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Sunday, June 29, 2008


Red Wave on the mend

Somehow, today's Meet the Press wasn't the same and we all know why. I think among Tim Russert's really great qualities was that he charmed viewers across the political spectrum and made every effort at old-fashioned objectivity despite his well known Democratic political roots. Though he took politics and his show very seriously, it always had a light enough touch to be entertaining and fun. A tough interviewer, he never seemed to ambush his guests as many do routinely these days. He will really be missed.

Tom Brocaw obviously is an old pro and soldiered on well as today's host, but at the same time, it was so obvious that he was wishing it were not necessary for him to be there.


One good point made on one of this morning's news shows was that Mr. Obama seems to lack even the most fundamental economic theoretical knowledge. How do you propose large tax increases and restrict trade agreements when the country is teetering on recession? Maybe it's time for him to sign onto his beloved internet and review the Wilkepedia entry for Herbert Hoover.

But what do you expect from a man who thinks there are 58 states!


At least one of the (most) loyal musings readers noted the absence of a Thursday post. Thought there is no regular schedule for Musings posts, we haven't missed a lot of Thursday's recently. Actually, I could have done one Thursday. The background is that I had surgery Tuesday - a robotic, radical prostatectomy to be precise, after a biopsy provided an unexpected and annoying result last April 30. Fortunately, all of the subsequent testing reviewed so far indicates that my asymptomatic condition, caught completely by serendipity, had not advanced beyond the unfortunate gland.

This is not your grandfather's (or more to the point, mine) prostate surgery. Basically, the doctor knocks you out, makes 4 small incisions in the abdomen through which instruments and a small camera are inserted. Operating the instruments robotically, the doctor cuts around the prostate until it becomes separated, opens a plastic bag at the end of one of the instruments, puts the prostate in the bag, and pulls it out through one of the incisions. (No, this is not an elephant joke). A biopsy is performed on the prostate bed, and the results come back before they close (so they can cut some more if the biopsy is positive - mine was not). Lest this sound simple, it takes quite a lot of experience before the doctor becomes much good at handling the instruments this way, but my doctor had done hundreds of these operations and won't do them any other way anymore. The procedure is advertised as a 2-4 hour operation, but mine was done in Olympic year record time of - one - and - a - half hours. I was released from the hospital Wednesday afternoon, and am slated to be home from the office for another week. Then it's another week before I'm back on the golf course. The old fashioned way, you were out of commission much longer.

So, I really didn't feel like blogging Thursday though I had plenty to say. The biggest annoyance of the recuperation is that I am tethered to a catheter until midday tomorrow, when I hope the doctor will remove that. It's not painful - just sore and annoying. Actually, if I had undergone this procedure a few years ago, I would have suggested to my friends in Guantanamo that they merely hook up the terrorists to a catheter until they talked - less politically explosive but probably just as effective as waterboarding.


On Monday, I bought 1000 shares of Sirius Satellite Radio at 2.00. It looks like the FCC may finally approve this deal. The logic of those opposed (that it would be somehow better to let SIRI and XM compete to the death of both of them) has always escaped me. Why are consumers better off with two satellite companies? Isn't it better to be able to access the entire spectrum of satellite radio off the same receiver? Imagine if the world of free radio was divvied up into two or more mutually exclusive sets of stations. Isn't it better to be able to access all stations with an AM/FM radio?

This was of course a zero buy since SIRI has no shareholder equity on its balance sheet. This also led me to realize that last week's value buy of Alleghany should have been for more than 6 shares since it was a value buy and the $2,000 -$4,000 limit applies only to zero buys. If I had bought, say, 30 shares, Monday might have been a pretty well-timed sale day given what went on in the market the rest of the week. It's nice to have a formula, but you still have to follow it properly.

Tuesday, (yes Tuesday) I bought 100 shares of Loews (L) a new name I like now that they have sold their cigarette business. The price was 48.70.

Thursday, June 19, 2008


Fakin' It? Surely Thou Jests

One of the most outrageous accusations we heard from the "root for anyone but Tiger Woods crowd" was that he was feigning serious pain and injury during his incredible, gutty victory at the US Open. Why did it hurt so much on only some shots? What could he have taken on the back nine Sunday that enabled him to play so much more comfortably? Why would a guy with such a bad knee crouch to read his putts (seemingly without pain).

Heck, I wanted to see Rocco Mediate win as much as the average underdog's fan, but there was no way you could deny what Tiger was going through. Today the truth came out - Torn ACL, stress fracture, etc. requiring season ending reconstructive knee surgery. This is a long rehab, by the way, and most guys are never quite the same. The Tiger people are putting a good face on it, but the likelihood is that he did permanent damage in pursuit of victory at Torrey Pines. And he sure made the skeptics noted above look and sound ridiculous.


