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Sunday, July 13, 2014

 

Obama's numbers in free fall


This comes to you from Boston, MA., following a very busy period that has seen few if any posts, for which I apologize profusely.  It certainly hasn't been for lack of material.

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The President's media friends are soft-pedaling it but Obama's numbers are in Bush 43 territory or worse.  But why shouldn't they be?  Is anything really going right with this Administration?  Even the better jobs numbers reflect part - time and low wage jobs, with little or no move by the long term unemployed to rejoin the work force.  But most of those have learned that they can make it without traditional jobs, living on unemployment, food stamps, subsidized or free health insurance and taking off the books assignments as they come.  The marginal benefit of having a regular full time job is not worth the downsides, so who can blame folks for making a perfectly rational choice.  But keep that in mind the next time you are asked whether you favor yet another extension of unemployment benefits.
As for increasing the minimum wage, I don't think that's a fix for much of anything.

Meanwhile, the Administration's failures are all too obvious. Its policies on the Mid-East, Russia and Ukraine, immigration, green energy and climate, etc. have all been shown to be fruitless at best, misguided at worst.  It has had no answer on the Benghazi and IRS scandals, where they appear more culpable by the day.  The Keystone pipeline project remains mired in progressive political hell, with Canada now fully prepared to sell its oil in Asia.   And recent Supreme Court decisions have indicated impeachable offenses in the areas of recess appointments and Agency discretion (notably, the EPA) where the Administration has ignored the rule of law and arguably violated its Constitutional responsibilities.

Not that the Republicans have any desire to start an impeachment round, having learned that it backfires when the President is a media darling, a la Bill Clinton.  Besides, the GOP has its own problems, failing to articulate a clear solution on immigration, and seeing its fracking allies tied to Oklahoma earthquake activity.  The GOP does look pretty good for the 2014 elections, but has yet to see a compelling candidate emerge for 2016.  I don't believe Senator Paul is a serious candidate, and if I had to guess, I would say the top two right now are Rep. Ryan and Gov. Kasich.  But it's very early for all that.
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On a happier note, I did get to see Counting Crows in Central Park, and that is a great summer concert venue.  Crows have a new album in the works, to be released in early September.
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The interminable easy money policy by the Fed has been criticized here before.  We think near zero interest rates have been doing more harm than good for some time.  Of course, we start from the premise that the dual mandate from Congress (minimize unemployment and keep the dollar stable) is a mistake to begin with, since we believe the Fed's job should be to keep the dollar stable.   In fact, the Fed has made matters much worse by targeting two per cent annual inflation as its definition of a stable dollar.  That is anything but since the dollar's value will be halved every 36 years at that inflation rate.  The Fed has now built that inflation expectation into the economy, and the statistics show that higher inflation is already occurring, though its effects are spotty so far.  But that's why I continue to buy gold and tips.

The WSJ printed an excerpt from an interview the Daily Princetonian recently conducted with former Fed Chairman Paul Volcker (who broke the back of the severe inflation of the 1970's).  Here are excerpts from the excerpts:

DP: Does high inflation matter as long as it's expected?
PV: It sure does,,,The responsibility of the government is to have a stable currency.  This kind of stuff that you're being taught at Princeton disturbs me.  Your teachers must be telling you that if you've got expected inflation, then everybody adjusts and then its OK.  Is that what they're telling you?  Where did the question come from?
DP: and to get back to the central banking a little bit, given the trade-off between inflation and unemployment-
PV: I don't believe that.  That's my answer to that question.  That is a scenario and a delusion, which economists have gotten Nobel Prizes twenty years ago to disprove.
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So what did you think of the World Cup?  Clearly New Yorkers were heavily into it and I imagine it was pretty much the same around the country.  I guess lots of people will watch tomorrow's final between Germany and Argentina.  I kind of expect Germany to win.  By the way, this final is more or less a Jewish nightmare, since Nazi hunters generally had to track their targets down in, you guessed it, Argentina.
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I hope you are watching 24, back to its old riveting self, thanks largely to a great, if somewhat familiar story line compressed into fewer episodes.  It should also be pointed out that the brilliance of William Devane as the President has carried the show this season.  Also, if somehow you missed True Detective,  HBO is rerunning the series and I believe for binge watchers, all six episodes are available on demand.
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Back home after a very pleasant three days in Boston, where the weather was great and there were lots of can't miss food options.  But still did not get to Fenway.  Next time, maybe.
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One reliable way for me to attract critical comments is to go off on my rant about the climate control freaks, who are panicked because scientists' models show that man's productive efforts are changing the climate (presumably for the worse?).  My objection is that the models do not nearly replicate actual earth conditions so in the absence of direct evidence and controlled experiments, no one can really say whether these theories are correct or not.  That the earth has been in a warming trend for a century or so is not in dispute (though it appears that trend has not continued for the last decade or so), only its cause.  That more and more articles get published supporting my skeptical position just feeds my obsession (and drives the true believers nuts).

So naturally it warmed the cockels of my heart ("who needs hot cockels" - Woody Allen) to read Confessions of a Computer Modeler by Robert J. Caprara in a recent WSJ op ed section.  Here are some excerpts:
After earning a master's degree in environmental engineering in 1982...my first job was as a consultant to the EPA.  I was hired to build a model to assess the impact of its Construction Grants Program...The computer model was huge - it analyzed every river, sewer treatment plant and drinking water intake in the country...The model showed huge gains from the program (in) water quality...By the late 1980's, however, any gains from upgrading sewer treatments would be offset by the additional pollution load coming from people who moved from on-site septic tanks to public sewers, which dump the waste into rivers.  Basically, the model said we had hit the point of diminishing returns. 
When I presented the results to the EPA official...he said that I should go back and sharpen my pencil.  I tweaked coefficients and recalibrated data.  But when I reran everything the numbers didn't change much.  He told me to run the numbers again.  After three iterations I finally blurted out, "What number are you looking for?"  He didn't miss a beat; he told me that he needed to show $2 billion of benefits to get the program renewed.  I finally turned enough knobs to get the answer he wanted and everyone was happy. 
I...assume he understood the inherent inaccuracies of these types of models.  There are no exact values for the coefficients in models such as these.  There are only ranges of potential values.  By moving a bunch of these parameters to one side or the other you can usually get very different results, often in line with your initial beliefs.  Surely the scientific community wouldn't succomb to these pressures like us money - grabbing consultants.  Aren't they laboring for knowledge instead of profit?  If you believe that, boy do I have a computer model to sell you.
The academic community competes for grants, tenure and recognition; consultants compete for clients.  And...many professors moonlight as consultants, authors, talking heads, etc.  I am not saying this is a bad thing.  The legal system is adversarial and for the most part functions well.  The same is true for science.  So here is my advice:  Those who are convinced that humans are drastically changing the climate for the worse and those who aren't should accept and welcome a vibrant, robust back-and -forth.
Those who do believe that humans are driving climate change retort that the science is "settled" and those who don't agree are "deniers" and "flat-earthers."  Even the president mocks anyone who disagrees.  One thing I have learned is how hard it is to convince people with a computer model.  This does not mean people are dumb.  They usually have great BS detectors, and when they see one side of a debate trying to shut down the other side, they will most likely assume it has something to hide, has the weaker argument, or both.
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The market has stopped its steady grind upward for now and the mood is pretty cautious.  Our formula has called for a lot of sales.  

