April 2009 Archives

Free Advice On the Stock Market--And Worth Every Penny!

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The writer Ralph Ellison was surely correct when he observed that “the welfare of the most humble black Mississippi sharecropper is affected less by the flow of the seasons and the rhythm of natural events than by the fluctuations of the stock market.” Not many of the aforementioned sharecroppers owned any stocks, of course, and it’s sometimes difficult to see even today why the stock market is such a big deal to so many people. Roughly half of the nation’s households own stock (and this includes retirement plans). Real annual returns from stocks have averaged -4.1 percent over the last decade, but even before the most recent swoon, only one-third of America’s households boasted portfolios worth more than $10,000, while the top 10 percent of households accounted for roughly 85 percent of all the value of stock held in this country. On the face of it, this would suggest, as a distressingly simplistic piece in The Economist does, that “many middle-class people are only modestly affected by falling asset prices.” Directly, perhaps, but changes in stock prices can have a helluva impact on whether business execs are inclined to expand their operations, not to mention the inclinations of banks and private investors to provide the additional capital for such a move. Likewise, faltering share prices may spur these same corporate decision-makers, or coin-flippers, as it would appear in some cases, to cut back. In either case, conditions on Wall Street can obviously lead either to layoffs or more and/or better jobs for folks who ain’t ever invested in any market other than Piggly Wiggly.
Still, all this conceded, how much political influence should be accorded the high-riding cowboys who help to determine whether CNBC is passing out tips on bull-ridin’ or bear wrestlin’ ? Shortly before our last presidential contest, a quite impressive young friend of the GOP persuasion quietly warned me that Wall Street would “go nuts” (and not in a good way) if Obama was elected. Whether he intended it to or not, this comment came through as, “Therefore, you have no choice but to vote for McCain.” In response, I meekly allowed that, rightly or wrongly, the majority of voters looking at the collapse of their rosy retirement dreams and their kids’ college funds were unlikely at that point to inquire “how high” just because Wall Street asked them to jump. Don’t get the ol’ Bloviator wrong, now. Like it or not, we ignore what happens on Wall Street at our peril, but by the same token, we can also hamstring ourselves individually or as nation by obsessing nonstop on what it means every time some corporate bigwig raises his eyebrows or scratches his fanny. A great many market gurus, for example, were in a holding pattern over Limbo-Land International at the end of the second week of last month as they awaited news about how the astute and informed investor was going to react to seeing Friday the Thirteenth on the calendar.
Also, while we are surely correct to think that, in general, a strong market is a good thing, we have to understand that corporations sometimes improve their market appeal in ways that don’t always benefit their employees or business partners directly. Cutbacks and streamlining can make an iffy buy into a good one, but that’s not much cause for celebration for those who get laid off as a result of the boss’s desire to shed some corporate bodyfat in order to look “leaner” to investors. Likewise, victims of the great tech-bubble explosion may just recall the skyrocketing stock values of garage-bred companies that had never shown a profit and went rather abruptly to their graves in the same condition, taking with them a lot of suddenly shirtless shareholders who had been seduced not by the company’s soundness or prospects, but by the apparent belief that its stock prices had discovered a permanent cure for gravity. Seems to me, there was an outbreak of this delusional “Wall Street’s Gone Weightless!” fever back in ’29 as well. All of this is to say, that while it would be both ignorant and foolish to say that the stock market isn’t a critical measure of how our economy is doing, it isn’t the only one. Nor does its rapid movement in one direction or another necessarily mean that the folks who are shoving it along know where they’re going.
One thing’s for sure, one of the painful lessons that we should take away from this mess is that we need a more realistic definition of what certain terms actually mean. All my adult life, I have heard people insist that that “over time” the stock market has been a can’t miss prospect for the great majority of investors. For individuals, however, the operative consideration is where “over time” begins and ends for them. If you plan to live forever and are simply playing the market for amusement, or you are looking to amass a huge portfolio for your kids to fight each other and the IRS over, then this may not be a concern. However, if we actually envision laying hold of some of our gains or are simply forced to do so at a particular time, then this current disaster should surely jar us into realizing once and for all that regardless of what you heard from some loud-mouthed stock-savant on TV or some real-estate goober one time, your “gains” or your “worth” in such holdings amounts to absolutely nothing (except to the estate and property tax vultures) unless there’s somebody who wants to buy it when you want to sell it, and even then, there’s the moderately important question of just how badly they want to buy it. I speak from bitter experience here, as I and the Missus have seen the yolk of our little stock nest egg turn dark green in a matter of weeks, and, in the span of a year, we’ve had only two prospects who even deigned to take a look-see at what we were absolutely sure was a prime piece of reasonably-priced real estate.
Doubtless those whose parents lived through the Great Depression can understand Mom and Pop a lot better now, especially why they adamantly refused to throw away even a used piece of “tin foil” and bought in incredible bulk every time a major staple was on sale. (When my Mama died, her toilet paper holdings were sufficient to, shall we say, meet our family’s needs for roughly eight months.) God Bless ‘em, hers was a traumatized generation who had faced such painful and sustained deprivation that even after the crisis passed, they often scrimped and saved and denied themselves for the remainder of their days simply to be ready when --not if--they and those they loved were be called on to do so again.
Hopefully, our current ordeal will not prove severe enough to scar several generations so severely, but at the same time, it won’t be a bad thing if we come out on the other side with a much clearer and hopefully permanent understanding that while we have some say-so in how we are valued by others as human beings, our economic “worth” is always to some degree up to them.

