Communist China, 1995--- the dawn of capitalism.

The Hong Kong based guide talked about the free enterprise zones, building
projects, golf courses, and roads with a chest full of pride and visible
excitement. Capitalism was everywhere along the tour route, and judging from the
advertisements on billboards and posters, the world was coming to China!

But although the government was embracing "for-profit" business for the first
time, the train-ride out of the country evidenced the abject poverty of what
would become a willing and able workforce. Another communist built wall was
falling; another socialist society was moving closer to "The Force".

Today, in the very birthplace of capitalism, an entrenched, arrogant, and
incompetent congress equates greedy executives with the demise of capitalism
while the economic force field it demeans catapults third world nations onto the
leader board of global economic growth potential. Capitalism dead? Hardly.

As congressional fat cats lament the corruption of governments throughout the
world, they line their pockets with favors from powerful lobbyists on Wall
Street, within drug companies and insurers, and seek the bed of every
conceivable public and private special interest group, ad nauseum.

Isn't "lobbying" a euphemism for "corrupting"? Isn't our government as corrupt
as any of those that we so pompously criticize? Aren't all business taxes passed
on to consumers?

The failure of the grandiose Health Care Reform movement, or its transformation
into a "we'll just let the taxpayers continue to bite the bullet for spiraling
costs" welfare program is a glaring example. Our eloquent President has changed
his tag line from delivery system cost containment to "what the heck, we'll just
change the definition of insurance and move on".

They just don't get it --- do you? Chinese and Indian economies are glowing
because their businesses are growing. Emerging markets emerge through
capitalism. Why? Because their governments nurture the job providors.

Here, we cut our entrepreneurs off at the knees and expect them to be globally
competitive. We tax and abuse our creative best, allow power mongers to control
the reins of government, and encourage our citizenry to ask: "what can my
country do for me?" Career politicians who can't remember their last private
paycheck are voting American capitalism comatose.

Just as surely as major corporations breed corruption and greed in the executive
suite, they also provide jobs, health insurance, and pension benefits to
millions. Blaming capitalism is an easy non-answer to many questions--- isn't it
clear that greed is a result and not a cause?

If it's shareholder protection we want, lets empower regulatory bodies to insure
it. Require shareholder advocates on boards of publicly traded companies, for
example. Yes Madam Speaker, 401(k) investors and taxpayers are shareholders too,
and they bleed directly and indirectly when congress kills companies.

What taxpayers want from their government is preventative action instead of
post-disaster bailouts and blame deflection rhetoric.

There's no mystery why sub-prime mortgages were allowed to run wild, or any
doubt that derivative creators were encouraged to slither around the regulators
with their too-complicated-to-understand-so-just-trust-me time bombs. Yet the
financial product creativity factory continues to flourish.

Similarly, the financial "Weekend at Bernie's" debacle was a regulatory blunder,
a mirror image of Social Security funding, but definitely not evidence of
problems with capitalism.

If we want to cut health care costs, nearly 90% of my survey respondents listed
tort reform as an essential ingredient in any package--- clearly not a topic
that a lawyer-laden legislature would have an interest in considering. Talk
about entrenched lobbyists!

Fear of frivolous legal action (and absurd jury awards) boosts costs for all
businesses, all professionals, and all consumers. We need laws that prevent
abuse of the system and which demand that people take responsibility for their
own bad decisions and clumsy errors.

We need fresh new independent politicians who want to make things better for
people, not for Republicans or Democrats, liberals or conservatives. You can't
get meaningful change from career politicians who pander for votes with every
decision opportunity.

Class warfare politics is America's shame. The majority of Americans want the
opportunity to succeed at something, to become rich and famous, even. We don't
want free; we want affordable. We want to be in control of our own destinies. We
want jobs, world-class education, and healthcare that doesn't have to look over
its shoulder for ambulance chasers.

Instead of the popular congressional "we can't cut business income taxes,
because that will benefit the rich", let's try "we have to use tax policy to
encourage businesses to increase in the full-time, permanent employee,
population, because that will benefit America.

For every 1% an employer increases permanent staff, it gets a 5% Federal, State,
and Local income tax credit. For every year a more than 20% staff increase is
maintained, all other taxes, levies, fees, charges, and miscellaneous
assessments are decreased by 10%.

Audit the calculations and have strict penalties for those who become too
creative; fine attorneys and accountants double who help businesses circumvent
the spirit of the law. Keep the tax benefits out of CEO mansions.

