Get Rich Slick

Well I’m dead tired this week after another international trip.    I was up in Canada and interestingly the job market there seems fairly strong as most of the people I talked to where contemplating job hopping or expanding their expenditures.    It has long been rumored that Canada is in a housing bubble but I didn’t see fear in the eyes of the populous up there.   Interestingly while I was up there, the London exchange announced it wanted to merge with the Toronto exchange so perhaps the common wealth empire is resurrecting itself again after a two century stoic absence.

If anyone is desperate for a job, I would suggest you head north for some potential opportunities assuming you have a skill that is in demand such as anything in the oil & gas industry.

In other news, the past three weeks I’ve received unsolicited e-mails out of the blue asking if I would be interested in a couple of different executive positions.  Additionally, I’m getting quite a few hits on my LinkedIn profile from mostly recruiters.   I take this as a really good sign that perhaps the U.S. job market is finally starting to recover and we’re taking our first baby steps in that direction.   Of course, I turned them down because despite working like a dog, I’m currently enjoying my new job and want to ride it out for at least a couple of more years if not longer.   I could probably take one of those new jobs and get a 100k boost in salary but being in a position I don’t want to be in isn’t worth the extra money.

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The Fed announced a $600 billion dollar planned Treasury purchase and may decide to pump more money if “necessary” in the future.  This essentially now lays the groundwork for the next bubble.   The Dow is already showing signs of resurrection as it soared to 11.5k and while there may be a few pull backs I have no doubt we’re on our way to Dow 12k and maybe 13k.   I also have no doubt that all bubbles end in only one way: hard crash.

So the only obvious question that is begged here is when to get out?    Dow 12k or 13k  or maybe tempt fate and try to ride it all the way to Dow 14k?   This will be my last ride up and I suspect it may be a ride through December 2012 but I have no plans on “investing for the long term” in the Wall Street Casino.    There are just too many baby boomers that are starved for cash and whatever money they have in the “market” will simply be pulled out over the next decade.   Generation Y and below is saddled with poor job prospects and trying to get by TODAY much less planning for 40 years into the future.   Generation X is a bit disillusioned and trying to find their footing as the crash of 87, 2001, 2007 have left a bitter taste in their mouth.

So there you have it from Boomers to Millenials, the stock market is dead.   You’re all getting one last ride; Enjoy it; Profit from it; Cash out before the fall.

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In the pit of my stomach, I knew it was coming and I’m sorry to see it finally arrive.   What am I talking about?  The desperate stories of some of my friends, peers and even strangers that have still not found work after being laid off for months or in some instances years.   Here are a few quotes from people I’ve spoken to over the past couple of weeks.

“I never thought I’d be out of work for six months and looking at jobs that paid HALF of what I was making…”   from “Bob.”

“It’s been two years and I’m ready to get back to work but nothing is out there and I’m getting desperate!”  from “Sally.”

“I’ve moved in with my mom and we’re getting by on babysitting money….”  from “Cindy.”

I know it is only a matter of time before these people will tap me for money.   A few will be too proud to ask for money and will likely end up suffering the humiliation of being homeless, living out of a car or ending up in a shelter and a few won’t be too proud and ask for money and try to make a go of it but putting a band aid on a severed limb will only provide superficial help.

Ironically and what infuriates me to no end are these planned “shopping” trips that a few of my relatives are planning for the X-mas season.  Yeah, that’s right, despite the horrible economy, potential for total financial collapse, there are people I know out there that are still interested in buying crap at outlet malls or other places to exchange gifts.  Oh well, I guess if no one buys anything the economy will worsen so maybe shopping is a good thing but crap is still crap.

Like I’ve written before, either you are employed and doing the work of three people or you are unemployed with little or no prospect because someone is doing your job for you.

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So I’ve been experimenting with Groupon and I can’t decide yet if I like it or not.    The way Groupon works is that it basically acts as a giant “coupon” discount repository but the coupons are only good for a period of time.   The plus is that often the coupons have a 50% discount value so you could buy $50 worth of services or products for $25.   I recently purchased one however I was told that the coupon wasn’t immediately available for use and I would need to wait a day for the coupon to work.

This is certainly understandable but a disappointment nonetheless because a one day delay means you have to wait a day to use the coupon.   I will follow up with my experiences with this but does anyone out there have any good or bad experiences with Groupon?   I found this very interesting discussion here on Groupon’s partners and it seems the best thing to do is avoid services places (restaurants, massage spas, helicopter rides) and stick to consumables (CafePress, online retailers, etc.)

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Whether you want to call it a recovery or just exuberant optimism about the economy improving, the one question that’s been begging in my mind is what’s going to happen with oil if and when the economy booms?  If oil is currently at $85 during a recession then what will it be during a real recovery?   The more I run through the scenarios the more I don’t like the outcome:

Scenario 1:  Assume the economy picks up steam, oil rises from $85 to $120 which quickly begins to take the steam out of any recovery and plunges us back into recession.

Scenario 2: Assume the economy remains stagnant, oil rises from $85 to $110 because of the Fed’s $2 trillion dollar inflationary pumping into the economy.

Scenario 3: Assume the economy dips back into recession, oil rises from $85 to $115 because the US will incur more deficit spending and the US dollar loses value against other currencies thus raising the price of oil.

