Thanksgiving 12,000

Maybe it will still happen.
DOW 12,000 by Thanksgiving.
Less than 6% up from today.

That could happen quickly and easily.
November 25, 2010.
A month to go until then.

Somehow I expect the market to drop right after the election. But then it could go up some more.
Anyway, to refine my opinion. I mean that some time before Thanksgiving I expect the DOW to touch 12,000.

If it doesn't, my heart will not break.

And the main reason I am bullish now is that business is good. Profits are going up. Unemployment is actually good for business because it makes it easier to hire good workers at reasonable wages.

And the main reason I am bullish on the long term is that I believe in people. People are creative and adaptable. They can overcome any obstacle. They have a lot of desire. Animal spirits. Progress. Innovation. It's getting better all the time.

Employment Crisis

Hyperbole

Healthy unemployment rate might be 5% to 8%
Now it is 9.6%

so the problem is for only from 4.6% to 1.6% of the labor force.

The problem is not "the economy"

it is individuals who are not very employable.

Those individuals need individual attention.

Just goosing the economy is not going to get them jobs.

But look for good too!

It is good for business if there is a large labor pool.
Keeps down inflation
Keeps profits up

NOT A CRISIS

why must everything be a crisis?

20% Solution, Community Spirit

Read today how teachers are getting fired because there is not enough money.

How about sharing what money there is?

Works for me.
I could live on less.
I could live on a lot less.

I suspect that is really where most people are. Cut out the luxuries and the non-essentials and we could live well on a lot less.

But we have it set up so that people will not take less. They choose nothing over a cut.
Unemployment for some, rather than lower wages for all.
That is the choice we are making.

Lucky I have my own business.
I can lower my prices as much as needed in order to stay occupied.

If I was not allowed to lower my prices I would probably be out of business.

If everyone would take a 20% cut, then we wouldn't need the layoffs.

I Was Wrong About Gold

I thought $1,250 was a top. Sept. 4 I posted my opinion that gold would start to go down and go back to $800. It isn't happening.
In fact gold is up almost 5% from there.
At that rate it would be up to $2,000 in a year.
But I still believe gold is in a bubble.
And it is not easy to call the top of a bubble.
The shape of the bubble curve is usually a hyperbola followed by a quick crash.
How high is high?
Can't say until the crash happens.
When will the top arrive?
The future is not predictable.

Why Does California Have Budget Problems?

I wish there was a comprehensive analysis of this question somewhere.
Maybe there is.
The usual suspects

Public employee unions
Public employee pensions
Poor immigrants needing services such as public education and medical care
demographic changes, too many young and too many old
tax policy causes wealthy to move to Florida
Anything else?
Prop 13
unemployment
initiatives of all sorts

So what is the truth? Who has really looked at it carefully?

SWAN

What's Wrong With 2% Inflation?

A little thought experiment

You have a million dollars
You invest it all in a nice stock that pays no dividend.
The stock goes up exactly 2% a year. Inflation is also exactly 2% a year.
10 years later you sell for $1,220,000 (compound return)
A nice gain of $220,000
You pay tax on the gain at 15% for a tax of $33,000

That $33,000 was really just a confiscation of your wealth.
The gain was no real gain
After inflation you just broke even.
And then you paid a tax on a gain that was no gain.

I suggest indexing capital gains. That would be fair. In this situation there would be no gain to report if the gain were indexed.