Within a few years, the new, no-party, independent congress will be
no-business-taxes-ever proponents and will be able to move on to a Flat-Fair
personal income tax combination and a national pension plan that replaces the
Social Security Ponzi scheme.

The cost of hiring and providing for new employees has made it a decision of
last resort for most of us--- the nostrils are just not wide enough. If we want
more jobs, we need to encourage employers to hire additional workers.

Jobs, Permanent Jobs, Millions Of 'Em--- Make it so.


Steve Selengut
sanserve (at) aol.com
http://www.kiawahgolfinvestmentseminars.net
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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A participant in the morning Working Capital Model (WCM) investment workshop
observed: I've noticed that my account balances are returning to their (June
2007) levels. People are talking down the economy and the dollar. Is there any
preemptive action I need to take?

An afternoon workshop attendee spoke of a similar predicament, but cautioned
that (with new high market value levels approaching) a repeat of the June 2007
through early March 2009 correction must be avoided--- a portfolio protection
plan is essential!

What are they missing?

These investors are taking pretty much for granted the fact that their
investment portfolios had more than merely survived the most severe correction
in financial market history. They had recouped all of their market value, and
maintained their cash flow to boot. The market averages remain 40% below their
2007 highs.

Their preemptive portfolio protection plan was already in place --- and it
worked amazingly well, as it certainly should for anyone who follows the general
principles and disciplined strategies of the WCM.

But instead of patting themselves on the back for their proper preparation and
positioning, here they were, lamenting the possibility of the next dip in
securities' prices. Corrections, big and small, are a simple fact of investment
life whose origination point, unfortunately, can only be identified using rear
view mirrors.

Investors constantly focus on the event instead of the opportunity that the
event represents. Being retrospective instead of hindsightful helps us learn
from our experiences. The length, depth, and scope of the financial crisis
correction were unknowns in mid-2007. The parameters of the current advance are
just as much of a mystery--- today.

The WCM forces us to prepare for cyclical oscillations by requiring: (a) that we
take reasonable profits quickly whenever they are available, (b) that we
maintain our "cost-based" asset allocation formula using long-term (like
retirement, Bunky) goals, and that we slowly move into new opportunities only
after downturns that the "conventional wisdom" identifies as correction level---
i. e., twenty percent.

So, a better question, concern, or observation during a rally (Yes, Virginia,
seven consecutive months to the upside is a rally.), given the extraordinary
performance scenario that these investors acknowledge, would be: What can I do
to take advantage of the market cycle even more effectively--- the next time?

The answer is as practically simple as it is emotionally difficult. You need to
add to portfolios during precipitous or long term market downturns to take
advantage of lower prices--- just as you would do in every other aspect of your
life. You need first to establish new positions, and then to add to old ones
that continue to live up to WCM quality standards.

You need to maintain your asset allocation by adding to income positions
properly, and monitor cost based diversification levels closely. You need to
apply cyclical patience and understanding to your thinking and hang on to the
safety bar until the climb back up the hill makes you smile. Repeat the process.
Repeat the process. Repeat the process.

The retrospective?

The WCM was nearly fifteen years old when the robust 1987 rally became the
dreaded "Black Monday", (computer loop?) correction on October 19th. Sudden and
sharp, that 50% or so correction proved the applicability of a methodology that
had fared well in earlier minor downturns.

According to WCM guidelines, portfolio "smart cash" was building through August;
new buying overtook profit taking early in September, and continued well into
1988.

Ten years later, there was a slightly less disastrous correction, followed by
clear sailing until 9/11. There was one major difference: the government didn't
kill any companies or undo market safeguards that had been in place since the
Great Depression.

Dot-Com Bubble! What dot-com bubble?

Working Capital Model buying rules prohibit the type of rampant speculation that
became Wall Street vogue during that era. The WCM credo after the bursting was:
"no NASDAQ, no Mutual Funds, no IPOs, no problem." Investment Grade Value Stocks
(IGVSI stocks) regained their luster as the no-value-no-profits securities
slip-slided away into the Hudson.

Embarrassed Wall Street investment firms used their influence to ban the
"Brainwashing" book and sent the authorities in to stifle the free speech of WCM
users--- just a rumor, really.

Here we are once again. For the sixth time in the thirty-five years since its
development, Working Capital Model operating systems are proving themselves to
be an outstanding market cycle management methodology.

And what was it that the workshop participants didn't realize they had--- a
preemptive portfolio protection strategy for the entire market cycle. One that
even a caveman can learn to use effectively.


Steve Selengut
sanserve (at) aol.com
http://www.kiawahgolfinvestmentseminars.com
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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