This is a long post. I'm feeling chatty today. I have another dog run--I'm driving to Springfield today for a double run due to the great need. Plus, I have book club. So I will not be checking in prior to tomorrow.
Our fence is almost finished, and our marriage is intact for the moment. Already, we can see that the dogs are not very interested in change strange vehicles. A white van passed through yesterday and nary a look was given to it. Generally there would have been some energy expended toward it. No positive energy. I'm sore this a.m. from tamping posts. I only tamped three, but these aren't muscles that I use in the ordinary course of business!
Yesterday I had to go to the Doc (annual exam that I last had in 2000). That frequency is on the level of locusts visiting you! I have a distorted since of the past. I would have guessed that it was 4 years. The Dr. L delivered my two children. He's probably just a wee bit older than I am. I adore him. He has a heckuva practice having left one to the larges ob/gyn groups.
When I became pregnant with Hannah, my current GYN was just that. No obstetrics. He was too old, and it was too much liability. So he recommended Dr. L. He never took on a another doctor. So he's had a lot of years of being on call. He doesn't look any worse for the wear.
After more than 20 years with an office in the hospital's medical office building, and his literally being just a few dozen steps from the labor/delivery room, he is now about 1/2 a mile a way. I laughingly said, "So have they built a tunnel for you under the road?". "You know that they have for me?", he said slyly. "A Segway". This is essentially a two wheel motorized scooter. After completing my appointment, running a couple of errands with an end bounty of wine and note cards, and having lunch with the person who took my last position, I drove past Dr. L's offices. Sure enough, that handsome devil was on his Segway on the way to the hospital. The road that he must travel is quite busy. He has no helmet. I see not good in that.
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Second, the Stock part. My day started off with a grand surprise. About 3 months ago, I lost a gold bracelet. It's an Edwardian (1910) bangle, hollow core bracelet with etching. It's about 1/4" wide and oval. It clasps, without a safety chain. That bracelet has opened on me and fallen off several times. I took it to a jeweler to see about getting a safety chain. He said that he would not alter the bracelet. I purchased the bracelet on E-bay. I don't remember what I paid, but it was not quite $200. I've bought several pieces of estate jewelry off of E-bay (same dealer).
I was upset about losing the bracelet. I wear it 24/7. So when it went missing, I felt a sense of loss. I was gassing up the T-bird and while the pump was going, I was picking up miscellaneous trash off the floor, and there it was. Under the left hand side of the passenger seat. As it was open and tilting upwards, when I grabbed it I thought it was a piece of plastic trash. No gold or glint could be seen. My heart soared at being reunited with my bracelet.
"Now what the heck does this have to do with stock?" you may reasonably, if not impatiently ask. Well, when I returned from my cornucopia of errands and look at my E-trade which houses my gold stocks, I was pleasantly surprised to see that they had gone up. I did lighten my position in WGDFF, by selling off 800 shares at $3.24 earlier. But, my account is now over $18K (you remember when it went down to $13.8K?) Quite a bounce back! Of course, it could come crashing down at any time.
Banker asks of the amnesiac quality of the market. Subprime seems but a bad dream. Well, the come-to-Jesus discussions with stockholders when the great kimono is opened for the September 30 earnings releases is just around the corner. Perhaps October is such a volatile month for the market because it coincides with 3rd quarter earnings releases. Whatever ills are facing the economy and the market, they can be shrugged so long as there is no empiricism (earnings releases etc) to substantiate the fears. To this observer, at least, that is what I gather.
While the 09.30 kimono opening will provide disclosures on markdowns on loans due to market valuations, the bad debt writedowns will be ongoing. I'd bet that you will see a bifurcated mix. One thing that you may not know about Sarbanes-Oxley is this. (I don't pretend to know much--my subsidiary was immaterial to the whole organization, but they spent LOTS of time on my contract reserves as we had 100% performance guarantee contracts--meaning we could lose ALL of our revenues on a contract, if we did not meet promised milestones. God it makes me shudder. But reserving TOO MUCH under SOX is just as bad as reserving TOO LITTLE.
As you've seen me write here before, some of the disclosure language on the loan loss reserves were specious. Management was basing reserves based on historical performance. Historical performance was PRIOR to the crappy loans being made. It's mixing avocados and porcupines (there so different you cannot even stay in the same genus!). I imagine expectations of future losses may have been realigned a bit. BUT, know this, those expectations are going to continue to evolve as reality gets reconciled with expectations. Route 1 would be reserving as possible (within regs) as investors are already expecting it. The future surprises will be minimized. Route 2 would be de minimis writedowns (oh, they can make it fit guidelines, and they were careful about how they stated that in some of the 10-K/Q's to give them wiggle room) now and death by water torture as continuing (and surprising) future writedowns are made.
Has the market forgotten? No. But it is party on until the clock strikes midnight. That the market took a quick dive yesterday after Poole's comments tells me there are some nervous folks out there. I think that there is a large contingent of the market that thinks that there will be so much liquidity from the infusions that the market will go straight up. We still have the Fed discount window securities buy-backs. Have these firms proffered the funds to buy back the tainted securities that they proffered? I don't know. Seems like there is a bit of silence on that.
I'm not sure that I'm buying the Bernanke put. But that is why this blog is called "The Perplexed Investor" not "The Intrepid Investor". And it is the divide between being perplexed and being intrepid that all of us need to conquer in order to become exquisite investors. And I'm sincerely trying to find that middle ground.
I'm pressing publish without really proofing. I need to load up the car with my transport stuff. Enjoy your day.
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