The Blue Collar Investor WeBlog

The holiday season is upon us and here is what people are talking about: The stock market is down dramatically; the real estate market is even worse; the bond market when factoring in inflation is giving us absolutely nothing; and our government officials seem confused. Although there is a lot of hope with a new administration coming in, that is, let’s face it, an unknown factor. In addition, tens of thousands of jobs are being lost, terrorism is back in the news, and there are foreclosure signs in many neighborhoods. Pessimism abounds as Santa starts waxing his sled.

In some small way, this is an analogous pessismism investors feel when their favorite stock starts dropping. When I discuss exit strategies, I suggest two paths to take: Curl up into a fetal postition in bed and feel sorry for yourself…this is the do-nothing approach; Or take action in the form of exit strategies. I use this rhetoric simply to make a point. Certain circumstances we have no control over; others we do. The latter scenario is where we need to take the bull by the horns and move in a forward, positive direction. I don’t mean to get overly philosophical in this article, but I recently became aware of a story that has some meaning to me  in my life and inspired me to devote this column to perhaps inspire others.

This is the story of Michael Gates Gill: Michael was a child of privilege, the son of Brendon Gill, a noted writer for the New Yorker. He grew up in a home that had 25 rooms, a gymnasium, and a two-story library. After graduating from Yale University, Michael undertook a path as an advertising executive, presiding over ad camaigns for such entities as the Marines, Christian Dior, and Ford. At age 53 he was married with children, commanding a six-figure salary, and leading a lavish lifestyle.

One day, a fellow executive asked to speak with him: “Michael, we have to let you go.” He had received his death sentence!

He tried his hand at his own consulting business but failed. Money was running out and his ability to cope was declining. He was enetering the path of the fetal position. Just when matters seemed as bleak as possible, Michael’s twenty year marriage ended in divorce and he was susequently diagnosed with a brain tumor. Is it plausible to assume that many of the pessimists out there, when hearing this story, may be saying to themselves: “I’m not so bad off after all!”

Walking the streets of New York City one day, Michael walked into a Starbucks to sulk over his latte. “Would you like a job”, the server querried. His response was a knee-jerk, laser-like, comeback: Yes, I need a job, I’ll take it. He knew that he couldn’t afford to miss this moment. What he didn’t know was that his life was about to change forever.

The idea of putting on a barista’s uniform was humiliating and scary. He thought: What if I’m fired from this job? Those concerns were  proven unfounded. He found his calling. His strength is customer service. They love him and he loves the interaction with the great variety of people he meets and greets daily.

Now Michael finds himself happier today than ever before. He doesn’t miss the big house, the lavish lifestyle, or the 12-14 hour workdays. By lowering his overhead and having “less stuff”, he feels free. His daughter noticed that her father seemed so happy in his new life that she suggested he keep a journal. That memoir is the basis for his recently published book, How Starbucks Saved My Life. Now Mike’s customers and co-workers know the true story of the man behind the counter.

Mike’s former life went from bad to worse; his new life has gone from good to unbelievable. When Tom Hanks heard of this amazing story, he bought the movie rights and plans to play Michael in the movie. “If opportunity knocks, go for it”, says Michael; “forward motion is better than no motion at all.” Who can argue with that philosophy?

By the way, that brain tumor…..turns out that it’s not life-threatening at all and Starbucks Health Insurance is taking care of the treatments.

“I’m alive. I’m happier than I’ve ever been.”

We wish you all a holiday feel-good story.

Alan and Linda Ellman

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Last Week’s Economic News: First the bad news: The economic slump showed signs of worsening as consumer and business spending declined sharply. Consumer confidence remained poor and the housing market remained a drain on the economy.

Now the good news: The stock market reacted favorably to news that the federal government was inclined to rescue Citicorp and working diligently to unfreeze the credit markets. As a result, the S&P 500 appreciated 12% for the week for a year-to-date total return of -38%.

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Market Tone:

This market is so unpredictable that even the seasoned institutional investors are remaining on the sidelines. However, I have noticed small signs (we’ll take anything at this point!) of improvement in certain areas. Today I will highlight the  VIX which has improved from 80 to 55 in that last few days and the Banking Industry which is starting to develop some healthy chart technicals. It’s too early to break out the champagne but certainly worthy of monitoring. I’ll continue to do exactly that and share the information with you. Now the charts:

VIX- 11-28-08

BANKING INDUSTRY 11-28-08

We’d love to hear from any of you who holiday feel-good stories to share with your fellow Blue Collar investors. Use the comments link of this article to respond or contact me directly @ alan@thebluecollarinvestor.com

Alan