Professor Elam

Accounting & Investing Info for San Antonio A & M

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  • Professor Elam

    Burj Tower Opens

    Building skyscrapers and new football stadiums re signs of market optimism, and often market tops! The developers of the Burj Tower say it is 90% sold. But apparently that means sold to sub developers who are looking to re sell the parts of the building they bought, or lease them out. Apt prices have fallen from $1900 a sf to about half that. Hmm, really?

    You will be relieved to know that there are safe floors every 25 stories or so. The structure is concrete and said to be airplane resistant unlike the steel structure of the WTC, at least that is the theory. By the way Dubai World is not the owner of this structure. 

    And so we have two giant construction projects on opposite sides of the world opening in the same two months, City Center in Las Vegas and the Burj. Good luck guys. 

  • Professor Elam

    A Tax Free Society, the Sunday News

    Sunday Jan 3, 2009 San Antonio Express News

    governments can keep Ponzi schemes going for a very long time so long as nobody demands his dime back

    T R Fehrenbach P 9b Other Views

    Fehrenbach notes that only Norway can afford the socialist welfare state the European nations have created. Norway has only a few million people and the oil income, like the mid East to support it This is hardly the case for other countries like Greece. 

    Now let's jump to page 1a and the headline, 

    Millions of American report income of zero

    Gee really?

    Six million Americans receiving food stamps report they have no other cash income. 

    This is probably an oversight on their part, claiming some income would likely make them eligible for the Earned Income Credit, the negative income tax which pays one cash, if you qualify by earning a little, but not much. the article goes on to cite three apparently healthy able bodied men and women who claim they simply cannot find any job, hard to believe as I saw two or three help wanted signs just yesterday. Okay so they are in Miami, but one woman claims to have been selling homes, making six figures and living in such a house herself, gee do you suppose she put anything down on the house? But with more and more folks piling onto the food stamp, read Lone Star Card in Texas, rolls, does anyone think they will willingly give the perk up should they find a job?  No, as Fehrenbach explains,  barter and cash underground economy will provide the needed income to make things work, it just will not be reported. 

    Over half of America now pays no income tax.  And a very small portion, less than 10%, pay over half of the total in come tax. Will that work?

  • Professor Elam

    Past as Prologue

    Picture 1

    It has been the strongest one year rally since the Depression, we keep hearing this on CNBC, etc. 

    And so there are many calls for a top, noting that little progress has been made since Sept with lower volume and less participation. Okay, is this the top or just a pause?  This rally is remarkably like the rally in 2003, let's take a look. 

    Picture 2

    Did I say remarkably like?  Gee the two even climbed about the same point scale!

    2009 seems to have peaked earlier, 2004 went three months into the year before correcting. But the bit point is just that, it corrected it did not crash.  Markets do not always do the same thing but this is an interesting analog.  

     

  • Professor Elam

    Exponential Moving Averages

    Is there a universal magic bullet for stock market timing?  The use of a 13 and 34 week exponential moving average may be as close as it gets. 

    Picture 7 

    The 13 week crossed the 34 week in late 207. Note that it never crossed the 34 week again until after the crash low!  Clearly the use of moving averages will lag a big turn in the market until the MAs catch up with the new trend. But, had one gone short and covered at the buy point, 

    one would have made a lot of money

    one would have sat out the entire crash. 

    The distance between the two MAs is beginning to widen which is a worrisome alert. Note the two MAs were the furthest apart at the March low. ANd the MACD is nearing the zero line on the histogram. And the black red MACD is getting very very close together. Let''s watch this closely. 

    Picture 8 

    NO Fear!  The VXX is an index that is composed shows put buying, ie, insurance against a decline in teh market. There is no fear at present. But the volume has increased the last three months, and particularly the last few days of 2009. But until we get a MA crossover, complacency reigns. 
     

  • Professor Elam

    Societe General Looks for Two Year Collapse

    Societe General has issued a two year forecast calling for a severe bear market. Actually this will be a continuation of the one that began in 2007.

  • Professor Elam

    Barney to the Rescue!

    A Bloomberg reporter tackles HR 4173.

    Surprise, Barney Frank's reform legislation promises banks up to $4 trillion in bailouts available, creates lots of new agencies, and runs some 1200 pages. 

    Bottom line, congress will continue to throw money at the problem before it lets anyone face up to the problems they have created. 

  • Professor Elam

    Pimco Suggests Slowdown Ahead

    PIMCO runs the world's largest bond funds. They are looking for a stock market pullback and a move to increased safety. I can believe that for the next few months, question is, when does the world demand a higher interest rate form the US to swallow all this new debt?  At that point bond prices will head south. 

  • Professor Elam

    Avatar Top Grossing Christmas Film

    James Cameron's $300 M Avatar epic is a box office smash, world wide. Interestingly the number two film, Sherlock Holmes!  No doubt this introduces a whole generation of younger folk who certainly do not read, so seeing Sherlock is the introduction. I have not seen Sherlock but find the description of martial arts stuff (obviously tailored for the younger viewer) to be a departure from the original series. And Nick Cage would be a lot closer physically to the original than shorter Robert Downey Jr. But  I still applaud the idea. 

    So what is going on in a down economy? Avatar uses new 3 D technology.  Tickets to Avatar are more expensive because of the technology  and that is helping the box office gross.  IN fact the movie industry did well in the 1930s. For a few cents on could escape the doldrums of the Depression in the movie theater. Movies catered to the whims of the public with both dark side fantasies, Dracula and Frankenstein, gangster movies like Public Enemy, as well as Fred Astaire Ginger Rogers musicals. The latter provided a glittering glamour world to take the public mind off the dreary economy With digital technology to make simple films and the internet available to spread them (think pjtv.com) look for lots of alternative entertainment. This helps explain why video games are such a hit. Once again studying socionomics gives us insight as to what is going on in the popular culture.  

  • Professor Elam

    More Education Audit Woes

    San Antonio Charter Schools were found lacking by the US Education Dept. the Texas Education Agency, and a local CPA firm needed a year to complete what should have been a three month audit. 

    If this was a private company would it still be in business?  Or would the Board be replaced?  Why do these things go for so long in Education before anyone seems to take action?

  • Professor Elam

    Words Matter

    My freshman economics text listed spaghetti as an inferior good. An inferior good was defined as one that you consumed less of as your income grew. Well, clearly this got the attention of the Italian food industry. Sometime since then and now a creative Madison Avenue type came up with a new phrase, yep, pasta was born. Forget Chef Boyardee and McCormick enveloped tomato sauce, enter Mario Batelli, extra virgin olive oil and pine nuts over penne pasta!  The wine industry was not far behind as a stroll through Central Market demonstrates.

    George Carlin wrote several books on the subject of words and their meaning. As George put it, I don't want to get on the plane, I want to get in the plane.

    I was reminded of this Christmas day over an expensive meal. The son in law commented on the fine gravy over the roast pork. I assured him at those prices we had a sauce not a gravy…

    Hmm, white bread or French baquette? What meal image does each of those two references conjure up in your mind?  Words matter, consider the difference and use it to your advantage in your writing.