Various

VARIOUS

TIAA Once More–and Buffett: (Mostly for teachers with TIAA-CREF holdings)

When you look at the holdings of the TIAA Traditional Annuity, it shows that 37% of their holdings are in "Structured Finance." In a paragraph on structured securities, it indicates they are created by bundling loans and then slicing the contractual cash flow they will produce into "tranches." [And so on, on p 7: TIAA Traditional Annuity: Adding Safety and Stability To Retirement Portfolios (dated August 2008). To get to this, you must be able to get on the TIAA home page. Then click: Help and Resources. Then click: View an Online Publication. Then scroll to TIAA Traditional Annuity White Paper and click the one and only box. You then need to have Adobe Reader. Then go to page 7, mentioned above.]

Slightly unnerving, but of course what is mentioned here is hard to evaluate. However, about 6 months ago, I switched from the Real Estate Fund, when it was up about one-half percent, year to date (it had previously been up over 1%) and is now down about 4%, year to date, with decreases the likes of which I have never seen for this fund, but far less than what happens to stocks on a bad day. When I switched to the Traditional, they promised 6% for the rest of their year, which ends February 28. Someone who bought into the traditional in the summer was guaranteed 5 ½ %. Nothing has changed since then. Since it often bounces about a half point or so, nothing about it looks as though it were in trouble. Otherwise, I would have expected another half point decline, or more.

Conclusion: I’ll stay with the Traditional, which I am more or less locked into, but I’ll hold off transferring in the other half of my holdings, which are in a CREF money market fund.

Buffett’s advice to buy American stocks now, which I previously criticized, makes little sense for retired persons or older persons, if safety is paramount. For persons in their 30's or 40's, perhaps one might switch one’s holdings from their money market fund to stocks (or stay in the stocks you’ve lost so much in). But for older persons, consider this: if you switched $1000 to stocks and the Dow falls to 6,000 [the level stocks should go according one Guru in this Sunday’s Times, if the recession is "severe," and therefore not altogether unlikely], and then stocks increase at 7%, after 7 years, the stocks will be worth $1204. If, instead, you took that $1000 and divided it between Traditional, at 6%, and Money Market, at 2%–or an average of 4%-- in 7 years the $1000 will be $1316.

And in truth, the increases in stocks from whenever the recovery begins (or before, since it’s a leading indicator), may not do half as well. This appears to be an unprecedented and catastrophic recession. With conditions that were much less serious, stocks were pretty stable–no increases–for about a decade beginning in the early 70's. And then there’s the Japanese Nikkei 225, at present little more than a third of its peak reached at the end of the 1980's. Maybe it will retrieve its peak by 2050. Maybe.

Nonetheless, if you are an optimist, and you believe that stocks have reached their bottom, obviously you should buy them, and who knows you may turn out to be right. Me, I’m remaining cautious, although if stocks drop as far as 6000, I may then start putting part of my CD money into them.
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Tidbits

1. I read someone who said that Jeb Bush will change his last name to McGillicutty. I then looked up Gillicutty and generally it has a negative connotation–in I love Lucy, it was "You silly McGillicutty," and in other sources, far worse. But in doing this, I came across an ad for a
T-shirt worn by an attractive young woman, which had on the front of the T-shirt: Make Awkward Sexual Advances, Not War.

2. It appears that the story that Palin didn’t know Africa was not a continent is untrue, but someone named Bill in Portland, Maine, said Bush (our W) once said "We spent a lot of time talking about Africa as we should. Africa is a nation that suffers from incredible disease."

3. I went into the bedroom the other night where my wife was winding down, with the latest count from Oregon: between Stevens (the convicted Republican felon, who if he wins, will resign or be forced to resign, paving the way for Palin to be elected Senator) and Begich. The Steven lead has been dwindling from the 3,000 or so plurality (there was a libertarian in the race also), that existed on November 5, since absentee ballots (and problem ballots) have not all been counted. She said, out of the blue, you’re here to tell me Begich is ahead by three, picking the number out of the hat. Amazingly, the report I just read had Begich ahead by 3. Now he’s ahead by about 800, when I last looked, and all the good pollsters, like 538, believe the uncounted votes are all in Democratic areas and Begich will win.