Scenario 4: Assume Greece defaults and sends cascading domino shocks across Europe, oil rises from $85 to $100 because Opec cuts production in their October 2010 meeting.

There are more scenarios but you get the picture and I find very little scenarios in which oil will drop but ironically the biggest scenario that will drop oil is the mass adaptation of electric vehicles like the Nissan Leaf or Chevy Volt and the push toward natural gas for power generation.

I’ve positioned myself with natural gas ETFs and energy ETF plays because its the only thing that makes sense in this current economic climate.  I hope my bets pay off!

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I got a letter today that my annually adjusting ARM would be adjusting in June from 4% to 3.125%!   Yeah baby!   This is why it’s so hard to pay off this mortgage, the rate keeps vacillating between 3% to 4.5% over the past few years.    Even if this ARM ballooned to 6% or 7% the mortgage payment would still be very manageable so why pay it off?

Unfortunately, while I would normally take the extra cash and invest it in the market, I can’t do that because this market is way overheated and long overdue for a big dip down.    So I can’t pay off my mortgage and I can’t invest in the market so the cash mounts and earns a paltry rate.   What a world!

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Suckers!  I traded in some secured debt (i.e. my car loan secured by my car) and did a balance transfer over to my new best friend credit union credit card!  As a result the loan is considered “paid off” and the lien holder sent me the clear and free title to my new car.   So now I just need to pay the outstanding balance on my credit card whenever I feel like it and in a worst case apocalypse bankruptcy it’s unsecured debt!

I actually have the cash to pay off the balance but why do that when it’s at a very low interest rate and there’s no rush?     Next move up trading student loans for mortgage debt

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I’m getting the sense that the market is going to start sliding back down.  By happenstance, my employer is eliminating a bunch of mutual funds from their portfolio and required all employees to move to the funds that would be remaining and out of the ones that would be gone.    I did this a week or two ago but forgot to write about it and with the markets sliding down I’m glad I did.   Ironically, I opted to push all my money into cash but the cash fund is also disappearing so I will have to make a move sometime over the next few weeks again.

I have a few months to make a decision but things are shaping up just right.

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Regular readers know that I have a great disdain for 401k plans and the mutual funds companies that offer them so whenever an opportunity arises to cash out my 401k from one of these horrible companies I usually jump at the chance.  Unfortunately, I was unable to do so when I left my last employer because the timing was horrible.   Because of extenuating circumstances, I was not able to stay 100% cash while investing like I normally would.  This was a result of poor choices, high fees and market volatility and opportunity that forced me into certain positions.

When I left my employer in January, I was down a significant amount in my portfolio.   To illustrate, I’ve got two diagrams showing the situation:

(click for larger image)

So while I didn’t recover 100%, it was close enough to Dow 10k to cash out.   In order for me to recover 100%, the Dow would need to climb up another 15% here and I just don’t see it happening.  As it stands, I’ve actually only lost my employer match which was free to begin with so I consider myself broken even and in 100% cash at this point for this account/money.

While many people have visions of Dow 14,000 now, I am highly skeptical that it will happen.   At some point over the next few weeks, a major correction is more likely than another 1k climb but anything can happen and I’m still seeing a great deal of volatility in the options market.

Gold is out of control, the US Dollar is on the brink, unemployment is high, and the S&P has a whopping P/E of 135+ and it’s like the dot com boom/crash all over again.

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Well it was a great experiment and it lasted for a short while but I’m pretty much down brown baggin’ it for lunch.   Up until now, I have been making my lunch at home and putting it in a lunch pack and eating it at work during lunch but I can’t do it anymore for a variety of reasons.

First, the savings isn’t all that great when you factor a few things in such as:

1. In order to save money, you have to buy groceries in bulk.  Once you do this you have effectively committed your lunch menu for the whole week.  For example, if I buy a pound of roast beef for sandwiches then I’m having roast beef sandwiches all week long.   If I buy turkey then I’m eating turkey.  These foods are perishable and if I don’t eat them by the end of the week they go in the trash.  I know someone will point out that I can freeze food but that leads me to problem number two.

2. The whole purpose of eating is nutrition, deliciousness, variety and freshness but eating frozen food bought in bulk defeats the purpose of many of these ideals and its counter-productive.

3. The food at my company’s cafeteria isn’t all that expensive thanks to the price deflation of just about everything these days.  Lunch is a reasonable $4 to $6 depending on what I buy and it is cooked fresh daily and it keeps the cooks and clerks employed as well as the dish washer people.

So instead of taking sandwiches to work, I’ll stop by the cafeteria and get a fresh one made and buy some hot fresh soup to go with my sandwich.  I may opt to take my own soft drink since the vending machines sell drinks for $1 and those don’t tend to spoil for a long while anyway.

This brings me back almost full circle to this post challenging Trent over at The Simple Dollar about the effectiveness of cooking meals at home in the infamous $0.99 Double Cheeseburger math.   Ironically, I was concerned about inflation back then before the big crash and I’m starting to get concerned about inflation again now that the Fed has pumped trillions into the system.

If anyone out there has any ideas I’m open to hear them but I hope they’re not “buy 10 cases of Ramen noodles” at $0.99 then heat them at office.

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