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robstuck (< 20)

State of the Union.. or should I say VEGETABLE GARDEN?

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May 21, 2009 – Comments (6) | RELATED TICKERS: AIG , MCD , DSX

I why know you're reading this right now- because you want to know the next big stock, the next big gain and who doesn't? I'm here to lead you to the promised land- the land of greenbacks that is. Or is it? 

First I'd like to say that I am an American born and raised in Atlanta, GA. However I am disgusted with where this country is going. Here is why..

1. The United States is comprised of uneducated, lazy rubes who for the most part are highly unproductive. Too many Americans are dependent on others. Whether it be their parents, their significant other, or the government.

2. I am a student of the world and find myself surrounded by extremely bright, motivated students from where everywhere but the US. It's hard not to notice the incredible work ethics of foreigners. The US public is too focused on trash news. This I think is a huge problem. In order for a democracy to work there needs to be an educated public, and how can our public be educated when our news is trash? The only good source of news we have- the newspapers- are quickly going out of business. 

3. The U.S. has been living through an era of unsustainability. Whatever happened to saving money? Too often people are buying on credit- buying homes on credit, buying cars on credit, buying clothes on credit. As we have seen the source of our credit (the banks) have soured. The Federal Government is quickly trying to perform CPR in order to get the nation growing again. How are they doing this you ask? By BORROWING MORE MONEY! Seriously? It is another example of money traveling from hard working people to losers. The U.S. is becoming a welfare state. Taxes are too high, and money is going from our most productive people to our least productive. The case of GM is an example of what is going to happen to the United States if we continue down this road. Once welfare has been created it is increasingly hard to stop. It is growing at a rate faster that our GDP. Thank God we are still having kids- the E.U. is not so lucky.

Many people think that the bailout is going to help the US economy. It isn't. Most of the money from "the bailout" is bailing out the auto industry and home owners, in short, they have bailed out the losers in the economy. They have put hard earned tax payer money- from our unborn children- put it in a briefcase, tied it to a ball and chain and sunk it in the mud. 

 The United States is a service based economy. This is a model that has worked well in the past, but due to globalization and the flattening of the world, that is competitive advantages, it will not work in the future. As Adam Smith said, "Wealth comes from labor." That is, wealth comes from making things. The US is increasingly importing more and more goods and doing less exporting and import replacing. 

The turnaround. The turnaround will be extremely slow. The economy has grown in past decades. Mainly due to being the world reserve currency and people all over the world investing their money in the United States. However, as we can see the world is increasingly getting tired of watching their money being devalued and their investments being destroyed. Due to the huge losses of capital in the recent downturn the coming rise will be slow. Extremely slow. SInce the march low we have already seen gains of 30%. Don't expect a big rise in the future.

So if you are asking where to invest i'll tell you where i'm putting my money. By the way i will warn you i dont pretend to be an investing GURU. I am merely a novice addicted to news, reading and wasting my time on caps. 

 I suggest limiting your exposure to the dollar. Here's why. Due to the enormous U.S. debt around 76 Trillion there is no way the United States will be able to pay back all of this money- at least in the coming 100 years. Unless, that is the Fed debases the dollar. That is, they purposely increase inflation to the point where they can pay back their creditors. Many already expect the United States to do this. China is moving their holding of greenbacks to commodities and natural resources. This is also due in part to their growing national economy/ population. 

 In short, i suggest this... 

GOLD

SILVER

SHIPPING (DRYS, DSX)

OIL and companies that deal with oil. Stay away from shady business such as shale and other expensive driliing techniques. many of those companies may be underpriced right now and have strong balance sheets, but only because they are unprofitable with oil under $60/barrel. 

BANKS- where? anywhere (AIG, C, BAC)

SOLAR and other energy efficient solutions- one thing the stimulus will help

ETF's of emerging markets (brazil, India, China... )

and.. MCD 

 

Thanks for reading the ramble fools i look foward to hearing your feedback! 

 

 - Robstuck

 

6 Comments – Post Your Own

#1) On May 21, 2009 at 8:47 PM, robstuck (< 20) wrote:

As I watch Bloomberg the U.S. could potentially lose their AAA credit rating. cream on cake.

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#2) On May 21, 2009 at 9:58 PM, soycapital (< 20) wrote:

Good post! Thank-you!

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#3) On May 21, 2009 at 11:22 PM, robstuck (< 20) wrote:

thanks soy. everyone post your thoughts

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#4) On May 21, 2009 at 11:39 PM, DRmatador (< 20) wrote:

Great picks and advice stuck. I completely agree. AIG, and C are both great high reward stocks with fantastic potential that are highly underrated. GO LONG GO HARD.

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#5) On May 22, 2009 at 12:02 AM, nightraderr (< 20) wrote:

solid post. lets hope it doesn't come true.

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#6) On May 23, 2009 at 7:52 AM, Toburk (58.51) wrote:

It's fully possible to turn this around; you just need to give the people (and thus the politicians) a good smack of the truth.  I'm Canadian, and let me tell you about what happened here in the late 70's. 

We had a Prime Minister, who you would call a liberal, and he would have agreed with you; basically a comical caricature of the "lazy welfare state dependency" type.  Well, he thought it was in Canada's best interest to rack up about $100 billion of national debt... at 20% interest.  Soon after he was ejected from office. 

Now the guy after him, he was a "conservative" and was unable to get the spending fully under control due to the lack of political will to cut programs.  That was just the regular operations budget he couldn't get under control, there were still the interest payments to deal with, and those were unpayable, which resulted in more debt being taken on to fund the interest payments. Well I guess you can figure out how that ended up right?   

 

It ended up with Canada having the strongest financial fundamentals in the G8.  How?  It gave the public a good smack to the face about what needed to be done, and it got turned back around. 

If you are wondering, about 80% of all Canadian debt as of now is unpaid interest on the original amount, with about $400 billion left to pay off after 30 years.

 

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