Sunday, December 28, 2008

Connections, political donations and cocktail parties

So yes I have sold my practice, retired and a lot of you have voiced concern about weather I will continue with this blog. The answer is a resounding yes and I am going to start with a little story about Bernie Maddoff. As you know I have for most of this decade warned many of you that these financial wrong doings are never the solitary acts that the media and the industry want you to think they are. What we have with the Bernie Maddoff scandal is another example of how the rules that the rest of us go by don’t seem to apply to certain people. Connections, political donations and cocktail parties as for most of this decade seem to out way professionalism and ethics. Wall Street in recent years has become a business where the customer’s money has become the firm’s money to do with as they see fit. Don’t blame your local broker he or she is subject to the most stringent rules and requirements imangable but understand that people like Bernie operate outside those legal requirements that you and I are often subject too.

I only know what I read but misgiving about Mr. Maddoff surfaced as far back as the 1970's and a fairly large amount of suspicsion has been build up that last 12 years! Yes that’s right heavy dought has been cast more than once in the last 12 years . Now Mr. Maddoff made off to a tune of 50 billion yes that’s BILLION , about double what the auto industry was bailed out for. Seems his operation didn’t pass the small test more than once, yet when notified the regulators sat on there hands or seemed unwilling to take on the challenge.

So here I will interject some of my own personal musings and many of you who know me personally will find this somewhat ironic. As it became clearer and clearer that I needed a change I began to shop around for a new clearing and compliance arrangement. One firm that shall remain nameless seemed like a pretty good fit to me but upon discussion they seem to have problem, not with this blog but with my other blog,"the Ridgewood blog”. A blog in which soccer moms and dads argue as to the nuances of turf fields, math programs and the finer points of pedestrian etiquette while crossing the local streets. The very day the Madoff story broke and it became know that the likes of Eli Wisel, Yeshiva University and NYU had all fallen prey to this scoundrel to the combined tune of say 80 million .I was being blown off by a firm that was worried about negative fall out from the Ridgewood blog? And that my friends was the as they say the straw that broke the camels back and told me once and for all it was time to step aside and search for new ventures.

The moral to the story is that it appears that the regulators and the industry have consistently protected themselves and defend their unaccountability at the detriment to the investor class, while the investor is left with these words to the wise "if your over 18 everything I say to you could be a lie ".

and yes there will be a lot more to say on this subject for the next couple of weeks while the biggest scandal in US financial history unfolds.

Tuesday, December 23, 2008

Time to Retire

Dear Friends and clients,

As you are well aware the stock market has been an extremely unforgiving place in recent years. While everyday we read of one financial catastrophe after the next the regulatory environment has become increasingly onerous. One financial scandal after another has made very difficult for Independent brokers such as myself to deliver the kind of services that you as clients deserve.

Recent events have made it virtually impossible for me to continue working as a stand alone broker and have put me in a very difficult position with some very big decisions to be made. That’s why I feel that the time is right to announce that I will be taking early retirement so that I can explore other opportunities.

I want to thank you for all your support over the years. If you need further assistance in my absence please contact Zuri Idoeta @ 1(717)393-7003 he can help you with your accounts and be taking over my practice.


James J Foytlin

PS this blog will continue with many updates coming in the next couple of days

Tuff Times for the US Economy

Monday, December 08, 2008

Japan a very willing consumer of US debt

The power of the next administrations stimulus plane lies in the voracious appetite by foreign banks and governments for US treasury securities. Over the Weekend several Japanese banks agreed that they would be willing to buy all the debt the US government can issue .This news of ready and willing customers, and not the stimulus plan it self is what has pushed the market higher since Friday.

Thursday, December 04, 2008

2008 Market Performance

12/31/2007- 12/2/2008 2008

Close Close % of Change

DJIA ^DJI 13,264.82 8,419.09 -36.53%

S&P 500 ^GSPC 1,468.36 848.81 -42.19%

NASDAQ ^IXIC 2,652.28 1,499.80 -43.45%

Russell 2000 ^RUT 766.75 441.82 -42.38%


Wednesday, December 03, 2008

Citi’s salvation signals the midpoint in this crisis

As I said previously my bet would be that Citi’s salvation signals the midpoint in this crisis. Don’t break out the Champaign just yet as one analysis Meredith Whitney keeps reminding us Citi as well as many other banks suffer from the “junk in the trunk” syndrome and these bad assets are systemic and slow to heel. On the bright side the recent resolution for Citi seems far more satisfying than the previous alternatives of Bear Stearns and Lehman Brothers.

At this point weak economic data is looking more and more like its being priced into the market and it appears that for the moment many stocks have already made there lows ,yet it would not surprise me to see the market as a whole make some lower lows. Long term investors have begun to pick up equities and fixed income predicated on the idea that yield equals good values and if not at lest you are getting paid to wait and wait and wait....Some of the large scale institutional barging hunters are becoming ever more active and even starting to compete for controlling stakes in various entities with each other .Some of the more recent data though far from benign has come in not nearly as bad as many had come to expect. It appears at the moment that the end of the world has been forestalled to yet another day.

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Thomas Jefferson said in 1802

Very Interesting Quote In light of the present financial crisis, it's interesting to read what Thomas Jefferson said in 1802:

'I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.'