February 21, 2012

Good business leaders know collaboration fuels their success

Posted in economic recovery, income inequality, role of government, U.S. Economy tagged , , , , , , at 9:21 am by realitytax

If the 1% saw the acquisition of wealth as a collaboration, if the rich, well-to-do, “successful” people recalled they aren’t doing ALL the work, the research suggests they’d be better at sharing.

Really.

Business owners guided by both concern for others and insight into the overall factors that lead to success, know this.

If the Democrats really want to get moral psychology working for them, I suggest that they focus less on distributive fairness — which is about whether everyone got what they deserved — and more on procedural fairness—which is about whether honest, open and impartial procedures were used to decide who got what. If there’s a problem with the ultra-rich, it’s not that they have too much wealth, it’s that they bought laws that made it easy for them to gain and keep so much more wealth in recent decades.

Johnathan Haidt
“How to Get the Rich to Share the Marbles”

20 February 2012

The role of government is always a subject of debate, but ensuring that scoundrels who are only motivated by putting money into their own pockets, and businesses that treat workers as disposable rather than seeing them as part of the collaborative effort that leads to success, are not allowed to enrich themselves without any oversight.

Jonathan Haidt is a professor of psychology at the University of Virginia and a visiting professor at the N.Y.U.-Stern School of Business. He is the author of “The Righteous Mind: Why Good People are Divided by Politics and Religion.”

September 23, 2009

Sep 2009 ERRI reflects late summer softness on Wall Street

Posted in economic indicator, economic recovery, ERRI, U.S. Economy tagged , , , , at 5:02 pm by realitytax

Despite significant improvement in the number of job losers in August, traditional end of summer sell-offs on Wall Street sent the Economic Recovery Reality Index (ERRI) itself 1.62 points lower, giving back some of the August gain to a modest 3.13 points over July 2009, to 14.41 for September, 2009. In August, the number of unemployed persons increased by 466,000 to 14.9 million, bumping the unemployment rate by three tenths of a percent – essentially unchanged among the major demographic divisions examined by the U.S. Bureau of Labor Statistics, and few experts doubt an overall rate increase to 10% as hiring necessarily lags other economic indicators;  both construction and manufacturing employment continue downward trends, though overall manufacturers are so light-staffed that any order can stimulate hiring decisions.

Despite the slight correction as summer wound down, investors seem optimistic and stock markets continue to reflect increasing willingness to move capital back into equities over the past quarter. The ERRI is based in part on a weighted, hypothetical mid-cap oriented index fund (see below) which lost nearly 5% of its August value with uneven movement across the sectors and industries being tracked, weighing the ERRI down. Solar technology and  consumer goods reflected weak sentiment, with renewed confidence in finance and non-solar energy.

Average weekly earnings continued modest improvement after a dip in the early part of the summer. The increase in the number of “discouraged” workers is still slowing, while the number of “involuntary part-time” workers crept up slightly. (Discouraged workers are those not currently looking for work because they doubt jobs are available for them.) The bright spot in the figures may be Health Care, where employment continued to make gains – up another 28,000 jobs (roughly the same number of jobs shed in the financial sector) after an increase of 20,000 in July.

U.S. government unemployment figures are estimates based on a monthly survey of households. All persons who are without jobs and are actively seeking and available to work are counted among the unemployed, including those on temporary layoff are included (even if they do not actively seek alternative work.)


Note: The particular selections comprising the security/equity component of the ERRI (data below) were selected to track various sectors, not out-perform the broader U.S. equity markets. These are not investment recommendations, and should not be construed as such. The ERRI fund is an entirely hypothetical construct, and while the author and/or persons connected to the research and/or this website may at times hold positions in these securities, particularly via any one of a number of mutual funds, no representation is made as to the suitability of any given equity, sector, on investment strategy for the reader.

