Merill Lynch Exposed

I’ve been contemplating whether I should expose the lavish corporate party that Merrill Lynch held on October 3rd of this year, just 2 weeks after they were forced to sell out to Bank of America. So I have a 3 part blog this week, Merrill Lynch Exposed, Regulation, and The Direct Market Connection to Republian and Democratic Presidents, among the weekly updates.

The lavish corporate party was held at Starr Pass Resort in Tucson, Arizona. I was there, by coincidence. My beautiful fiancé and I had decided to do a “date night,” and I had wanted to see the resort that was on the outskirts of the town I lived in. I’ll let the news channels dig up the specifics on what the lavish party included but I wanted you to know who broke the story (if it breaks at all). Merrill Lynch didn’t go bankrupt, but they might as well have. Here’s an excerpt from Wikipedia.org (my favorite information website).

Three days later, the company froze hiring and revealed that they had charged almost $30 billion in losses to their subsidiary in the United Kingdom, exempting them from taxes in that country.

Bloomberg reported in September 2008 that Merrill Lynch had lost $51.8 billion in mortgage-backed securities as part of the subprime mortgage crisis.

Mr. John Thain, the former CEO of Merrill Lynch, by the way, to make a point, to highlight, “Based on a formula by the Associated Press, in 2007 Thain was the best-paid CEO among the S&P 500 companies, receiving $83.1 million,” (according to his page on Wikipedia.org). He killed that company, and most of shareholder value. Mr. Thain’s pay is 0.16% of the $51.8 billion in losses. Now that may not seem like a big percentage but when you think that his salary is 1/10th of almost 2% of the total losses for which he presided over, that makes me mad. Everyone hears about what Warren Buffet is saying and doing because he has a history of world-class level investing returns, so what about the bad ones? Well, Mr. John Thain is now a big whopper at Bank of America and he’s in charge of a few things. So, if I can give you any investment advice in this article it would be. . . DO NOT BUY BANK OF AMERICA STOCK.

It makes me mad as hell that Big Whoppers can drive age-old companies into bankruptcy but have no repercussions. This is why we need more regulation. Regulation protects the investor because obviously the boards do not. I think that the fact that John Thain works for ANYONE now is proof enough that the boards do not protect the investor. Regulation can come in a number of ways but most likely this time it will come in more transparency. The Bush theory on regulation is that there should be none, and that businesses should be trusted. I’m willing to say that theory didn’t work and that Joe The Plumber is paying the price. I’m going to say this, and I hope it’s true, Bush is the worst president of our lifetime. I hope it’s true because that means the worst is almost past us. So I didn’t have much to say about regulation but let’s just agree that there needs to be more. The segue from here is to show the historical market returns for Democratic and Republican presidents.

There’s no particular reason, but I’m choosing to start with the year 1953.

REPUBLICAN
1953-1961: DOW Industrial Average +101%
President: Dwight D. Eisenhower
Vice President: Richard Nixon

DEMOCRAT
1961-1963: DOW Industrial Average +6.4%
President: John F. Kennedy
Vice President: Lyndon B. Johnson

DEMOCRAT
1963-1969: DOW Industrial Average +44.2%
President: Lyndon B. Johnson
Vice President: Hebert Humphery

REPUBLICAN
1969-1974: DOW Industrial Average -10.1%
President: Richard Nixon
Vice President: Spiro Agnew

REPUBLICAN
1974-1977: DOW Industrial Average+19.8%
President: Gerald Ford
Vice President: Nelson Rockefeller

DEMOCRAT
1977-1981: DOW Industrial Average +0.0%
President: Jimmy Carter
Vice President: Walter Mondale

REPUBLICAN
1981-1989: DOW Industrial Average +129%
President: Ronald Regan
Vice President: George H.W. Bush

REPUBLICAN
1989-1993: DOW Industrial Average +46%
President: George H.W. Bush
Vice President: Dan Quale

DEMOCRAT
1993-2001: DOW Industrial Average +214%
President: Bill Clinton
Vice President: Al Gore

REPUBLICAN
2001-2009: DOW Industrial Average -21.6%
President: George W. Bush
Vice President: Dick Cheney

Tally:
REPUBLICANS: +264.1%
DEMOCRATS: +264.6%

My numbers are by no means scientific. My prediction is that after Obama’s 8 years in office, the Democrats will have a big lead on the Republicans. Stay strong and invest for the long term!!!

