I think gold is a great thing to sew onto your garments if you’re a Jewish family in Vienna in 1939 but civilized people don’t buy gold – they invest in productive businesses.

[via]

The chart above shows how the stock of Monster Beverage Corporation (MNST) performed yesterday (April 30, 2012). Moral of the story? Trading on unconfirmed rumors or third party tips is dangerous, irresponsible, and — in most cases — downright stupid. More info on what happened here.

No position.

Netflix (NFLX) is getting demolished right, left and center. The stock is down nearly 35% today alone. Even though I’m still very optimistic about the future of this company, I think it’s time for CEO Reed Hastings to go.

No position.

A lot has been said recently about Slovakia’s “unwillingness” to financially support the expansion of the bailout package orchestrated by the fellow members of the European Union and the European Financial Stability Facility (EFSF). I thought I’d share some of my own thoughts on the issue.

First and foremost, let me state the following: I am a Slovak citizen. I was born and raised there and left for United States in 2002 at the age of 20. I am currently not affiliated with any Slovakian political party, nor have been in the past.

Now let me lay down some basic facts about Slovakia and Greece.

Slovakia, which only adopted the single Euro currency last year, is the European Union’s second poorest member and currently has some of the lowest salaries, averaging about €780 a month vs. Greece’s minimum of €750. Slovakia has a per capita GDP of USD $23,000 to Greece’s USD $27,000 at purchasing power parity. The average monthly pension in Slovakia is less than €400 compared to €1,400 in Greece. Greece has a long history of corruption, government mismanagement and tax evasion (remember the outdoor pool story?). The Greeks have been living beyond their means for years, and their country’s rising debt level has placed a huge strain on it’s economy. The Greek government also borrowed and spent heavily after it adopted the Euro and in 2010 had a public debt of nearly 143% of its GDP – a staggering number by all means.

So no wonder the Slovaks are furious over the bailout.

Earlier today I had a conversation with an old friend of mine from Slovakia. He points out an important and mostly overlooked fact that Slovakia will not be paying for the bailout from some sort of financial reserves. It has to borrow money in the market and pay interest on it; and the more it borrows, the more it will cost it to borrow in the future. Alas, the vicious cycle of global financial mismanagement continues.

But here’s what my friend had to say about the logic behind the bailout opposition:

Come back home to Slovakia, work for 600 Euro a month like most Slovaks and maybe then you will understand. Looks like you have been away for too long. Enough is enough. The thing is the bloody bailout will pass anyway, however, I strongly believe there is nothing wrong about expressing your own opinions in democracy. Or is there? We can argue if this was the right or wrong vote, but at least we are strong enough to have our say. Isn’t this something we were deprived from in communism and have long fought for?

This quote from Richard Sulik, the speaker of the Slovak parliament and head of the Freedom and Solidarity (SaS) party, sums it up best:

“It is no longer about Greece, it is about the euro.” This, and similar nonsense, is what the European politicians use to frighten their voters and explain them why they must continue in moral hazard. Just like it is impossible to extinguish fire with a fan, it is equally impossible to solve the debt crisis with new debts. The only thing that will help is to face the truth. Greece must declare bankruptcy, Italy must start saving and the rules set up by the eurozone upon its establishment must finally start being observed. It will hurt, but it is the only solution.

Btw.. I strongly recommend you read this brochure (PDF, in English) on the SaS website which explains the party’s refusal to back the ESFS.

The way I see it is that you cannot solve the ‘Greek problem’ just by throwing money at it. What Greece needs is a major government and financial restructuring, better fiscal spending policy and tougher tax regulations. But what the Greeks need most is the actual will and courage to implement and enforce such changes and policies in the first place. Any sustainable long-term solution to their country’s problems must come from within themselves first – not from the EFSF or coutries like Slovakia. If not, it will cost Greece and the European Union only more and more money over time.

Richard Sulik, the speaker of the Slovak parliament and head of the Freedom and Solidarity (SaS) party, explains why he hopes the Euro bailout fund will fail and why troubled countries like Greece shouldn’t be bailed out:

[The banks] took on too much risk. That one might go broke as a consequence of bad decisions is just part of the market economy. Of course, states have to protect the savings of their populations. But that’s much cheaper than bailing banks out. And that, in turn, is much cheaper than bailing entire states out.

A few years back, we [Slovakia] survived an economic crisis. With great effort and tough reforms, we put it behind us. Today, Slovakia has the lowest average salaries in the euro zone. How am I supposed to explain to people that they are going to have to pay a higher value-added tax (VAT) so that Greeks can get pensions three times as high as the ones in Slovakia?

The Greatest Threat to Europe Is the Bailout Fund [Spiegel]

Breaking news from Netflix CEO Reed Hastings today:

So we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently. It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: In a few weeks, we will rename our DVD by mail service to “Qwikster”.

We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.

Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies.

According to Hastings, there will be no pricing changes for both plans. This is indeed a shocking decision given the ongoing firestorm and massive exodus of subscribers due to the recent price increase. Netflix stock closed down at $155.19/share on September 16 – a massive drop from the all-time high of 300+/share just a few weeks ago.

Disclosure: No position.

Here’s some rather depressing facts about the current state of the U.S. economy and its middle class from Robert B. Reich, the former secretary of labor and a professor at the University of California, Berkeley:

THE 5 percent of Americans with the highest incomes now account for 37 percent of all consumer purchases, according to the latest research from Moody’s Analytics. That should come as no surprise. Our society has become more and more unequal.

When so much income goes to the top, the middle class doesn’t have enough purchasing power to keep the economy going without sinking ever more deeply into debt — which, as we’ve seen, ends badly. An economy so dependent on the spending of a few is also prone to great booms and busts. The rich splurge and speculate when their savings are doing well. But when the values of their assets tumble, they pull back. That can lead to wild gyrations. Sound familiar?

The economy won’t really bounce back until America’s surge toward inequality is reversed. Even if by some miracle President Obama gets support for a second big stimulus while Ben S. Bernanke’s Fed keeps interest rates near zero, neither will do the trick without a middle class capable of spending. Pump-priming works only when a well contains enough water.

Also check out the eye-popping infographic here.

The Limping Middle Class [NYTimes]

The ISE Cloud Computing ETF is scheduled to begin trading under the ticker symbol SKYY in early July:

The ISE Cloud Computing Index Fund (SKYY) will seek to replicate an equal-weighted index that includes companies actively involved in the cloud computing industry. The underlying benchmark will include about 40 stocks operating in a number of technology sub-sectors, such as software, communications equipment, computers & peripherals, and Internet software and services.

[Via Yahoo! Finance]

Taxes for the top 2 percent are very likely to go higher. Uncle Sam’s share of capital gains and dividend income might rise, and means-testing for Social Security and Medicare is probable. In the United States, the very rich hold most of that wealth in dollars, which are worth increasingly less. As income inequality has grown dramatically in the nation, the very wealthy are blamed for all manner of social ills.

It all comes down to rule No. 1:

Having money is better than not having money.

Obviously, having money may not buy you happiness, a good health, or love – but let’s face it: it sure fucking helps.

7 life lessons from the very wealthy [Washington Post (sub. required), via The Big Picture]

Well.. nothing new or shocking here. I’ve been thinking about opting out from Social Security for a while since I have my own traditional IRA into which I contribute the maximum of $5000 each year. I try to play it safe so I only invest in high quality blue chip stocks, S&P 500 index funds and high dividend-paying REITs. Judging by the recent news and alarming statistics surrounding the Social Security and its near-insolvency, it seems like a good idea not to rely on government when it comes to your retirement.