I interrupt this vacation for a special public announcement.   One of the most important Flip Its any American can do is to ignore the advice from financial planners and the oft-under-educated and ill-equipped advisors at your company that always try to convince you to invest in the stock of the same company you work for.

From idiotically foolish 401(k) and IRA plans that will match your investment if you’ll put your retirement savings into helping prop up your companies stock with that added, consistent demand.   I’m not sure how many times I’ve told viewers on Happy Hour to ignore those idiots, but it’s enough that several people at Fox have come to ask me to explain more about it.

And why do I keep harping on this conventional wisdom of using those matching funds and other supposed company-sponsored supposed wealth-builders that everyone tells you is so important for your future well-being and days of retirement?

Worker Assets Shrink at Fannie and Freddie
New York Times, United States - 12 hours ago
The employees of Fannie Mae, and those of its counterpart Freddie Mac, are reeling from financial blows themselves as the mortgage finance companies lurch …

Hopefully some of those (now) poor employees at supposedly very safe companies that were even sponsored by your tax dollars heeded the advice and got the hell out of their company’s stock before it crashed 90% over the last few years.

In the last couple years of running my hedge fund, I owned a lot of News Corp the stock (NWS), and I often suggest it as a good buy to anybody who asks me for my opinion on it.  Indeed, I wouldn’t work here if I didn’t believe in its future and its ability to grow.

But anybody wanna guess how much of my savings, investments, and retirement funds I have in News Corp, the parent of the company that I depend upon to write my checks and keep my present day life operating?

Let me repeat — DO NOT EVER INVEST YOUR RETIREMENT IN THE STOCK OF THE SAME COMPANY YOU GET YOUR INCOME FROM!

Here’s what I was dreaming of redeeming in my own head today:

1. Olympic Glory, Not Money

2. You’re the Socialist, Not Me!

3. Support Operation Backpack

1. I remember when it was wildly controversial that we’d allow professional athletes to compete in the Olympics. Remember when it was about the spirit of competition and not the money? (and don’t get me wrong, I LOVE money…but there’s a time and place for everything and I don’t think the Olympics were supposed to be “money’s” time and place.)

2. Your socialist Republicans and Democrats gave the shareholders of the auto companies $25 billion in easy loans, and now the car companies want double that. Free money for big, well-connected, well-funded corporations and their cronies. Why is it that people call me the socialist on CodyWillard.com when I am simply calling for an end to consumer-funded central subsidization of these giant corporations? Redistribution of wealth is socialist – the level playing field I’m calling for isn’t.

3. Homelessness must really suck, especially when you’re a kid. Help some of our closest neighbors here in NYC by taking a look and helping out with Operation Backpack. We’ll have Trading Spaces’ Rachel Weinstein out here in a bit to tell you more.

1. You guys have heard me talk about how semiconductor inventories are up and how when they’re moving up that’s not a time you want to own the stocks. You can see the spike in this chart here from The Telecom Connection Newsletter–

Don’t fight it – stay away from the semi’s.

2. Real headline today: Nobel Laureates Scholes, Stiglitz Predict Slowdown; Goldman Sees Recession. You been to the grocery store, the gas station or Wall Street itself lately? Did you look at that chart of spiking tech inventories I just showed? You realize when things are finally better and stocks are far off their bottoms, these same Nobel Laureates will be quoted telling you that they think things are finally going to be okay?

3. So I get this little Madden Foldout of my Rolling Stone magazine this morning. I can’t decide if it’s sheer genius or exactly what’s wrong with our country that they can figure out how to advertise the NFL, ERTS, Sprint, NBC, NFL.com, NFL Network, Coors Light, GMC, Madden 09, Pepsi, the NFL Players’ Association, Keith Urban and Gibson Les Paul all on one page!

Today’s sign that the investment banking and hedge fund worlds are in full secular decline — you think they’d be blasting people like me with emails like this a week before the event if biz were fine? I don’t:

Currently we have three remaining options on a first come/first served basis available until August 29th:

1. Cocktail Reception Sponsor ($20,000): Your organization is presented as the exclusive sponsor of the cocktail reception.

2. Meal Sponsor ($15,000): Your organization is presented as the exclusive sponsor of the breakfast, the lunch, or a coffee break.

3. Keynote Introduction Sponsor ($10,000): A senior executive from your organization introduces one of our keynote speakers (based on availability).

Each of these options include additional benefits: 1 attendee pass, signage on the website, at the venue, and in the event program; and the list of attendees’ contact details.