Purchases   
Date    Symbol     Shares     Price     Comments

5/21      TAI           100       20.97      Rare fund purchase
5/21      NWBI       200      13.20       Value Buy
5/23      BYD         200       10.62        Zero Buy
5/28      IAU          200        12.23       Gold ETF
6/4        GIFI         200        18.48       Value - Tulane Portfolio
6/13      NVEC       50         51.15       Zero Buy
6/16      BK.PR.C  100        22.81      Preferred
6/20      GNE         300          7.30      Value Buy
6/24      ONCS      3400        0.60      Zero buy - our lotto ticket
6/26      WFC.PR.P 100       23.73

Sales                                                   Date Bought      Price

5/23      AWCMY   200         5.36          2/11/10         5.85
5/23      AWCMY   200         5.36          2/25/10         5.31
5/27      AA             100        13.52        12/9/08          9.46
5/27      AA             100        13.52        9/28/11          10.50
5/28      HON           50         92.28        9/16/11          46.99
5/28      KNX          100        23.82        1/10/00            3.33       Love them 7 timers
6/2        ECL             25        109.12       8/25/05          32.10 
6/4       AVSR         6600       0.0035      2005-2007    Lost 11,000 - You have to clean out the dogs
6/5         TFX            25        107.56       6/16/06          51.20
6/9        USAK         200        18.60        8/24/12           3.74
6/10       PCP             10       272.95       10/6/08            69   Quads require patience
6/13       PQ              400         6.43        11/22/04           4.46       Tulane portfolio
6/18       HUB.A         25      121.40        12/22/00          23.56
6/19       GENC         100       10.89         2/2/09              8.17
6/19       GENC         100       10.89         2/23/09            6.15      
6/23       GIFI            100       21.61         3/16/09            7.04   Tulane portfolio
6/26       SLB              25      114.87         5/12/05           34.05  SLB is best of breed
6/30       PQ               300         7.50         4/10/12            5.80  Tulane portfolio
      
                                                          

   



Monday, May 26, 2014

 

Kindergarten for $60,000 per year

There has been quite a brew-ha-ha concerning college commencement speakers and protests by students causing invited speakers to withdraw.  Such occurred at Rutgers, Smith, and most recently at my alma mater, Haverford College.  The list includes some pretty fancy finishing schools where you might think liberal arts, pre-law and pre-med seniors might be mature enough to listen for ten or 15 minutes to an eminent scholar, business or community leader with whom they might have differing views.  Alas, such is not the case, at least for the left wing progressive police who apparently believe the first amendment applies only to those who share their preconceived notions, or the propaganda force fed them over 4 years by a faculty with an agenda that supersedes the mere dispensing of actual knowledge.  

In Haverford's case, the target of extremist left-wing wrath was the former chancellor of Berkeley, of all places, wherein certain Fords objected to the methods used to terminate the mindless "occupy" demonstrations on that campus.  Security had been called in (to protect other Berkeley employees) and allegations were made that some of the officers got a little rough with a few of the demonstrators.  Quite properly, the then Chancellor called for an investigation of the security force, the results of which I don't know, but the Fords were not saying that the investigation was unfair or incomplete.  They were saying that before being allowed to speak, the Chancellor should make amends by apologizing and assenting to a list of demands.  Of course he would not do this and therefore opted out of the speaking engagement.  Haverford's first year President took his side, saying that the students' demands were inappropriate, but he was sorry that they were offended.  He could have gone on to say that the graduates instead could have merely voted with their feet and opted to skip the ceremony and receive their diplomas in the mail.  But he didn't.  We'll talk about that missed call next week during alumni weekend.

In the end, the President of Princeton filled in as a substitute and to his credit, pronounced the protesting students "immature," a very polite word for what they are.  At that, the students expressed their indignation and shock to be called such a name.  All of this was duly reported in the Wall Street Journal and commented on extensively in the op eds, presumably to the embarrassment of the College (and certainly the alumni).  If academic freedom means anything, it should allow for everyone's first amendment rights and we have commented in this space before about the offensiveness of campus speech codes (specifically at Dartmouth but pervasive almost everywhere).  That should go for the protesting students and also for guest speakers on campus.

By the way, if you want to read a really great commencement address, see the weekend WSJ or go to WSJ.com and take a look at William H. McRaven's speech at the University of Texas.  Entitled "Life Lessons From Navy SEAL Training," it will make your day and give you a lot to think about, especially if you've spent $60,000 or more per year on someone's liberal arts education.
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What a revelation it is to see GOP primary voters actually making intelligent choices to pick electable candidates rather than make such contests about conservative purity.  Liberal pundits misread these results if they choose to believe they are a rejection of the Tea Party or its ideas.  Instead, it is the inevitable marriage of the Tea Party with Republican conservatives, and in fact, Tea Party folks returning to their natural affiliation.  This gives the GOP its best chance to also capture the votes of so-called moderate Republicans (who are actually liberals in the classical sense of the term) and certain libertarians of an even less conservative stripe.

6th year elections (of a President's tenure) are almost always bad for the Chief Executive's party, and having endured a shellacking in 2010, Dems are right to be fearful of another one, which, if bad enough, has the potential to flip the Senate for at least two years (when some of those freshman Republicans are up for re-election in a Presidential year).  This administration's record is so bad, and it has been so contemptuousness of Congress and the separation of powers, that a loss of the Senate will be catastrophic for them.  It will be good for the country however, since Dems are set to move without super-majority support on all kinds of things in Obama's last two years if they retain the Senate..  One wonders whether Dems will regret scotching the 60 vote super-majority for confirmations if the GOP also wins the White House in 2016.  With a small senate majority, the precedent has already been set by the Dems for the GOP to nominate and confirm anyone they want in 2016 and beyond if they take the White House and the Senate.   
If the GOP does carve out a majority in November, look for Justice Ginsberg to immediately resign, citing ill health, and for the Dems to try speeding a replacement through during the lame duck session.

Once the GOP takes charge, if they do, look for heightened investigations into Benghazi, the IRS scandal, PPACA rule making, and the Federal Reserve.  GOP investigators will be so busy, they will hardly have time to spend denying climate change (no need, the weather seems to be doing just fine with that).

By the way, if you really want an environmental issue to worry about, forget climate change and start wondering what is happening to the bees of the world.  There is an alarming die off among bees, and though the cause is not known for sure, pesticides are certainly a candidate.  Bees are essential to pollination and therefore, essential to the very base of the food chain.  It won't matter how warm or cold it gets if there are no bees around.
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Hopefully the Ukranian election now allows that crisis to wind down a bit.  The Russians, if they are smart, will settle for the annexation of Crimea and for an agreement to allow some kind of limited self rule for the eastern part of the country.  The President, as I wrote, seemed to get off to a good start in handling this one, as he immediately invoked sanctions (weak as they were) and threatened harsher ones.  Unfortunately, that threat was largely a bluff and Putin called him on it.  The Europeans had even less backbone, so the result is what it is.  We have said many times before that as dangerous as it is to be our enemy, it is just as dangerous or more to be our friend, a lesson that won't be wasted on the Ukranians.
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 The Mets finally made a move today, firing their hitting coach and releasing a completely washed up Valverde, two moves that make sense but will hardly make the difference.  The players said the usual things they say when a coach gets canned, that he was a good guy and it was the players that didn't produce, but if he was doing a good job, then you don't need a hitting coach since the Mets can't hit, particularly with runners in scoring position (except for Daniel Murphy who can hit period).  The Mets continue to have to overcome the poor in - game strategy of manager Terry Collins and they simply don't have the talent to do that.  It is way past time for Wally Backman to be called up to take over for Terry.  At this point, it's largely his team that he prepared in Las Vegas, where he has a great record, so he might as well be the manager anyway.

The other thing that has to change is for Sandy Alderson to stop wasting money on retreads in decline like Valdeverde, Farnsworth, Chris Young, Curtis Granderson, etc, etc.  At least Bobby Abreu still has his hitting chops.  But the rest of these free agent stiffs (and Colon is another borderline member) we didn't need.
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So when baseball becomes too frustrating to watch, at least there is great New York jazz music to hear and see instead.  Last Monday, I saw one of the best shows I ever attended, an all-star tribute to the late producer Mat Domber at the massive (and sold out) Symphony Space on 95th and Broadway.  Performers included Randy Sandke and Warren Vache on trumpet, Harry Allen, Anat Cohen and Bob Wilber on reeds, trombones Wycliffe Gordon and John Allred, Dick Hyman and Rossano Sportiello on piano, Ed Metz and Rajiv Jayaweera on drums, Joel Forbes on bass Bucky Pizzarelli on guiitar and Becky Kilgore on vocals.  This ensemble of veterans and current jazz royalty seemed all in top form and the audience was suitably enthusiastic.  It should be noted that Cohen, Gordon, Hyman, and Jayaweera have all taken more or less regular turns with Birdland's Wednesday evening featured Louis Armstrong Centennial Band.

