Fortune Watch

You knew it the moment it left the club, that spark at contact when you catch it just right. You look up. It’s just reaching the top of its climb— and heading down right at the pin, a pin positioned left of center on the elevated green, much too close to the water.

This could be the one! Four mouths hang open, not a sound. Then whack, the ball strikes low on the stick and disappears; the pin wobbles; the ball is nowhere to be seen—

Moe and Curley are certain it dropped into the hole as they hurry their tee shots and rush to their cart. “My buddy Stan holed out like that at Disney a few years ago”, you hear, as they search the cooler for four cold brewskis.

Larry isn’t ready to slap you on the back yet. “With my luck”, he says, “the ball would go dead left, down the hill and into the water”. He calmly puts his tee shot on the green, far to the right of the pin— about where you were really aiming. What are your expectations? What scenario fits your game today?
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The White House has released another of its health care reform clarification emails— there will be more. It seems strange to me that the focus is on insurance coverage rather than on the spiraling costs of health care itself.

Frankly, the drafters of the insurance reforms have little, if any, understanding of insurance, risk assessment, or underwriting— and nary a clue about running a business. But why should they care? This is Robin Hood politics, not business. Why do we continue to re-elect them is a far better question.

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Warren Buffet a highly influential American has finally hit the panic button, saying that we are going to be crushed under a mountain of debt taking into consideration the amount of debt the country is piling up.

Last year, Warren Buffett says, we were justified in using any means necessary to stave off another Great Depression. Now that the economy is beginning to recover, however, we need to curtail our out-of-control spending, or we’ll destroy the value of the dollar and many Americans’ life savings.

Here are some not-so-fun facts from Buffett’s editorial today in the New York Times:

* Congress is now spending 185% of what it takes in
* Our deficit is a post WWII record of 13% of GDP
* Our debt is growing by 1% a month
* We are borrowing $1.8 trillion a year

$1.8 trillion, that’s a lot of money. Even if the Chinese lend us $400 billion a year and Americans save a remarkable $500 billion and lend it to the government, we’ll still need another $900 billion.

Which brings us to the million Dollar question “where’s it going to come from?” Most likely the printing press. And, ultimately, that will destroy the value of the dollar.

A  Miami man, Albert Gonzalez, 28, his motto is “operation get rich or die trying”. Two Russians and Albert Gonzalez are being indicted for allegedly stealing 130 million credit card numbers, the largest identity theft in history. That’s a lot of credit card numbers — like, one for every housing unit in the United States. Just how did they do it?

The historic theft involved five corporate data hackings, between 2006 and 2008, including Heartland, Hannaford, 7-Eleven and two unnamed companies, according to Channel Web. US investigators say the team scanned lists of Fortune 500 companies and learned about their checkout counter machines (also known as point-of-sale systems).

Then they would write specific codes to corrupt their data systems and launch a virus from computers in the United States and Europe to pull hundreds and thousands of credit card numbers, and sort through them using a “sniffer,” which is basically a data analysis system that decodes big chunks of information.
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September is fewer than three weeks away. Feeling nervous? Maybe you should be. For investors, the period between Labor Day and Halloween is proving an annual fright show. And no one knows why.

It was, of course, in September last year that Lehman collapsed and everything fell apart. But then it was also September-October 2002 that the last bear market plunged to its lows.

The 1998 financial crisis? It began late August, and rolled on for two months.

The famous crash of 1987 came in October. But most people have forgotten that the market actually started sliding downhill in late August.

That’s almost exactly what happened in 1929 too. The big crash came in October, but the market peaked just after Labor Day. Prices began falling through September, then tumbled further still.

The worst month of the Depression? September, 1931, when the Dow fell about 30 percent. It was also in September, 2000, that the bear market really got going.

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This is a real world situation that could impact each of you as professionals, investors, and friends of persons who could fall for such schemes. So please get angry about it!

An envelope arrived yesterday from a worried investor (not a client of mine) in Appleton, Wisconsin. He had been contacted with an “investment partner” opportunity touting a “guaranteed investment program” that would absolutely “double and triple his money every sixty days” with no worries, work, or risk involved.

So why was this total stranger contacting me?

Inside the envelope were four separate documents: (1) a call for twenty-five new investors who would become partners in this special, private, guaranteed investment program, and (2) an endorsement of the program from Helen Taylor, the founder of ResponseLink Pros, Inc.
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The Investment Grade Value Stock Index is a barometer of a small but elite sector of the stock market. Some Investment Grade Value Stocks are included in all averages and indices, but even the Dow Jones Industrial Average includes several issues that are below Investment Grade and very few boast an A+ S & P rating.

The IGVSI tracks a portfolio of approximately 400 stocks— and less than half of them are likely to be found in the S & P 500 average. This new market index was developed in late 2007 to provide a benchmark for the equity portion of investment portfolios managed without open-end mutual funds, index funds, or any of the other popular speculations and hedges that are included in most professionally managed portfolios.

Two related indices (the WCMSI and WCMSM) track portfolios of closed-end income funds. Between the three, they serve as an excellent performance expectation development tool for investment portfolios managed according to the disciplines of the Working Capital Model (WCM). Through July 31 2009, these indices soared approximately 24%—- about five times the growth of the S & P 500 and twelve times that of the DJIA.

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