Given the audience of 130-150 investment professionals from endowments, foundations, and pension funds, we feel that this could be a good opportunity for you. See below for the list of keynote speakers and a sample of confirmed attendees. If would like to reserve one of the options above, please let know by August 29.

Woohoo, for only $20,000 I can have a banner in a hotel as 130 panicked Wall Streeters sip free Grey Goose and pretend they don’t care that it’s free. Wall Street has imploded before our eyes, and the cyclical decline ongoing in the economy isn’t gonna help. I do expect we’re headed to DJIA 12,000 before 11,000…but we’re headed to a ten-handle as the valuations in the market come down on lower earnings expectations and more economic malaise continues.

1. “Bizarre” Ain’t Good

2. Temporarily Vicious

3. Sentimental Rally Ahead

1.  Condo Rice dismissively says the Russian reaction to our signed missile deal with Poland was “bizarre”.   Uh, isn’t “bizarre” the worst case scenario when it comes to geopolitical actions?

2.  There’s a new less-global economy and society that we’ve entered into as we enter this worsening recession.  Trade was already going to be hurt by the economic downturn…the virtuous cycle of the last 25 years has indeed (as we’ve been telling you!) at least temporarily turned vicious.

3.  Sentiment is decidedly negative out there right now.  The market’s are oversold, they’ve been trashed and we keep hearing about the potential of more disaster.  I expect we’ll see the DJIA back above 12,000 before we see it below 11,000.  Though I do expect we’ll see the 10-handle sometime after that rally.

1. Trade-able Rally Cometh

2. Obama Energy Hypocrisy

3. McCain Energy Hypocrisy

1. I’ve been saying for weeks that the way to trade this market is…er, had been to short the rallies. Sentiment is awfully negative out there right now and that means shorting rallies isn’t such a good idea right now…watch for a big countertrend rally of 5-10% in the next few weeks.

2. Energy and gas companies get, by Obama’s camp’s own admission, at least $13 billion of federal government “giveaways” every year. So what does Obama’s camp propose? How about hundreds of billions of government “giveaways” to energy and gas companies as long as they’ll try to develop new technologies. Why do I always feel like I’m the only one seeing this obvious circular logic this way?

3. And McCain? He wants to keep giving away those 13 billion of your tax dollars and also a bunch more, newer and different incentives for the oil and energy companies. We haven’t had a free market for energy in this country or anywhere else on this planet for years…and I’m sick of supporting these companies with my wallet both at the pump, at the meter and with my tax dollars.

Here is the first of my Four No Brainer Trades for the end of the first decade of the 21st century.

1.  Bet on higher rates.

We’ve gone from a glut of capital and liquidity to a shortage.  What happens when supply dries up and demand continues?  Prices rise.

The supply of capital has clearly dried up in this country, but people and companies still very much need short-term and long-term capital.  So the price of capital will rise.  That means higher rates.  People and companies have been willing to lend money at almost no interest…that’s over.

Remember when a struggling GM could tap the money markets for tens of billions in very low-rate short-term financing a couple years ago?  Capital is now so scarce that GM (as well as Ford, Chrysler, and so on) won’t even offer leases to their customers anymore.  The repackaging of securitization of all these mortgages, leases, credit cards, etc are rippling around the globe and making people and companies realize that their assets weren’t worth as much as they thought they were since the risk on not being paid back is actually much more severe than they realized.

I’m often asked how a stronger or weaker dollar would affect this analysis for higher rates — the short answer is that it won’t.  The globalization that we’ve just gone through has interconnected all of our central banks and our currencies to the point that we now, at least for the time being, have a de facto one world fiat currency.  That means higher rates the world over — not just in the US.  The glut of capital that just dried up and turned to shortage is a global phenomenon.   Certainly the relative value of the dollar vs. the Euro and/or the Yen will impact how high rates in this country go — the magnitude of the move, not the move itself.  Higher rates await the US and the world over the next couple years.

Come back tomorrow for part 2.

PS.  The August edition of The Cody Report will be published Wednesday.  Sign up now to receive to get my latest and greatest stock picks.

First they sold out to Motorola.  Then to Gap.  Now to the evil empire of Wal-Mart?

And don’t get me started on Jimmy Page’s playing for the opening of the NYSE at the top of WMG’s market cap, when it came back public after its owners fleeced its value.

I love rock n roll.  I love AC/DC.  But…

Sigh.

