Red Skelton's Commentary on our Pledge of Allegience

More than 2 centuries ago, our Founding Fathers fought for and achieved their independence from Great Britain. On this 4th of July, we the people find ourselves under assault from our own government and our future as a free nation is at risk.

I think what follows more than speaks for itself.

The Pledge of Allegiance
by Red Skelton

As a schoolboy, one of Red Skelton's teachers explained the words and meaning of the Pledge of Allegiance to his class. Skelton later wrote down, and eventually recorded, his recollection of this lecture. It is followed by an observation.

I - - Me; an individual; a committee of one.

Pledge - - Dedicate all of my worldly goods to give without self-pity.

Allegiance - - My love and my devotion.

To the Flag - - Our standard; Old Glory ; a symbol of Freedom; wherever she waves there is respect, because your loyalty has given her a dignity that shouts, Freedom is everybody's job.

United - - That means that we have all come together.

States - - Individual communities that have united into forty-eight great states. Forty-eight individual communities with pride and dignity and purpose. All divided with imaginary boundaries, yet united to a common purpose, and that is love for country.

And to the Republic - - Republic--a state in which sovereign power is invested in representatives chosen by the people to govern. And government is the people; and it's from the people to the leaders, not from the leaders to the people.

For which it stands

One Nation - - One Nation--meaning, so blessed by God.

Indivisible - - Incapable of being divided.

With Liberty - - Which is Freedom; the right of power to live one's own life, without
threats, fear, or some sort of retaliation.

And Justice - - The principle, or qualities, of dealing fairly with others.

For All - - For All--which means, boys and girls, it's as much your country as it is mine.

And now, boys and girls, let me hear you recite the Pledge of Allegiance:

I pledge allegiance to the Flag of the United States of America, and to the Republic, for which it stands; one nation, indivisible, with liberty and justice for all.

Since I was a small boy, two states have been added to our country, and two words have been added to the Pledge of Allegiance: Under God. Wouldn't it be a pity if someone said that is a prayer and that would be eliminated from schools, too?

Red Skelton

To listen, go to: http://www.usflag.org/skeltonspledge.html

Intelligent Trader 070109

This week is a holiday shortened one and I thought it would be in my best long term interests to spend some time reviewing my entry, exit and position sizing strategies.

It’s not rocket science to get the trade direction right. Market direction is a broad declarative statement that eventually proves itself correct. You’re either in a trend or you are retracing a portion of the major trend. Either way, the prognostication proves to be right on the button.

(As an aside: one thing that drives me crazy is that every time Elaine Gazzarelli is introduced, we’re reminded that she “called” the 1987 market crash. This event happened more than 21 years ago and it seems like her market calls have since then missed the mark. You would think that she would have done something since then – don’t you think?)

The key to larger than life profits is to know how far the move will take you. Predicting this is not possible. Some argue differently but anyone who says that they can predict this is lying through his teeth. Successful trading is about probabilities and minimizing mistakes. There are an infinite number of ways to trade the markets and do so successfully.

Ideally, every trade that I make will have both high probability and high profitability. I know intuitively that I can’t have both on every trade. But, I do want the best of all possible worlds, which is why I have gone back to the text books this week.

I’ll report back on any changes that I make.

RAC
The Intelligent Trader

The Intelligent Trader; June 30, 2009

For some time, I’ve been talking to folks about the 1970s and it’s not just been about my 35th high school class reunion. I started trading in the 1970s learned the art of technical analysis and charting from a master trader. In the days before computers, charts were updated daily by hand. Doing this day in and day out gave you a unique feel for the market, especially when it came to the bear market that happened in that decade.

Back then, inflation was the culprit that was destroying the stock market. For more than a decade stocks had done nothing and investors were beginning to throw in the towel.

Don’t get me wrong here – equities aren’t going the way of the Edsel. Even though the trigger for our current bear market was the mortgage industry, the bottom line is that a bear market is just that – a bear market and it is worth noting the similarities to the present market to what we saw during the 1968 - 1982 period.

Overall, most investors still think about investing in pretty positive terms. The 1990’s were a good time to be involved in the market. But, like all good things, the past few years have been a different story.

For the ten years ending 12/31/2008, the Lipper Large Cap Growth Fund Index sported a total return for the period of -34.27%. Investors putting money into a growth fund at the beginning of 1999 is still under water as this month comes to a close.

We get to a discussion as to the merits of ‘buy and hold’ another time.

Let’s take a look at the bear market of the 1970s.

The Dow - 1970 - 1980 (chart above)

Where the market of today differs from the bear market of the 70s can best be summed up in one word – debt. Given the breadth and depth of our debt situation, it’s going to take more than a fortnight or two to fix the economy and the market. This isn’t a computer meltdown or a Long Term Capital like collapse.

The debt level currently afflicting our country has reached epic proportions at the personal and government level. The government’s answer to all of this is to spend more money. The cure is to not keep spending money like there is no tomorrow.

To stop the bleeding, we need to apply a tourniquet. People are re-thinking their spending habits in order to reduce their debt load. After years of consuming too much, they are slamming on the brakes. Corporate America is also putting their spending habits under a microscope.