Further, while the hypothetical index fund component shows apparent growth of 17% when calculated simply against an initial cost-basis of $10,000 (the September valuation was $11,697.72) it should be noted that the weighting of various sectors and components means the effective impact is approximately tantamount to only a 7.5% increase. The ERRI fund calculation represents only investor sentiment to the extent stock market behaviors reflect this mostly professional group; domestic (and global) economic recovery depend heavily on wages and employment, as well as difficult-to-quantify public sentiment.

Data on the equities is presented “as though” an investment had been made in an “index fund” for the ease of comparison and understanding, but no such fund exists nor did any investment take place. Equity investments are volatile, particularly when not carefully diversified and monitored. The third column in the table below represents the percentage change in the individual equity prices as of the close of the NYSE on 4 September 2009 versus the previous month.

symbol 4 Sep 09
close
%
+/-
index
value
Sector Industry
EMN $ 50.26
-4.68

1,357.02

Basic Materials Chem. (Plastic & Rubber)
HON $ 37.15
+2.12 594.40 Capital Goods Aerospace & Defense
CAT $ 46.11
-3.50 691.65 Capital Goods Constr. & Agric Machinery
FDML $ 11.46
-23.50 1,180.38 Consumer Cyclical Auto & Truck Parts
HQS $ 8.40
-7.59 999.60 NonCyclic Consumer Fish / Livestock
BBEP $ 9.94 +13.86 675.92 Energy Oil & Gas (Integrated)
PZE $ 6.74
-3.99 559.42 Energy Oil & Gas (Integrated)
AIB $ 6.91 +17.52 497.52 Financial Money Center Banking
CMA $ 25.42 -7.93 381.30 Financial Regional Bank
FITB $ 10.52 +8.34 494.44 Financial Regional Bank
CCI $ 27.83 -1.00 556.60 Services Communications Srvcs
JWN $ 29.23 -3.53 701.52 Services Retail (Apparel)
FSLR $121.47 -17.07 850.29 Solar Technology Semiconductors
RIMM $ 77.50 +0.53 542.50 Technology Comm. Equipment
PLXS $ 25.25 -5.00 580.75 Technology Electronic Instr & Controls
POM $ 14.17 +1.87 1,034.41 Utilities Electric

Disclaimer: Readers are advised that the ideas, materials, and opinions contained herein should be used solely for informational purposes. The author does not purport to tell or suggest investment securities that should be bought or sold. Investors should always conduct their own research and due diligence and obtain professional advice before making any investment decision. Neither the author nor realitytax shall be liable for any loss or damage caused by a reader’s reliance on information obtained in any posts, newsletters, special reports, email correspondence, or comments on the web site. The author is not a registered investment advisor or broker/dealer. The information contained herein does not constitute a representation by the publisher or a solicitation for the purchase (or sale) of securities. Opinions and analyses are based on sources believed to be reliable and are written in good faith, but no representation or warranty is made as to their accuracy or completeness, and we are not liable for errors or omissions. All such information should be independently verified with the companies mentioned. The author(s) receives no compensation of any kind from any companies that may be mentioned on this web site. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed; the intent is neither to suggest investment choices/strategies nor to influence market conditions, but rather to divulge methodology for inclusion of equities and sectors in the Economic Recovery Reality Index [ERRI]

Digg the ERRI report.

August 10, 2009

Aug 2009 Economic Recovery Reality Index up slightly to 16.03

Posted in economic indicator, economic recovery, ERRI, health care, Obama administration, U.S. Economy tagged , , , , , at 2:41 am by realitytax

Bolstered by a very slight improvement in the unemployment rate and average weekly earnings, since non-farm payrolls declined slightly, despite robust activity on Wall Street the Economic Recovery Reality Index (ERRI) crept up a modest 4.76 points over July 2009 to 16.03 as of August 7, 2009. Unemployment rates remained essentially unchanged among the major demographic divisions examined by the U.S. Bureau of Labor Statistics, and many experts still expect the overall rate to increase to 10%, in part because hiring necessarily lags other economic indicators.

