In Support Of Barack Obama

Just because the U.S. economy is going down the toilet does not mean that everything else has to come to a stop.

We are still in the middle of a tightly contested presidential election. While the current financial crisis will be beneficial to Obama, he still needs to fight his way to the White House.

So far, I've donated $150 for his presidential campaign and I've got $50 more to give as I don't want to go over the $200 limit as my donations will be available publicly. Instead of donating the $50, I had my missus donate $100 as she has never made a donation to his campaign. For October's contribution, I'll split the $100 donation between my wife and I.

On This Day

Not counting my 401(k) and fully vested ESOP, I lost $1,247.94 today!

Of the 12 stocks that I hold, I lost $379.73 on my largest position which I've held for the last 4 years.

I'm holding 38% cash and 8.4% Gold in my portfolio.

Never have I ever suffered such a 1 day loss. With the exception of my speculative position in AIG, I expect all my positions to recover.

As of Friday, my 401(k) was 16% down YTD and I won't find out how much I've lost today until tomorrow. My ESOP should be okay because my basis is 50% of my company's stock price.

My losses are pale compared to the $1,200,000,000,000 (not zimbabwe dollars!) that was shed from the U.S. stock market today.

Dow Pow!

What a day! I can't say that I'm surprised because we had this coming for a long time. What should have happened in March is finally here.

As I said on Friday, the market was being propped up by the expectation of the bail-out Bill. The thing is, sentiment on the ground is against it. Myself and everyone else I have spoken with, are against this bail-out. Congress had very little room to wiggle out of this predicament. However, I have no doubt that the government will see this through but the damage has already been done.

The Dow broke through 2004 levels on high volume and the S&P 500 is holding by the skin. U.S. equity markets are doomed. The next best hope lies abroad. Emerging markets may perform worse in the near term but they will recover before the U.S. as there will be a net outflow of funds out of the U.S.

With the exception of Tech, my money is on Russia, Brazil, Australia and Canada. And if I was to add, one more country it would be South Africa.

Rebalancing My 401(k)

I've finally decided to take action and re-balance my 401k. I had close to 33% held in my employer's stock which I receive as matching contribution. Considering what has been happening over the last few weeks in the equity markets, I decided to lower my exposure to the company stock.

In 2002 we saw the fall of Enron and WorldCom that resulted in thousands of employees losing their life savings after the 2 giants failed and filed for bankruptcy. 401k's of long serving employees held significant amounts of their savings in company stocks which resulted in huge losses after the 2 companies collapsed.

The Pension Protection Act of 2006 was therefore passed to remove the restrictions that forced employees to hold onto the matching stock allowing them to diversify their holdings to other funds in their retirement plans.

And this morning you can be sure that the failure of Washington Mutual Bank caught some of the employees on the wrong side as their company stock fell to a mere 16 cents after the FDIC took over the bank's assets.

Looking at the markets in general, things seem to be holding because there is an expectation of the passing of a bailout plan to aid the failing financials. While it certain that Treasury will come up with something, the size of the bailout will be smaller than the $700 billion that they had initially proposed. And taking into consideration that the bail-out does not address the root cause of the financial crisis, the bail-out is certainly going to be another failed band-aid attempt of solving the crisis.

As of this Friday, we are 2 trading days into October and the charts of major indices going back a decade are looking terrible. There is a very high probability that in the coming weeks we might retest the September 17 lows at an even higher volume.

Cut, Cut, Cut. Cut Here, Cut Now!

For the last two years I've been in charge of the capital budgeting in our department. Basically, the job entails managing the capital purchases and forwarding the purchase request to the procurement department. In addition, I get to sit in the divisional capital budgeting committee which is responsible for disbursing the funds.

Being in charge of the purse-strings can be a good thing or a bad thing. In many instances I have to turn down requests from people who don't like taking no for an answer especially if they are more senior than I am. With a budget of close to $2 million per year, I instituted a process for prioritizing capital requests and objectively determining the value added to the department.

And it's not just the buying that I'm responsible for. I also have to review the capital assets and determine which one's need to be disposed to free up capital and also create room for new assets.

Now that the U.S. economy is experiencing strong headwinds, I've found myself between a rock and a hard place. The Operations blokes plus the divisional vice-president want the department to come in under-budget while colleagues at work have the opposite view.

With one week to go before the last quarter, I'm now beginning to feel more heat from the top considering that most of the capital purchases are made in the last quarter.

I believe that I should be a good steward of the company's money. Unlike the guy who did the job before me, I'd hate to approve purchases of assets that we really could do without. For example, we have an asset that was bought three years ago for $250,000 that has never been put to use up to date. And the guys who put in the request for it are still at work and they keep coming up with news ways to burn cash. You'd think this is scandalous but it doesn't seem to be the case.

The way it's looking, I'll be making a few enemies at work in the coming weeks.

Innovator, Imitator Or Idiot?

