Rockefeller example

Back in the depression, there was one person (I'm sure not the only one) who saw the need for hiring, the need for building, and the need for leadership.

Strangely, the person I'm speaking about is John D. Rockefeller Jr..

The family owned a property in mid-town Manhattan when the depression hit. Rockefeller did something with this property that many big corporate executives of the time were unable to do. He decided that instead of hunkering down and keeping all of the family money, he would take a chance and develop the property. In the end, the project hired over 75,000 people. He was also able to convince other corporations like RCA to participate in the development the property. His vision to develop the property helped middle to lower economic class Americans. Together, the people working on the project not only built an American icon, it assisted a little bit in helping America get out of the depression.

The property is Rockefeller Center.

It would be nice if companies and wealthy entrepreneurs of this time would look to this example when wondering whether or not to hire. There is plenty of money out there. It is just being kept hostage because of fear and greed. The holders' of capital need to show some faith and get some projects going. The government can't be the only entity hiring.

arbitrary coherence

I started reading Daniel Ariely's Predictably Irrational, and the topic of Arbitrary Coherence was brought up. In the book's words, "Although initial prices can be "arbitrary," once those prices are established in our minds, they will shape not only present prices but also future ones (thus making them "coherent"). " With this being said, I am looking at stock prices a little more carfully with the focus being on the relationship between a company's stock price and its true value. If there is a significant difference, is arbitrary coherence a reason? Can understanding the topic of Arbitrary Coherence make a person a better investor or trader? I think so.

Comments welcome.

Banks will be lending soon

It looks like the retail banks will begin lending more in the near future. There are a few reasons for this idea. The banks' last quarter's earnings showed a lessening of loan losses. The banks' trading gains have also come back to earth now, eliminating that outlier. Companies also will be looking to expand their business as their balance sheets are cleaned up and their efficiencies are almost at an all time high.

The banks loan loss totals are getting smaller. This is obviously a positive for the banks in a couple of ways. Primarily, the banks can lessen the amount of money they hold back in order to cover loan losses. Last quarter, the banks used this money to pad earnings. But this is a bad long term strategy and can not be used for very long. The banks also have to replenish the amount of actual loans that were dramatically lessened in the last three to four years to their balance sheet. Consumer credit is increasing, allowing banks to feel more comfortable lending. Businesses have straightened out there balance sheets and set up their businesses to grow.

The ridiculous trading profits that were provided by the government funding through TARP is basically over. The market will not increase 50% like it did in the last two years. This will force the banks to find other forms of revenue in order to keep their shareholders happy. Lending is something that the banks are rumored to do from time to time.

Companies will have to expand their business in order to grow their profits. The ability to cut more is almost over. Production is quite high right now. Their balance sheets are set up to handle loans. They will be looking to the banks in order to provide loans to expand their business.