The Basis of the Occupy Wall Street Protests

Almost everyone has heard of the Occupy Wall Street protests and their catchy "we are the 99%" slogan, but what merit do the actual protests hold?

None.

The purpose of the protests is 1. to create more and better jobs, 2. have more equal distribution of income, 3. have less profit (or no profit) for banks, 4. and lower compensation for bankers.

Let's go through these goals one by one.
1. Protesting on Wall Street will not create more and better jobs.  Period.
2. An equal distribution of income goes against the American dream.  Why can't talented and motivated people pursue positions that have higher salaries?  This argument makes no sense.
3. Limiting the amount of profits on banks or any corporation would set this country back fifty years.  Banks need to make money the same way companies like Apple and Microsoft need too.  While we are at it, why don't we just pass legislation limiting the profitability of all companies.  That would really stick it them. 
4. Why should bankers receive less compensation?  They are paid as much as they are because they bring a ton of value to the company.  They are the best and brightest people in the industry, and they should be compensated as such. 

The protesters argue that this is in response to the 2008 Financial Crisis in America, and that this is a preemptive strike against further problems.  However, this country does not make drastic changes based on "preemptive measures."  When the Enron scandal hit, we had Sabranes-Oxley to fix the accounting fraud going on, and when the 2008 Financial Crisis hit, we instituted measures to prevent something like that from happening again.

The saddest part of this movement is the "we are the 99%" catchphrase. These people think they are doing well, going after the top 1% of Americans.  However, in one last dose of hypocrisy, these people need to be evaluated on the world stage.  If you make over $34,000, you are in the top 1% of income on a world basis.

Let me say this again.  The vast majority of the Occupy Wall Street protesters are actually in the top 1%, or will be at some point in their lives. 

Their slogan should be we are the top 1%, fighting to reduce the income of the top .0001%.  It's only now to you realize the true hypocrisy of this argument. 

Life Lesson #1: The Weather

The weather has baffled the human race since the dawn of civilization.  We have all been burned by the weatherman saying something that has not been true.  I believe that this nonsense needs to stop.  I am proposing that all terms to describe the weather are to be broken down into 4 different terms.  Under this policy, fines would be administered to weather stations that try and get cute and confuse people on something as basic as the weather.  The four overarching terms are Steamy, Balmy, Mildly Brisk, and Brisk, and each will be described below:

1. Steamy
This is the term to use on extremely hot days.  The temperature must be equal to or greater than 90 degrees Fahrenheit to use this term.  Humidity and dew point are not considered to use this term.  If someone says it is steamy out, you should be thinking it is good beach weather.  Under no circumstance should individuals be wearing jeans in steamy weather.  If the weather is steamy, you should either be inside, on the beach, or working. 

2. Balmy
This is the ultimate weather condition.  To qualify as balmy, the temperature must be between 80 and 90 degrees Fahrenheit.  Everyone likes a good balmy day.  Generally these types of days have a nice breeze to them, but this is by no means a requirement to be considered balmy. 

3. Mildly Brisk
This is the ultimate weather term.  Most of the time this term is used, and for good reason.  This is one of those rare terms that can encompass a wide variety of weather conditions.  For the weather to be mildly brisk, the temperature must be between 20 and 80 degrees Fahrenheit.  Generally people will start complaining in the lower part of the mildly brisk range that it is getting "cold."  Well, unfortunately cold is not a weather term anymore, and you should do humanity a favor and inform them that it is now mildly brisk.  If they do not believe you, refer them to a definition of brisk, and tell them that they are experiencing a mild form of that.

4. Brisk
It is never a good sign when someone tells you it is brisk outside.  The temperature must be equal to or lower than 20 degrees Fahrenheit to be brisk.  You should always be wearing warm clothes during brisk weather, unless you are from Russia, Northern Canada, or the Upper Midwest of the United States.  Generally this is a good time to hibernate in your place of residence and watch Netflix until it becomes mildly brisk again.

The Investment Twist
Since this is an investment blog, it would be wrong not to mention that Netflix should be considered a buy right now.  Netflix is oversold, and their stock price has fallen from $300 to $110 because of a 4% decline in the number of streaming customers.  I've got a newsflash for potential investors: It is getting brisk outside, and people will not be spending their time outside anymore.  People are going to get bored and subscribe to Netflix until the weather becomes mildly brisk again.

I have a December 2012 price target for Netflix of $150.

Disclosure: I do not own Netflix 

The Gold Standard

Gold is one of those investments that makes people hesitate before buying: it doesn't pay dividends, it doesn't have earnings to back up its price, and the price (annualized over the last 100 years) has barely broke even compared to inflation.  That being said, for as long as we know, Gold has always been adored by the human race and everyone wants to own it.  Over the last 6 years, Gold is up over 400% while the S&P 500 is just break-even over that same time period.  Gold is considered as safe or safer than most currencies, and unlike Greece, Gold will never default and will never be worthless.  There are 3 different ways you can own Gold:

1. Buying GLD or IAU

This is one of GLD's warehouses of Gold.