"There are three 'I's in every cycle. The innovator, that's the first 'I.' After the innovator comes the imitator. And after the imitator in the cycle comes the idiot." - Warren Buffet.

This quote by Warren Buffet makes me wonder where we are in the current economic cycle.

His conglomerate announced yesterday a $5 billion investment in Goldman Sachs' preferred stock and an option to purchase an additional $5 billion in common stock in the beleaguered investment bank.

The Going Is Getting Tough

And the tough are now going back.

A top executive at a Nairobi bank with global connections told the Sunday Nation he had so far interviewed 10 Kenyans who previously worked in the US, where a financial bubble lasted years.

The senior banker said another 20 have sent emails enquiring about opportunities as incomes fall amidst heavy personal debts.

This Green Card business is killing people. Thousands of immigrants are being laid off before their applications have been approved causing them to leave the U.S.

What makes it worse is that the USCIS has been making major blunders for the last one year such that close to 1 million people are now stuck in the deep hole of retrogression.

PS. It's not the debt that is driving professional Kenyans back home.

The Office, Kenyan Edition

First there was the Nation Media scandal and now we have the KenCall saga. In total, I printed out the 80 pages of comments and read them over the weekend. I'm not sure what is happening in Kenya but I would hate to imagine the going-ons in some of the major companies in Kenya.

Since I have never worked in any of the major companies in Kenya, save for during college vacations, I'd hate to imagine that what is being spilled is the norm.

I can attest to the fact that the few times I've worked in Kenya, being paid on time was an issue. And if I'm not wrong, I think one of the small companies that I worked for as a student in the 90's still owes me my wages. Only that I can't be bothered to remember.

Like in the case of delayed salaries in KenCall, the MD used to disappear during end month. The routine was to go to upcountry and then the accountant would tell us that he is waiting for the guy to come back to sign the checks. What he didn't realize was that his actions drove the employees to steal from the company in order to meet their daily sustenance.

If it was not printing paper that they were selling, it was printing ink, doing secretarial work for other people, sending customers to the competition, using company car as a taxi to a host of other activities.

Much later I heard that the company got into problems with its suppliers, creditors and clients, and closed shop. The MD who owned the company started another business and I continue to hear that he has never changed. You would think that he has learned his lesson.

I can only hope that the owners of KenCall will arrest the situation before it gets out of hand.

Things Will Fall Apart

I'm sitting here watching CNBC and there is news that the U.S. government is looking into setting up an "agency to soak up bad loans and mortgages".

I can't think of a worse solution to the financial crisis that has gripped the financial markets. It reminds me of Americans taking home equity loans to pay off the credit card debt only to turn around and max their credit cards agains. And now the banks have been left holding onto the bad debt.

So you can expect that once the government takes over the bad debt, the banks will go about with issuing new debt to consumers just like nothing ever happened.

You could argue that this will not happen but without a change in the way banks continue to do business it would be foolish not to expect this to happen.

My take is that the U.S. is financially doomed. It will take years to clean up this mess and I can't entrust the government to so. Because of this I have immediately changed my 401(k) election to 80% international funds going forward. And in the months to come I will re-distribute my retirement money from domestic funds to the international funds.

I'll still be exposed to U.S. stocks through my company pension plan and my social security contributions. So if I'm wrong and the U.S. prospers I won't be totally left out.

401k Misery

With the financial markets in turmoil, I decided to go through my 401k with a view to see if I need to change my elections. It so turned out that I'm not doing too badly.

For the YTD ending 15th of September (Black Monday), I am 17.3% down. That means for every $10 contribution in my retirement account, I have lost $1.73. A small sum but it adds up to thousands of dollars considering I contribute 10% of my gross pay and my employer matches half of it.

And for people who have been working for at least 2 or 3 decades and have retirement on their horizons, it get worse.

One colleague who was employed a few months before me told me this morning that she's $20,000 YTD down on her 401k and sounded rather distressed because she uses the services of a financial planner/advisor who doesn't come cheap.

For me my main worry is that a third of my retirement savings consists of the company match which is -21% YTD and hence the losses. I know the law was changed in August last year to allow for the sale of vested stocks but I'm yet to take advantage of the situation.

Taking into account the tax savings from the pre-tax contribution and the matching contribution from my employer, I would think that I've lost less than 5% on my actual contributions. And the fact that I've taken an aggressive strategy confirms that I don't need to make any changes yet.

In the grand scheme of things, I see the current situation as part of the risks associated with investing. Since I plan to retire in Kenya, I am certain that my 401k plan and the company pension plan in addition to my social security contributions will be sufficient to see me through my golden years. Except if the stock market crashes and I lose everything.

Unable To Buy AIG Shares

With the U.S market in turmoil, I thought I'd go in and buy some distressed assets. One particular stock that I've been eying is AIG which is now trading as if they are going to close shop tomorrow.

