It seems that governments have run out of money unless of course they print some more.  Consumers are basically tapped out, buried under a load of debt.  Corporations, well it is not their money and it is to be used for productive capacity when the economy improves. 

So where could the United States find an untapped pool of spending?   Yes, the Tax exempt foundations like Gordon Moore, or Bill Gates, Tides or the countless other foundations that have been created to protect the ultra-riches billions of assets from taxation. 

It is time to end the loop-hole of tax-exempt foundations sheltering billions in assets for the rich.  When you look at the "good" they claim to do, it falls far short when the Nation is facing another depression (Krugman, not me). 

Therefore Congress, confiscate these foundations and spend the money on building infrastructure, clean energy and efficient transportation systems.  Bill Gates himself chide you Congress on spending more while he is sitting on tens of billions of idle cash.  No, confiscate his foundation and spend it to save the Nation.

If this chart does not convince you to sell some QQQQ and buy CSCO, I don't know what it will take to make your horse drink this water.



CSCO is one of the best managed, visionary companies that is revolutionizing our world and it is CHEAP!  Needless to say, I looked at this chart and sold QQQQ bloated with an over priced AAPL and loaded up with CSCO.

In the past few months I have heard that Apple, AAPL is dictating whose stuff can run on their machines more than once.  First JAVA now whose software you can embed advertisements into your iphone apps.  Personally, that kind of business practice, especially on the internet is offensive.  I cannot be the only person that finds AAPL's actions objectionable. 

Needless to say that type of business practice has always failed in the past and I expect that trend to continue. 

It is time to dump AAPL from your portfolio because it has a long ways to fall!

In my clients asset allocations, Europe, Australia and Far East better known as EAFE makes up about thirty percent of all equity allocations.  In preparing client reports yesterday I noticed that those percentages were way down.  Then I glanced at 12 month returns and SPY was kicking EFA's butt by over 1400 basis points.

I ran these charts this morning because I felt a compelling blog post.

First a three year to give some background.  There is a high correlation between these two asset classes.  The gap in performance that has crept into the relationship is the compelling opportunity that this blog is trying to highlight.





This gap is being driven by recent news headlines no doubt, but I want to remind everyone a year ago the "Talking Heads" on Wall street were suggesting that the dollar would lose its reserve currency status and that China was moving massive reserves into the EURO. 

Remember, buy low, sell high.  EFA is low relative to SPY therefore it is time to rebalance to neutral, even overweight EFA.

Are you a small business owner?  Have an IRA, 401K, or some other type of retirement account?

What are you invested in?  Who is investing it for you?

Are you having a problem getting credit, financing inventory or receivables?  What about expansion?

Why are you giving your retirement funds to the Wall Street casino lead by Goldman Sachs, Fidelity, Merrill Lynch and Morgan Stanley?

I have a vision of a pool of retirement capital by small business owners for small business owners so they can finance and grow their businesses.  Wall Street controls the money because small business owners and every other American does not even think what they are doing with their retirement funds. 

What would happen if small business owners and other enlightened investors were to pull their funds from the Wall Street Casino and invested in each other - the real economy? 

If you are a small business owner and you think the retirement capital could be better invested in local businesses and not the Wall Street Casino, give me a call and let us organize that pool of capital.

Interesting that on February 5, 2010 I penned "Time to take profits on CREE".  Well it looks like CREE closed about $56 and change on its way to a high over $83.  Currently CREE is trading about $67.

Remember, I love CREE and the future of LED lighting.  In the past year I learned of VECO which is also a player in the LED lighting future. 

So here are a couple of charts comparing CREE, VECO to the Russell 2000 index ETF, IWM.

Last three years:


Last year:


The 200 day moving average is $56, the 50 day is just over $73.

I would not be adding to this position at this time, but as it approaches the 200 day moving average I would be looking to add. 

Growth is going to be explosive as this new lighting technology gains acceptance and expands its applications. 

Keep your eyes open for opportunities to add to both positions. 

This has been a pretty good hiccup in the markets, down from $122 on SPY.  I would like to point out two very good entry points for those who missed the 09-10 rally.

First, is the level of 105 on the SPY.  This was strong resistance on the way up, in fact I wrote a piece on it (Will SPY print 105, September 9, 2009).  I expect 105 to offer strong support given its strong resistance going up.

Second is just below at 94-96.  This represents the 50 percent retracement between the March 8, 2008 low and the April 26, 2010 high. 

I think 105 will prove to be a hard nut to crack and will prove to be the support level of the market on this pause that refreshes. 

Now that peoples eyes are open to the problems of our governments finances, it will be more difficult to make poor decisions by National, State and local administrations.  More responsible finance decisions made by government officials will not be a factor for growth of earnings, in fact there should be some contraction and layoffs, lots and lots of layoffs of government employees. 

A break below 105 will cause me great concern.  A break below 94 is an exit sign.

They always say buy low, sell high and that is how you make money in the stock market.  

Here is a diversified investment that was blowing the socks off the EFA, SPY and MDY and now is blowing their socks off to the down side.  Of course I am talking about the Spain's ETF, EWP.



like that guy says, buy low my friend!

If a large number of European nations begin cut to their budgets, lay-off workers and reduce benefits to the population, exactly how is that going to improve retail sales, corporate earnings?

With the Euro trading at $1.25 and a strong down trend in place, how can American businesses compete in EURO land, let alone defend their domestic markets from cheap European exports? 

One last thing, America is going need to start an austerity program of its own because our political leaders have spent our Country into a crisis that is going to take several years if not a decade of eliminating wasteful spending, excessive entitlements and useless programs. 

It is one thing for a young family with their first credit card to experience a leaning curve regarding wise use of credit, it is completely different thing for a government to be irresponsible with credit. 

How many other excessively indebted government entities have been irresponsible with credit?  What is the total debt owed by governments?  What about just in the USA?  The State of Alaska borrowed $2 billion from the public employees this year to balance its budget while it put money into a Constitutional Budget Reserve?  (Alaska's borrowing was the growth in the un-funded pension obligations in FY 2010) 

Can America meet all the promises it has made and pay back all this debt?  Federal, State and City?

If "We the People" decide that American governments will be debt free in 30 years with some exceptions for buildings and other infrastructure what tax rate would need to be imposed if spending remained constant?  How would reducing America's obesity of debt impact the economy?

In 1995 America was sold a bill of goods that government could increase the growth rate of our economy and meet the excessive liabilities our elected folks have accrued for us.  In the past 15 years, the Goldman Sachs run US Treasury and Federal Reserve have utterly failed at managing this accelerated growth rate.  Just look at a long-term S&P500 chart from 1947 to today. 

America, start producing your energy domestically! 

Pay off your debt and then SAVE, SAVE, SAVE.