Now – if the Federal Government would only stop the spending …

Why the overkill?

My job as a trader is to make money and like I’ve said before – the key to success is trading the market you have and not the one that you want. Hope and Pray is not an investment strategy.

I’ve written at length about my 5 step process. I’ll not belabor the point here except to say that you can make money in this market. The key is to understand what kind of market you are dealing with.

Looking back to 1974-1975, stocks made a significant bottom then rose over the next year and a half. The Dow rose 70% plus which, if history is any guide, means that we have some room left on the upside. This is what has the talking heads babbling today.

The reality is this – Wall Street is either too good or too bad. It’s never average. This leads me to conclude that we may be overshooting the top side because a number of economists are starting to call the turn in the economy.

The rally of 1974-75 ended with the onset of the next bear market when the Dow gave back the obligatory 20% plus. Right now our indicators have the defense on the field.

So here’s the big picture. I don’t think history will repeat itself. I do think we’ll have to play the market from both sides – long and short. I do think that passive investing will get you killed. This market screams out for active investing. If you think buy and hold is the answer – think again.

That’s about it for now.

RAC
The Intelligent Trader

Intelligent Trader June 29, 2009

Another Broken Promise

"I pledge that under my plan, no one making less than $250,000 a year will see any type of tax increase," Obama told a crowd in Dover, N.H., last year. "Not income tax, not capital gains taxes, not any kind of tax."

WASHINGTON – The Obama White House left open the possibility Sunday that the president would break a campaign promise and raise taxes on people earning less than $250,000 to support his health care overhaul agenda.

White House adviser David Axelrod said the administration wouldn't rule out taxing some employees' benefits to fund a health care agenda that has yet to take final form. The move would be a compromise with fellow Democrats, who are pushing the proposal as a way to pay for the massive undertaking without ballooning the federal deficit.

"There are a number of formulations and we'll wait and see. The important thing at this point is to keep the process moving, to keep people at the table, to the keep the discussions going," Axelrod said. "We've gotten a long way down the road and we want to finish that journey."

But if President Barack Obama compromises on that point, it would reverse a campaign tax promise.
"I pledge that under my plan, no one making less than $250,000 a year will see any type of tax increase," Obama told a crowd in Dover, N.H., last year. "Not income tax, not capital gains taxes, not any kind of tax."

At the time, his Republican rival, Sen. John McCain, R-Ariz., was proposing a tax on health benefits similar to the plan Obama is now considering. Just a year ago, Obama spent millions on campaign commercials attacking the idea.

One ad accused McCain of favoring "taxing health benefits for the first time ever ... taxing health care instead of fixing it. We can't afford John McCain."

A second Obama ad called McCain's approach "the largest middle-class tax increase in history." Driving the point home, it contended the "McCain tax could cost your family thousands. Can you afford it?"

Under the current proposals, a tax on health benefits would affect only those with pricey health plans. The idea would be to tax as income the portion of health benefits worth more than a specified limit. Officials are considering several options, including one that would set the limit at $17,240 for family coverage and $6,800 for individuals.

Plans worth more than that would be taxed; those worth less would see no increase.
Obama has faced similar criticism before. When he increased taxes on tobacco to pay for a children's health bill, his critics said he was raising taxes on those making less than $250,000 a year.

Obama left open the possibility of a tax during interviews last week, insisting he wasn't taking any option off the table despite his personal opposition. But two of his high-profile advisers — budget chief Peter Orszag and economic adviser Jason Furman — both have indicated they support some taxes on health benefits to pay for the overhaul.

Sen. Chuck Grassley, R-Iowa, said that Obama should step in an oppose the tax if he's truly against it.

Otherwise, he faces a loss to his own Democratic Party and his own campaign credibility.
"I think it's going to take presidential leadership to get people of his party to see that we shouldn't be subsidizing high-end health insurance policies that drive up inflation in health insurance," said Grassley, the top Republican on the powerful finance committee.

Grassley — and, to be sure, other Republicans — remember Obama's scathing criticism of their GOP presidential nominee.

"Since the president denigrated John McCain's effort to move in this direction during the campaign, it's going to take, in order to win over Republicans, presidential leadership in that direction," Grassley said.

To help sell his plan, Obama scheduled a town hall-style meeting this week in Annandale, Va., a Washington suburb. He plans to take questions Wednesday from the audience and from online sites such as Facebook, YouTube and Twitter.

Axelrod insisted that the White House has made progress on a health care plan and is working with Congress.

Even so, the emerging legislation is hardly the bipartisan collaboration Obama's top advisers had sought.

"One of the problems we've had in this town is that people draw lines in the sand and they stop talking to each other," Axelrod said. "And you don't get anything done. That's not the way the president approaches us."

Axelrod appeared on ABC's "This Week" and NBC's "Meet the Press." Grassley appeared on "This Week."

Source: Newsmax

The Intelligent Trader; June 28, 2009

To read this week's diatribe, just click: This Week's Long and Short of It
or cut and paste the following into your web browser:

http://www.christyinvestments.com/intelligent-trader-2009/intelligent-trader-weekly-062809.htm

RAC
The Intelligent Trader