some heavy-duty insights. He said: "We know for starters, that 100% of net job growth in the U.S. comes from entrepreneurial start-ups, as a Kauffman Foundation report documented in 2010. If you took start-ups out of the picture and looked only at large or incumbent businesses, job grown over the last 35 years would actually be negative. In the words of Kauffman's Tim Kane, 'When it comes to U.S. job growth, start-up companies aren't everything. THEY ARE THE ONLY THING.'" (emphasis mine)
So why isn't' the government, and specifically this administration doing anything and everything to foster new start-ups? Why aren't we encouraging companies to move here? With a simple wire transfer, people and businesses can move billions of dollars around the globe, to better tax and business friendly countries, but we can't wire transfer or email workers like the money.
"Over the last 10 years, U.S. multinational firms cut their domestic work force by 2.9 million while boosting hiring abroad by 2.4 million." (Ibid Notthaft)
So please, Mr. Obama, please stay home and be quiet. We Americans will solve all of these problems. If you will get government off our backs and out of our wallets, we will work wonders and restore the American Dream. Government cannot do that, so please stop trying.
More Later, Wade
Wednesday, September 28, 2011
PICTURESQUE
STOCK MARKET AND POLITICS
I've never attempted to write what I'm about to write. I use metaphors from time to time, but I'm not that good at them. I'm a little out in left field, metaphorically speaking.
I would like to draw a picture for you. This is not that tough because I'm going to use a picture as the subject matter, and try to make this whole process picturesque. There will be four components and we can learn lessons from each one of them, but the main lesson I hope to convey is that what we see, what we understand is all part of something else, something bigger. And this something else has a part in determining the direction of each of these components. This idea is sort of a "No man is an island," to use another metaphor.
I'm sure you've seen a picture of a fox hunt, probably in ol' England. The hunters are adorned in their red coats, their riding helmets. The fox has taken off and the dogs lead out. The hunters jump hedges and streams which somehow the dogs get through. Okay, do you have that picture in mind? Focus in on the horses jumping the hedges.
Now, back off a little and you'll see more countryside. Trees in the distance. A farmhouse off to the left. The fox has skedaddled off over the next rise.
Now, look some more and you'll see the skies, the clouds and the wind blowing. This artist is good. It's a blustery day, a good day to be up on a tall warm-blood. It's synergy in motion.
Now, consider your own life, your history, the scenes you've seen and you'll realize what you see, what you think about and what you feel is an integral part of how you see this picture.
Let's come back to the American stock market. You are chasing the fox. The blood hounds are out. You're ready for the adventure. You look hard and realize your viewpoint is part of something bigger.
1) You're looking at a specific company. Will it come out with good earnings?
Will it disappoint? Will it be the right investment for you?
2) It's part of a major industry which is really growing. It should do well.
3) But the economy is in the doldrums. The earnings are good, but all these stock seem stuck.
4) News keeps coming out about the European debt crisis. Greece is about to go under.
How can debt in Italy or Greece, and the housing market here, and our new trade numbers with China, and the threat of new taxes, effect your little "Micro-Chip" stock? Because it's a part of the whole. The components effect the larger picture and the larger picture effects you small company.
Think how inter-connected everything is. A small computer chip company in Southern Idaho, doing business in the computer industry with it's rapidly advancing changes; stuggling to make it in America, with an economy which has strengths and weaknesses; all transpiring on the back canvas of the world stage. It's mind boggling and very exciting as we try to make sense of it and figure out how to trade. Molly Farragut from Fairbanks just did really well with this on a great trade on the whole market---the Dow---trading the Diamonds (DIA). She took $2,610 and sold it for exactly $5,000 three days later---netting $2,390. More later.
So how do you trade? How do you make money? One, put the market forces to work for you. Be a seller, as in a covered call writer. Focus on the short-term, make sure there's a forklift to move your stock. Think about the exit before you go in the entrance. Do things with a purpose. Connect the dots better.
See my new revised book STOCK MARKET MONEY MACHINE to learn how to get these market forces to work for you, not against you. It's available on Amazon.