Nonetheless, investors seem optimistic, some of the uncertainty surrounding the big 3 U.S. automakers has subsided, and stock markets reflect an increasing willingness to move funds back into equities over the past month. The ERRI is based in part on a weighted, hypothetical mid-cap oriented index fund (see below) which showed upward, yet uneven movement across the 10 sectors/industries being tracked. Solar technology and utilities lagged other sectors, which were led by investment in retail and cyclical consumer goods, with solid performance in basic materials and capital goods equities (construction, aerospace, etc.) Energy showed some investor confidence, while both financial and service sectors reflected substantive improvement in sentiment.

Average weekly earnings, which had fallen in June reflecting that wage earners continued to be under siege, showed a modest recovery during July by returning to the levels they had been at in May of this year. The increase in the number of “discouraged” workers is slowing – it has risen roughly 335,000 people over the past 12 months, but only 3000 were added to that number in the latest monthly figures, while the number of “involuntary part-time” workers declined slightly. (Discouraged workers are those not currently looking for work because they doubt jobs are available for them.) The bright spot in the figures may be Health Care, where employment continued to make gains – up about 20,000 jobs in July.

U.S. government unemployment figures are estimates based on a monthly survey of households. All persons who are without jobs and are actively seeking and available to work are counted among the unemployed, including those on temporary layoff are included (even if they do not actively seek alternative work.)


Note: The particular selections comprising the security/equity component of the ERRI (data below) were selected to track various sectors, not out-perform the broader U.S. equity markets. These are not investment recommendations, and should not be construed as such. The ERRI fund is an entirely hypothetical construct, and while the author and/or persons connected to the research and/or this website may at times hold positions in these securities, particularly via any one of a number of mutual funds, no representation is made as to the suitability of any given equity, sector, on investment strategy for the reader.

Further, while the hypothetical index fund component shows apparent growth of 23% when calculated simply against an initial cost-basis of $10,000 and an August 7 valuation of $12,298.41 it should be noted that the weighting of various sectors means the effective impact is approximately tantamount to only a 17.6% change, which is not evident in the raw data below. The ERRI fund calculation represents only investor sentiment to the extent stock market behaviors reflect this mostly professional group; domestic (and global) economic recovery depend heavily on wages and employment, as well as difficult-to-quantify public sentiment.

Data on the equities is presented “as though” an investment had been made in an “index fund” for the ease of comparison and understanding, but no such fund exists nor did any investment take place. Equity investments are volatile, particularly when not carefully diversified and monitored; the ERRI would have shown even less improvement had closing prices from even a day sooner been utilized in the calculations (since that would have reduced the “ERRI fund” improvement.) The third column in the table below represents the percentage change in the individual equity prices as of the close of the NYSE on 7 August 2009.

symbol 7 Aug 09
close
%
+/-
index
value
Sector Industry
EMN $ 52.73
+43.09

1,423.71

Basic Materials Chem. (Plastic & Rubber)
HON $ 36.38
+16.68 582.08 Capital Goods Aerospace & Defense
CAT $ 47.78
+49.64 716.70 Capital Goods Constr. & Agric Machinery
FDML $ 14.98
+54.91 1,542.94 Consumer Cyclical Auto & Truck Parts
HQS $ 9.09
+8.60 1,081.71 NonCyclic Consumer Fish / Livestock
BBEP $ 8.73 +19.26 593.64 Energy Oil & Gas (Integrated)
PZE $ 7.02
+17.39 582.66 Energy Oil & Gas (Integrated)
AIB $ 5.88 +28.38 423.36 Financial Money Center Banking
CMA $ 27.61 +26.42 414.15 Financial Regional Bank
FITB $ 9.71 +37.54 456.37 Financial Regional Bank
CCI $ 28.11 +15.87 562.20 Services Communications Srvcs
JWN $ 30.30 +50.67 727.20 Services Retail (Apparel)
FSLR $146.47 +3.48 1,025.29 Solar Technology Semiconductors
RIMM $ 77.09 +16.49 539.63 Technology Comm. Equipment
PLXS $ 26.58 +23.11 611.34 Technology Electronic Instr & Controls
POM $ 13.91 +2.73 1,015.43 Utilities Electric

