Fortune Watch

A couple of days ago, I watched a short interview with the legendary investor Warren Buffett on an investment news channel. The interview was conducted shortly after the annual general meeting (AGM) of Buffett’s company Berkshire Hathaway. Buffet said many interesting things—as he always does—but the really educational part of the interview was the contrast between the world that Buffett inhabits and the world that his interviewer seemed to come from.

It was like listening to members of two different species talk. If a fly (which lives for perhaps a few hours) and a tortoise (who can survive for a hundred years or more) had a conversation, it would probably sound like Buffett and that interviewer.

At one point, the interviewer asked Buffett to comment on how his companies would cope with the downturn. Buffett replied that things were certainly down at the moment but he expected them to be OK in three to five years. I could see that the mere mention of a time scale like three to five years had derailed the interviewer’s thought process. Coming as she did from a world where three to five hours or at most three to five days is the standard unit of time, the idea of an investor talking in years seemed to have thrown a spanner in her works.

Next, she pulled out the day’s newspaper and drew the old man’s attention to a news item that US unemployment was up to 700,000. She wanted to know what he thought of the news. Buffett said that he was sure that five years from now, the employment situation would be much better than it was today. Again, this epic timescale put an end to that line of questioning.
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Since this morning the Internet has been abuzz about widespread trouble with Google.

Google Search and Google News performance slowed to a crawl, while an outage seemed to spread from Gmail to Google Maps and Google Reader. Comments about the failure were flying on Twitter, and quickly became one of the most searched terms on the popular micro-blogging site.

A Google spokesman said “We’re aware some users are having trouble accessing some Google services, and we are looking into it, and we’ll update everyone soon. Please let us know how Google services are working for you in your location and on your connection.”

UPDATE: The issues seem to be going away around 9:50 Pacific time.
UPDATE 2: 10:35 AM Pacific: Google says the problems are resolved and will give more details later. “The issue affecting some Google services has been resolved,” the spokeswoman writes. “We’re sorry for the inconvenience, and we’ll share more details soon.”

When the outage began, many users turned to Twitter to vent their frustrations and to look for information. Twitter users also were quick to begin reporting that the trouble was clearing up. “Google is back and I’ve stopped twitching,” said one Tweet.

This kind of outage is going to be tough on Google. When Google goes down, lots of stuff breaks. Not just Google’s own apps like GMail and Google Talk, but also applications like Firefox, which use Google as it’s default search provider.

All of Google, or at least the big pieces, went down and this is bad news for Google’s efforts to build up Apps, and to a lesser extent, Gmail, as critical business tools. It also undermines the entire category of hosted applications. If the mighty Google can stumble, then who can be trusted?”

The problem is not downtime- it’s lack of any way to mitigate the problems, and a complete and total lack of any customer service from Google. There is NOBODY you can call when there’s a problem.

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We hear about millionaires — and billionaires — quite frequently. But less often do we hear about pet millionaires. They do, however, exist. Since 1923, when the first reported case of a pet inheritance was affirmed in Willett vs. Willett, pets have been receiving money. Sometimes quite a lot of money. Here are seven dogs and seven cats (in particular order) that are probably richer than you:

Some of the World’s Richest Dogs

These dogs know how to live the high life. Seriously. They give a whole new meaning to the phrase “being treated like a dog.”

1.Gunther IV, the German Shepherd: This dog actually received his inheritance from his father, Gunther III, a German Shepherd who received an inheritance from Karlotta Liebenstein, a German countess. Gunther IV has bought a Miami villa from Madonna and won a rare white truffle in an auction. Learn more about Gunther IV on a Web site devoted to him and those he hangs out with. He’s worth about $372 million right now, thanks to his growing trust fund.

2. Oprah’s dogs: Oprah Winfrey has several animals, including some dogs. She wants to make sure that her dogs are cared for when she is gone. Her will specifies that that her dogs receive $30 million for their care. (Just a drop in the bucket when you look at the billions Oprah is worth.) True, that money will be split amongst all dogs that she has, but even so, each and every one is probably richer than you are. They’re definitely richer than I am.

