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Tuesday, July 31, 2007


Political Comedians

The market slump last week, which resumed today, has both fundamental and technical underpinnings. Caution is required, and the formula we have revealed in recent posts, was designed around a cautious outlook, by maintaining a large cash position, making most buy decisions based on balance sheet strength, and steadily taking profits as they come. Nonetheless, one should not be complacent, since in a bear market, the only defense would be to sell everything. Hardly anyone does this before it is already obvious that you are in a bear market - too late. So my investment decisions will continue to be guided by my formula discipline, and the hope that I will fare as well or better than in the 2000 market break. Of course, this could still prove to be a "correction," and not the end of the bull market.

Politics would be hilarious if there were no serious consequences, and sometimes you just have to sit back and let yourself be entertained. So the internecine war of words between Dems Hillary and Obama has a lot of us in stitches, particularly since many feel that they will ultimately share the ticket. All the fuss is over a hypothetical debating point about whether and when you "negotiate" with dictators. It's also great to hear commentators quote the wisdom of JFK, as if that answers the question for all time. You will recall that in one of his frequent oratorical catch phrases, Kennedy responded to questions about his cold war tactics by saying "We will never negotiate out of fear, but we will never fear to negotiate." Nothing like a non-answer that sounds definitive. Hillary and Obama need to work on that, I think.

Then there is the circus playing out in NY politics, where somehow, the arrogance of the new Democratic governor's staff, in using state police "information" to try to smear Republican Senate majority leader Bruno, was outed by the new Democratic Attorney General of all people, Andrew Cuomo. Of course, Cuomo wants to be Governor someday, so what's the problem in embarrassing Governor Spitzer, who naturally claims all this was dreamed up by his staff without his knowledge. This, of course, registers about the same score on the believability meter as President Bush does when he says that the firing of the US Attorneys was all Attorney General Gonzales' idea, but he's still a great guy who should keep his job.

That whole carnival has led to the Dems calling for yet another Special Prosecutor, with an endless budget and a seemingly unlimited agenda. I'm not sure what that's going to accomplish with the Administration moving into the later stages of lame duck status.

So it all reeks of the same plot lines as the World Wrestling Federation, but without the good humor.

Perhaps the only thing more embarrassing was Senator Russ Feingold's appearance on the Fox Sunday morning news show. OK, I'll give him props for going on the show in the first place, where he figured to have a tough interview, but his tired and hysterical ravings about the alleged offenses of the Bush Administration were ample demonstration for why he lacks much of any credibility on any topic I can think of.
We'll get to Investments, Part V soon, and also go to work on analyzing candidate Guiliani's health care solution, but for now, we'll simply report that I bought 200 shares of Harleysville National Bank (HNBC) on Thursday for 14.08. Then on Monday, I bought 500 shares of Hauppage Digital (HAUP) for 4.96. My history with HAUP is an interesting illustration of the formula as its price has gone down and up over the years. Early in the year, I was selling shares in the $8 range and for as much as $8.95 last February. With the recent fall in price, HAUP was a "value buy" this week.

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