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Sunday, August 05, 2007


The Bourne Ultimatum and The Political Void

The Bourne Ultimatum is a Must See for those who love the Action genre, and even those who don't may find it sufficiently cerebral, particularly if they saw the first two movies. This is a rare series where a good initial effort was followed by an even better sequel, and the third of the series is every bit as good as the Supremacy. It's another superior effort by Paul Greengrass as Director, using his trademark "shaky" camera work to heighten the viewer's perception of being involved in the action. But again, he gets to work from a really good screenplay where a really unique sequence of scenes among the three movies is pulled together in the Ultimatum. I don't want to reveal anything about the plot, but it will certainly be helpful to have a pretty close recollection of the first two movies. Again John Powell's score is an integral part of the fun.

The Minneapolis bridge collapse brings to mind the corroding infrastructure of the country, and the lack of incentives and priorities to put it right. In NY, we didn't really need the reminder, since Con Ed is STILL dealing with the hole in the ground at Lex and 41st Street because of the burst pipe a few weeks ago. Buildings in the immediate area have still not all reopened due to the need for asbestos abatement following the explosion. So now all of the bridges need to be inspected and the pipes will need to be replaced eventually. Lots of work for the construction folks, but it's time to get around to it instead of these Congressional earmark expenditures on useless projects like the infamous road to nowhere.

Unfortunately, Congress is hooked on earmarks, and the recent "ethics legislation" does nothing to curtail them. In the majority, the Democrats are proving to be no improvement over the Republicans.
In Presidential politics, the Dems strategy seems to be for Obama, Edwards, and the lunatic liberal base to make Hillary look good by criticising her more reasonable positions at every opportunity. So by comparison, she looks responsible and certainly electable. Does anyone take Obama's foreign policy ravings seriously? I guess this is one of those cases where the more we're exposed to him, the weaker he seems as a candidate.

Not that anything much is happening on the GOP side either. The McCain candidacy has completely imploded, and I doubt he will stay in the race much longer. Thompson is running but hasn't officially committed, meaning that his exit, when it comes can, be considerably more graceful. That leaves it to Guiliani and Romney, and I suspect the latter is an Obama-like stealth candidate whose appeal will likely wane with exposure. So religious righters may have to accommodate themselves to Rudy, unless they can convince Newt to make the race. But Newt's run, if there is one, is more likely to be Quixotic, sort of like Barry Goldwater, where he gets slaughtered but plants the seed for some future conservative activist.

All of this proves that the marathon has become too long to sustain enthusiasm for any candidate continuously.
The stock market certainly had another miserable week, reeling from failures in the mortgage sector, teetering hedge funds, and the knowledge that the shake-out is not nearly complete yet.
In the end, the market perceives a credit crunch, and the two major liquidity impacts that supported the market (share buy backs and takeovers) will soon be MIA. I, for one, am against buy-backs anyway, as I have stated previously, preferring dividends as a way to reward investors (in the absence of growth investment opportunities). As for takeovers, I am fine with having my companies taken out, but it does not do the economy any good for private equity to do a takeover, stiff the bondholders by over-leveraging the company, get their money out, lay off the employees and walk away from the ruins. The bond market has finally figured out that there is a need to protect bondholders, so for new bonds they have restored all of the old covenants that force bankruptcy under certain conditions. So market dynamics have really changed.

This is not the end of the world, just the end of a chapter. It is and will be painful, as all important adjustments are, but investors would be well advised to go back to doing fundamental home work, find and accurately assess value, and transact accordingly. This is certainly not a time for leverage, margin buying, option buying, etc. Above all, it is time to keep to your trading disciplines, whatever they are, maintain your asset allocation, and keep a cool head. And above all, don't commit everything at once to any decision. Whatever moves the market makes will take time, and you can let that time work for you instead of against you by trading in smaller increments.

On Wednesday, I bought 200 shares of Marine Max (HZO), the recreational boat builder/servicer, for 18.70.

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