Disclaimer: Readers are advised that the ideas, materials, and opinions contained herein should be used solely for informational purposes. The author does not purport to tell or suggest investment securities that should be bought or sold. Investors should always conduct their own research and due diligence and obtain professional advice before making any investment decision. Neither the author nor realitytax shall be be liable for any loss or damage caused by a reader’s reliance on information obtained in any posts, newsletters, special reports, email correspondence, or comments on the web site. The author is not a registered investment advisor or broker/dealer. The information contained herein does not constitute a representation by the publisher or a solicitation for the purchase (or sale) of securities. Opinions and analyses are based on sources believed to be reliable and are written in good faith, but no representation or warranty is made as to their accuracy or completeness, and we are not liable for errors or omissions. All such information should be independently verified with the companies mentioned. The author(s) receives no compensation of any kind from any companies that may be mentioned on this web site. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed; the intent is neither to suggest investment choices/strategies nor to influence market conditions, but rather to divulge methodology for inclusion of equities and sectors in the Economic Recovery Reality Index [ERRI]

Digg this article!

July 31, 2009

Why is HQ Sustainable Maritime in the ERRI fund?

Posted in economic indicator, economic recovery, ERRI, Obama administration, U.S. Economy tagged , , , , , , , at 7:58 pm by realitytax

HQ Sustainable Maritime Industries, Inc. (HQS), is an integrated “aquatic product” producer, processor and farmer of toxin-free tilapia with operations in China, other aquatic products and marine bio and health-care products sold principally to customers in North America, Europe and Asia. HQS facilities are certified according to the Hazard Analysis Critical Control Points (HACCP) standards and assigned a European Union (EU) code required for exporting aquatic products to the EU. HQS is also certified in accordance with the Aquaculture Certification Counsel, Inc. (ACC) standards. The Company owns a “nutraceuticals” and health products company, producing and selling products subject to certification(s) by the China Ministry of Health.

HQS shares plummeted from about $16/share in late July of 2008 to just over $3 by the end of October 2008 as the effects of the lack of accountability and transparency on Wall Street precipitated the spread of the well-documented credit and liquidity crisis outside the mortgage and banking sectors, and share prices dipped again a bit in March when much of the market struggled. Investor sentiment is typically positive when the 50-day moving average is rising, especially if it’s also above the 200-day moving average. HQS 200-day numbers trended down since August 2008 until late may, shortly after the more volatile 50-day average had “crossed above.” The 50-day, now showing signs of life, had dipped below the 200-day in early September of 2008. Other technical indicators complete a “mixed” outlook (arguably neutral or slightly better) but small ventures such as HQS face immense challenges to growth and success as the echoes of the credit crisis have spread to the world markets.

With just over $100 million in market capitalization (a Small-Cap stock) HQS valuation tumbled during the latter months of 2008, tracking the broader markets. HQS is used within the ERRI fund to benchmark non-cyclic consumer activity, particularly food, and comprised 10.11% of the valuation at fund inception. The market recovery can’t be measured solely by tracking large companies engaged in retail clothing, the financial sector, and/or utilities; small companies face a very competitive landscape as they seek resources to expand. HQS has scheduled the release of its 2009 second quarter results for after the close of the market on August 10, 2009.

It is interesting to note that institutions own a significant portion of the outstanding shares in HQS, approaching double the average for the fish/livestock industry. Tilapia consumption in America has reportedly been growing at over 35% a year for the past 8 years.