Wade
I've never attempted to write what I'm about to write. I use metaphors from time to time, but I'm not that good at them. I'm a little out in left field, metaphorically speaking.
I would like to draw a picture for you. This is not that tough because I'm going to use a picture as the subject matter, and try to make this whole process picturesque. There will be four components and we can learn lessons from each one of them, but the main lesson I hope to convey is that what we see, what we understand is all part of something else, something bigger. And this something else has a part in determining the direction of each of these components. This idea is sort of a "No man is an island," to use another metaphor.
I'm sure you've seen a picture of a fox hunt, probably in ol' England. The hunters are adorned in their red coats, their riding helmets. The fox has taken off and the dogs lead out. The hunters jump hedges and streams which somehow the dogs get through. Okay, do you have that picture in mind? Focus in on the horses jumping the hedges.
Now, back off a little and you'll see more countryside. Trees in the distance. A farmhouse off to the left. The fox has skedaddled off over the next rise.
Now, look some more and you'll see the skies, the clouds and the wind blowing. This artist is good. It's a blustery day, a good day to be up on a tall warm-blood. It's synergy in motion.
Now, consider your own life, your history, the scenes you've seen and you'll realize what you see, what you think about and what you feel is an integral part of how you see this picture.
Let's come back to the American stock market. You are chasing the fox. The blood hounds are out. You're ready for the adventure. You look hard and realize your viewpoint is part of something bigger.
1) You're looking at a specific company. Will it come out with good earnings?
Will it disappoint? Will it be the right investment for you?
2) It's part of a major industry which is really growing. It should do well.
3) But the economy is in the doldrums. The earnings are good, but all these stock seem stuck.
4) News keeps coming out about the European debt crisis. Greece is about to go under.
How can debt in Italy or Greece, and the housing market here, and our new trade numbers with China, and the threat of new taxes, effect your little "Micro-Chip" stock? Because it's a part of the whole. The components effect the larger picture and the larger picture effects you small company.
Think how inter-connected everything is. A small computer chip company in Southern Idaho, doing business in the computer industry with it's rapidly advancing changes; stuggling to make it in America, with an economy which has strengths and weaknesses; all transpiring on the back canvas of the world stage. It's mind boggling and very exciting as we try to make sense of it and figure out how to trade. Molly Farragut from Fairbanks just did really well with this on a great trade on the whole market---the Dow---trading the Diamonds (DIA). She took $2,610 and sold it for exactly $5,000 three days later---netting $2,390. More later.
So how do you trade? How do you make money? One, put the market forces to work for you. Be a seller, as in a covered call writer. Focus on the short-term, make sure there's a forklift to move your stock. Think about the exit before you go in the entrance. Do things with a purpose. Connect the dots better.
See my new revised book STOCK MARKET MONEY MACHINE to learn how to get these market forces to work for you, not against you. It's available on Amazon.
Wade
Friday, September 23, 2011
Market Thoughts
I would like to put in my thoughts on the market right here, right. It's September, historically a very bad month. It's the end of the red-light period (no-news) and has been left with non-earnings news, mostly from around the world. It's been pretty bleak. Then the Fed disappoints, and bam, it's down.
This period is about over. The market has pretty good support at 11,200. That's the DJIA. If it hits 10,800 again, which it might do, that is even more firm support. But companies are making huge amounts of money. Official earnings season begins about Oct. 10th. However we're wrapped up with a government which is doing more harm than good, and this puts a damper on everything.
If you have a chance to look at an IBD, Wall Steet Journal or Barron's, or even look it up online, look for a 30 day chart---one that incorporates August and September up to now. Look at the last few days of August. In technical analysis, or in any charting way of thinking, you look for a double bottom. Specifically a chart or bounce that looks good is called a "double bounce, with a raised right cheek." I'm not making this up. It's like a double dip but the second dip---if it does not go as low as the first dip---signals that the market, or a particular stock, will go up more. If you have a triple dip, with two lows that are higher than the first low, it's even better. The market moves up. I think we're about to have a quadruple dip, and the market will rebound nicely.
