Kirt's Cogitations™ #227
A Rising Tide Lifts All Boats
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Cog·i·ta·tion [koj-i-tey'-shun] – noun: Concerted thought or
reflection; meditation; contemplation.
Kirt [kert] – proper noun: RF Cafe webmaster.
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.
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.
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
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),
, Pepsi (PEP),
Proctor & Gamble (PG),
National Semiconductor (NSM),
Rockwell Collins (COL),
Northrop Grumman (NOC),
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
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.