Buying Gold ETF's is probably the easiest way to own Gold.  These funds are very liquid, and can be traded easily on the NYSE.  GLD is one of the largest ETF's in the world, with a market cap of over $68 billion.  Rest assured, this ETF backs up their fund with physical Gold (as you can see on the right), so this option is the equivalent of buying Gold and having someone else hold it for you.  With Gold hovering around $1650/ounce, this is the perfect way to invest in fractional ounces of Gold.


2. Buying Gold Coins

The US American Eagle Gold Coin

Buying Gold coins is a fun way to own Gold. The United States American Eagle is one of the most popular Gold coins, but multiple countries around the world produce them.  The downside to buying coins is that you have to pay a premium for them.  Generally for a 1 ounce Gold coin, you will have to pay $100 over the current spot price for Gold.  Another downside is security, as storing Gold coins in your home can be dangerous if the wrong people become aware of it.  The advantage to Gold coins is that they are legal tender in the country that issued them.  For example, the US Gold Coin has a face value of $50, so if Gold were to go to $0 (not going to happen), this coin would still be worth $50.  Since you're going to be paying out $1700+ for one of these coins, the $50 face value does not seem like much of a consolation after all.

3. Investing in Gold Mining Stocks
This is perhaps the most intriguing way to own Gold right now.  Current industry experts all agree that Gold Mining stocks are vastly undervalued, so if you are a value investor who is still wary about Gold, this is the way to go.  Over the last year, the Miners have underperformed GLD by 20% and over the last 5 years they have underperformed over 100%.  Gold Mining companies own the land where they mine the Gold, so when the price of Gold goes up, the value of their natural resources goes up as well.  Accounting policy follows conservatism, meaning that these companies are valued with a Gold price of much less than $1600 in mind.  If Gold doesn't see a major correction, expect Gold Mining Stocks to soar.  2 ways to invest in the miners could be through the ETF GDX or the mutual fund Tocqueville Gold.

As of late, Gold has become a safe haven when there is fear in the market.  With the U.S. debt ceiling issue and the European debt crisis, fear is here to stay, at least for the foreseeable future.  Gold is also a great inflation hedge, as the price is based on the U.S. dollar if you buy in the United States.  If Ben Bernanke decides to start QE3, you can expect to see Gold rise by around 20%, as it did during QE2.

I see Gold as a long term investment the can have volatile swings in the short run.  Because of this, I have a long target price of $3,000 by 2015 for Gold.

Disclosure: I am long IAU and Tocqueville Gold 

Steve Jobs: Innovator and Leader

Today is a tragic day.  Apple, Inc announced that their co-founder, Steve Jobs, has passed away.  I would be hard pressed to find a person in America who hasn't used a product created by Mr. Jobs.  From the iMac to the iPod to the iPad, Steve Jobs has touched all of our lives, and he will never be forgotten. 

Will Apple be the same without Steve Jobs?  We can take a look at the history of AAPL by looking here.  AAPL has been one of the most successful stocks out there in the last 10 years, but can it continue?

People may be worried that the stock price will be down big tomorrow because of this announcement, but I do not think so.  I believe that this news is already baked into the price.  AAPL is trading at a forward looking P/E of 11.62.  This is a ridiculously low P/E for a growth company like AAPL.  Generally, the higher the growth, the higher the P/E multiple.  Amazon, Inc. trades at a 66.11 P/E, and Amazon grows at a slower rate than AAPL.  Intuitively, this makes no sense, and I would expect AAPL's P/E to rise in the near future.

I have a price target of $500 for AAPL by December of 2012, and given the current price of the stock, I would be surprised if that isn't attained.

Disclosure: I am long AAPL.  I have no position in AMZN

Welcome to Investments and Daily Life

This all-in-one blog is set up to help you, the investor, accumulate wealth while discussing important topics in today's society.  Investing can be daunting at first, and even the very best in the industry are only correct 55% of the time.  By flipping a coin, you can be correct 50% of the time, so why pay someone to make investments for you when you can do it yourself?

While I am not going to give any stock recommendations today, I will go over some of my favorite websites to use when considering stocks.

1. Google Finance
http://www.google.com/finance
This will give you a snapshot of how the United States market is performing as well as international markets.  You can add stocks to you watch list so you can easily see how your stocks are doing on any given day.

2. Finviz
finviz.com
This website will give you anything you want to know about a certain stock.  It will display technical trends as well as tons of financial data and indicators on a given stock.  We will go over some of the most useful indicators later, but this is a good starting point for financial data.

3. Seeking Alpha and Motley Fool
seekingalpha.com
fool.com
These are two of the most helpful websites to help you keep up on what is happening in the investment world.  Use them to get information on sectors as well as investment ideas.

This is all I've got for now.  Stay tuned for more updates.