DOW JONES TO HIT 52 WEEK HIGH BY NOVEMBER

You read it first here – the Dow Jones Index (for that matter, most North American indices and stocks) will be at 52 week highs by November 2009 or sooner!

Am I nuts? The Dow at the time of writing this (April 17, 2009) is around 8,100 and the 52 week high is 13,191. That’s a 63% increase from where we are to a new high. Can a sane man be that bullish? Well, it doesn’t take a sane man to make that kind of a call. It just takes a person who understands what I call the Comparative Delusion. This is my introduction to it and the Dow Jones will be my first subject.

Those of you who have been paying attention may have already noticed something peculiar. Earlier I stated the 52 week high was 13,191 (which is true – look it up for yourself but hurry because it’ll change around May 4) but the Dow peaked at 14,280 before the collapse, right? So what gives? Well, the peak was on October 11, 2007 – more than 52 weeks ago. Can you believe it? We’re already 18 months into this mess.

Because of the Dow’s rapid descent since then, as we move forward in time the 52 week high will fall further and further (refer to the 1 year Dow chart below) because as we move forward a day (or week or month) in time, another day (or week or month) drops off the left side of the chart and is added on the right. In essence, the Dow will be getting closer to its high even if it doesn’t move higher. That’s the magic of Comparative Delusion.

 dow-1yr3

Beginning around May 4, 2009 the 52 week high will drop every few days until around June 26 when it will settle at 11,934 for a little over a month. If at that time the Dow is still at 8100 (assume no progress between now and then) the 52 week high will only be 47% higher (right now it’s 63%). We will have gained on the high without actually gaining anything in absolute terms.

This pattern will continue until around November 6, 2009 when the 52 week high will be around 9,200. In order for the Dow to be at a new 52 week high it only needs to gain about 13.5% from where it is now over the next 6 months – a highly probable scenario in my view. Of course the media will jump all over this around October (if not sooner) as the Dow gets within striking distance of the new high and the Great Bear Market of 2008 will be just a memory. This pattern applies for almost any index or stock. Pick one and try it out for yourself.

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Published in: on April 24, 2009 at 3:41 pm  Leave a Comment  

AN OPTIMISTIC MESSAGE TO RECENT GRADS (PART 2)

You’re enduring lean times and pinching pennies. It’s a drag. There’s all kinds of cool stuff you’d like to buy but just not enough dough in your pockets. Even worse – prices are as low as you’ve ever seen them and you feel like you’re missing out. Awesome! Remember this feeling.

This is a time to get in the habit of discerning your needs versus your wants. Your current financial position may provide no other choice. Soon enough that will change. You want to prepare yourself for when this situation arises again (trust me, it will) by being in a position to take advantage of it. There are many resources out there on personal finance. Do yourself a favour and become “financially literate” and be patient.

I was in a similar situation in the 1990’s and vowed that I would be ready the next time these opportunities surfaced. Saying “not now” to yourself, especially for large purchases puts you in the right frame of mind. Basically you’re asking yourself if you really need it now or if it can wait.

I have learned to put off most purchases, although it was very difficult because I am an impulse buyer at heart. The lean times I endured (and the debt that ensued) forced me to learn to do without. Now I am reaping the benefits because I have no debt other than my mortgage. I’m able to take advantage of deals and save thousands of dollars in the process. Many around me “blew their brains out” by building mass amounts of consumer debt buying everything in sight over the last few years. They are really struggling now while I’m taking advantage of the situation. They are stressed and depressed; I’m excited and energized.

You will achieve great prosperity within 10 years, I promise. As long as you persist and never give up. At times you may feel like running for the woods and leaving everything behind. That’s normal; we all go through it from time to time. Instead of running, just take a little break and eat a bowl of ice-cream.

About landing that great job?

Be realistic about the positions you’re after. Maybe you have a specific role in mind and you wouldn’t have had trouble landing it if only you had graduated 2 or 3 years ago. Don’t feel jaded or that you have been dealt a bad hand. Make lemonade out of those lemons!

If you haven’t already, learn how to spruce up your resume and develop good interview skills. There are many resources on the subject so I won’t go into detail here.

Keep your eye on the prize but don’t be blind to other great opportunities that may be before you. It’s more important that you get your foot in the door rather than wait a long time for that dream job. You will learn great skills and expand your experience in the meantime. Not to mention make some great friends, too. Consider an opportunity even if it arises with a different company than you are targeting. It may serve you well to learn about the competition and you’ll get paid to boot!

Let’s suppose things are really going badly and there are no offers at all. If your dream company isn’t hiring right now find out who cleans their office and work for them. While you’re cleaning their office at some time introduce yourself to the key players and let them know you’re interested. You’ll have to be patient but as you build rapport with them they will think of you when that position does finally become available.