3. news023Trouble Helmsley: New York’s “Queen of Mean”, Leona Helmsley, famously cut her grandchildren out of her will, but left her Maltese terrier $12 million. However, a judge knocked $10 million off that amount, so that brings the amount to $2 million. Additionally, Trouble will be not be so well taken care of after death, as the dog can’t be buried in the Helmsley mausoleum, due to cemetary requirements and state law.

4. Drew Barrymore’s yellow Labrador retriever and chow mix, Flossie, has been left a home. Flossie awakened Barrymore and then-boyfriend Tom Green when a fire raged through the home. Barrymore amended her will to leave the home, valued at $3 million, to Flossie in return for this possibly life-saving deed.
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Everyone I know is sick of this recession, and sick of hearing about this recession. For one, the media’s attention to the global financial situation is depressing. But as many have pointed out, we are in this situation because of our own devices. On the individual level, poor financial and debt management, have exacerbated outside factors such as the housing market collapse and high rates of unemployment. For others, indiscriminate consumer debt has led to a number of individual crises. But in such a climate, there is a lot that can be learned. While it would have benefited everyone to know this several years ago, here are twelve personal financial lessons that can and should be learned during this recession.

Learn How to Plan Ahead

Source

It’s no secret that poor planning contributed to why so many people are currently in untenable financial situations. Don’t Panic. Figure out where you are at, where you want to be and put in place a realistic plan for getting there. The majority of businesses without plans in place before they start operations do not succeed. So if you are serious about creating a way to get ahead, or even just caught up, this step could not be more necessary. Unique circumstances will come up and cause you to stray from your plans temporarily, but structure is necessary in order to monitor your progress, and stay focused.

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The Working Capital Model (WCM) looks at investment performance differently, less emotionally, and without a whole lot of concern for short-term market value movements. Market value performance evaluation techniques are only used to analyze peak-to-peak market cycle movements over significant time periods.

Security market values are used for buy and sell decision-making. Working capital figures are used for asset allocation and diversification calculations. Portfolio working capital growth numbers are used to evaluate goal directed management decisions over shorter periods of time.

WCM tracking techniques help investors focus on long term growth producers like capital gains, dividends, and interest— the things that can keep the working capital line (see Part One) moving ever upward. The base income and cumulative realized capital gains lines are the most important WCM growth engines.

The Base Income Line tracks the total dividends and interest received each year. It will always move upward if you are managing your equity vs. fixed income asset allocation properly. Without adequate base income: 1) working capital will not grow normally during corrections and 2) there won’t be enough cash flow to take advantage of new investment opportunities.

The earlier you start tracking your dependable base income, the sooner you will discover that your retirement comfort level has little to do with portfolio market value.
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It matters not what lines, numbers, indices, or gurus you worship, you just can’t know for certain where the stock market is going or when it will change direction. Too much investor time and analytical effort is wasted trying to predict course corrections— even more is squandered comparing portfolio market values with a handful of unrelated indices and averages.

Annually, quarterly, even monthly, investors scrutinize their performance, formulate coulda’s and shoulda’s, and determine what new gimmick to try during the next evaluation period. My short-term performance vision is different. I see a bunch of Wall Street fat cats, ROTF-LOL, while investors beat themselves senseless over what to change, sell, buy, re-allocate, or adjust to make their portfolios behave better.

Why has performance evaluation become so important short-term? What happened to long-term planning toward specific personal goals? When did it become vogue to think of investment portfolios as sprinters in a race with a nebulous array of indices and averages? Why are the masters of the universe rolling on the floor in laughter?

— Because an unhappy investor is Wall Street’s best friend.

By emphasizing short-term results and creating a cutthroat competitive environment, the wizards guarantee that the majority of investors will be unhappy about something, most of the time. In the process, they create an insatiable demand for an endless array of product panaceas and trendy speculations that regulators fall bubble-years behind in supervising.
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Every correction is the same, a normal downturn in one or more of the markets where we invest. There has never been a correction that has not proven to be an investment opportunity. You can be confident that governments around the world are not going to allow another Great Depression “on their watch”.

Every correction is different, the result of various economic and/or political circumstances that create the need for adjustments in the financial markets.

While everything is down in price, as it is now, there is actually less to worry about. When the going gets tough, the tough go shopping.

