Posted on 07/25/2005 1:42:01 PM PDT by PeterPrinciple
StocksAtBottom.com Sitting Around the Table DJIA 10640 NASDAQ 2170 S&P 1229
July 19, 2005
The Macro Picture at mid-year
By the time this year is over, America's Gross Domestic Product (GDP) should grow by about 3.5%. There was good growth in the first half and we should get a slow-down (oil induced) by the end of the second half. If you look around the world, most major countries are starting to slow down. By year-end Asia will have experienced the greatest degree of growth for the year. The United States will be second and Europe will follow in third place.
In the first half of the year, profits for US corporations exceed what were beginning of the year expectations. There will probably be some disappointments in the second half. As for interest rates, on January 1st, the 10 year Treasury was at 4.22%. That's pretty close to where we are today. The key right now is that it doesn't look like the Fed is finished tightening. Rates will be headed higher in the second half of the year.
If you put it all together it indicates to us that stocks should do better in the second half, than they did in the first half. The New York Times published an expose on the Medicaid industry in New York State yesterday. As you probably know Medicaid programs are administered by the respective states. They are state run programs, with state guidelines. The Federal government simply writes a check to each state absorbing 50% of each state's cost to run the program.
These are big programs. New York State spends $42 billion per year on its program. It turns out that fraud on a yearly basis reaches into the billions. We didn't say hundreds of millions, we said billions. One dentist was billing Medicaid $61,000 per day for her services. She was locked up over the weekend. We are bringing this to your attention because as a free society there is something we can all agree on. Whether one is right-wing, left-wing, or middle of the road, government should be run as EFFICIENTLY as possible regardless of who is entrusted with public office. You have to squeeze a dollars' worth of services out of every dollar.
Clearly we could be talking a hundred billion dollars per year in fraud and who knows how much in waste on a national level. The people, who administer this program on a state level, claim everything is beautiful. The program is working great. These guys are on drugs that run these programs, and at the very least delusional. As citizens of this free republic we should be all over our elected representatives on this one. We did a quick check and found that NYS spends way more on Medicaid than the state of California, and California has twice as many people.
Years ago we heard Mario Cuomo, the then Governor of NY asked about this discrepancy between California spending and NYS spending on Medicaid. His answer was, "We take better care of our people than California." There are 4 million Medicare recipients in NYS. On average the State spends $10,000 per year per recipient. In the next half dozen years, Medicaid spending in the United States will outstrip the money that Social Security recipients receive. This can't be folks. We have to tackle what is turning out to be a nation wide rip off of the American taxpayer. You got to get in on the action on this one and write your representatives.
The more efficiently a government works, any government, the better off we will be as citizens, and in our case as investors also. If investors who have an ownership interest in this society don't force the various governments to adhere to efficient operating procedures, than the investment class must suffer. Our suggestion is that you share this information with your friends, your co-workers, your golf course buddies and anybody who will listen. It's time to get involved. Now for a few stocks. ..............................
Sometimes I have been accused of being an anarchist because I want to get rid of government. But I would settle for efficiency.
I like my newletters from Stocksatbottom.....sometimes they have a way of saying things very clearly. They said I could post their newsletter if I didn't give their stock picks.
Now your realize, I'm sure, that if 100,000 people start buying their stock picks, that they should start to go up for you.
That was not my intent and I don't think there are that many potential subscribers here at FR. I just like the philosophy of the newsletter.
That latter statement is a non sequitur if I ever saw one.
It's Bush's fault.
Yeah, that's what I was thinking.
OH! That's OK. Someone ELSE is paying for it..........RIGHT?
WHoops...Forgot the sarcasm off switch....
Rates will be headed higher in the second half of the year. If you put it all together it indicates to us that stocks should do better in the second half, than they did in the first half.
He's just opining that the good news outweighs the bad.
And any trading system will be profitable - provided enough people are using it!
What does NY spending on Medicaid have to do with the GDP?
I've had better luck with these guys than the broker who was earning a commission.
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