And I saw that band on Wednesday night for their usual terrific two sets, thoroughly enjoyed by a nearly full house dominated by tourists.  On Thursday night, I returned for a really fine set by vocal stylist Karrin Allyson, whom I had not previously seen.  I can heartily recommend that you look for her future gigs around town or at a nearby jazz club.  Her songs and arrangements are really spirited and well thought out and she knows how to show off her vocal chops to their best advantage (knowing that she doesn't have the tone and range of someone like, for instance, Jane Monheit).  Her version of the classic "Moanin'" was really memorable. I was sorry I could not stay for the second set, but did note that the first set was a complete sell-out.
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We have again adjusted the print format for the stock transactions to make it easier to read.  It's the least I can do for loyal followers who have now topped 21,000 page views of this blog.  Many thanks to all for your continued interest.

The market has been moving sideways, reflecting the economy and the geopolitical cross currents.  As always, it's important to take profits in accordance with our formula.  That led us to take a profit in AstraZeneca, a move that looks really good now that it appears that the Pfizer deal is not likely to happen.
BK.PR.C is a "new old" name, Bank of New York Mellon preferred stock.  

Purchases

Date     Symbol  Shares    Price

4/16/14  KN          100        30.53
4/23/14  KN          100        30.94
4/28/14  BK.PR.C 100        23.13
5/2/14    GNE        300        8.11
5/2/14    RVN        100        30.35
5/5/14    TIP            20        114.11
5/9/14    GLDD      300         7.56
5/9/14    BOLT       200        16.27
5/12/14WFC.PR.P 100        23.82
5/16/14 GNE          300          7.25
5/16/14 GHM         100         27.51

Sales                                                      Date       Purchased Price

4/14/14 USAK       200         17.40       8/24/12               3.74
4/17/14  KNX        100         24.26       1/10/00               3.33
4/21/14  AWCMY  400          5.00        1/22/10              5.99
                                                              2/11/10              5.85
4/22/10   USAK      200         18.91      8/24/12               3.74
4/28/14   DVN          50         70.63      4/4/12                 70.19
5/2/14      AZN          50         80.80      3/25/02               49.40
5/9/14      SXI            50         74.05      5/11/98               30.25
5/12/12    PQ            400          6.25      10/20/04               5.07
                                                              11/22/04               4.46    
 

Tuesday, April 15, 2014

 

"Vacation's" Over

After a month off from blogging, it's good to be back at the keyboard.  I wouldn't exactly call it a vacation, since there were weekend business trips to Savannah and to Orlando and then it was tax time.  But now we should be back to a weekly, or at least bi-weekly, schedule.  By the way, I was somewhat disappointed in Savannah.  In part, the weather was at fault, but the food options were nothing to rave about and the bar scene, even downtown, was pretty lame.  There were some better options in that latter regard on the river walk, and I saw one pretty decent cover band.  But it's not a town I would be rushing back to.

I really don't need to discuss Orlando again, although I have to admit we found much better food this time around.  Of course, we went to some pretty expensive spots.  Speaking of expensive, the most expensive taxi cabs in the world have to be in Orlando.  Seriously, it was 10 bucks on the meter before we even got off the hotel grounds.  That trip was during March Madness time so we saw plenty of B-Ball in the evenings at the hotel bar.  And then baseball finally started!  So that trip was too long (6 nights) but otherwise, OK.

Next stop is beautiful Albany, NY for two nights to end the month of April.  Let the lobbying begin!
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 Do I feel any differently about the President's performance now that Russia has annexed Crimea and is threatening Eastern Ukraine?  Well, on the one hand, no, since again, this administration has taken our defensive posture down so many pegs, we are really not in position to do much militarily.  So tactically, they haven't had any choice; strategically, this administration has been a disaster, which is what we've said all along.  The one tactical mistake Obama did make was promising to veto any stronger sanctions Congress would pass, which gave Putin the green light to do whatever he wants.  That position needs to be reversed immediately.  I know the Administration is concerned about the scenario where they strengthen sanctions and have Russia cut off Europe's gas supply.  But the only way we have  to back Putin off is to fire up the sanctions and we need to do that post haste.  Americans can do their part by not buying any imported Russian products.  I know Stoli is good vodka, but there are lots of others.  Let the Stoli's pile up on the shelves, folks.
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There was good news from the Supreme Court where Chief Justice Roberts seems to have his mojo back.  In a logical follow up to Citizens United, the Court ruled that the ridiculous overall limit of $123,200 on contributions an individual can make to all candidates in a cycle violated the First Amendment, which any high school junior could have told you (if they still taught civics in public schools).  Now, there is no way my contributions would ever be in any danger of hitting half that total, but that's no reason to deny someone else their rights.  Frankly, I would have been happy to see the Court throw out all of McCain Feingold, but they didn't need to go that far to decide this case, and the majority did indicate that they would welcome a case that gives them the opportunity to do that.  Of course, Dems howled that the decision would mean endless money in politics, but they really don't care about how much money is in politics as long as it's theirs to spend.  No one raises more money than the Clinton's and Obama and their bundlers.  So it's all politics.  Which is why the GOP is going to pursue the IRS scandal to the end.  That's all politics too and you know the trail ends at the White House someplace.
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Two interesting movies showing on Showtime that you may have skipped during their theatrical runs are The Great Gatsby and On The Road, each based on iconic novels by F. Scott Fitzgerald and Jack Kerouac respectively.  In recent polls, Gatsby has been frequently staked to the number 1 position among American novels of all time.  Fitzgerald, though, is notoriously hard to screenplay, ironic in that he ended his career writing screenplays.  The reason his books don't lend themselves to the movies is that in truth, they are largely psychological and introspective with surprisingly little action and not all that much plotting either.  There will be long descriptive passages and narrative insights, but really, it's the Seinfield of American dramatic literature, nothing happens.

At least in Gatsby, something does happen.  There are parties, both drunken huge ones and tension filled intimate ones.  There are lovers reuniting, would be affairs failing to germinate, and it all culminates in a tragic fatal accident and a murder suicide.  Probably more action than in his other novels combined, and all squeezed into what is basically a novella.  Yet, even with all that, the passages that we Fitzgerald fans love are still the moments of intimate dialogue and narrative insight.

The 1949 movie version with Alan Ladd is rarely, if ever seen on television, so most of us have little or no familiarity with it.  Running only 92 minutes, it is little remembered despite a pretty fair cast.  But the 1974 version, staring Robert Redford in the title role, Mia Farrow as Daisy, Sam Waterston as Nick, and a terrific Bruce Dern as Tom (a chilling performance) is well known.  It stuck pretty close to the book including all the memorable character building scenes and many of our favorite quotes.  The (mis)casting of Redford as the mysterious Gastsby is notorious.  I thought actually Redford played the part too well and was too true to the character.  A persistent criticism of the novel has been that the Gatsby character is not clearly drawn and at book's end, he is still the one main character we don't fully get, although Nick seems to think he does.  In that sense, Redford pulled it off.  At movie's end, we really don't know what to think of him either, except that he clung to the possibility of reclaiming Daisy regardless of the odds and that wry smile gave him a puncher's chance.  Nothing else seems to matter.  My guess is that Redford thought this was how he was supposed to play the part.  My main criticism of him is how slow paced his scenes all are.  He's even worse as a Director.  I mean, did The Legend of Bagger Vance really have to take that long?