It is more than likely the employees of your target gather after work at some local watering hole. Find out where and when they go to unwind. Hang out there for awhile and “accidently” meet them. Again, when the opportunity presents itself let them you know your background and that you are interested in working for the firm. You will already have an “in” when the inevitable happens.

Be creative and think of other ways you can get on your target company’s radar that will put you ahead of your competition. Good luck!

TBS

Published in: on April 16, 2009 at 1:38 pm  Leave a Comment  

AN OPTIMISTIC MESSAGE FOR RECENT GRADS (PART 1)

So you’ve got that shiny new degree elegantly framed and proudly displayed on a wall. You’re sending out resumés in bucket loads with few or no nibbles. The economy is in shambles and job postings are few and far between. Perhaps you’re having trouble making bill payments and your student loan payments are about to begin. You’re depressed and see no light at the end of the tunnel.

Relax. Take a deep breath. This is the best time of your life. Yep, that’s right, there is an incredible opportunity right before you if you step back, put things in perspective and have a long-term view.

I was in the same boat in the mid 1990’s so I share many of the experiences you are encountering. My future seemed bleak at best. I began to second guess my career choice and contemplated selling body parts to earn extra cash (not really, but you get the picture). At that time I couldn’t fathom how incredible the next 5 or 10 yrs would play out. I know, 5 years seems like forever to you at the moment but trust me, they will pass in a flash so enjoy every moment.

Looking back at that time in my life I now recognize I made some choices and developed some habits that have paid huge dividends. For the most part I didn’t realize the potential future impact of those choices at the time; I was just trying to survive. In addition, there are things I should have done or continued that I didn’t and now I am paying the price. I will now share some of those with you.

Stay active and healthy

This one is probably strange at first because you may be in your early or mid 20’s and are in pretty good shape. That’s great! But make a commitment to yourself to continue an active lifestyle. Especially, if your chosen career will find your butt firmly planted in a chair for the bulk of the workday. I didn’t give it much thought at the time but having spent the past 10+ years in a chair I can guarantee you that a desk-job will make you “squishy” and lethargic!

Furthermore, you may be getting stressed out about finding a good job. Getting regular exercise is a great way to relieve that stress so you can focus better. It’s also more productive than being a couch potato. You’re going to live for many years. They will be more enjoyable if you’re flexible enough to tie your own shoes for most of them.

Perhaps a gym membership is out of reach of your budget right now. That’s fine. There are other ways to get physical on the cheap. For example, check out your local recreation or community centres. When I lived in Toronto in 1998 my roommate and I frequented the local Rec. Centre. They had an indoor track, indoor pool, fitness room (weight room) and gymnasium (where we could participate in various sporting activities). To use the pool and fitness room you had to pay a whopping $3 every 6 months! Twice a year they would issue a limited number of shoe-tags that gave you access to these features. The other activities were free. Plus, it’s a great way to make new friends and contacts. Look around and be creative, you might be surprised at what you discover.

If you smoke, quit. I’m a smoker and I wish I had quit a long time ago. All I’m going to say is it gets waaaaaay harder to quit the longer you smoke. It’s an extremely unhealthy habit (not to mention expensive) and there will come a day when you will wish you never started.

Finally, listen to your mother and eat your vegetables!

In the next instalment I’ll explore finances and how to land that perfect job.

Published in: on April 13, 2009 at 4:39 pm  Leave a Comment  

Let’s start with a couple polls!

Published in: on April 11, 2009 at 3:03 pm  Leave a Comment  
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About me

I’m The Baker’s Son, literally!

I was born in the early 1970’s to immigrant parents (my father was a baker by trade) and raised very modestly under the traditional European mentality of don’t spend more than you you earn and avoid debt as much as possible. Good advice, but incomplete, as I will explore in my posts. Many of you may have be under the same guidance of find a job with a good company, work hard, put a little away for a rainy day and someday when you’re old you may be able to retire.

At an early age I realized there had to be a better way and been searching for it ever since. I’m getting closer to it each day and intend to share my thoughts and progress with you. Now, I really never believed in any get rich quick schemes (neither should you), though I have fantasized winning the lottery on occasion, I’m more in the “work smarter, not harder” camp.

I am a professionally designated accountant who has worked for Fortune 500 companies, as well as privately held companies. I have been investing for a little over 10 years during which I have made some mistakes but also had many successes. I intend to help you avoid some of the mistakes I made by exploring the trends and anomalies that I’ve witnessed and point out how the media confuses and distorts by what I call The Comparative Delusion.

A special thank-you to my wife (a.k.a. The Baker’s Daughter-In-Law) and PJGS for encouraging me.

I hope you will enjoy the journey,

The Baker’s Son

Published in: on April 11, 2009 at 1:37 pm  Comments (1)  
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Hello world!

Welcome to The Baker’s Son Blog. Please be patient with me as I try to figure out how to operate this thing.

Fear not for there shall soon be many interesting and provocative posts.

The Baker’s Son

Published in: on April 9, 2009 at 2:44 am  Leave a Comment