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Kirt's Cogitations™ #227
A Rising Tide Lifts All Boats

These original Kirt's Cogitations™ may be reproduced (no more than 5, please) provided proper credit is given to me, Kirt Blattenberger.

Please click here to return to the Table of Contents.

   Cog·i·ta·tion [koj-i-tey'-shun] – noun: Concerted thought or
                                        reflection; meditation; contemplation.
   Kirt [kert] – proper noun: RF Cafe webmaster.


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A Rising Tide Lifts All Boats

President John F. Kennedy uttered that line in a speech countering criticism that his proposed tax cut would benefit only the wealthiest of Americans. The argument postulates that when the people at the top of the financial food chain get fatter, so do the people at the bottom. There are exceptions to all rules, but generally it is true. Even the poorest people on Earth are better cared for during times of plenty for the rest of the world. In these economic boom times, the only chronically hungry souls are those who are kept that way by evil militias that prevent the delivery of an abundant and waiting food supply. You will know who those fanatical dogs are by the endearing name referenced by the news media: "resistance movements."

But I digress. The main purpose of this missive is to give examples of just how much the hulls of some boats have been lifted over the past year or so of record-breaking stock market activity. Here are snapshots of some of the key world indices.

NASDAQ 2-year chart DOW 2-year chart S&P 500 2-year chart
 Nikkei 2-year chart FTSE-100 2-year chart

Based on the evidence presented, it is hardly arguable that many companies are doing extremely well. So, apparently, are some of their key management. A few years ago, shortly after the 9/11 attacks on America, I reported on a website that shows stock transactions of senior company executives and major stockholders. At the time, many of those mahogany row individuals were cashing in on very sizeable numbers of their companies’ stocks. Recall that the country – and the world for that matter – was still adjusting to the severe economic downturn precipitated by the tech bubble bust that began in the spring of 2000. Hundreds of thousands, even millions, of dollars worth of stocks were being cashed in on.

Today, profit taking at some of the world’s largest companies is in high gear as the markets seem to push through to another record high level every couple days. Who would have believed a couple years ago that the DOW could potentially break the 13,000 point barrier in 2007? As recently as the fall of 2005 we were being told to prepare for one of the worst world economic conditions in modern history as the Hurricane Katrina-induced oil scare was forced in front of us day in and day out for months and months. The price of oil would be over $100 per barrel by the end of the year (2005), and we would finally get what we deserve - $5 per gallon gasoline at the pumps, and $1,000 per month home heating oil bills. As with the prediction of a devastating 2006 hurricane season that in actuality had no named hurricanes make landfall, the doom and gloomers of the financial world missed the mark not by a little, but by a huge margin. The forces of nature, both human and geophysical, are simply too random to contain in an equation yet. I believe chaos theory is most applicable here.

Anyway, if you feel like your personal boat has lifted – or not – then you might want to take a contemporary look at how high the ships of some of our corporate admirals are rising. Keep in mind that the selling prices of the stocks are not necessarily all profit – they might have been purchased at some lower price rather than having been awarded as options. With all the backdated options issuances coming under SEC scrutiny lately, things are probably changing a bit in that realm. I am no stock analyst, so use your own interpretations of the data being linked to in the following examples.

Our first stop is at Lockheed Martin (LMC), which has been the recipient of a great many defense contracts lately. The leader in stock sales there for the last few months (since August 2006) is Marcus Bennett, selling 14,300 shares for a total of $1,078,820. Marcus has only 5,878 shares remaining, or at least until another options award is made.

Next on the list is, of course, Microsoft (MSFT). Since November of 2006, Mr. Bill has sold 18,000,000 shares for a tidy $521 million. Maybe he gave it all to Bono? Bill only has 937 million shares left to sell, so he had best exercise some caution.

So that you do not think the poor Apple (APPL) guys and gals are hurting, Serlet Bertrand has sifted a cool $23.4 million out of the kitty by selling 270,000 shares.

At Raytheon (RTN), Mr. Jay Stephen seems to be the big winner with 20,000 shares sold in March of 2006 for $878,952. Interestingly, not many shares have been sold lately by Raytheon execs.

Here are a few other recognizable companies to check in on: Analog Devices (ADI), National Instruments (NATI), Ford Motors (F), eBay (EBAY), Gateway (GTW), Google (GOOG), Yahoo (YHOO), Qualcomm (QCOM) [], Pepsi (PEP), McDonalds (MCD), Boeing (BA), Starbucks (SBUX), Adobe (ADBE), Proctor & Gamble (PG), Nike (NKE), National Semiconductor (NSM), Rockwell Collins (COL), Agilent (A), Northrop Grumman (NOC), Broadcom (BRCM), Anadigics (ANAD).

As is apparent by the list, extreme wealth is the purview of neither the Democrat nor the Republican, the Conservative nor the Liberal. When it comes to making money, all the top earners are capitalists, even if some try to impose socialism on everyone around and below them. The question to ask yourself is, “Am I receiving a proportional share of the wealth that the company I work for has gained as a result of my efforts?” If the answer is “yes,” then you are in an enviable position. If the answer is “no,” then you must determine whether you are better off staying where you are for reasons of perhaps security or because you really like where you are, or whether it is time to pull up the stakes and find a better opportunity. The job market for experienced engineers of all sorts is as good as it has been since the late 1990s. Now could be the perfect time to finally make your move.

Do not limit your ambitions necessarily to working for somebody else. If you like being part of a large team and prefer projects that require a huge amount of material and financial resources, then corporations are the place for you. If, however, you have an idea that either by yourself or a few trusted friends has the promise of being a successful start-up, you might want to pool your financial and intellectual resources to strike out independently. Many large businesses are outsourcing engineering work both overseas and locally in order to keep a check on head-count and make the bottom line look better from a liability perspective. There is risk involved, but with the overall job market being what it is today, at least you will have a good fallback position in case things fail to go as planned. Waiting to be laid off before trying your hand at self-employment is not a desirable business plan.

So in the spirit of the opening metaphor, if you are watching all the boats around you going up, up, up while your own ship of life is barely staying afloat or sinking, now is the time to plug the hole and start bailing, or change ships. Or, build a boat of your own.
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