This means that the market the rest of this week bounces off 11,200. If not, all bets are off.
You can play the whole market---either an index trade on the Dow, DJX, or by buying calls or puts on the DIA, an ETF that owns all of the DJIA 30 stocks. These are called the Diamonds. They have $1 and $2 strike prices. For example, if the Dow is at 11,200, you could practice trade (first to learn how to do this) the DIA $112 or $114 calls. Play is for a double. An old rule of thumb was that if the Dow went up 100, that represented about 50 cents on the option. Check it out and see if it's still true.
Let me know how it goes.
This period is about over. The market has pretty good support at 11,200. That's the DJIA. If it hits 10,800 again, which it might do, that is even more firm support. But companies are making huge amounts of money. Official earnings season begins about Oct. 10th. However we're wrapped up with a government which is doing more harm than good, and this puts a damper on everything.
If you have a chance to look at an IBD, Wall Steet Journal or Barron's, or even look it up online, look for a 30 day chart---one that incorporates August and September up to now. Look at the last few days of August. In technical analysis, or in any charting way of thinking, you look for a double bottom. Specifically a chart or bounce that looks good is called a "double bounce, with a raised right cheek." I'm not making this up. It's like a double dip but the second dip---if it does not go as low as the first dip---signals that the market, or a particular stock, will go up more. If you have a triple dip, with two lows that are higher than the first low, it's even better. The market moves up. I think we're about to have a quadruple dip, and the market will rebound nicely.
This means that the market the rest of this week bounces off 11,200. If not, all bets are off.
You can play the whole market---either an index trade on the Dow, DJX, or by buying calls or puts on the DIA, an ETF that owns all of the DJIA 30 stocks. These are called the Diamonds. They have $1 and $2 strike prices. For example, if the Dow is at 11,200, you could practice trade (first to learn how to do this) the DIA $112 or $114 calls. Play is for a double. An old rule of thumb was that if the Dow went up 100, that represented about 50 cents on the option. Check it out and see if it's still true.
Let me know how it goes.
Covered Calls Batch #1B
WHY DO COVERED CALLS WORK
We ended the last blog with thoughts on "Assets Producing Income." This is a solid way to get "cash flow wealthy." Think of the alternative: You trade your time for money. What about getting your money working harder for you? Getting your money to carry a bigger share of the load? Many people do not know how to do this. Let me state it in a way that just might make sense to you.
We buy an asset, in this case a stock, and then sell a fluffy option against our position. When I say against our position I mean it's like a lien on a property. Someone has the right to buy our stock. Built into the option price is all the speculation and future growth possibilities.
Say, you buy a great piece of real estate. It's in a very desirable neighborhood, one that many think will grow in value. You not only rent it for more than normal, but what if you gave the renters the right to buy the property at a fixed price, say within a year or two. Question: Will people pay more in rent if they have the right to buy the property down the road? Will they pay more now to lock in the price? Understand this and you understand the power of writing covered calls.
The asset is the stock, you know exactly what you paid for it. There is no fluff. A stock price today is based on the anticipation of future earnings. Take that last sentence to the bank. However the option is loaded with speculation, along with the time to expiration. Think of Bank of America's stock at $7.05. It's solid right now, look at the investments of Warren Buffett. It is at $7.05 and the current book value is over $20. What a bargain. Now, what do investors think of the price and the direction it will move. The October call options are 55 cents to sell (Wednesday price). If you owned 1,000 shares, you could sell 1,000 of these options for $550. Yes, if you actually sold the stock you'd have to give back the 5 cents, or $50 (.05 X 1,000), but you take in $550 now. That's cash you can use. It's your money. The market gave it to you. Think of purchasing 1,000 shares for $7,050, or half of that on margin, $3,525. Now, by selling the option you take in $550 cash. Wow.
DOUBLE DIPPING.