In addition to headquarters in Seattle, HQS has operational offices in Wenchang on the island of Hainan, in China’s South Sea. (Hainan is the largest Special Economic Zone laid out by Chinese leader Deng Xiaoping in the late 1980s.) The nutraceuticals produced are used to enrich feed used by HQS’ cooperative aquaculture operations. The successful negotiations with the Chinese government underscore the value HQS sees in Asian markets in general, and China in particular. With the increasing pressure from the Chinese on American fiscal and monetary policy it seemed prudent to include both HQS and Research in Motion in the ERRI fund, making nearly 15% of the fund total “responsive” to business with the People’s Republic.


Disclaimer: Readers are advised that the ideas, materials, and opinions contained herein should be used solely for informational purposes. The author does not purport to tell or suggest investment securities that should be bought or sold. Investors should always conduct their own research and due diligence and obtain professional advice before making any investment decision. Neither the author nor realitytax shall be be liable for any loss or damage caused by a reader’s reliance on information obtained in any posts, newsletters, special reports, email correspondence, or comments on the web site. The author is not a registered investment advisor or broker/dealer. The information contained herein does not constitute a representation by the publisher or a solicitation for the purchase (or sale) of securities. Opinions and analyses are based on sources believed to be reliable and are written in good faith, but no representation or warranty is made as to their accuracy or completeness, and we are not liable for errors or omissions. All such information should be independently verified with the companies mentioned. The author(s) receives no compensation of any kind from any companies that may be mentioned on this web site. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed; the intent is neither to suggest investment choices/strategies nor to influence market conditions, but rather to divulge methodology for inclusion of equities and sectors in the Economic Recovery Reality Index [ERRI]

July 17, 2009

U.S. July 2009 ERRI at 11.27

Posted in economic indicator, economic recovery, mortgage reform, Obama administration, U.S. Economy tagged , , , at 6:19 am by realitytax

Using a proprietary “realitytax” calculation that incorporates stock market valuations drawn from 10 major sectors central to economic recovery in the U.S. (as detailed in the ERRI equity table below) and wage and employment data released by the Bureau of Labor Statistics, the Economic Recovery Reality Index [ERRI] value is calculated as 11.27 for July 2009. The August ERRI will be released following the BLS assessment, scheduled for August 7.

The index reacts somewhat sluggishly to changes in the stock markets; it is considerably more sensitive to the employment data.  For the sake of comparison had the ERRI been calculated and published at various times  during the summer of 2008 prior to the ripple effects of the credit/mortgage crisis, etc., values would have been roughly 6 to 10 times greater. While generally the absolute number is less relevant than the trend, single-digit values correlate strongly with recession.

The number of unemployed persons (14.7 million) and the 9.5% unemployment
rate, and the 65.7% civilian labor force participation rate in the U.S. were little changed in June. The employment/population ratio, at 59.5%, trended down during the same month, with roughly 30% of the unemployed having been out of work for half a year or longer.

The figures in the columns “shares” and “values” in the table below are included to further illuminate the weighting of the entirely hypothetical equity component of the new ERRI formula. Neither this formula nor the “fund” should be construed as investment advice or an endorsement of any particular equity, sector, or strategy. I am a student of the economy trying to figure out if/when the recovery is underway, not a broker, trader, economist, banker, investment adviser, or even a mathematician.

The sectors and specific stock choices, explained in greater detail by following links from each symbol, are a complex balance intended to measure broadly the market activity in areas reflective of key domestic sectors and global inter-dependencies while carefully excluding certain traditional index components (such as the big three U.S. automakers) that are reacting to such unusual conditions that they might distort the calculation. As such, they are included because they are expected to track various sectors, not out-perform the broader U.S. equity markets. They are included publicly for the sake of veracity, transparency, and verification only.

