Bailout ...

Sept 2008...

We are in middle of a largest bailout in the history. Latest bill for US taxpayer is estimated to be $700B.

It seems that no one on either extreme of political spectrum like this bailout. Financial conservatives don't like as they think of potential tax increase that will most probably come with new administration. Some don't like government picking sides and some simply don't like government intervention.

Some of my friends on liberal side think of this as just another way wall street and rich getting help from government. I sense that some of them think there is some massive collusion going on between wall st. bankers and republican administration.

What no one is talking about is this: the real estate bubble of last few years has pumped up the US economy. All of this surely has resulted in huge taxes being paid to IRS. So what if US government uses some of the money for bailout.

What I don't like about government intervention is that they will surely won't think about everything. The voices being heard are the ones who have strong lobby in Washington. Some times voice of the main street gets lost in Washington.

Here is another problem that I have. Once an arrangement like resolution trust is in place, it eventually will lead to a scenario where government ends up selling the paper back in the market and some of the same banks getting bailed out will buy that paper back. And that is not right.

Let's see how this plays out.

Blog Fatigue

I started this Blog last year. My original intentions were to post regularly. But then the Blog fatigue set in.

What I mean is that I didn't get around to posting for a long period of time. Why does this happen ? I think, the novelty wears off. This experience has taught me an investing lesson. You see, I started looking into blogging as a way of exploring the Web 2.0 technologies and in part to understand why Google has been successful. How long can Google and other Web 2.0, especially the social networking companies like Facebook and Myspace, can thrive ? Will there be a social networking fatigue for lot of people ? This can curtail the growth for these technologies and eventually whole eco-system that relies on it (equipment makers and software vendors).

Investing in uncertain periods...

I get asked a lot about my investing strategy during recent credit crisis/housing meltdown/recession that started in fall of 2007. My answer is pretty simple. I have made no drastic changes to my overall investments. Stay the course. I have been sticking to dollar cost averaging into my 401K as well as my Vanguard accounts.



I have made minor additions to my portfolio. I have added 3 mutual funds with small positions in them. They are:

• Fidelity Canada (FICDX)


• Fairholm Funds (FAIRX)


• CGM Focus funds (CGMFX)

All 3 have done reasonably well for me. I picked Fidelity Canada for a small hedge against dollar and it's exposure to energy sector. Reason to pick Fairholm funds is because of it's huge position in Berkshire Hathaway and again exposure to energy. CGM focus fund is really a momentum fund but the manager Ken Heebner, has been picking momentum plays and rotating into different sectors , incredibly well in this decade. Picking of these funds aren't really because of the current crisis. I have been keeping a tab on them for a while.

I also picked up little bit of Wells Fargo (close to $29) and Wachovia Bank (around $25). I intend to hold them for a long time. As of the writing, I am loosing money on both of these :-(

My Merrill managed account did loose money on fixed income investments (primarily HFLAX). Rest of the account has outperformed market just by a tad. In loosing market, that's not saying much.

In the long term, I am convinced that diversified equity (stock market) investments is the way to go. Last decade hasn't been great, but my time horizon is really 20+ years. We will see :-)