The new version, directed by Baz Luhrmann, and starring Leonard DeCaprio as Gatsby, Carey Mulligan as Daisy, Tobey Maguire as Tom and Joel Edgerton as Tom, is much more entertaining than the 1974 version, even as it expands on and strays from the book a little without changing the characters or the plot.  The Director (and co-screenwriter) makes a lot of interesting choices, many of which work and a few don't.  Most obvious is a soundtrack overlaying 20's jazz with rap and other modern forms.  I thought I would find that much more obtrusive than it was.  The music certainly adds an element of fun and excitement to the big party scenes at Gatsby's estate.  Another interesting device is to have Nick tell the story after the fact from a sanitarium where he is recovering from alcohol abuse and other ill effects of his Long Island summer.  He returns to his writing, encouraged by his doctor who tells him that penning the story of Gatsby will be good therapy.  He does so, and brilliantly, and because of this device (where Nick is so clearly a stand-in for Fitzgerald), we get to hear some of our favorite narrative passages with the author's observations (which since they don't actually move the plot, we would probably not get to hear otherwise).  In prior versions, it was not so clear whether Nick or Gatsby was Fitzgerald's stand-in.  After all, Gatsby's story in some ways parallel's the author's, whose marriage to Zelda was put on hold until he struck gold with his first novel.  This could explain some of the ambiguity surrounding Gatsby's character, since Fitzgerald likely was not so keen on revealing so much of his own character.

Which brings us to DeCaprio's performance.  Certainly, DeCaprio is in the top echelon of current American actors, and this performance is transcendent.  For the first time, we are given a Gatsby we can understand, a cultivated personality with a purposely affected speaking accent, youthful (much more so than Redford), alternating between extreme confidence and awkward diffidence, and relentlessly optimistic, hopeful, and opportunistic.  We understand finally that he is very much the front man, subordinate in Wolfsheim's illicit bootlegging operation, since in this movie, he abandons Daisy in the middle of his party to take business calls. In the end, like Nick, we are left in admiration of his personality and his loyalties.  And as always, the energy and intensity of DeCaprio's performance make such a stark contrast to Redford's sleepwalk.

As for the rest of the cast, Mulligan is fine and Maguire is truly excellent in portraying the unworldly, naive Nick, so out of place in the East.  But Edgerton, as brutal as he is, fails to lend much humanity to Tom, and it was that aspect that made Dern's depiction of his brutality so much more chilling.

I did have a few nits to pick, mostly involving things that were missing which I consider almost indispensable.  Gone is the scene where Gatsby meets Tom and Daisy's child, the one irrefutable piece of evidence of their one-time love that can't be denied.  In the "74 movie,  Redford's sickly reaction to that meeting is one of his better moments.  Also, there is no witnessing of the Jordan Baker character cheating at the golf tournament.  In fact in this version, Jordan is a mere catalyst without any appreciable character at all.  In the book, Nick says he and Jordan "wearily began an affair" but there is not much hint of that in this movie.  Even Daisy's character falls a bit short in Luhrmann's script.  We never hear Di Caprio remark that "her voice is full of money," which was undoubtedly Redford's best line (and one of the book's most memorable).  Finally, a very moving scene (and enlightening as to Gatsby's history) in the book and the "74 version is Gatsby's father's arrival at Nick's home for the funeral.  That does not happen in the new version.  But these are quibbles.  Clearly this is the best Gatsby yet, and an entertaining one too.  If anyone wants to take another shot at Tender Is the Night, the message is clear - take some chances.
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On the Road is a disjointed mess of a movie, even though there are big names behind its production and a few big names in the supporting cast as well. That makes it faithful to the book, which, let's face it, is also a mess.  Kerouac struggled to get it on paper, famously discarding nearly complete versions, before finally sitting down and banging out the final version in no time at all.  This did not impress everyone, especially Truman Capote, whose opinion was "that's not writing, it's typing."  What Kerouac typed was really a US travelogue, finishing with a side trip to Mexico.  He depicted his own and his best friends' lives as generally unemployed artists, writers, and perverts who indulged in as much alcohol, drugs, and sex as possible.  The movie depicts this bohemian lifestyle which in the 1950's came to be known as the beatnik generation.  In addition to the above vices, there was a love of music, especially modern jazz, that is also central to the movie.  As in the book, there ain't much plot here.  But on some level it is fun.  I have never really understood Kerouac's idolization of his friend Neal Cassidy, the subject of the Dean Moriarity character, and in the movie, he is taken down a few pegs in the end.  There is some satisfaction in that, I think.  Less developed than in the book is the Allen Ginsburg character, though there are some scenes depicting gay and bisexual activities.

This is another book that is almost an impossible subject for a movie.  I was determined to stick with it, and if you do, there is some payoff.   But mainly, it made me want to go back to the book for another turn through the real thing.
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Here are the stock transactions.  There have been a lot of them.  March was a pretty good month, and we certainly wiped out that miserable January.  But so far, April looks real shaky.  Investors need to keep an eye on this market.  Most of the pros think we will end the year higher after a correction or two along the way.  I hope they are right.
 Buys                                                                                 Sales
Date        Symbol       Shares       Price                Date   Symbol     Shares   Price   Date Bought  Price Pd

3/5            SJM           25            99.16              3/5      GENC      200      10.91   2/2/09            8.17  
3/11          KN            100          28.02               3/10     AA          200      12.00   2/17/05        29.47 
3/14          PFG.PR.B  100         24.71                                                                   3/20/06        30.20
3/17          AGCO       100         52.40               3/12      PQ          400        5.35    4/22/09         2.91
3/21          KN             100         31.50               3/18     BYD        200       14.10   11/5/07       40.05
3/25          WFC.PR.P  100         21.98                                                                    11/19/07     38.25
4/4             KN            100          31.59                                                                    10/27/08      3.95
4/7             HSC           100         23.75               3/24     SFE        100        21.59   11/27/03       8.22
4/8             GLD             20        126.30              3/26     PWR      100        36.63    11/3/08        19.73
4/11            KN            100          31.35              4/2       AA         200        12.80     12/19/08     9.46
4/11           NVEC          50           53.44             4/2      CNRD     100        42.35     4/26/05       1.30
4/14           SBRAP        100         24.33             4/4       AWCMY 500         4.60     6/29/12       3.27

Yes, that's the right purchase price on Conrad.  We rode Boyd Gaming down a long way in the financial crisis until it started to recover.  It looked like it might no be able to service its debt there for a while.


                  
   

Wednesday, March 05, 2014

 

Richmond Musings

Coming to you live from Richmond, Virginia, it's Wednesday night!  One nice thing about the Richmond Weston is free use of their computers, and since I travel with only a blackberry, and neither a laptop or an i-pad, it is convenient to do blogposts otherwise. Also, the computer room is right near the bar!  It just doesn't get any better!

So our so-called President has been taking a beating in the WSJ because of the Ukraine and Crimea, and I have to say that's a bit unfair.  Anyone with even a passing knowledge of Russian history knows of their age old paranoia concerning their bordering countries, so Putin's move is no different from what the Czars would have done.  The fact is, what military response could the President have really brought to bear anyway?  I think the measured response by the West in threatening sanctions was just right, and by the way, it had the desired effect of tempering the Russian response anyway.  So the WSJ criticism in this case was over the top, and you know if I'm taking my favorite paper to task, I must be right.  This in no way absolves the Administration of its feckless failures on Iraq, Afghanistan and Syria, but I'm going to maintain my objectivity (ok, stop guffawing). 
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Movies are in the news this week since the Oscars were awarded, and as usual, I have not seen any of the movies considered yet.  Catching up on last year, I have to say Silver Linings Playbook was terrific, and DeNiro was positively hilarious.  Though Bradley Cooper played the heavy in Wedding crashers, his talent was clearly visible even then so it can't be to anyone's surprise that his talent is now recogized in Linings and this year's America Hustle.  Can't wait to see that since it also stars Jennifer Lawrence who was out of this world in Linings.  Also I loved Argo, particularly John Goodman and Alan Arkin.  But really, Ben Affleck is consistently underrated as an actor, and shows incredible promise as a Director.    When he is in a movie, it always seems like the best moments are his.  Think back to Good Will Hunting and recall two great scenes where he is fantastic.  First, where he 'represents" Will in a job interview, demanding a retainer, ending up by telling the hiring interviewers that they're "suspect," since they can't quite put together the $200 he asks for.  Then, the great scene with Will (Matt Damon) where he tells him that if "he's still here, he'll kill him.  You're sittin on a lotto ticket.  The best part of my day is when I pick you up and hope for a moment you'll be gone, no goodbye, no nothin'.  I don't know much but I know that."