4. I Have never seen so many upsetting economic headlines in the Times and upsetting economic stories: Headline (Tuesday, November 11) "Almost Entire Town Is Drowning In Debt as Home Values Plunge." Allen Sinai, a well known business economist: "Consumption literally caved in" (referring to the dip in consumption reported on Friday, October 31), an article in which was stated the fact that consumer spending dipped for the first time in 17 years. "It is a prelude," Sinai goes on, "to much worse news on the economy over the next couple of quarters. The fundamentals around the consumer are all negative, and there are no signs of any help anytime soon, from anywhere."

Or: "Spending Stalls and Businesses Slash U.S. Jobs," Sunday,. October 26. The article goes on to list some companies announcing their intention to cut workers: "Merck, Yahoo, General Electric, Xerox, Pratt & Whitney, Goldman Sachs,. Whirlpool, Bank of America, Alcoa, Coca-Cola, the Detroit automakers and nearly all the airlines."

5. I previously wrote about the election, but the following from a friend has led me to mention my own peculiar circumstances: "I don’t how you were on election day but I was a mess. I spent all day (several really) calling for Obama and was so anxious that night that I was calling Colorado up until 8:30. I didn’t really relax until he won Ohio and then I really yelled (until my ribs hurt). He may not be perfect, but I saw him on 60 Minutes tonight and – it is so damned good to see a president who can think and talk."

When at about 7:30 election night, it was mentioned that Indiana was too close to call, I felt pretty sure Obama would win, since 538 and others had called Indiana either leaning Republican (538's only mistake other than the one vote in Nebraska) or too close to call. If the polls were way off, for whatever reason, and Indiana been called Republican a half an hour after the polls had closed, this would have totally unnerved me. After it became clear that Obama would win Virginia, since the McCain lead existed only because much of the Obama strongholds (primarily northern Virginia) had not been counted, and after he won handily in Pennsylvania, I was pretty sure he would win. Of course, Ohio absolutely cinched it.

I then leave my party at 97th and Columbus, where incidentally they are building a Whole Foods store, even though recently I read that profits have practically evaporated because people are economizing, I walk home and don’t hear horns blaring or anything else. They may have been, but I could concentrate on only one thing. I didn’t have my keys and my spouse, Marianne, was asleep. I didn’t have my keys because Marianne had seen me out, so instead of locking the door as I usually do when I leave the apartment, I simply walked out without my keys.

I call her as I walk home, but she’s asleep and the ringer was turned off. Fortunately, a neighbor was in front of the building and let me in. I then start banging on our apartment door. Curiously, the same thing had happened to Marianne a month ago and I wasn’t awakened, but our very attractive neighbor, Lisa, was, and Marianne was able to sleep at Lisa’s. Unfortunately or fortunately, Marianne was awakened before Lisa was awakened and I was able to get into the apartment. The upside is that Marianne, now unable to get back to sleep, was able to hear Obama’s victory speech.

I then stay up all night, watching the Franken race (one of two individuals I had given money to). I was on a site that showed the percentage of the votes already counted, in the high nineties, and the counties in which the vote was not fully counted, making it appear as though Franken could reduce the slim lead. But at 5:30 am, I couldn’t stay awake. The result was I didn’t wake up until about noon. I then went out to get my fix–The New York Times–and I suffer the way all addicts suffer when the addictive substance isn’t available. There were simply no New York Times anywhere. I was able to get a Daily News and then only because they printed an extra edition. But methadone isn’t heroine. Moreover, when I got back to the apartment, after eating at EJ’s, and got on The New York Times web site, they had already begun changing it. Only a weak later did I see the historic paper, with the headline–OBAMA.

Incidentally, one friend worked in Florida, another in Virginia, still another in Pennsylvania (and I made calls to Florida and Pennsylvania. I figure Obama owes his election to me and my Polytechnic colleagues.