symbol 07/15
benchmark
shares value Sector Industry
EMN $ 36.85 27 994.95 Basic Materials Chemicals – Plastic & Rubber
HON $ 31.18 16 498.88 Capital Goods Aerospace & Defense
CAT $ 31.93 15 478.95 Capital Goods Constr. & Agric Machinery
FDML $ 9.67 103 996.01 Consumer Cyclical Auto & Truck Parts
HQS $ 8.37 119 996.03 Consumer NonCyclical Fish / Livestock
BBEP $ 7.32 68 497.76 Energy Oil & Gas (Integrated)
PZE $ 5.98 83 496.34 Energy Oil & Gas (Integrated)
AIB $ 4.58 72 329.76 Financial Money Center Banking
CMA $ 21.84 15 327.60 Financial Regional Bank
FITB $ 7.06 47 331.82 Financial Regional Bank
CCI $ 24.26 20 485.20 Services Communications Srvcs
JWN $ 20.11 24 482.64 Services Retail (Apparel)
FSLR $141.54 7 990.78 Solar Technology Semiconductors
RIMM $ 66.18 7 463.26 Technology Comm. Equipment
PLXS $ 21.59 23 496.57 Technology Electronic Instr & Controls
POM $ 13.54 73 988.42 Utilities Electric

July 15, 2009

[ERRI] Economic Recovery Reality Index – Stock Component

Posted in economic indicator, economic recovery, U.S. Economy tagged , , , , , , , , , , , , , , , , , , at 1:35 pm by realitytax

There are 15 stock/equity holdings that make up the “market component” of the Economic Recovery Reality Index, picked to represent a variety of sectors. The ERRI is an experiment, an attempt to balance the spin and rhetoric with some of my own data; I’ve created a new economic indicator.  I’m picking the 15 stocks, and publishing the list here, to be purchased at the opening price on July 15th, 2009 because 2nd Quarter earnings reports are coming in over the next two weeks; it was time to commit the choices.

This is not by any means investment advice. In the interest of disclosure: I note that I know I own some of these (not the majority) directly, and may own some or all of the rest through mutual funds. Of those from the list I have in my own portfolio their combined value is well under $5,000. This isn’t an attempt to influence their market values, or those of any other stock. I’m not an economist, or an investment specialist.  I’ve deliberately excluded any company in my portfolio with a holding greater than $1,000. I’ve deliberately ignored the reports from my mutual funds about what specific positions they hold – they were selected for broad goals, not individual components.

I’m not an investment professional, I’m a former small business owner working as an independent contractor in the computing industry. I am “pro-economic recovery.” In this matter I don’t care who’s in the White House or the U.S. Congress, I just want the U.S. and world economies to become reliable – economic systems underpin our well-being almost as directly as reliable, affordable health care (yes, I’m in favor of that, too.) In fact, some of the stocks listed below I don’t want you to invest in, since I think you should use your money to support businesses and industries you want to see flourish – but this was to measure economic activity not encourage it.

I’ve not sought the advice of CPAs, brokers, or any other professionals (I told you this isn’t investment advice) in either the selection of these stocks or the other components of my ERRI calculation. I’m just putting it online to hold myself publicly accountable. I’m sure the CEO of the World Bank and many others have more time-tested, reliable means of making this determination; I’m just trying to work out how to pay for my kid to go to college and be able to retire in a few decades.

So I’ve researched and selected the following 15 stocks.  I’ll explain each, including what sector they’re in for those unfamiliar with a given company, as well as the other components of the ERRI in subsequent posts; the broad goal for the “market component” was to represent numerous sectors while not relying on the likes of the S&P 500, etc.

The opening prices will appear in a comment/reply so I can get this out in before the market opens.

AIBAllied Irish Banks

BBEPBreitBurn Engy PtnrLP CmmnUnt Rprstg Ltd

CATCaterpillar Inc.

CCICrown Castle Intl Corp

CMAComerica Inc.

EMNEastman Chemical Co.

FDMLFederal-Mogul

FITBFifth Third Bank

FSLRFirst Solar Inc.

HONHoneywell International Inc.

HQSHQ Sustainable Maritime

JWN Nordstrom Inc.

PLXSPlexus Corp

POMPepco Holdings Inc

PZEPetrobras Energia Participaciones SA

RIMMReasearch in Motion