Or those three unbelievable scenes with the new recruits in Boiler Room.  He's only on screen for those and a couple of other scenes, but it's enough to dominate the movie.  His understated characterization of Tony Mendez in Argo is just another example of how he does so much, by seeming to do so little.

As for this year's movies, I have a passing interest in seeing Gravity and Slave, but a real interest in American Hustle and Blue Jasmine.  And maybe the Dallas Buyers Club given how good McConaughey's speech was and how great his work on True Detective has been so far.  So we'll leave it there for now.
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Austin City Limits has been a great hour for over 35 seasons.  I have to say that if you grab a look at the recently played show by Arcade Fire, it's fun, even for us old-timers.  This is a band of 8 remarkable musicians, playing a wide range of instruments with intelligence and skill.  I enjoyed this band way more than I expected.

Another thing I loved recently, that I expected to not like, was 42, the movie about Jackie Roosevelt Robinson, who broke baseball's color line and in so doing, laid a significant marker in the civil rights struggle.  Besides doing that, Jackie was a great baseball player, a true Hall of Famer, who came to the major leagues at 27, leaving some of his prime years in the Negro Leagues. He was Rookie of the Year in 1947, and played only 9 more years, quitting in the 1957 post season when the Dodgers announced their move to LA and attempted to trade Jackie to the hated Giants. 

Robinson was an inspiration to so many people, including my Dad, who shifted his allegiance from the Yankees to the Dodgers when # 42 arrived.  On our three trips to Ebbets Field, in "55, "56 and "57, he still became so excited when Jackie reached base.  There was nothing like seeing Jackie dance to his lead, a total distraction for any pitcher.  Even toward the end of his career, in 1956, he won a World Series game  against the Yanks by stealing home.

Where most movies would overdramatize the racial aspect of Jackie's story, 42 if anything underplays it.  The vitriol that actually occurred was even worse than the movie depicts.  The scene in Cincinatti, where Louisville native Pee Wee Reese puts his arm around Robinson, quieting the crowd, is done beautifully in the movie, underplayed perfectly.

Also great in the movie is Harrison Ford's exquisite depiction of the Mahatma, Branch Rickey.  The Brown Dodgers was his idea, and his early move to recruit Robinson, Campanella, and Newcombe from the Negro leagues led to pennnants in 1947, 49, 52, 53, 55 and 56.  The Bums just missed in 1950 (by 1 game) and in 51 (the playoff loss to the Giants).  So he created a dynasty on a par with the Yankees of that era.  But that only goes so far in the telling of Rickey's story.  There are so many great anecdotes.  When he was GM of the Pirates, Ralph Kiner, perennial NL home run leader objected to the salary cut Rickey "offered."  When he threatened to hold out, Rickey responded, "we finished last with you, we can finish last without you."

On another occasion, Rickey quizzed a young prospect about his habits.  "Do you smoke?" he asked.  Yes.  "Do you drink?"  Yes again.  "Do you go out with strange women?"  Again yes.  "Judas Priest," Rickey bellowed, "you must have horns!"

Rickey liked for his players to be married.  He was convincing one player to change his status from single and offered him a bonus of $3,000 if he got married, real money in those days.  The player called him.  "Well," he said, "I talked to the one and only."  "What did she say," asked Rickey.  "She told me I should hold out for $5,000."

Rickey always said that "luck was the residue of design."  It's one of my favorite truisms.
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The world will miss Sid Caesar, one of the funniest men in history.  If you don't believe me, watch any of his shows from the 1950's.  Or Silent Movie.  Or Mad, Mad, Mad, Mad World.
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The WSJ monthly magazine is usually a ponderous waste of time, regardless of how great the models look, but the December issue has a great story on Ernest Hemingway's time in Cuba.  You can probably find it on the website.  It's enough to make me want to go back and reread For Whom the Bell Tolls and The Sun Also Rises.
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Here are the stock transactions:

Purchases:
Symbol       Date    Size           Price         Comments
PQ             2/13     600 shares    3.77             0 buy
TIP            2/18     20                111.95
PBCT        2/19     200                14.18          Value Buy
AGCO       2/10       50                51.83          0 Buy
WFC.PR.P 2/21      100               22.34  
L                 2/24      100              43.45          Value
EXPD         2/25      50                41.91           0 Buy
SBRAP      2/16      100               23.90         
AGCO        2/28      100              52.57           Value
NWBI        3/3        200              14.23           0 Buy
TIP             3/4        20                112.82   

Sales

CNN.PR.B 2/13      400               45.95           Off the buy/hold list 

Thursday, February 13, 2014

 

Oh, Snow. No Relief In Sight

Having battled my way into the office for three plus hours last week, the idea of another trip featuring trains that don't come, parking lots not plowed, and slick sidewalks and stairways did not appeal this morning, so instead, we did the technology thing and worked from home today.  The uncannily accurate weather forecasters were right about when this storm would come and when the snow would change to rain, so I assume they will be right that it will change back to snow tonight, with more snow coming Saturday.  Ugh. 

Back in the "real world," Janet Yellen has moved in as Fed Chair and promptly told Congress that nothing would change.  This pleased the stock market which always favors higher prices today and we'll worry about next year when it comes.  I call this the "Wimpy Syndrome" (I'll gladly pay you Tuesday for a hamburger today).  The good news is that she is continuing the reduction in bond buying, but the bad news is bond buying continues, and the Fed's accomodative stance that punishes savers by keeping interest rates artificially low has the ironic effect of starving the economy.  I guess the Fed's dominant Keynesians will never figure this out.  Luckily, our stock trading formula seems to thrive under these suboptimal conditions.

Congress did its part by abandoning any attempts to use the debt limit law to achieve budgetary discipline.  I guess no one gives a hoot anymore.  At least we have the Sochi Games to distract those who care about that.  Even I haven't been able to ignore a few of the nice moments from there, mainly the Opening Ceremony   (unfairly criticized because one of the Olympic Rings didn't illuminate, but really, who cares?) and the Russian Pairs figure skaters.  The best story I heard reported from the games was, as usual, from curling fans, noting the absence of alcoholic beverages at many of the locales (the Russians are appropriately paranoid about their extra mortality caused by alcoholism).  "Really," said one young fan, "how can you watch curling without some beers?" which strikes me as an eminently reasonable question.
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As interminably awful as the Grammy's award show was, Grammy's tribute to the Beatles was very entertaining.  If you saw it, you saw many of today's artists performing excellent covers of very good Beatle
songs.  As for the performance by Paul and Ringo, it was also fun to watch if not exactly an artistic triumph.  Fittingly, the Journal's excellent rock critic Jim Fusilli authored a retrospective last week called "Invading Powers" recollecting Beatlemania 50 years ago.  Here is an edited version:

