Has President Elect Barack Obama Been on Our Website?

Drew and Shock Exchange discuss economy, presidential election

Below is a presentation handed to the team by Mr. Neverson in advance of our August 16th meeting.

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Foreword 

Financial Calamity . . . Hate to Say it . . . But we Told You So

During mid-September I have received several phone calls from friends and family asking my opinion on the recent financial crisis and what to do with their 401k money and personal investments.  This really wasn't news to me because for a while now the Shock Exchange has been screaming about the poor health of the U.S. economy, but our cries seemingly fell on deaf ears.  The short answer about the Market is . . . GET OUT!  There may be short-term upticks in the Market due to current or future stimulus packages, but I cannot think of any reason why corporate earnings and ultimately the Market should rise long-term.  Over the past few years the Shock Exchange has discussed the negative trend in the vital signs of the economy (housing starts, unemployment claims, consumer confidence) and how they will affect the Market and our investment portfolio.  Nobody has a crystal ball of course, but (i) over the coming weeks I would pay close attention to corporate earnings  announcements and Management's outlook for the future and (ii) wait again for 4th quarter earnings announcements in January/February 2009 to determine whether to get back into the Market.  This 3-4 month period will also give investors a chance to analyze the trend in economic indicators and to wait for any new developments such as more bank failures, hedge fund blow ups, rogue traders, etc., to be priced into the Market.

Never in my Lifetime

Big ticket items like housing and autos drive the economy and we knew that once these two sectors slowed that there would be serious pain ahead.  Also, the bankrupty of Fannie Mae and Freddie Mac and the near bankruptcy of Bear Stearns due to its large holdings of mortgage-backed securities were harbingers of things to come.  But never in my lifetime did I expect (i) the bankruptcy of Lehman, the failure of AIG and its blue chip trading partners, the failure of Citigroup, Wachovia, etc. or (ii) that the U.S. government would spent almost a trillion dollars to bail out these.  Certain companies and individual investors have avoided investing in real estate and the stock market in general, expecting their pending collapse.  By bailing out certain companies for making bad investments and indirectly supporting the Market in the short-term, the government is in effect penalizing the "smart money" who saw this calamity coming.

Shock Exchange "Swagger Jacked" by Mr. Obama?  You decide.

On October 20, 2008 (a few days before the election) Senator Obama appeared on BET's 106 and Park and he had some very interesting things to say that day and since.  Below are some uncanny similarities between Mr. Obama's BET interview, his economic stimulus package divulged after the election, our March 2008 investment meeting and other sections of our website:

Reign in the Rising Cost of Education

The Shock Exchange discussed this as a high priority for the next president during our March 2008 investment meeting.  Prior to October I never heard President Elect Obama mention the rising cost of college as a campaign issue.  Most of his conversation concerning education centered around improving the quality of elementary schools and high schools prior to kids attending college.

Terence (106 & Park):  "Mr. Obama, are there any issues that weren't discussed enough concerning young people?

Mr. Obama:  "I do think education was something that was neglected a little bit.  I am a big proponent that we make college more affordable.  We didn't talk about it much but I've got a program that says if anyone puts some time in community service . . . in a program like Americore we are going to give you a $4,000 tuition credit, every student every year . . . And that's enough to pay for community college and it's enough to pay for 2/3's of the cost of a public college tuition in most states.  It will prevent young people from having to take on sixty, seventy thousand dollars worth of debt. "

Dream Big Dreams

In the "History" section of our site we mentioned that one of our philosophies is "To challenge young student-athletes to 'dream big dreams' on the basketball court as well as in the business world. The Shock Exchange is a big proponent of visualization – before you can achieve anything you must first visualize it." 

Terence (106 & Park):  "Thank you so, so much for taking the time out to speak to us today.  Before we let you go are there any final words for the young people out there?" 

Mr. Obama:  "Yeah, just dream big dreams and just know that if you work hard there is nothing you can't achieve . . . and that includes winning this election."

Invest in Infrastructure

In March we highlighted that the U.S. economy was in terrible shape and even scarier was the fact that none of our presidential candidates had acknowledged this or voiced any concrete plans to address the situation.   We also stated that (i) repairing the country's roads, bridges, levees and overall infrastructure should be a high priority of the next President and (ii) the President may have to get creative by offering low interest loans to states and local municipalities who do not have the capital but will receive the benefits of such investment. 

After the financial problems experienced by Lehman, AIG, Wachovia, etc. both John McCain and Mr. Obama began to acknowledge that the U.S. economy was in dire straits but still did not offer many details of how to improve the situation.  Within two weeks after Mr. Obama's being elected, I read in the newspapers that Mr. Obama indeed had a plan to spur the economy and the pinnacle of the plan was . . . Eureka! . . . You guessed it - investment in U.S. infrastructure (improve roads and bridges, modernize schools, etc.) which would also create millions of jobs.  But again, the major details were to come later.  On November 17, 2008 I then heard a CNBC interview with Atlanta mayor Shirley Franklin who (i) relayed the dire straits that her city, and several other U.S. cities, were in and (ii) voiced the merits of the federal government offering the city of Atlanta a bail out package for infrastructure investments which could create tens of thousands of jobs in Atlanta.   Does any of this sound familiar?   

Results of the Meeting

2008 Season

Coach Baker kicked off the meeting to address his take on the 2008 basketball season.  Given that Coach Baker spent part of the season recruiting new players, he felt that the season was a success and that the team really began to gel towards the end of the summer.  Furthermore it was paramount that the team builds upon the momentum built up in its last tournament, Fastbreak City-wide, in which the team established that it could hold its own against older competition and that it could still move the crowd from park-to-park, borough-to-borough.

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