Some history is in order for all those who like to reward and blame politicians.

Go back to the first war in Iraq. President Bush (the Older) had a 89% approval rating on February 28, 1991. Then the economy tanked. His fault? No. Real estate crashed in the early 1990s. What happened next? President Clinton won the Fall 1992 election. However, Clinton’s election did not signal roaring economic times and Democrats lost the House and Senate to the Republicans for the first time in 40 years during the Fall of 1994. Did Clinton sink the economy in that short time? No.

Then magic happened. During late 1994 the Internet started to roll and in August 1995 Netscape went public (the trigger we are still feeling today). Stock markets boomed during 1995-1999. The Dot-com bubble was on. However, this bubble was a problem and people knew it. Federal Reserve Chairman Greenspan uttered the phrase ‘irrational exuberance’ in a December 1996 speech, but simply pointing out a bubble was only so useful.

The good times kept rolling. President Clinton had an approval rating of 73% on December 19, 1998 — six years into his Presidency. Did he or the Republican Congress have anything to do with record tax receipts coming into government coffers? No. The Dot-com bubble was spinning off cash to everyone. America was feeling rich.

Party over. The Nasdaq crashed March 2000. The Fed knowing the massive problem on their hands, and deathly afraid that the Dow would deflate, started cutting the Fed Funds rate of over 6% on May 16, 2000 to a low of 1% in June 2003. If the Dot-com bubble had not popped in the Spring of 2000 would Al Gore have been President? Of course, but the Fall of 2000 instead brought another President Bush.

President Bush (the Younger) inherited the Dot-com bubble implosion and less than a year into office, 9/11 hit. Two wars followed. However, all of that Fed rate cutting had started problems. This time real estate and the Dow were zooming up. People rewarded Bush for the economy (even though we were just in the middle of another bubble). His second term started in January 2005.

All is well until summer 2007 when the new bubble starts to deflate. It finally crashes in October 2008 and President Obama wins the Presidency standing at the right place at the right political time. If the economy had not sunk over 2007-8 would McCain be President? Of course. Now the economy is poised to crater again. If it crashes is it all Obama’s fault? No.

So are you really sitting there still thinking Presidents change your financial life? Presidents have all been irrelevant for the last 20 years. Behavioral finance answers our market questions, not the behavior of politicians. There are sheep in my film for a reason.

Stephen Bernard, AP Business Writer, writes today:

“NEW YORK (AP) — Stocks tumbled Thursday after two disappointing economic reports renewed investors’ concerns about the pace of a recovery. The Dow Jones industrial average fell about 165 points in afternoon trading. Broader indexes also fell by more than 1.5 percent. Interest rates also fell sharply as investors flocked to the safety of Treasury bonds. The Labor Department said claims for unemployment benefits rose unexpectedly last week and the Federal Reserve of Philadelphia said manufacturing activity in the mid-Atlantic region has dropped during August.”

Sounds like a simple report from the AP, right? Nonsense. Think about the two words bolded.

Altucher gives the fundamental view why not to chase GM’s IPO, but smart trend followers won’t chase it either:

Three new podcasts:

Aug 17: MP3 1

Aug 16: MP3 2

Jul 14: MP3 3

I took a long break, but starting up the podcasts again. Hit me with questions via email if you want me to cover a subject.

Worth watching.

From Montier:

“The sheer hubris of many in the economics profession never ceases to amaze me. Take for instance a recent paper by Kartik Athreya of the Federal Reserve Bank of Richmond entitled ‘Economics is Hard. Don’t let Bloggers Tell You Otherwise’. In a move that is eerily reminiscent of the controversial talking Barbie of the early 1990s who fatefully uttered ‘Math class is tough’, Athreya’s short paper essentially lays out a quite staggering claim — that economics should be left to those with a PhD in the subject!”

