Happy Talk
Research for Online Investors

by John Dalt

2/24/09

These are times that try men’s souls.  Gold is getting ready to correct.  How do I know?  I have had people ask me how to buy gold, one of the highest traded options on the market is the January 2010 GLD $150!  When non-traders or investors start asking, “How do I get some”, and options interest is high on a bet on a 50% increase, Mr. Market is ready to chop off some heads.  I sold out of the gold and silver positions last week and have switched sides to short gold.

Fed Chairman Bernanke appeared before the Senate Banking Committee today, democrats made points on the need for more regulation of financial institutions; republicans questioned the amount of borrowing the U.S. needed to cover the deficit. Chairman of the committee Chris Dodd could not resist slamming the idea of allowing citizens to invest Social Security Accounts in the stock market. Bernanke could have hit it out of the park, but did not. Maybe he does not think it would be a good idea to have 100 million people as stockholders rather than participating in a giant Ponzi scheme. Can you imagine the importance of every citizen owning stocks in U.S. companies? Imagine the ownership mentality that would develop. People might even begin to quit looking to government to solve their problems and protecting them from poverty. At the end of the hearing, Dodd admitted his choice of words concerning ‘nationalization of banks’ had been poorly chosen. Within minutes of the hearing ending, financials gained traction taking the rest of the market up with them. There were many traders covering shorts, which adds to volatility.

The president addresses congress and the nation tonight.  If he inspires the country to go to work and pull themselves up by the bootstraps, it would inspire confidence in the nation, and the markets.  If OH! Bama paints a litany of problems and government remedies, today’s rally will be short lived.  We need some ‘happy talk’, I wish OH! Bama would read one of Ronald Reagan’s old addresses.  It would be inspiring to hear him tell us government was not the answer, that we lived in the greatest country on earth, that the U.S. is like a shining city on the hill.

There is a good article in the Wall Street Journal about California.  The difficulties they face balancing the budget, comparing the state to France!  One of the problems they have is one I have pointed out in our little town.  The school district is our largest employer, they get whatever they want.  The school employs 200 employees, doubled to 400 votes with spouses out of 1900 registered voters.  If you get 40% voter turnout (760 votes), every voter that is not employed by the school cannot stop wasteful taxes and spending.  This is happening around the country, as public sector jobs increase, the electorate becomes dependant of big government for payroll.  California is running out of people to pay the bill.  I remember a quote about ‘Socialism works, till you run out of other people's money.’  You can read it here.

I heard that Larry Summers, the president’s chief economic advisor fell asleep at yesterdays ‘Fiscal Responsibility Conference’. I guess the fix is in, more taxes, more spending, more five year plans. The president wants to commit to lowering the deficit to only $500 billion in four years. That is almost double the deficit of one year ago, before the present financial crisis, and after the Iraq war is over. So much for fiscal responsibility. 

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future. 

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