On the Political front:
My current Election Prediction ticker: Obama/Biden ticket by 16% - STILL (since my Oct. 1st call)
My prediction for the elections. . . “no more fear mongering.”

Disgraced Politician of the Week
This week’s honor goes to Alaskan Senator Ted Stevens. He’s the longest serving Republican in Alaskan government, the newest being Palin. Senator Stevens is famous for wanting to censor the internet, satellite radio, and premium TV channels. So what he’s saying is that he’s all for guns, but not for freedom of speech. His home renovations came from an oil field research company, of which he did not claim on his taxes. Also, “In September, The Hill reported that Stevens had "steered millions of federal dollars to a sportfishing industry group founded by Bob Penney, a longtime friend". In 1998, Stevens invested $15,000 in a Utah land deal managed by Penney; in 2004, Stevens sold his share of the property for $150,000.” Glad he got caught, he’s a scumbag, shithead.

Win Ben Stein's Money

Some people read the NY Times, some the Wall Street Journal (WSJ), some the SF Chronicle, some the Vacaville Reporter, and some Yahoo! news, you too should find your favorite columnist. If yours truely is your favorite columnist than read on my friends and I will continue to amuse you. I read most of the columns on Yahoo! Finance and that's where you will find my favorite columnists; Ben Stein, Robert Kiyosaki, and more recently Charles Wheelan.

My take on Ben Stein. . . I like Ben because he’s old. Being old has it’s benefits, he’s been around, seen a lot, and obviously the guy knows how to invest. I like Ben because he’s smart. Would you risk your daily pay on a TV show? I like Ben because he knows how political choices impact investments. And, last but not least, I like Ben because when it comes to investing, he’s a permabull. Because of his attitude towards investing he remains cool headed when emotions on Wall Street run high. One of my favorite adages is, “Cool heads will prevail.”

My take on Robert Kiyosaki. . . He wrote a book called “Rich Dad, Poor Dad,” where he chronicles the choices that his two dad’s made in regards to investing. I have not read this book yet, and though I’m a fan of his, truthfully, honestly, I’m not lying to you. . . I probably won’t get around to reading his book. I like Robert because he knows the ins and outs of Real Estate investment. It is important to know basic real estate investing strategies and how that fits into your overall investment techniques and goals. I like Robert because he understands the indirect opportunities of investing (the positive consequences of investing in something that you may not have expected). While investing, most list the negative possibilities when taking a risk by investing your money. It is just as important to understand that not taking a risk (by investing your money) is just as costly a mistake. Robert Kiyosaki typically writes about the unexpected with his investments, which is valuable insight.

My take on Charles Wheelan. . . He wrote a book which I have not read. Infact, the only reason to which I’ve decided to include him is because I read an article he wrote a week ago which had such an impression on me that I decided he’s one of my new favorites. It’s a very good article http://finance.yahoo.com/expert/article/economist/111589 . I’ll put him on my watch list next to the crumbling banks.

Those are three of my favorite columnists which I trust to provide cool headed investment advice.

