Don't Quit Your Day Job…

Déjà vu is a phrase borrowed from France to describe the odd feeling that an experience happened before. Often attributed to a dream, déjà vu is an odd experience leaving one with an odd, creepy feeling. Sadly, budget woes in California can’t be attributed to the feeling; they were supposedly patched up as recently as August. Here we go again! In 2011, California is facing a $14.4 billion budget gap.

Posts I liked, for around the internet and from right here at DQYDJ!

The Federal Deposit Insurance Corporation is a federal company created to insure commercial banks in the Glass-Steagall Act of 1933. Member banks pay a percentage of their deposits into the fund in exchange for the backing of the “full faith and credit” of the United States Government. Seemingly, this means that any bank failures which drive the fund to undercapitalization would trigger the backing of the United States general fund. It also means that when the trust fund is low, as it is now, the FDIC should make moves to ensure the banks it serves don’t ‘bankrupt’ the trust! In that vein, new FDIC rules which started January 1st limit the amount of interest ‘problem’ banks can charge to 75 basic points above the national average rate (weighted by bank capitalization).

One of the more interesting risks you’ll face in investing in stocks (or bonds, or any security of a single company for that matter) is headline risk. Headline risk, as you may know, is the effect that news can have on a company (or sector, etc.). Often times, negative news which is only loosely related to a company can hurt it negatively. Of recent note: Tiger Woods’s “transgressions” on the companies that pay him to sponsor their products.

From the twilight zone department: various polls put Scott Brown, Republican challenger for the special election for Ted Kennedy’s former Senate seat in Massachusetts, within striking distance of the Democratic favorite, Martha Coakley. Public Policy Polling yesterday released a poll suggesting a statistical dead heat in the race, while Rasmussen released poll results on January 4th showing Coakley with a 50% – 41% edge. The Boston Globe, however, counters with a poll showing likely voters leaning 53% to 36% towards Coakley – more in line with historical results in Massachusetts.

What should you make about the Mark Hulbert article claiming that top market timing newsletters are bullish heading into the new year? After a 27.76% increase in the value of the S&P 500 (not counting dividends) in 2009, how much further does the stock market yet have to run? And what does a bullish consensus among market timers mean, exactly?

Links from the week of January 4!