I had an interesting back and forth with a Congressman’s Press Secretary…how great is it that we can have discussions like this in this country? I’d imagine the tone from say a Chinese representative might be a little different than this. Great country. Let’s keep on keeping it that way.

Cody,
Big fan of the show; my boss, Congressman Garrett (R-NJ) has been on with y’all a couple of times. I was just reading your blog post from yesterday, most notably, “While the idiot Republicans and Democrats that you guys voted into power in this country are bumbling around with stimulus packages, bail outs for the richest people in the country — the investment bankers, bail outs for FRE and FNM, and wondering if they should even vote on how many miles is far enough from the shore to drill…the evil genius Putin is taking over Europe. I don’t believe the government can do any good whatsoever by redistributing wealth, but I do expect them to protect me from Putin. Wake up!”

Just wanted to take a second and let you know that there are elected officials who voted against bail outs for BSC, FRE and FNM, and have been calling for action against Russian aggression even prior to their actions in Georgia this past week. Take for example, H.Res. 1166, “Expressing the sense of the House of Representatives regarding provocative and dangerous statements and actions taken by the Government of the Russian Federation that undermine the territorial integrity of the Republic of Georgia.” This resolution was introduced by Congress in April and passed the House on May 7, 2008. This bill had 34 cosponsors and was passed 390 - 23. Clearly, there are some elected officials who wish to protect the American people, as well as citizens of the world in general, from Putin, as you put it.

I’ve heard your oft stated sentiment, “Government out of it…I believe in free markets…I’ll never vote for any of you” (e.g. August 7, 2008, 5:36pm). There are elected officials who support small government, with limited intervention, and endorse the principles of the free market. It doesn’t help their efforts when opinion leaders fail to distinguish between elected officials who serve to promote these ideals, and those who simply parrot their party talking points.

You do a great job and we watch the show every day in the office here in DC. You all work very hard to keep our elected officials accountable…someone’s gotta be watching y’all. ;-)  Erica

Erica,

Thank you so much for sending this. You have no idea how mindblowing it is to this cowboy from NM that my voice is heard by elected officials.

My single biggest problem with either party is that by definition you have to “join” their party to run on their duopolistic platform. And once you “join” anything you are beholden to that faction…I want politicians who are simply beholden to their constituents. Republicans tend to pretend they are free-marketers…except when they legislate to endlessly create unlevel playing fields and subsidize and create welfare programs and health care programs etc etc. You are either act and fight for freedom and democracy or you act and fight to destroy it.

I welcome a debate that could convince me and other free-thinkers otherwise, but I can’t fathom how any Republican or Democrat can pretend not to be sold out when their parties take in billions every year.

Thanks again!

Best,

Cody

Cody,
You make some great points, and while I’m not privy to those conversations if they do indeed exist, I’m sure that there is an extent to which all legislators are “beholden” to their “factions.”

I’m not the lady to debate you or try and sell you on the “value” of a two-party system; parties are not what our Founding Fathers ever intended. Besides, I have a business background, not politics.

It’s just a little precarious to start speaking in absolutes (ie.e. all Republicans, all Democrats, all elected officials)…but then again, you have a show to do…;-)

We are definitely big fans; keep up the good work!

Erica

Oh, and for the record — I don’t think I’ve ever said, “Government out of it…I believe in free markets…” I often say I’ll never vote for a Republican or Democrat, but that’s got nothing to do with “free markets”. Just freedom. Which is sorta the same thing anyway, but not always.

1.  Greenspan’s “BSC Bailout”
2.  Jonas Brothers Who?
3.  Simply Put:  Fear Putin!

1.  Anybody else notice that Greenspan (okay, okay, agreed he’s salt-grain worthy, but still), anybody notice that he didn’t mince words in the WSJ today in calling not just the FNM and FRE bail outs actually “bail outs”, but he called the Bear Stearns bail out exactly what it was – a bail out with taxpayer money.
2.  The Beatle’s actual first signed contract is gonna be sold for about half a million dollars.  The Beatles had 27 #1 hits.  Fast forward to 40 years later – can anyone here even name a #1 hit from this year?
3.  While the idiot Republicans and Democrats that you guys voted into power in this country are bumbling around with stimulus packages, bail outs for the richest people in the country — the investment bankers, bail outs for FRE and FNM, and wondering if they should even vote on how many miles is far enough from the shore to drill…the evil genius Putin is taking over Europe.  I don’t believe the government can do any good whatsoever by redistributing wealth, but I do expect them to protect me from Putin.  Wake up!