I still don’t believe that the Bailout Package is going to work. My opinion could partially be due to the fact that it’s called a Bailout Package and not exactly helping anyone. I want the American people to win, so I’m asking you to join me in a sedition against the banks. Here’s how it’s all going to go down. . . when the government bails banks out, the “credit freeze” will thaw, and banks will lend again. Here’s what we can do as a society to send a message to the banks, pay for everything with money that you’ve saved. It’s that easy. I realize that you have to borrow money to purchase a house and that’s the only thing that I will let you borrow money for. The banks in America have wronged you for too long, now it’s payback time. Live within your means and they will feel the pain!!! Pay your credit cards down, save money, earn some interest and buy only the things that you feel are worthy of your hard earned dollars. Viva Los Americans!

On the Political front:
My current Election Prediction ticker: Obama/Biden ticket by 16% - STILL (since my Oct. 1st call)
My prediction for the elections. . . “cool heads will prevail.”

This week’s Disgraced Politician of the Week is John Edwards. John Edwards lied about allegations that he had an extramarital affair even though it was true. The only reason that I bring him up is because had he won the Democratic Primary Election, things would look very different with less than a month left in elections. Palin would have been a shoe-in for vice president. If I were a Democrat, I would be extremely angry that John Edwards risked the most important election in our history just because he wouldn’t come clean. He’s a disgrace. If you’d like to know more, go here http://en.wikipedia.org/wiki/John_Edwards .

The Socialist Republic of America?

Fitting that as we cruise into the first week of Next Generation Leaders' blog, and I being the Politics/Business guy that our country is entering its largest state of socialism, ever.

Allow me to introduce myself. I'm Erik Watkins, otherwise known as Erik Wayne (call me what you will). I'm a registered independent and like Tony, spend far too much time listening to radio, watching tv, and reading news about my respective subject. At a point in my life I probably listened to 4 hours of CNBC, 2 hours of CNN, 4 hours of Howard Stern, and read every article on Yahoo! Finance. I've also given a good 2 years' worth of listening to such talk radio hosts as Mike Savage, Glen Beck, and Dr. Laura Schlessinger. I'm not sure why I never got into Rush Limbaugh, could be that I don't have patience for strung out, druggie, hypocrites. I'm a self taught investor and learned a lot by reading books about random walks on wall street, confessions of street addicts, and an oracle of omaha. I've also learned a lot by losing a lot of money in the dot com boom.

Now to the topic at hand, The Bailout. I did some rough numbers the other day when the government announced that they were going to bail out CEOs on wall street. Here are my numbers: 300 million population = 240 million in the lower and middle class (my rough estimate that 80% of the population fits these categories). Urban planners use an estimate of 2.7 persons per household to estimate population densities, so I will use that. 240 million / 2.7 = roughly 90 million households. $700 billion bailout / 90 million households = roughly $7,700 per household in the middle and lower classes.

Your government was nice enough to give you $600 each and $300 for your kids earlier this year, thank you uncle sam.

Aaaaaand. . . . today I saw that we have 43 days until we know for sure Bush is not going to remain in the White House. Unless we go to war at which point he may decide that life outside may not be as safe as he originally thought 8 years ago. Am I the only one who gets mad at the national polls and mass media who tell me everyday who is going to be the next president? I don't think so. Who am I voting for? I'm a realist republican, meaning, I believe that minimizing government benefits everyone (come on, we've all been to DMV (MVD for those of you who live outside California). . . uh huh, thank you), yet republicans have run up the largest budget deficit EVER, and we're still going. I want some input here. Since I'm registered independent, I want people to respond to this blog and tell me at the very least which party I belong to and if you have time, why.

Where's my political party?

Believe in a balanced budget

Believe in lower taxes

Believe in moderate government spending for the necessary items such as welfare

Believe in a woman's right to choose (believing that though it may not be my choice, I wish to not impose my beliefs on someone else)

Believe in equal rights for gay and lesbian couples

Believe in strengthening the dollar (more on this later)

Believe in strategic covert military actions vs. all out war

Keep in mind the fiscal items from above are more important to me than the social ones. Am I a republican or a democrat?

Maybe next week I'll tell you who I'm voting for.

Thanks for reading, enjoy Jen's post on Friday!

-Erik