From time to time in these blogs I mention the buy-back. I believe the buy-back is the most powerful strategy in the stock market. It's a wonder so few people know about it, and fewer yet use it. When you sold the option you opened a position on your stock. If you buy the same option now---same month, same strike price, same quantity---you would close the position.
Let's say the stock goes down to $6.95 and three weeks have elapsed. The option premium has gone down. Think how this works. You sold the fluff---including the time to expiration. Now the stock didn't move exactly like someone thought it would. The option is now going for 10 cents. After you check out the options for the next month out, and you like the new price, you decide to buy back the October's for 10 cents and sell the November's for 50 cents. You spend $100 to buy back, and take in another $500. What if you can do this every month? It's easier to do than you think. It's an awesome way to make repetitive income.
As I traveled the country, many students not only extolled the virtues of writing covered calls and how it "saved their fannies," but many told me how they were double- and triple-dipping. I set out the beat my own students at this process. Twice, once with Qualcom and once with Netflix, I was able to do five, read that 5, times in one month. I've tried since then and have not been able to do so. Twice, piece of cake. Thrice, tough but doable.
What you need to do this several times a month is three things:
1) An understanding of how the buy-back works.
2) Working knowledge of how to use orders and alerts to notify of stock movements and target prices.
3) A volatile stock, say one that moves 50 cents to $1 every few days. This is for stocks between $2 and $8.
For more expensive stocks, the movement must be $2 to $5 every few days.
It's not that tough. It's even easier than you think. With internet access, a good broker, you are in the drivers seat.
The next blog will be about why we use cheaper stocks, instead of Google and Apple. We'll also continue with more inside secrets on how to excel at this process.
We ended the last blog with thoughts on "Assets Producing Income." This is a solid way to get "cash flow wealthy." Think of the alternative: You trade your time for money. What about getting your money working harder for you? Getting your money to carry a bigger share of the load? Many people do not know how to do this. Let me state it in a way that just might make sense to you.
We buy an asset, in this case a stock, and then sell a fluffy option against our position. When I say against our position I mean it's like a lien on a property. Someone has the right to buy our stock. Built into the option price is all the speculation and future growth possibilities.
Say, you buy a great piece of real estate. It's in a very desirable neighborhood, one that many think will grow in value. You not only rent it for more than normal, but what if you gave the renters the right to buy the property at a fixed price, say within a year or two. Question: Will people pay more in rent if they have the right to buy the property down the road? Will they pay more now to lock in the price? Understand this and you understand the power of writing covered calls.
The asset is the stock, you know exactly what you paid for it. There is no fluff. A stock price today is based on the anticipation of future earnings. Take that last sentence to the bank. However the option is loaded with speculation, along with the time to expiration. Think of Bank of America's stock at $7.05. It's solid right now, look at the investments of Warren Buffett. It is at $7.05 and the current book value is over $20. What a bargain. Now, what do investors think of the price and the direction it will move. The October call options are 55 cents to sell (Wednesday price). If you owned 1,000 shares, you could sell 1,000 of these options for $550. Yes, if you actually sold the stock you'd have to give back the 5 cents, or $50 (.05 X 1,000), but you take in $550 now. That's cash you can use. It's your money. The market gave it to you. Think of purchasing 1,000 shares for $7,050, or half of that on margin, $3,525. Now, by selling the option you take in $550 cash. Wow.
DOUBLE DIPPING.
From time to time in these blogs I mention the buy-back. I believe the buy-back is the most powerful strategy in the stock market. It's a wonder so few people know about it, and fewer yet use it. When you sold the option you opened a position on your stock. If you buy the same option now---same month, same strike price, same quantity---you would close the position.
Let's say the stock goes down to $6.95 and three weeks have elapsed. The option premium has gone down. Think how this works. You sold the fluff---including the time to expiration. Now the stock didn't move exactly like someone thought it would. The option is now going for 10 cents. After you check out the options for the next month out, and you like the new price, you decide to buy back the October's for 10 cents and sell the November's for 50 cents. You spend $100 to buy back, and take in another $500. What if you can do this every month? It's easier to do than you think. It's an awesome way to make repetitive income.