In this case, an overheated real estate market, an overdose of financial bad judgment, and a damn the torpedoes stock market, propelled by demand for speculative derivative securities and Hedge Funds, finally came unglued.

But it is the reality of corrections that is one of the few certainties of the financial world, one that separates the men from the boys, if you will. If you fixate on your portfolio market value during a correction, you will just give yourself a headache, or worse.

Few of the fundamental qualities that made your IGVSI securities sound investments just two years ago have permanently disappeared. We’ll be using credit cards, driving cars and motorcycles, drinking beer, and buying clothes twenty years from now. Very few interest payments have been missed and surprisingly few dividends eliminated.

Only the prices have changed, to preserve the long-term reality of things—and in both of our markets.
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Citigroup became the latest bank to post better than expected results for its first quarter. The bank on Friday said net income of $1.6 billion, compared with a loss of $5.11 billion in the quarter a year ago. Citigroup’s problems are far from over, but it had its best quarter since late 2007.

The bank reported a loss to common shareholders of $966 million after massive loan losses and dividends to preferred stockholders. But before paying those dividends, the bank had net income of $1.6 billion.

Overall, Citigroup’s results were better than expected. The company reported a loss per share of 18 cents, which was narrower than the 34 cents analysts predicted. A year ago, Citigroup suffered a loss of more than $5 billion, or $1.03 a share.

Citigroup’s revenue doubled in the first quarter from a year ago to $24.8 billion thanks to strong trading activity. Its credit costs were high, though, at $10 billion, due to $7.3 billion in loan losses and a $2.7 billion increase in reserves for future loan losses.

Citigroup has been one of the weakest of the large U.S. banks, posting quarterly losses since the fourth quarter of 2007. But in March, CEO Vikram Pandit triggered a stock market rally after he said that January and February had been profitable for Citigroup.
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In light of the current Keynesian-style government fiscal stimulus measures introduced to try to tackle the economic slowdown, the series looking at economic theories within the context of the present situation examines the work of Jean-Baptiste Say and classical economic theories.

Say’s Law, one of the core tenets of classical macroeconomics, states that “aggregate supply creates its own aggregate demand”. Classical economics emphasises the equilibrium between supply and demand as key for a balanced economy and suggests that recession and unemployment are caused by a mismatch between supply and demand rather than, for Keynesians, a lack of consumption.

Say (1767-1832) was a French economist who advocated saving rather than spending and a focus on production instead of consumption. In fact, he believed that  consumption destroyed wealth and only production could create it. Say’s Law makes supply a precondition for demand because, in order to buy something, he believed that you must first sell something.

This is crucial for economic growth, because the desire to generate purchasing power motivates productive effort and invention. It also has major implications for how governments respond to downturns and periods of high unemployment. While Keynes wrote that aggregate demand and the use of fiscal spending is the key to economic recovery, classical economists believe that spending capital on Consumption without saving and investing it in production could mean slower potential future growth.
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With gold prices topping $1000.00 plus per oz., one has to question, is now the time to buy gold or has the buying opportunity already passed? Should you invest in the actual commodity of gold itself or is there an alternative that could prove to be more profitable?

The rise in gold prices from $250 per ounce in 2001 to over $900 today has drawn investors and speculators into the precious metals market. However, buying gold per se should not be considered an “investment”. After all, gold earns no interest and its quality never changes. It’s static, and does not grow as sound investments should.

“It’s more accurate to say that one might invest in a gold or silver mining company, where management, labor costs, and the nature of new discoveries all play a vital role in determining the quality of the investment and the profits made.”, stated Congressman Ron Paul (TX-R) in his address before the U.S. House of Representatives.

Both gold and dollars are considered money, and holding money does not qualify as an investment. However, there is one big difference between the two. By holding paper money one loses purchasing power. The purchasing power of commodity money, e.g., gold, however, goes up if the government devalues the underlying currency.

Many believe the United States is the cause of the global financial crisis we are currently experiencing and consequently, they are looking to the US to provide leadership in escaping this crisis. The US Dollar is currently experiencing strength over other currencies because it is presumed that since we are leading the pack with recovery initiatives, it stands to reason that our economy will recover before those who are following our lead.
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