"Sociologists who study the 1960's attribute much to the Beatles' arrival in America 50 years ago...Some credit the cheeky, high-energy quartet with being just the boost the U.S. needed after having endured the assassination of its president.  Others cite the band's seemingly instantaneous popularity as a sign of an emerging teenage consumer culture.  Such claims obscure a more fundamental question: In February 1964, were the Beatles any good?"
Fusilli points out that the Beatles were veteran performers by the time they performed on Ed Sullivan, at Carnegie Hall and the Washington Coliseum. They had performed almost daily since summer, 1960, and at the Royal Albert Hall twice in 1963.  They had also done two sets a day at the Olympia Theatre in Paris in the weeks before coming to America.
"By 1964, the Beatles were a tight quartet who could play pop, rock 'n' roll, rockabilly, and R&B with equal force and efficiency.  They had studied (and covered) their predecessors-but had developed their own sound: Lennon and McCartney gave the group two versatile, easily differentiated vocalists; and Harrison...was a lead guitarist with a feel for several styles.  McCartney wasn't yet the exceptional bass player he would become; Lennon provided color and support as a rhythm guitarist.  But with the savvy, rock-solid Ringo on drums, they were built on a platform of driving rhythm.  What distinguished the group, though, was its songwriting."  Here Fusilli recounts the early hits they wrote, McCartney's "Love Me Do," Lennon's "Please, Please Me," influenced by Buddy Holly and their first UK #1, the first two US albums, including "I Want To Hold Your Hand," #1 in the U.S. by the Feb. 9 Sullivan gig.
"They opened the Sullivan performance with McCartney's "All My Loving," which displayed the group's many talents in well under three minutes.  The meticulous, syncopated arrangement found Lennon playing triplets on rhythm guitar while McCartney, who sang lead, offered a walking bass line and Starr altered his accents on his snare drum as his cymbals sizzled.  After adding tidy country licks on the turnarounds, Harrison played an eight-bar interlude at the bridge with nods to rockabilly.  A cleverly crafted pop gem, "All My Loving" was delivered with confidence and an infectious elan born of experience."
"After performing "Till There Was You" from the Broadway musical "The Music Man" - perhaps as a bone thrown to Sullivan's traditional viewership - they played another compact gem: the Lennon-McCartney composition "She Loves You."  As on the recording, the live reading was driven by Mr. Starr.  Two and three part harmonies delivered the lead vocal, which built to the twin hooks: "woos" and "yeah, yeah, yeah!" Lennon played folk chords on electric guitar, thus enriching the mid-section and freeing Harrison to add colorful filigrees.  In front of more than 70 million viewers, the quartet knew they were on their game.  At the midway point, Lennon, who had been relatively static in contrast to McCartney's bubbly exuberance, exchanged a smile with Harrison.  High on his platform, Mr. Starr continued to bob behind the cymbals.  His fills and the rumble of his kick drum and toms made the performance."
"The Beatles returned in the second half of the show with the Chuck Berry-influenced "I Saw Her Standing There and "I Want to Hold Your Hand," but by then notice had been served.  ...The Sullivan audience saw that the band could deliver the hits with authority and charm.   Two years after Mr. Starr joined them, the Beatles were...a self contained group capable of writing, arranging and performing increasingly challenging and ever-engaging rock and pop of the highest caliber.  Were they any good?  Oh yes.  And they were going to get better."

My view - The Beatles in 1964 were a competent rock band.  Harrison and McCartney were learning to play their instruments and eventually would be very good.  Starr was an underrated drummer, largely because his technique was unconventional.  As vocalists, they were exceptional, particularly McCartney.  And they had three great song writers.  McCartney and Harrison wrote outstanding melodies, and Lennon's lyrics were the strength of his songs.  And they were outstanding arrangers too, an ability not recognized enough.  If you want to know how to end a record, listen to the Beatles.  Only rarely do their songs fade out.
It is interesting that "I Saw Her Standing There" is still so fondly remembered.  That was the "B" side of the "I Want To Hold Your Hand" 45 RPM single (remember those?).
Those were fun days and the music world was really on fire.  As Beatle songs became more sophisticated and broke new ground, it was common to downplay the early hits, but  they have survived anyway.
You can read Jim Fusilli's reviews in the WSJ every week, as if you needed yet another reason to read America's greatest newspaper.

 By the way, one other thing little remembered.  Several months before Sullivan, Jack Paar ran a film of the Beatles playing in a European concert, which for many of us, was the first time we had heard of or seen them.  They were shown singing "She Loves You" and it was that rare song you love the first time you hear it.  After that, those of us who had seen it were primed and when DJ's like Murray the K and Cousin Bruce Morrow started promoting the group, Beatlemania was lifting off.
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For those who heard the State of the Union and are anxious to start their MIRA, my advice is forget it, and buy a lotto ticket.  Obama's brainchild has little or no appeal for anyone I can think of.  Investments will be limited to low interest Federal debt, and the accounts themselves must be rolled into Roth IRA's as soon as there is any appreciable money in them.  In short, anyone who thinks this will be a retirement solution is dreaming.
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 WSJ's Dorothy Rabinowiz has long been a voice in the wilderness defending  those railroaded into court and even prison by out-of-control DA's and AG's and other accusers in the wave of trumped up child abuse cases from the 1980's and early 1990's.  Most of these cases were built on the "testimony" of young children, who were persuaded that their teachers, schoolmasters and even parents had abused them.  They were extensively coached  by these accusers, often making the most ludicrous charges and describing impossibly absurd abusive acts.  The most infamous of these trials was that of the Amirault family,which owned Fells Acres nursery school in Massachusetts.  Ms. Rabinowitz kept after this case until finally the family was exonerated and released from prison, though the DA's, led by the current Massachusetts AG, Martha Coakley, have never acknowledged their innocence.  Violet Amirault and her daughter Violet served 8 years in prison before their convictions were overturned.  Her son Gerald was finally paroled after 19 years  The child accusers were almost as much victims as they, never actually being able to separate what was true from what they had been programmed to believe.

Ms Rabinowiz resumed her crusade last week, this time in defense of Woody Allen, who was recklessly accused by his ex Mia Farrow, and her adopted daughter Dylan who became convinced that Allen had abused her when she was 7.  Dylan recently renewed those charges.  Rabinowitz' take is illuminating.  "It's impossible to read Woody Allen's reply to charges that in 1992 he molested his and Mia Farrow's 7 year old adopted daughter, Dylan, without being struck by its haunting echoes of the words of countless people accused of such crimes.  He had thought that the charges were so ludicrous he didn't think of hiring a lawyer, he reported in an op ed for the New York Times on Sunday.  He had believed that "common sense would prevail."  He had "naively thought the accusation would be dismissed out of hand."  It was the kind of naivete evident in virtually every person known to me who had been falsely charged...convicted and sentenced to long prison terms on the basis of testimony from children coaxed into making accusations.  Accusations made, at ages 5,6,or 7, that many of them would continue to believe fervently were true, into adulthood."

Allen said in the op ed, wrote Rabinowitz, that "After Mia Farrow accused Mr. Allen of molesting Dylan, Connecticut police called on the Child Sex Abuse Clinic at Yale-New Haven Hospital to investigate.  The investigators' conclusion was indisputably clear.  :Dylan had not been sexually abused by Woody Allen.  She had made the accusation, the investigators said, either as a response to stress or because her mother had coached her to do so, or a combination of both.

So how are we to know the falsely accused from the true sex offenders every community fears?  That's a hard question, but for starters, there should be corroborating reliable evidence to convict.  The Penn State cases are an example where the evidence meets that reliability test.  But Woody Allen?  Are you kidding?

One might also consider his primary accuser, Mia Farrow.  Farrow's good works on behalf of world youth notwithstanding, her life's record is largely one of rank opportunism starting with her goofy marriage to Frank Sinatra.  Her relationship with Allen secured her standing in his ensemble movie casts.  Allen's own life choices represent some odd twists and turns, but his talent has been undeniable, and if anything, his desire to be a private person speaks for itself.  Self promotion is not what Woody's about.  His longstanding friendships and the desire of his cast members to work with him again and again put the lie to the monster characterization Farrow would assign him.

I think Rabinowitz again has this right.  It's a shame that Woody's reputation has been so unfairly tarnished.
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Here are the transactions since the last post:
Purchases:
Date          Stock symbol       Shares           Price      Comment
1/17              ONCS               4200       0.4725        Our lotto ticket paying off?  Bought a few more shares
1/21              WFC.PR.P          100      21.31
1/21              SJM                      25       97.80          Still a value buy even at this price
1/27              GWR                    25       90.03           Zero buy, Small RR performing big
1/28               IAU                     200      12.20          The "other" Gold ETF
1/29              GIFI                     100      20.97           Value in the "Tulane Portfolio"
1/31              AGCO                   50       53.89           New name meets the value criteria
2/3                SBRAP                 100      24.75           Another good looking reco from full service broker
2/5                NEM                    100       21.30           Maybe it finally bottomed
2/7                FNFG                   300       8.45             Zero buy, trying to consolidate its aquisitions
2/10              PLP                       100      21.25            Best preferred stocks are in the insurance sector
2/11              AGCO                   100      51.27            Value Buy, building the position

Sales
1/15               B                            100      39.31            We paid 8.3125 on 3/22/99
1/21             DBD                         700      34.90            Took Diebold off the hold list; took a small loss
1/21             BEAM                      150      83.40            paid 62.75 in 2006, 52.88 in 2008
1/21             BEAM                      150      83.40            paid 76.62 in 05, 21.52 in 09

We sold BEAM to the arbitragers; the company is being sold to Suntory.  On Diebold, we just don't think its products have much growth potential in the US, and management doesn't seem to be able to achieve its international potential.  We found AGCO in the WSJ daily list of dividend increases, and noted price to book of less than 2 and debt to equity less than 0.7.