As I traveled the country, many students not only extolled the virtues of writing covered calls and how it "saved their fannies," but many told me how they were double- and triple-dipping. I set out the beat my own students at this process. Twice, once with Qualcom and once with Netflix, I was able to do five, read that 5, times in one month. I've tried since then and have not been able to do so. Twice, piece of cake. Thrice, tough but doable.
What you need to do this several times a month is three things:
1) An understanding of how the buy-back works.
2) Working knowledge of how to use orders and alerts to notify of stock movements and target prices.
3) A volatile stock, say one that moves 50 cents to $1 every few days. This is for stocks between $2 and $8.
For more expensive stocks, the movement must be $2 to $5 every few days.
It's not that tough. It's even easier than you think. With internet access, a good broker, you are in the drivers seat.
The next blog will be about why we use cheaper stocks, instead of Google and Apple. We'll also continue with more inside secrets on how to excel at this process.
Sunday, September 18, 2011
Covered Calls Batch #1A
I would like to continue the educational process about using the stock market as a way to generate income. I firmly believe it makes a great part-time, home-based business. I will share a few covered call basics, then give a batch of stocks that generate around 10% cash this month, and even 20% if you use margin. At the end I'll give a few helpful hints and then make more useful techniques in Batch 1B.
Covered Call writing is a way to use an asset to sell a position against it for income. Rental real estate readily comes to mind. Or licensing something. You use an asset, keeping it intact to generate income. In the stock market, this works well because you are buying a fixed price asset, like a stock. At least it was fixed when you bought. Now you sell an option against your covered position.
Call Options usually give a person the right to buy a stock at a fixed price, called the strike price, on or before a certain date, called the expiration date. This type of investment has an added level of risk - that of the expiration date. Whenever an investment ends, say an option for six months to buy a piece of real estate, the clock is not your friend. Time works against you. Also, the option is very risky, so one should be very careful.
Let's look at the riskiness of the stock option. The option premium is made up of several components. One is the time to expiration. Another is a constant, built into the formula for pricing. But the fun begins with this third component, called the speculative value, or the implied volatility. We call all of these the time value.
Before we move on let me give one example of time value, or the speculative value. It is someone's guess, someone'e speculation. You could have an $18 stock with the $20 call option at 40 cents. Another company's stock price is also $18, but the option at $20 is $1.20. And our third stock at $18 has a $20 call going for $2.80. Why the difference? Aahh, there is the $64,000 question. Basically and simply, the 40 cent option says the stock is flat, it's not going anywhere. The $1.20 option says there is a slight amount of volatility. It's moving. The $2.80 says we have a mover. The option is expensive (the puts are probably expensive, too).
Expensive options do not necessarily make them better, or the stock better. A cheap option is not better or worse. The prices tell a story. Think of the process in reverse. Think like an option salesman, or think like a seller of the option. If you sell a call against stock you own, you are selling the right to let someone buy your stock at $20, in our example. If your stock is dead in the water, going nowhere, you're not going to get very much for selling the option. No one will pay you much. But if you have stock in a tremendous company, and the immediate future looks good, or there is good news everywhere, then the option is expensive. From your point of view, if you are giving up everything above $20, and that possible future looks good, don't you want to get paid well? That's why you get $2.80.
If we put real numbers to this trade, you would buy 1,000 (or any amount in lots of 100 shares), for $18,000, or $9,000 on margin. Now you sell the $20 call (ten contracts at 100 shares each) for $2.80, or $2,800. That's right, someone is willing to give you $2,800 cash now, and tie up your stock for the next four weeks. Now, as time moves forward, the stock will go up, down or sideways. If it's above $20 you will sell the stock, and keep the $2,800 and the new capital gains of $2,000. If it does not go above $20, you get to keep the stock and the $2,800. And you write the calls out for the next month, for say $2,900, or whatever you can.