More:

“The idea that what we need is more ‘worker bees’ gaining their PhD’s from conducting ‘angels on a pin head’ like work based on minor alterations to previous research makes me want to cry. Where were the warnings from the orthodox economics establishment ahead of the global financial crisis? Oh, that’s right there weren’t any.”

Try and find the PhD academic work on trend following.

From the net:

“The cable television program Mad Money with Jim Cramer first aired on CNBC in 2005. According to CNBC’s Web site in an article titled, “Mad Money Manifesto” by Jim Cramer, the show’s mission statement and Cramer’s job: “…is not to tell you what to think, but to teach you how to think about the market like a pro. This show is not about picking stocks. It’s not about giving you tips that will make you money overnight – tips are for waiters. Our mission is educational, to teach you how to analyze stocks and the market through the prism of events.“

As you consider that, consider an excerpt from my book The Complete TurtleTrader:

“Richard Dennis’s friend Tom Willis had learned long ago from Dennis why price, the philosophical underpinning of Donchian’s rule, was the only true metric to trust. He said, “Everything known is reflected in the price. I could never hope to compete with Cargill [today the world's second-largest private corporation, with $70 billion in revenues for 2005], who has soybean agents scouring the globe knowing everything there is to know about soybeans and funneling the information up to their trading headquarters.” Willis added [when talking about trend followers], “They don’t know anything about bonds. They don’t know anything about the currencies. I don’t either, but I’ve made a lot of money trading them. They’re just numbers. Corn is a little different than bonds, but not different enough that I’d have to trade them differently. Some of these guys I read about have a different system for each [market]. That’s absurd. We’re trading mob psychology. We’re not trading corn, soybeans, or S&P’s. We’re trading numbers.”

Clear choices.

From Barrons:

“…a recent Reuters dispatch [noted] that a woman robbed a McDonald’s in Oklahoma using a pair of men’s underwear held in place by paper clips to hide her face. When a hard-working bandit can’t scrape up a couple of bucks to buy a decent mask, you don’t need Mr. Bernanke to inform you times are tough.”

Nice.

This one is new to me.

From the wires:

“The jobs picture is much worse than they’re telling you. Forget the “official” unemployment rate of 9.5%. Alternative measures? Try this: Just 61% of the adult population, age 20 or over, has any kind of job right now. That’s the lowest since the early 1980s — when many women stayed at home through choice, driving the numbers down. Among men today, it’s 66.9%. Back in the ’50s, incidentally, that figure was around 85%, though allowances should be made for the higher number of elderly people alive today. And many of those still working right now can only find part-time work, so just 59% of men age 20 or over currently have a full-time job. This is bullish? (Today’s bonus question: If a laid-off contractor with two kids, a mortgage and a car loan is working three night shifts a week at his local gas station, how many iPads can he buy for Christmas?)”

I don’t post this to be a downer. No doom and gloom here. However, I am so frustrated that the so-called leaders are leading millions to a dead end. There is a way out, but we are not headed that way. For starters:

1. Stop spending the country’s credit card.
2. Start the rollback of government employment.

Will this make things better in the short term? Of course not. But if you have a fat kid you don’t give him more food. You make him run!

From MarketWatch:

“U.S. companies won’t expand their businesses until they are sure the economy will grow, but the economy can’t grow unless businesses hire more workers and invest in new capacity, says Ethan Harris, chief North American economist of Bank of America’s Merrill Lynch unit and the top economic forecaster in July.”

The article continues:

“Harris and his team at Merrill won the July Forecaster of the Month award from MarketWatch, based on their predictions for 10 top U.S. economic indicators released during the month. He also won the contest in February.”

Let’s add a little dose of reality for Rex Nutting (the reporter):

1. Hiring workers does not mean your business will grow.
2. July Forecaster of the Month? Said with a straight face.

Please take Rex Nutting behind the tool shed to have his [blank] beat (figuratively of course) for pushing drivel.

I wasn’t going to post this, but once he mentioned the government creating ‘leaf raking’ projects…I spit my tea out!