Neither redwavemusings nor its author are investment advisors and the securities mentioned here are not to be considered recommendations since they may not be suitable for readers.   


Thursday, January 16, 2014

 

Special Polar Vortex Post

The cold weather is headed back to the Northeast again next week, though nothing like the misery we endured a couple of weeks ago.  Of course, y'all understand that the reason the polar vortex descended this far south is...global warming. 

I guess the only thing not being blamed on global warming these days is the mysterious closing of certain lanes on the Jersey entrance to the George Washington Bridge.  On the contrary, the e-mail evidence clearly indicates that those lanes were closed by Governor Christie's out-of-control campaign staff.  Reminiscent of a certain Presidential re-elect campaign (1972 to be exact), owning a one-sided lead doesn't seem to bring about caution and safety first tactics to political zealots; instead they become emboldened and reckless.  Geez, even football players know enough to run out the clock when you're way ahead.

Still, the story of this "scandal" has been a source of endless amusement for the working press and TV's talking heads.  And for good reason.  The only thing more hilarious in this new year was the fine and benching incurred by the Knicks' J.R. Smith for attempting to untie the shoes of his opponents during play.  I can't understand why the powers that be don't see the humor in this antic, but they don't.  The way I look at it, if you can't or won't defend your man properly,  you need to find creative ways to slow him down.

The major beneficiaries of the Bridge story have, of course been the hapless and hopeless members of the Obama Administration in D.C., since it served to push their daily failings to the (often unread) middle pages.  Unlike their Johnny on the spot fellow Dems in New Jersey, who have rapidly initiated not one but two investigations into bridge-gate, the Obama gang has apparently concluded there is no reason to investigate anyone with regard to IRS-gate, the infamous targeting of conservative groups that severely hamstrung the Romney campaign last year.  The FBI, for one, which reports to the Attorney General as I recall, has apparently determined that no one is really responsible, even without performing an investigation.  So we should be glad that for once, no money will be spent I guess.  Of course, the Attorney General is way too busy criminalizing normal business activities to be bothered with an actual crime.

This lethargy when it comes to actual issues that should be investigated is of the same mold as the Administration's response to Benghazi, its failure to maintain any order in Iraq (and we are headed for the same end in Afghanistan), and its ineptitude in implementing PPACA.  Of course, when it comes to pursuing its own objectives in the face of Congressional intransigence, the Obama folks have become very energetic about circumventing the Constitution.  So today, Obama floated the trial balloon that if Congress won't enact an increase in the minimum wage, he'll simply issue another executive order to do it.  You would think that the Administration would be tired of getting slapped down by the Courts on all of these extra-constituional moves.  The most recent (of many) of these slap-downs involved the DC Circuit's dismantling of the FCC's net neutrality rules.  It looks like another one is coming (based on oral argument) when the Supreme's explain to Obama that for him to make a recess appointment, Congress actually has to be in recess.  That didn't bother the Administration when it appointed Richard Cordray as head of the new Consumer Protection Bureau, and when it filled out the Labor Relations Board with union cronies.

The point of all this is that we have an Administration that runs the Federal Government as if we were some banana republic, and whose foreign policy choices have left us at grave risk in the Middle East, in East Asia,  and caused us to lose the peace in Iraq.  In fact, it appears that a renewal of the centuries old civil war in Islam (The Great Schism) is underway between Sunni's and Shiites.  This is no place for the faint of heart, so my advice to Mr. Obama in this case would be to follow his instinct and get our kids out of Dodge.  Syria is now such a mess, we don't even know who to root for, since the opposition is split between Al Qaeda and the moderates we favor.  Somehow, when Assad exterminates Al Qaeda, he's not so bad.  But in reality, he is being propped up by Iran and its proxy Hezbollah, and those are really not our friends. Meanwhile, John Kerry's shuttle diplomacy between the Palestinian territories and Israel has yielded little except for a harsh condemnation from an Israeli official, making the often heard complaint that if it's bad to be our enemy, it's really dangerous to be our friend.  For that, Israel was harshly rebuked by a State Department spokesman (as if to prove my point).  While it was a very touching display of loyalty to the Secretary, one would have thought that maybe State's employees might have thicker skins, being career diplomats and all that.

So I guess one would have to conclude that all of the above, including the President's falling (39%) job approval rating, is because of...global warming.  That's as good an explanation as any, right?             
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By the way, the increasing hostility of the courts to Obama's methods makes it all the more troublesome that Senator Reid resorted to the nuclear option to remove the filibuster and stack the DC Court with progressives.  Republicans should remember that cold blooded tactic when they reorganize the Senate (under their control) in 2015.  There will be no reason to worry about protecting the minority's rights after having theirs trampled in this session.
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In case you didn't know (and why should you), we are approaching the Winter Olympics, coming to you live on tape from some Godforsaken Black Sea resort in Russia.  There is genuine, and well founded concern about security at these Games, given the disposition of Chechen and other Islamic folks in that part of the world.  Regardless, I make it a point to ignore as much of the Olympics as possible so as Hawkeye Pierce famously said, the instrument hasn't yet been invented that can measure my indifference.  In our era of the professional Olympian, is there any greater hypocrisy than the so-called "Olympic ideal" which viewers will hear about endlessly from opening to closing ceremony.  For my part, the Olympics resonated when we sent true amateurs to the game, great athletes though they were, even if it meant taking on the pros from the autocratic countries.  Now -nothing.  The other thing that sickens me is the concept of the veteran Olympian.  So Tiger Woods' girl friend being unable to ski in her third or fourth olympics due to injury doesn't exactly break my heart.  I don't like to see any athlete get hurt, but really, give someone else a chance.  If it were up to me, athletes could compete in a maximum of two Olympics, and coaches maybe two or three. 

I have to admit that when stuck watching the closing ceremony, the command that the youth of the world should reconvene in four years at the next site leaves me ROTFLMAO.  Youth?  Maybe at their first Olympics, but by your third Olympics, you ain't that young anymore.
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We're changing the format for the investment recap, going for a little more economy.  Here goes.
Purchases since the last post
Date           Symbol        Shares         Price       Comment
12/20          STI.PR.A     100            18.64     Suntrust Preferred
12/27          ENI              200            14.78     value buy
1/2              BRLI            100            25.47     zero buy
1/3              TIP                20            110.15     ETF
1/3              GNE             200            10.19     value buy
1/6              FAST            50              46.68     Zero buy
1/7              MET.PR.B    100            24.96     MetLife Preferred  
1/14            NR                200            11.80     value buy - the "Tulane portfolio"

Sales since the last post
12/20          USAK           200             13.82    paid 4.79 on 6/25/12
12/23          RAVN           100              42.26   paid 30.68 on 8/31/12
12/24          HAUP           2,800            0.17    That's the last of 'em.  They can't all be gems.
12/26          AAON            100            32.11    Paid 4.27 on 1/26/05
1/2              ABC                100            70.11    paid 14.34 (adjusted for split) on 11/29/01
1/8              SFE                   83             19.90   paid 13.38 on 6/21/04
1/10            TMO                 25            114.48  paid 19.88 on 1/13/03
1/13            LFUS                50             92.34   paid 25.63 on 11/13/00

Monday, we got the good news of a takeover offer for our BEAM shares that pushed the stock up about 15 points.  All in, including dividends, our accounts were up 24% for 2013, a good job considering how much we keep in cash, preferreds, and muni's.  Returns matter, but risk adjusted returns are important to consider.  Markets do fall out of bed. 