HERE'S OUR SAMPLE BATCH #1A:
We'll take $20,000 and buy some stocks on margin, spending close to $40,000. We're looking for 5% to 10% option returns. This means our cash returns will be double this on margin.
FAS is going for $13.84, 1,000 shares cost us $13,840. We sell the $14 calls for October for $1.63, Or $1,630.
MU (Micron Technology---one of my favorites) is $6.98, or $6,980. We sell the $7 calls for 65 eents, or $650.
EK is $2.80, and we buy 1,000 shares for $5,600 and then sell the $3 call for 41 cents times 2,000, or $820
JDSU is going for $13.17, or $13,170. We then sell the $13 calls for $1.18, taking in $1,180.
We sold some of these in the money and some out of the money. I didn't do the calculations for the extra.
CONCLUSION
We invested $39,590 and took in $4,280. That's over 10% on the whole amount, but about 20% on our original $20,000.
And think of this: We have $4,280 in the account. We can pull it out and pay the bills. We could buy more stock with it. We could leave it there in the account to help with the margin. It's just cash in the account.
We did this with only one trade per stock. In real life we could do buy-backs and double dip. We can buy back and sell out the next month. We're in the game, putting time to work for us. We're in the game, selling the fluff of the options. We have assets producing income, helping us retire better.
______________________________________________________________________________________________________
Copyright 2011 All Rights Reserved. Please see your own financial professional for trade suitability.
All prices and transactions are a snap-shot in time. Your results will vary.
Covered Call writing is a way to use an asset to sell a position against it for income. Rental real estate readily comes to mind. Or licensing something. You use an asset, keeping it intact to generate income. In the stock market, this works well because you are buying a fixed price asset, like a stock. At least it was fixed when you bought. Now you sell an option against your covered position.
Call Options usually give a person the right to buy a stock at a fixed price, called the strike price, on or before a certain date, called the expiration date. This type of investment has an added level of risk - that of the expiration date. Whenever an investment ends, say an option for six months to buy a piece of real estate, the clock is not your friend. Time works against you. Also, the option is very risky, so one should be very careful.
Let's look at the riskiness of the stock option. The option premium is made up of several components. One is the time to expiration. Another is a constant, built into the formula for pricing. But the fun begins with this third component, called the speculative value, or the implied volatility. We call all of these the time value.
Before we move on let me give one example of time value, or the speculative value. It is someone's guess, someone'e speculation. You could have an $18 stock with the $20 call option at 40 cents. Another company's stock price is also $18, but the option at $20 is $1.20. And our third stock at $18 has a $20 call going for $2.80. Why the difference? Aahh, there is the $64,000 question. Basically and simply, the 40 cent option says the stock is flat, it's not going anywhere. The $1.20 option says there is a slight amount of volatility. It's moving. The $2.80 says we have a mover. The option is expensive (the puts are probably expensive, too).
Expensive options do not necessarily make them better, or the stock better. A cheap option is not better or worse. The prices tell a story. Think of the process in reverse. Think like an option salesman, or think like a seller of the option. If you sell a call against stock you own, you are selling the right to let someone buy your stock at $20, in our example. If your stock is dead in the water, going nowhere, you're not going to get very much for selling the option. No one will pay you much. But if you have stock in a tremendous company, and the immediate future looks good, or there is good news everywhere, then the option is expensive. From your point of view, if you are giving up everything above $20, and that possible future looks good, don't you want to get paid well? That's why you get $2.80.
If we put real numbers to this trade, you would buy 1,000 (or any amount in lots of 100 shares), for $18,000, or $9,000 on margin. Now you sell the $20 call (ten contracts at 100 shares each) for $2.80, or $2,800. That's right, someone is willing to give you $2,800 cash now, and tie up your stock for the next four weeks. Now, as time moves forward, the stock will go up, down or sideways. If it's above $20 you will sell the stock, and keep the $2,800 and the new capital gains of $2,000. If it does not go above $20, you get to keep the stock and the $2,800. And you write the calls out for the next month, for say $2,900, or whatever you can.
