Say x = y

Then x² = xy (because x = y, right?)

So, x² - y^{2 ₌} xy - y² (just subtracting y² from both sides)

Next (x + y)(x - y) = y(x - y)  (a simple algebraic expansion)

so, (x + y) = y  (just divided across by x - y)

then, y + y = y (remember that x = y)

so, 2y = y (now divide across by y to reach the stunning conclusion)

therefore, 2 = 1

It just has to be wrong, right? Can you spot an error?

Back to the TUV: they're currently all over the media in Ireland because the vice-chairman of the party said that Irish is a "leprechaun language."  They've back-tracked, apologizing for what they now say was a childish mistake.  I don't think the apology is the story.  I think that the big story here is that vice-chairman of the TUV must believe that leprechauns are real–worse, he apparently knows the language they speak.

After a long hiatus, punctuated by a change in jobs which had me commuting from LAX to JFK each week, I am back updating Well Beyond the Pale.  There is a backlog of over 500 articles that have not yet been published; they've been prepared over the past twelve months.  I am proof reading them and will program them to appear in one big bolus.

Well, I wouldn't dispute the fact that a stimulus package will create jobs.  After all, a tax hike has a negative impact on the economy, so putting money in should be stimulative.  However, it might have made more sense to give a tax rebate rather than what looks to be very poor value for money.

I am nervous, I must confess, by as I look at the prices for companies such as AFLAC, GE, Pfizer, Amgen, Walgreen, Wal-Mart, Boeing (though BA has other problems) or McDonalds, I am wondering if I am really seeing a once in a lifetime opportunity to buy companies on the cheap.  I assume it is and am going on a buying spree.  For the past eight weeks, I have convinced myself that every day we've hit bottom, but the market keeps dropping.  Other than tight credit–which will ultimately loosen−the conditions of many leading companies is sound. Things now seem to be crawling back−at least prices are improving.  I accidentally bought some Aflac at the start of the month: I am part of the company DRIP and sent the check to the wrong address, so the purchase was delayed by about four weeks; I ended up buying in early March instead of early February. 

So, have we passed the bottom?  There's really no way to know−as Alan Greenspan said in the 90s "the future is fundamentally unknowable."  I am seeing dividend yields more than twice as much as the highest I've seen before, so while there is risk, it's time to get back in.  If the market goes lower, I end up buying more.  The sidelines are for sissies!

The one thing I do want to start buying is a bank.  I am interested in Bank of America [NYSE:BAC]; the company has closed as low as $3.14.  Today it closed at $7.58: while $3.14 definitely seems to be too low; I don't know if $7.58 is too high.  There's lots of uncertainty in the banking trade: what is the situation with the company assets: loans.  For now, I am going to avoid banks−insurance companies like Aflac is a different story−I am going to avoid banks for now.  It's not clear to me what will happen: shareholder dilution is one thing that scares me with banks.

Overhanging the entire market is the problem with the housing market.  If the US is true to form, it won't bail out home owners that borrowed too much.  There will be some help, token help, but I expect to see lots of foreclosures and maybe lots of personal bankruptcies.  The challenge here is the both businesses and individuals are fixing their finances−their personal balance sheets−so it will take time: lot's of time.  The crises in 1907 and the 1930s are probably good guides.  I'd therefore expect the housing market (and commercial real estate) to fester for many years.  I expect that things will start to get back to normal by 2015/2016--sad, but it takes time to fix a financial mess when GDP, lots of GDP, is borrowed from the future.

So, even though what I am writing here sounds like bad news, it's actually good news.  I am going to get five or six years to buy quality companies at a discount−PE's will languish.  I will also stalk Bank of America.  I still don't know what's a good price.  I know that if it ventures into the $3 to $4 range again−and there's no major bad news−I'll start buying.

It's a good question and goes to the heart of the matter.  I think that the assumption has to be that, for a growth company, the overall trend in price is positive--at least, that would be my expectation.  If I had any other inkling, I think I wouldn't invest in the company in the first place.  So, I view the low price as something that could be achieved in the short term--with in a year and probably less.