Thursday, December 19, 2013

 

Back to DC

Upon further review, my reread of our last post convinced me it was among the most satisfying we've done.  So if you missed it, give it a look, right below this one.
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Meanwhile, I am back from 5 event filled days in Washington D.C. at the NAIC, one of the reasons this post is coming so late.  The Insurance Commissioners have plenty of problems of their own, not to mention they are always causing us industry people migraines.  But on top of everything, the long awaited Federal Insurance Office report on modernization of insurance regulation was finally published, 23 months late.  Though it largely waffled around the issues, the Report had enough meat to it to add stress to an already overwrought group.

Nevertheless, Washington is such a good meeting location that the interminable meetings, relentlessly bad weather, and reluctant taxi cabs were easily overcome by the excellent restaurants and watering holes within easy reach.  Two high end eateries I can recommend are first, Palena, a real gourmet style haven featuring fixed price extravaganzas on Connecticut Ave. a little past the zoo. Second, is Restaurant Piccolo in Georgetown, which I liked even better.

By the way, the Metro is pretty convenient, except for two important items, at least one of which is fixable.  First, the Washington Metro has the world's longest, slowest, and squeakiest escalators.  They are so slow that you really have to factor that time into which transportation method to take to a given site.  The other problem is that the fare cards you use to pay for the Metro seem to instantaneously demagnetize after your second trip, leaving you the task of recovering your still trapped money at the very few stations where there are clerks to do that (well, one station, Metrocenter).  So now you are encouraged to buy a trip card, which is plastic, for two dollars.  I finally did that and now we'll see how long that lasts.  Meanwhile, I still have about $20 on demagnetized fare cards to try to recover.   But then, why should we expect anything to work properly in D.C.?

Speaking of which, with all their other problems, nothing has the insurance regulators more apoplectic than the roll out of Obamacare.  The number of people who have successfully purchased health insurance on the various exchanges is pitifully small, leading me to the conclusion that the ACA will actually leave more people uninsured than the old "system."  And it's not just the notorious federal exchange that's failing.  Many of the 15 state exchanges supposedly up and running are having awful problems of their own.  I think I read that in Oregon, a fairly blue state with its own exchange, something like 40 people had actually succeeded in obtaining insurance on the exchange as of November's end.    No wonder four state exchange heads have been sacked already.

What the ACA's supporters should really be concerned about are not so much the mechanical problems, bad as they are, but rather the policy and rules related SNAFU's that are causing people to give up in despair and go bare.  Among these are the removal of their favored doctors and hospitals from exchange plans, the huge gap between medicaid eligible costs and the so-called subsidized premiums that leave low income families and young singles preferring to pay the penalty rather than be insured.  Add to that, the wholesale desertion of their profession by providers because the reduced medicaid, medicare, and plan reimbursements are inadequate to pay for their malpractice insurance premiums.

In short, this system is not merely broken, it's crashed.  This was obvious to many of us quite some time ago, but this stubborn administration and its Democratic sycophants in congress refused to do the right thing and postpone everything for a year or two.  Now they are looking at a situation where they will surely burn in the 2014 elections unless they do a "never mind" and repeal the whole thing at the last minute.  The ACA was designed by its authors (Dem staffers) to fail slowly, setting the stage over a modest transition period for single payor.  Instead, the crash on takeoff will cause the country to go back to largely private coverage, which is fine with those of us on the right, but only after very serious economic dislocation and some unnecessarily bad outcomes for too many, I'm afraid.  It will be an interesting and sad mess to watch.   
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New York City is its usual glorious self this holiday season.  Last night, I took some co-workers out to Birdland and then to the Penn Club, their prize for making the winning bid in a silent auction for the benefit of United Way.  It was quite fun and exciting walking around Times Square, which was teeming with tourists, as you might imagine.  So by all means, come to the City, visit the tree, skate on the ice in Rockefeller Center or Bryant Park, hear some jazz, stop at Jimmy's Corner or Measure for a nightcap, etc.  New York is alive - let's hope the new mayor won't screw it up.
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On Tuesday, CNBC had a terrific interview with James Grant, the famous bond investor, who was extremely critical of the Fed and the Obama Administration's statist policies.  Bond guys, unlike stock guys, tend to look at the world very clearly - not for them rose colored glasses.  For some reason, someone like Grant has a lot more credibility than a political animal like Mark Lavin, even when they are saying essentially the same things.  Anyway, check out the CNBC website - I would think the interview is still available.

As for yesterday's tapering announcement, everyone found a reason to cheer, hence the big rally in stocks, surely a one day wonder.  For Keynesians, the taper was laughingly small and there was a promise to keep short term rates low, even beyond the 6.5% unemployment target.  For supply side types, there was at last some taper, and the promise of more tapering in increments until the bond buying program is at last over sometime in fall, 2014.  My view is that the fed continues to be much too loose. Especially worrisome is the concern about reaching the inflation target of 2%.  I still believe the inflation target should be 0, and by worrying about low inflation, the Fed is setting up the media and the rest of us to accept inflation much worse than the target when they inevitably overshoot.   Inflation is not a neutral event.  It rewards borrowers (like all levels of government) and spenders, and debases the currency.  It punishes savers, investors, and especially those who live on fixed incomes.   It is the cruelest tax of all as we relearn every time it charges out of control.
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On 11/25, we finally gave up the ghost on Hauppauge Digital (HAUP), selling the 11,900 shares in our taxable account for 0.17, a loss of about 16,900.  Gordon Gekko wasn't the only investor who hated to lose money on a transaction, but the tax loss will come in handy this year as we have outsize taxable gains.  We had booked over 10,000 in gains on this stock in past years, so the failure here was not so much in the original stock selection but in the unwillingness to recognize that the business model would not be successful after the death of one of the two principal owners.  Having made that misjudgement, our formula had us throwing good money after bad.  So even after we sell the shares in the IRA later this month, we'll have a net loss in the stock and that's too bad, but not really too serious.  If you can't face into your mistakes and accept losses that become inevitable, you shouldn't be investing in individual stocks rather than funds.  And you do better when you view your holdings objectively, selling the dogs early instead of hoping to get back to even.  As they say, hope is not a strategy.

Also on 11/25, we sold 87 shares of AAON, an odd lot resulting from a prior split, for 29.33.  We paid 6.47 on 9/25/06.  On 11/27, we sold 200 more shares of USA Trucking (USAK), which has continued to levitate for no apparent reason since becoming a potential takeover play.  We got 14.96 per share versus a purchase price of 5.41 on 6/14/12 and 4.79 on 6/25/12.  Sometimes averaging down works, and sometimes (see above) it doesn't.  On 11/29, we bought 100 shares of BRLI at 29.61, a zero buy after it swooned following a drop in projected earnings.  On 12/2, we sold 200 shares of Genie Energy (GNE), another stock levitating for no apparent reason.  The bottom dropped out of the price last week.  We got 16.60 for shares we received as a spinoff from IDT at 10/31/11, when they had a book value of 9.09.  On 12/3, we bought 20 shares of the gold ETF (GLD) at 117.59.  We may have hit the bottom in gold for a while, or not.  On 12/6, we bought another gold stock, poor old Newmont (NEM), a value buy at 23.40 for 100 shares.  On 12/9, we bought 500 shares of our old friend Petroquest (PQ), a zero buy at 4.14.  On 12/10 we sold 200 more shares of USAK at 14.72 from the batch we bought at 4.79.  On 12/11, we added to our IRA's preferred shares, buying 100 of the Wells Fargo (WFC.PR.P) at 20.22.  On 12/12, we bought 100 shares of Gulf Island Fabrication (GIFI) at 22.20, a value buy.  Finally on 12/18, we bought 25 shares of Hubbell (HUB.A) at 94.12, a "zero buy."

Neither Redwavemusings nor its author are investment advisors, and the securities mentioned here are not recommendations and may not be suitable investments for anyone. 

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