Aging Ungracefully in a World Going to Hell

After three weeks of utmost exertion and 24/7 travail, the Ol’ Bloviator is delighted to have a chance to break what seems like an eternity of eerie silence in this humble little corner of the cyberkingdom. While he was struggling to survive the very real threat of death by dissertations, theses, and seminar papers, he also passed a milestone (One that, I might add, hurt him about as badly as if he had passed a kidney stone) by marking his passage into the tattered ranks of the Social Security-eligible. I don’t know why I’ve always made a big deal out of turning sixty-two. Maybe it’s because that’s how old my Daddy was when he died, a few days after saying he was going to go to town to sign up for Social Security. SS was never supposed to be a retirement plan, of course, but a lot of things that weren't supposed to be retirement options are getting a second look these days.
For a great many folks who are hankerin’ to hang it up, the time they used to spend reviewing their 401-Ks is now more sensibly spent considering where they would bury their winnings if that lottery ticket hits. The OB ain’t quite in that situation, thank goodness, but his prospects damn sure ain’t as spruce as they once was. Consequently, his new magic year is now four birthdays on down the road. To make matters worse, some of our distinguished solons over there in Hot-lanta are convinced that now’s the perfect time for a swift kick to the corduroys of those elitist profs who have been living high wide and handsome, slurpin’ off the old public teat all these years while thumbing their noses at the decent folk who pay their inflated salaries. As a consequence, if I understand correctly, our contracts for next year will essentially obligate us but not our employer. We still have to work it seems, but they don’t have to pay us all they owe us.
We’re about to be “furloughed,” say our pusillanimous bureaucratic euphemizers who apparently lack the cajones to simply come out and say they’re going to cut our salaries. (To me, a “furlough” is a well-deserved respite from hazardous duty; so I’ve asked to be sent to Hawaii for mine.) It’s true enough that they’re also doing this with other state employees, but where our esteemed Lt. Governor and some like-minded (and slack-jawed) legislators are all apologetic about this in other cases, they are clearly relishing the prospect of putting the dog-ass, pinko, pointy-headed professors in their places. Moreover, after offering but the faintest of resistance, our leaders and supposed advocates for public higher education in this state appear now to be rushing to do the bidding of a bunch of folks who not only reject the idea of global warming but are just now warming up to the notion of the globe itself.
Personally, I reckon can survive the furloughs if they come, and I probably won’t even kick about them too much so long as our exceedingly well-heeled up-top admin types absorb a lot more of the pain of this furtive pay cut than our staff people who don’t even take home $20K per year. The problem, however, with the “do more with/for less” directives that have followed me everywhere I’ve ever taught and certainly govern higher education even more broadly these days is that the reward for complying is simply being asked to do even more with/for even less. After all, if you could do more than you were doing, you probably didn’t really need all you were getting in the first place, right? Thus, today’s “reduced budget” simply becomes tomorrow’s “budget,” that is, until it is “reduced” itself, and the cycle begins anew. You get the picture, but let’s not forget the appreciative “atta-boys” suggesting a nice raise, “soon as we get the money,” that will be going out to the campus brainstrusters who figured out how to squeeze another drop or two of blood out of the turnipheads on their faculties.
Beyond all this, simply altering contract language is troubling enough in itself, especially in a setting where your real higher-ups in system offices have made no secret of their disdain for tenure. Personally, I’ve never worried about shooting my mouth off, regardless of whether said mouth was tenured or not, but there are definitely situations, not excluding the one right here, where the faculty’s freedom to express their opinions, or even simply teach it the way they see it, could be in serious jeopardy without tenure. I can readily understand why even a great many folks who truly support higher education would be skeptical of tenure in some ways. However, I can say in all honesty (at least all the honesty I can summon) that I can count on one hand the number of tenured faculty I have encountered personally over the last thirty-something years who struck me as actually abusing the privilege, and this isn’t simply the result of my failing memory, either. For example, I can remember very clearly suggesting more than once in my early days that the old coots who whined constantly that everything they had worked for and held dear was being destroyed should not tarry lest the door hit them in the butt on the way out….By the way, does anybody know a good, gentle doorknob-removal specialist?
P.S. One of the benefits of being a bonafide senior citizen is a free subscription to the “Old Codger News Service,” owned and operated by my friend JL over there in Alabama. Here’s a tidbit or two from today’s edition, but be warned in advanced the following ain't exactly “P.C.”
People are still talking about Michelle Obama breaking protocol by touching Queen Elizabeth. Historians say it was the first time an American First Lady touched a queen since Eleanor Roosevelt shook hands with J. Edgar Hoover.
While most were glad the Obama girls got their Portuguese water dog, some people hated to see another American dog thrown out of work.

Amen to that. It also worries me, JL, that prior to settling on “Bo,” Pres. and Ms. Oby didn’t visit the invaluable and authoritative Urban Dictionary website, where they might have learned that the term “water dog” is sometimes used to describe the male sex organ in a state of partial happiness.

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