Recently in Money Category

A few months ago, I suggested that investor panic was irrational.  Today's reaction was not.  The bailout plan, while costly and very risky, was what the market in general wanted, actually maybe even needed.  Representatives from both sides were thinking about their current constituency and the reaction to such a large number, had the bill passed.  The problem is that they are not looking at the more important constituency...the future.

I'm not saying $700B is a drop in the bucket, but the ramifications of no bill are unimaginable.  If banks fail and the FDIC has to come in and save what they can, we'll end up bailing out too much anyways.  However that will come at two costs.  First, the account holders with more than $100,000, as they'll lose most every penny over that.  Second, the future spenders of America.  Those of us who own homes now have to ensure that we keep it that way.  Because it will be more difficult and costly to refinance or buy new property.  Simply the less diverse batch of banks, the less chance of good deals.

Right or wrong, some bailout bill needs to be passed.

I did live blogging on the debate on Twitter and reading other Twitters while watching the debate.  The debate overall was boring, except McCain's references to Miss Congeniality.  That was hilarious.  I didn't know the Senate was a beauty contest.

It appeared that McCain was fresh and active, like he took a case of Red Bull before hitting the stage.  Obama, however, looked very tired.  The campaign has aged him.

Everything discussed tonight were things we've heard from the candidates in the past.  No new info.  It was boring and a draw.  However, one could say the Obama won because the War on Terror is McCain's strong suit.

On to the next debate, assuming McCain does not suspend his campaign beforehand.

Well, I was met with much joy today.  Apple stock down $15.50, just a bit over 10%.  I've been investing since 1991.  I even remember the my first investment, in a little mutual fund called Monetta Funds.  I liquidated that in the late 90's for a 30% gain so I could wildly invest in anything with "Tech" or "Silicon" or ".com" in the name.  And those I did pretty well in, probably average 20% gains, although mostly short-term, so I paid through the nose in taxes.  I would have done better, but I waited until I was sure the tech boom bottomed out before bailing.

Back to Apple.  The first shares I bought about 3 years ago are at a cost basis of about $15/share.  So I have a 10x + gain as of the current market value about $150/share.  Today's drop is in part because Apple is only predicting a Q4 earnings per share of $1, when analyst's had previously forecasted $1.23/share.  This reminds me of CVS Caremark (back then just CVS Corp) in around 2004 when they announced a penny difference in EPS and their stock dropped 15 or 20 percent.

What's wrong is that both Apple and CVS in their respective big drops are that they are still profitable companies.  Investors panic.  I am not saying Phil Gramm was right that the economic problems are mental, but these two instances and the tech boom are instances that the market is not for the faint of heart.

Long Term is the way to go.  I said I bought my first shares of Apple around $15?  I worked for CVS and started in their Dividend Reinvestment Program in 1992.  They started an Employee Stock Purchase Plan in 1994 or so.  My shares cost me between $6 and $20 per share in that timeframe.  Current market price?  About $40/share.  How's that for growth?

My point?  The market is all one big mental pot with millions of brains in it.  But clearer minds prevail in the long run.