BAIL-IN or BAIL-OUT … what’s the Difference?

Do you like those “Farmers Insurance” ads on TV?  You know the tag line ~ “We know a thing or two, because we’ve seen a thing or two” I like the ads and I like Farmer’s “I know a thing or two – because I’ve seen a thing or two in my life also!

In 1973 I began my ~ 30 odd years experience as a licensed securities, insurance and commodities broker. The DOW 30 hit an historic high in 1972 when Nixon won re-election over Mondale. (Watergate was in its infancy but it was a know at the time of the election) Nixon resigned August 9, 1974 (just so happens that is my birthday) the down “bottomed” two months later in October at 584. The “Bear Market” of 1972-1974 was a loss of 44.4%  I was working in the industry at the time at duPont Glore Forgan, owned by H. Ross Perot, who lost a lot of his wealth with duPont and sold out in late 1974 … Perot did ok, his company EDS was sold to GM for $1.5 Billion some yrs later.  1973cht

My 1st 12 months in the securities industry was tumultuous to say the least, Perot’s was a nightmare and for millions of American investors experienced a “wipe-out” financially.  Perot rebounded, as did I, the market and American Investors saw the Dow eclipse 1000 in 1982 and today the Dow is over 18,000. During my 1st year in the industry I learned from Mr. Perot the “secret” to financial security – “Live today on last years income and invest the difference.” Sound advice, however in today’s world for many American’s this years income and last years income are the same (if they’re lucky) and this story has been the same for the past decade! What to do?

Perot was “invited” into the securities industry in 1972. The Industry needed him to “BAIL-OUT” duPont Glore Forgan (it was in financial trouble and on the verge of insolvency) at the time duPont was the #2 largest firm behind Merrill Lynch, Pierce, Fenner & Smith and the financial industry feared its demise would be catastrophic. Perot with plenty of money, and his business Electronic Data Systems (EDS) – an American multinational information technology equipment and services company headquartered in Plano, Texas. EDS seemed to be a perfect fit with the Securities industry for its back-office processing and the Industry told Perot if he helped them out by infusing capital into duPont they would integrate EDS into Wall Street – a seeming “win-win” – after Nixon’s troubles with Watergate reached the point of his resignation, and the market concluded an epic “Bear Market” losing over 44% in a little under 24 months – Perot had enough and sold duPont (enough for his bail-out)

Today we sit on the verge of another historic market high (all time high of 18,636 ~ 8/15/16) 18,240 which was yesterdays high. We have a Presidential Election with more than enough “drama” similar to Nixon’s 1972 campaign. My opinion today is Trump appears to “be on the ropes” from his recent taped interview with Billy Bush, many Republicans calling for him to leave the campaign and Hillary (in my opinion) is in a position to win the election.  If this unfolds, we could see the Dow hit another all time high (good news) … the baggage Hillary bring, the investigations, etc could end up being a deja vu of Nixon’s era (bad news)

Even more troubling, in my opinion, is regardless of who occupies the White house next year Italy may see a “BAIL-IN” … I’m providing an article I found very scary, interesting and more than probable. Please click here to read it!

I don’t have answers to these problems … I do have experience with the previous problems similar to them and would be happy to interact with you on line, on phone or in person to see what you may want to do to ensure you’re not caught in a market melt down, a Bail – out or a Bail – in.

Until next time …

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About Willard Kille
My greatest talent is for understanding people and appreciating their needs, fears and desires. I actively seek out others, am quick to establish rapport, good at building interaction and enhancing communication between others. I like to help others in my unique way and believe when I give to others I am benefited. I am driven to achieve balance and harmony in a unique way, preferring to do things that bring beauty and balance into my life.

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