However, when I tried putting in my order online I got a message to contact my broker. I did so and I've been told that the AIG counter in the NYSE is yet to open. It looks like they will be taking a huge hair cut today as the stock is 50% down.

I'm going to monitor the situation but I think this is a tradable stock as it will be a while before we find out what's happening within the company.

PS. It's a good thing I couldn't place my trade as the stock hit a low of $5.82 when it opened. I'm calling in with a $6 order for 200 shares.

11:36 AM (ET) Update; In at $5.65. You make/lose money by taking risks.

Lehman Brothers Capitulates

Lehman Brothers as we know it is no more, or so it seems. As I type this, CNBC is showing live pictures of employees carrying out their belongings in boxes from their New York Headquarters. Apparently, Lehman brothers is not to big to fail and thus the Feds have refused to backstop their sale.

Their headquarters on the 7th Avenue has been turned into some sort of tourist attraction. Tourists have flocked around the building and are busy taking pictures of the establishment.

It remains to be seen how the markets will take the failure of Lehman Brothers but it is likely that they will not go down alone. Merrill Lynch and Washington Mutual are being mentioned in the same vein.

Addendum; Lehman Brothers Manhattan and Canary Wharf buildings are located in the most coveted addresses in New York and London, respectively. It will be interesting to see who takes over their signature grey buildings.

Yikes, Ike Is Here

The talk of the weekend this side of the world is Hurricane Ike. The monster which made landfall on Friday has caused pandemonium in the Americas.

As I went about running errands today, I couldn't help but notice all the gas stations were packed with cars filling up in anticipation of the arrival of hurricane Ike. The fact that gasoline prices have jumped by almost half a dollar in the last few days did not deter drivers from filling up.

Because I usually fill up on Sunday evening I decided against filling up in the congested gas stations. That was until I passed 2 gas stations that had closed down as they had run out of fuel.

With dark clouds fast approaching I quickly found my way to the nearest gas station and filled up my car. As they say, it is better to be safe than sorry.

Birthday Wishes

Another year older and another year wiser. All I can say is that time seems to fly. Just the other day I was finishing college and yet it seems like forever.

My birthday came to pass. As usual, there was not much of a fan fair as I've always been a low key individual preferring to celebrate my milestones privately with my loved.

In the days leading to my birthday, I started receiving birthday cards through the mail. Only that none of them were from friends or family. Instead, the banks, my church, stock broker and a host of retail stores (store credit cards) are the one's who have been sending me birthday cards and a few shopping coupons.

While I got cards from my family, emails and text messages from kin and kith, it's the businesses that seem to send me the birthday card. Surprisingly, I also got a call from our VP at work just as I was leaving work. For some odd reason, he remembered my birthday. Now I have to make sure that I remember his birthday next year which falls in the month of July or else I'll look bad.

As for the coming year, I have a lot of hopes that it will bring good tidings.

In Search Of A Job

After reading PKW's post regarding her job search, my mind raced back to the month of August at the turn of the century when I was in exactly the same predicament. The end of that month would have marked the end of my student years. I had until the 31st of August to submit my thesis.

Before the end of this journey, I had already embarked on another journey. A journey towards getting a full time job. From the beginning of the year I had started applying for jobs in my field of study. In total I had applied for close to 150 positions. Of which I had received well over a hundred regret letters that I have kept to this date. If my memory serves me right, I was called for about 10 interviews, out of which I received had only 1 job offer with a well known multi-national company.

However, it was not a job that I really wanted to take. But with no other option at hand I started the job at the beginning of August. Meanwhile I had not given up on prospecting for a better job even though I had become very selective with my job applications.

I cant remember the exact date but it was no more than 3 weeks after I had started working when I received a call from one of the companies that I had interviewed with and had rejected me. The HR manager at the end of the line went to to ask me if I was still interested in taking up a job with them. Knowing that I was not keen on my current job, I replied affirmative. After which she went to offer me a position different to the one I had applied. I don't know what I was thinking back then but I accepted the offer on the spot after she had explained the job to me.

I had barely been employed for one month and here I was jumping into another company. To complicate matters, I got another offer for a job in Kenya which I had not applied for but was paying well. While I had ambitions to return to Kenya, I turned down this job. To cut the story short, I continued working for the first company as I was able to delay my start date at the second company for a few months as they worked out the details of my work visa.

While I had been offered something different to what I applied, the job turned out to be much better than the one I applied for. I didn't think I would last this long with them but I am glad everything turned out well.

The 100 plus rejection letters that are neatly tucked away together with my college books in the basement are a testament to the uncertainty that I went through as i transitioned from student life into joining the workforce.

My advice for anyone who is also transitioning is to keep knocking on doors. Don't be afraid of rejection letters. That is the nature of job hunting.

And to PKW, I wish you God's best as you transition into full time employment. It may take a while, but something will eventually turn up.