HERE'S OUR SAMPLE BATCH #1A:
We'll take $20,000 and buy some stocks on margin, spending close to $40,000. We're looking for 5% to 10% option returns. This means our cash returns will be double this on margin.
FAS is going for $13.84, 1,000 shares cost us $13,840. We sell the $14 calls for October for $1.63, Or $1,630.
MU (Micron Technology---one of my favorites) is $6.98, or $6,980. We sell the $7 calls for 65 eents, or $650.
EK is $2.80, and we buy 1,000 shares for $5,600 and then sell the $3 call for 41 cents times 2,000, or $820
JDSU is going for $13.17, or $13,170. We then sell the $13 calls for $1.18, taking in $1,180.
We sold some of these in the money and some out of the money. I didn't do the calculations for the extra.
CONCLUSION
We invested $39,590 and took in $4,280. That's over 10% on the whole amount, but about 20% on our original $20,000.
And think of this: We have $4,280 in the account. We can pull it out and pay the bills. We could buy more stock with it. We could leave it there in the account to help with the margin. It's just cash in the account.
We did this with only one trade per stock. In real life we could do buy-backs and double dip. We can buy back and sell out the next month. We're in the game, putting time to work for us. We're in the game, selling the fluff of the options. We have assets producing income, helping us retire better.
______________________________________________________________________________________________________
Copyright 2011 All Rights Reserved. Please see your own financial professional for trade suitability.
All prices and transactions are a snap-shot in time. Your results will vary.
STALE POLITICS
Doing the same thing over and over again, and expecting . . .
I thought I'd weigh in with a few thoughts about the new so-called jobs bill, which is nothing but a taxing bill, with two massive new government agencies to steal away more of our freedoms.
I suggest we need growth. To get this we need stable taxes, ones we can count on, base decisions on and then get on with our businesses. We need a complete repeal of ObamaCare. It's a dangerous, destructive and dubious enterprise. It is fraught with stupid ideas. In fact, we need less government regulations---like the Dodd-Frank bill, a bill almost as bad as ObamaCare.
What we don't need is top-down government control. I vote for freedom. It always works. George Gilder, quoting technologist Carver Meade said: "We depend on innovations of the citizens of a free economy to keep ahead of the bureaucrats and the people who make a living on control and planning. In the long term, it's the element of surprise that gives us the edge over more controlled economies."
He goes on: "Almost everything Mr. Obama consists of bets on 'bureaucrats and people who make a living on control and planning." He states we have: "BUREAUCRATS BOSSING AROUND TAX DOLLARS."
Recently in Investor's Business Daily the editors opined, "Club for Growth executive director David Keating stated after phone conferences with numerous corporate CEOs: "They see job creators being viewed as just targets, sources of government revenues." Mr. Keating replies, "And so, their money is frozen on the sidelines."
I thought I'd weigh in with a few thoughts about the new so-called jobs bill, which is nothing but a taxing bill, with two massive new government agencies to steal away more of our freedoms.
I suggest we need growth. To get this we need stable taxes, ones we can count on, base decisions on and then get on with our businesses. We need a complete repeal of ObamaCare. It's a dangerous, destructive and dubious enterprise. It is fraught with stupid ideas. In fact, we need less government regulations---like the Dodd-Frank bill, a bill almost as bad as ObamaCare.
What we don't need is top-down government control. I vote for freedom. It always works. George Gilder, quoting technologist Carver Meade said: "We depend on innovations of the citizens of a free economy to keep ahead of the bureaucrats and the people who make a living on control and planning. In the long term, it's the element of surprise that gives us the edge over more controlled economies."
He goes on: "Almost everything Mr. Obama consists of bets on 'bureaucrats and people who make a living on control and planning." He states we have: "BUREAUCRATS BOSSING AROUND TAX DOLLARS."
Recently in Investor's Business Daily the editors opined, "Club for Growth executive director David Keating stated after phone conferences with numerous corporate CEOs: "They see job creators being viewed as just targets, sources of government revenues." Mr. Keating replies, "And so, their money is frozen on the sidelines."
