Comments on: First Stocks, then the Economy… Are Jobs Next?

By: Bill Donoghue

Bill Donoghue — Wed, 16 Dec 2009 04:11:26 +0000

From an economic viewpoint, this is nice to hear (I leave my cheerleader viewing to CNN’s reporters – they are entertaining).
If I am to believe Donald Trump, banks are making zero loans; they are buying cushier offices and airplanes. If they make loans, since American businesses are much less creditworthy and who in their right mind wants dollar-denominated assets. I will be Brazilian businesses get US bank loans before US small businesses (who have to survive to create most of the new jobs).
I am most concerned about a generation trying to retire with dignity and make their jobs available to the next generation who are beginning to understand the wealth they expected to inherit ain’t coming as their parents are not only unable to afford to retire but won’t get out of the way to let the next generation have a career.
If we do have a successful economic recovery, is that good news for investors? If banks were making loans would they be charging zero? I don’t think so. I think that borrowers would line up at double-digit rates just to survive. If interest rates rise, can bond values rise or will bond fund losses offset their incoeme? Can growth funds or value funds grow in value if intererst rates are rising?
It seems to me that the long-term investors with only a short-term left expect to earn more from stock and bond funds than money funds?
With Morningstar unwilling to rate bear market funds at all what should investors do?
Buy-and-hold is not only dead but seems prepared to haunt investors into their financial graves, yet the financial services industry refuses to change their tune, Can we afford another Lost Decade or has the economy found their decade and investors lost theirs?
I ask a lot of rhetorical questrions to invite a rational response and to learn a few new tricks on how to reduce risks and increase returns in the 21st Century.
Can you help?

By: Michael N. Chernick

Michael N. Chernick — Wed, 16 Dec 2009 00:05:29 +0000

Dear Jim:
I think your positive spin on an economic recovery vis-a-vis
upticks in the average workweek and temporary hires is a bit premature. It would be interesting to compare those numbers against the same metrics for the October / November periods in, let’s say, each of the last five years; Such an exercise might help to determine how much of a role seasonality plays in the increases you’ve noted. After all, workhours for manufacturers and wholesalers typically peak in advance of the holidays, and retailers beef up staffs with temporary help for the short term.
It’s ill advised to make too much hay out of the November jobs report. December’s employment statistics are likely to be somewhat skewed by seasonal factors as well, and therefore unreliable as an indicator of any jobs trend.
I will be much more interested to see the BLS numbers after January. By then, success or failure in the retail sector during the holiday selling season will have influenced hiring decisions for many business owners.

By: Paul Katchings

Paul Katchings — Tue, 15 Dec 2009 22:51:27 +0000

I love to see great studies backed by the numbers! Thanks!

“At the cost of stating the obvious, jobs are highly correlated with the growth of the economy”

You stated that “the rise in the average workweek is roughly the equivalent of creating another 800,000 jobs!” great observations and I concur;

But, conversely the (+ or -) lowering and increasing of the average 40 hour week will cause a labor storage as a new policy tool. The 40 hour work week use to be 48 hours and these 40 hours are not etched in stone.

But this is NOT the gist of my reply to the growth of the economy article.

The reason for my reply is how we will create 15 million instant high paying jobs in the USA by establishing 4,004 new public companies wrapped around 364 existing brands and make me, you and a few lucky others instant multimillionaires and billionaires in 2010 by being virtually proactive!

The instant solution for USA growth is derived from a new study caused by observing that 23 countries with the most public companies creates more value for its citizens than do 243 countries with few or no public companies. So it is now clear that the fastest way for countries to create value for its citizens is the simple establishment of an exact number of new public companies around existing brands.

Using the precedent of free employee stock options extended to free customers-stock-options for new public companies we find the means and the 3, 5, 11, 20, and more than 40 times purchase price reasons for how a 14 million ratio of virtual participants buying from 364 new public companies are used to solve not only the 15 million unemployment problem for the USA but the savings problem as well in 2010.

The average public company can create 3,746 new high paying jobs on an average priced product of $33.

Without exception the one formula that makes multiple value possible for a public company is x= (a*b/y)/c where X is stock price A is revenue B is earnings as a percentage of revenue Y is shares outstanding and C is rate of return.

With the fundamentals that 46% of each new public companies are given free to 14 million as customer stock options prorated at 2 shares each, and the average annual purchase is $33 with earnings of (+ or -) $.63, 61 million shares outstanding and a (+ or -) .03 rate of return we find;

That 14 million times $33 times $.63 divided by 61 million divided by .03 is a stock price of $159.05.

What this means is that the 14 million customer 2 free stock options are instantly worth $318.10 which is 9.64 times their cash purchase.

Now, there are ONLY two questions here to implement this solution requiring just 2,426 people to start.

1. Will 14 million customers buy a product or service for $33 when they know in advanced that their cash purchase will give them $318.10, $660, or $1,320 in instantly tradable equity?

2. Will 364 – 4,004 qualified readers head up a ‘virtual company’ within a formatted structure where the total registration cost and expertise are provided for a mere $30 participation fee and the ownership in each of the 364 – 4,004 new public companies is 31%?

31% of a $9.702 billion capitalized company (61 million shares times $159.05) is $3 billion.

Paul Katchings
http://www.b2bvp.com