Here I Stand

Here I Stand

Wednesday, February 16, 2011

S&P 500 Doubles it's 2009 Low

I will admit that I have been fairly bearish in the market as of late. I have not sold off any assets, as I am still a long term investor, but I have been preparing for a correction for the last two weeks or so. I have been reading quite a bit into the unrest in Egypt, as well as some of the budgetting issues here at home. Combine that with the markets recent stellar run, and I felt that it was over-inflated and could not last. I was prepared for a drop of 1.5-2% over the course of a couple of days and then a levelling off period, but it hasn't come. sure there have been off days here and there, but nothing like the correction I was expecting, and why I was leaning more conservatively with my trading. I can certainly admit when I am wrong, and in this situation, I have played too conservatively. I would have thought this an excellent time to take profits, but that would have meant missing out on the steady increases that we have seen. As I write this, the Dow is close to 12300, while the S&P has doubled since its 2009 lows, and I stand corrected on my bearish leanings.

The reason for this I beleive is that the unrest in Egypt has had very little effect on the oil imports. True, Egypt controls the Suez canal, but it produces very little oil (in relation to other gulf states) and the civil unrest in the region seems to have had little effect on the shipment of oil from other areas. Another factor is that Egypt, Tunisia, and Yemen, where the bulk of the unrest has been, play only very small roles in the emerging markets trade, while Brazil and India are still holding strong.

There is still a threat out there in the form of Iranian sabre rattling - just enough to spook investors into bearish tendancy's, but as situations calm down overseas, I see a continued steady increase in the general market, and possibly a drop in oil prices as the shipping lanes become more secure.

Sunday, February 13, 2011

No Small Feat

Read THIS in yesterday's Orange County Register, and to say the least, it is a bit disturbing. This state is having serious economic woes, and instead of offering tax breaks, incentives, and stimulus packages to improve on the local economies (such as hard hit areas like Michigan and Florida have done), they have increased the small business tax, and stood strong on beaurocratic red tape that just strangle small businesses in their infancy. It is no wonder why businesses are moving elsewhere. Something needs to be done, and I am not entirely sure that Jerry Brown is the man to make the changes we need.

Full Article here: http://www.ocregister.com/articles/shop-287761-business-wine.html

 Bob and Heidi Fisher at their wine shop, Salt Creek Wine Company in Laguna Niguel, found it difficult to open a business in California with all the requirements, forms, and taxes.
No Small Feat:
By Jan Norman

After several decades working in corporate America, Laguna Niguel residents Heidi and Bob Fisher started looking for a business to buy.


On a lark, Bob Fisher started selling wine for some friends who owned a winery in Paso Robles, so they thought a wine shop would be fun and lucrative. They bought the Salt Creek Wine Company, a retail shop that carries 300 types of wine, in Laguna Niguel two years ago

But even before the deal was finalized, they discovered that buying and running a business in California is entangled in red tape.

Fees, taxes and bureaucracy make it tough to turn a profit, Heidi Fisher said. California isn't the only place where government rules and regulations tie up small businesses, according to the Office of Advocacy within the U.S. Small Business Administration. Federal regulations alone cost U.S. businesses $1.75 trillion a year, 59 percent higher than in 2005, a new study for the agency claims. And the burden is heaviest on the smallest businesses, it adds: $10,585 per employee for firms with fewer than 20 employees, compared to $7,454 per employee at businesses with 20 to 499 employees and $7,756 at companies with more than 500 employees.
That study doesn't include state and local paperwork, the Fishers learned.

Among the forms and reports they encountered upon buying the Salt Creek Wine Company:

•One form had a hundred boxes to check or leave blank. "If you don't check the right box, you get the whole thing back but they don't tell you want you missed."

•An S corporation must file its officers every year. "If you file too early, it's rejected; if you do it too late you jeopardize your corporate standing."

•A wine shop collects sales tax and reports to the Board of Equalization

• The Fishers pay property tax to the county for all the equipment inside the shop

•Even though the shop only has a couple of employees who work just a few hours a month, it is cheaper for the shop to get these employees through a temporary staffing agency than to do the paperwork for payroll taxes and buy workers compensation insurance that is required for even a single part-timer.

•The city of Laguna Niguel doesn't require a business license but it does charge a fee to post temporary signs, such as for a sale. It cut the fee in half last year, she said. "It all adds up and it's time consuming to figure out. I have a college education, had a corporate career and knew a lot about business," Heidi said, "but the forms and processes you go through are not easily understandable." When the Fishers were in the process of buying an existing wine shop, Heidi was directed to go online to download mandatory government forms. The information was contradictory, confusing and overlapping, she said.

She doesn't recall the website, but California has CalGold.ca.gov, whose motto is "business permits made simple." (More recently, Gov. Schwarzenegger set up the Governor's Office of Economic Development, GoED.ca.gov, to help businesses navigate various layers of government. That website is still live but it's unclear whether new Gov. Jerry Brown will keep it as he has already cut his office's budget by 25 percent.)
The CalGold website is somewhat generic. Although it promises to list all the permits needed to start any type of business, a search for "wine shop," returns six possibilities including a smog test shop and a print shop. For a winery, which might be more complex than a retail outlet, the website lists six pages of city, county, state and federal agencies to contact for possible requirements. Some are obvious, such as occupancy permit and alcoholic beverage license; some questionable such as wastewater discharge permit and pesticide licensing.

Heidi said, "It has always been obvious to me that California has more onerous regulations for business, but after buying this shop a little over two years ago, I see it from a different perspective. Everything from the liquor license to the hoops you have to jump through add up."
She's quick to add that she agrees with some requirements. "I would hate to see someone with a criminal background running such a business as ours," she said.
She's a native Californian who finds it hard to imagine living anywhere else, but given her experience with buying and running a small business here, "I understand now why businesses leave," she said.


Contact the writer: 714-796-7927 or jnorman@ocregister.com