I agree. From my earliest real estate days I learned that "confusion means no." We're getting "NO" from around the country and around the globe. No more taxes. No more regulations. No more government control. No more loss of our freedoms. In fact, there's a good campaign slogan for 2012:
"NObama."
Friday, September 16, 2011
SUPPLY vs. DEMAND
It is really difficult to get a handle on the effect government has on our everyday lives without understanding a few underlying principles, including the jargon that accompany them. One such grouping of words that comes up frequently is "Supply-Side Economics," and "Demand Side Economics."
And then the party that destroys words consistently attacks and pins a epithet on a word---like "Trickle Down Economics"---and it confuses people even more. Guess which of the two types of economics has this negative appellation attached to it? We'll get to that in a minute.
Let me share a few ideas about each type of economic activities---especially those imposed by government---and then you judge, you decide which is best for the country.
DEMAND SIDE
This theory tries to increase demand with government infusion of money. Some call it stimulus. Lately, the Liberals are calling it investments. Demand Side uses government controls to control and manipulate production.
There are three ways they do this:
1) They borrow money, if needed. And it's always needed. Margaret Thatcher said;
"Liberal always fails because sooner or later they run out of other people's money."
This increase in deficits and debt causes inflation. They think they can pay off the debt with cheaper money.
2) They raise taxes, especially on the high earners.
3) They "Redistribute Wealth." They do not promote growth, except in government.
SUPPLY SIDE
This strategy incentivizes production, the supply side, by lowering restraints (read regulations at every level). Their emphasis is on expansion of business and investment.
They do this by:
1) Slash tax rates (especially at the margin---the next dollar).
2) Eliminate regulatory high hurdles. Make sure laws are passed by our representatives, not bureaucrats like the EPA.
3) Rein in inflation with tighter monetary policy.
One is proposed by the Keynesians who are Socialists, Big Government types. One is by Free Market Enthusiasts and Constitutionalists. Funny thing, that "Trickle Down Wealth" works. But the most amazing thing is that such a failed, stale, destructive concept as "Keynesian Style Demand Side Economics" gets the time of day. It should be abandoned, repealed and thrown in the trash-bins of history.
More on Keynes and the President's Destruction machine coming up in a few more blogs.
Wade
And then the party that destroys words consistently attacks and pins a epithet on a word---like "Trickle Down Economics"---and it confuses people even more. Guess which of the two types of economics has this negative appellation attached to it? We'll get to that in a minute.
Let me share a few ideas about each type of economic activities---especially those imposed by government---and then you judge, you decide which is best for the country.
DEMAND SIDE
This theory tries to increase demand with government infusion of money. Some call it stimulus. Lately, the Liberals are calling it investments. Demand Side uses government controls to control and manipulate production.
There are three ways they do this:
1) They borrow money, if needed. And it's always needed. Margaret Thatcher said;
"Liberal always fails because sooner or later they run out of other people's money."
This increase in deficits and debt causes inflation. They think they can pay off the debt with cheaper money.
2) They raise taxes, especially on the high earners.
3) They "Redistribute Wealth." They do not promote growth, except in government.
SUPPLY SIDE
This strategy incentivizes production, the supply side, by lowering restraints (read regulations at every level). Their emphasis is on expansion of business and investment.
They do this by:
1) Slash tax rates (especially at the margin---the next dollar).
2) Eliminate regulatory high hurdles. Make sure laws are passed by our representatives, not bureaucrats like the EPA.
3) Rein in inflation with tighter monetary policy.
One is proposed by the Keynesians who are Socialists, Big Government types. One is by Free Market Enthusiasts and Constitutionalists. Funny thing, that "Trickle Down Wealth" works. But the most amazing thing is that such a failed, stale, destructive concept as "Keynesian Style Demand Side Economics" gets the time of day. It should be abandoned, repealed and thrown in the trash-bins of history.
More on Keynes and the President's Destruction machine coming up in a few more blogs.
Wade
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