Economics
Recent Data
August new home sales fell 11.5% versus expectations of a decline of 1%.
Other
The best case that I have seen against a bail out:
http://pajamasmedia.com/blog/an-alternative-to-the-wall-street-bailout/
2000+ earmarks in the continuing resolution passed by the House:
More on the role the rating agencies in the financial crisis:
http://bigpicture.typepad.com/comments/2008/09/bloomberg-bla-1.html
A look at the demographics of sub prime mortgages:
http://mjperry.blogspot.com/2008/09/mind-numbing-effects-of-political.html
Politics
Domestic
International War Against Radical Islam
The Market
Technical/ Fundamental
As you know, stocks rallied on the expectations that an acceptable version of Paulson’s plan is going to pass. The S&P (1209) recovered above its July low (1198), putting both Averages over that support level. Volume remained low and volatility high; so even though the indices were up 2%, clearly there is a lot of fear and loathing out there and small wonder; the posturing going on by the political class into the evening was frightening to behold. Indeed at the eleventh hour John McCain and House Republicans have decided that (for political reasons?) to enter this fray in opposition of Paulson’s plan.
I don’t claim to be an astute political observer and I do my best not to voice my own political opinions in this commentary; but I am appalled by what is going on in
(1) Paulson and Bernanke know more about the workings of the financial system, what the problems are now and what the alternatives are for correcting those problems than all the members of congress COMBINED,
(2) they have come up with a plan to deal with those problems and avoid a meltdown in the financial system, they worked with congressional leaders since last Friday and by yesterday afternoon had the president, the democrats in both houses and senate republicans on board for approving the plan by the Market open Monday [although as I write this, there are house republicans in the news saying that there was never a deal; no politics in that],
(3) whatever the case, if there is no deal and quick, then what we have been through as shareholders to date may look like a walk in the park.
(4) my move yesterday putting about 1% of our cash to work is looking very much like a mistake in assuming that intelligent, thoughtful men would do what was necessary because to do otherwise was unthinkable.
Today, our Portfolios will start to take all positions in financial and industrial stocks to one half positions (note many of these holdings are already at 2/3 to of normal). They will sell one half of those shares at the Market open, watch the Market trade for a while then decide whether to sell the rest. If all share are sold, that will take cash positions from roughly 18-19% to 24-25%.
News on Stocks in Our Portfolios
A technical look at Walgreen (Aggressive Growth Portfolio):
A positive comment on Canadian National RR (Dividend Growth Portfolio):
More Cash in Investors’ Hands
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