A few posts back, I called the top for crude at $135, only to have the price shoot up to $140 briefly a week later. However, it did not hold at that level, any more than it stuck at the lower levels it has tested since my call. Frankly, it's hard to tell if the recent action represents base building for the next move up or a topping process. I'm not really good at dealing with short-term questions like that, but will only repeat that the evidence is clear that long-term demand adjustments are being made and they should impact crude eventually. I don't think there is any rush to sell energy stocks in toto, but nailing down some big profits would not be unreasonable. If the Fed really acts to defend the dollar, there will be a compounded impact reducing the price of oil.


So Mr. Obama has declined to observe the spending limits of McCain Feingold and sworn off Federal matching funds, a decision Mr. McCain will also be making shortly, after having belatedly done so in the primaries. Mr. McCain is being taken to task since by at first appearing to accept the matching funds (but never receiving them), he encouraged some contributors to salvage his then failing campaign. Since there is no end to the Dems' hypocrisy, they are trying to have McCain's campaign sanctioned for this technicality, but it will never happen.

In fact, there is more than enough hypocrisy to go around on this issue, since all of the above candidates (Hillary too) refused to accept the spending limits they advocate for everyone else. It's not money that corrupts politics, it's the crooked politicians. The only campaign finance system needed is to let anyone make any sized contribution they choose, as long as the campaign is obligated to disclose all contributions immediately on the Internet.


At age 62, Al Green has a new hit album. It's fascinating that great musicians can retain their ability to entertain us, seemingly indefinitely. At an industry dinner last night, the conversation turned to live performances folks had seen recently, and the remarkable energy and brilliance that had been displayed by Tom Petty, Paul McCartney, Bruce Springsteen, and Tom Petty just to name a few. Next month, I will be seeing Mark Knopfler in Central Park - I have to admit I'm pretty excited by that prospect.


At the other extreme pf competence is the bungled firing of Willie Randolph and half of his coaching staff. Look, we knew Willie was going, and posted to that effect, but there was no reason to fly him to LA, have him manage the first game of the series (a win), then lower the boom in the middle of the night. The blame for this goes to Wilpon the younger, another spoiled brat son of a wealthy businessman, just like Jimmy Dolan. No class, no real business sense, and no regard for their employees. What else is there to say? Inevitably, the organizations these characters run underachieve.


On Monday, I bought another 1200 shares of poor ol' Cardiodynamics (CDIC) at 2.02. The price was so high because I put in a market order, a pretty fundamental mistake with a thinly traded stock. Of course this was also the stock when a limit order I put in didn't fully execute. It's just a tough stock to trade right now. Yesterday, I bought 6 more shares of Alleghany Corp. at 365.00. By the way, business conditions are really terrible right now, as gasoline and food prices suck the (green) blood out of the economy. You are seeing the impact of that in the quarterly earnings reports. Still, watch the increment to shareholder equity for these reports; that will tell you something about the quality of the earnings. If the quality is good and the dividends are not too high, a reasonable share of earnings should fall through to equity. That was the good news in the otherwise disappointing earnings turned in by Carmax (KMX) and Lindsay Corp (LNN). Both stocks got crucified, but I think the selling was way overdone, long term. Of course for Lindsay, the stock was significantly overbought before the earnings came out.

Thursday, June 12, 2008


Mets June Swoon and WSJ musings

The Mets have serious issues, I'm afraid. The shaky bullpen now extends to the formerly reliable closer, Billy Wagner, who has blown three saves in a row. It looks like it's time for a change. That usually means the manager - exit stage left. However, in this case the real culprit may be Omar Minaya, the GM.

I still say the team's troubles stem from Omar's decision to jettison manager Willy Randolph's hitting coach last year and bring in Ricky Henderson and Howard Johnson. Henderson in particular seemed to affect players' attitudes negatively, but the real damage was to Randolph's authority. If the manager can't name his own coaches, the players know he is not really the boss, and that's the end of that. Not surprisingly, the team continues to underachieve.

On top of that, Omar changed his whole approach in coming to the big budget New York team. In Montreal, where he built his reputation, Omar's teams were young overachievers, and typically he lost his best players each year since the Expos could not afford big salaries. With the Mets, he has traded many of the young prospects for bigger salaried name players, who have usually turned out to be either overrated or past their primes. The result is an old, injury prone team that lacks the grit needed to win consistently.

So even though Willie will go first, I suspect that Omar will be out at the end of this season too. Pretty frustrating stuff for Mets fans.

The Guantanamo decision is in from the top court, and it went against the Bush administration, effectively throwing terrorist trials back to the civilian criminal court system. The President, missing the point, criticized the decision because of its implications for our security. Actually the Court should have decided the case based on what the constitution says. However, the majority's reasoning was as flawed as the Bush criticism, ascribing it to the prisoner's constitutional rights. But the enemy combatants have no constitutional rights, being neither US citizens nor US residents. They also have no Geneva prisoner rights not being soldiers for a signor of the Geneva Conventions. So the Court made a bad decision but not for the reason that the administration claimed.

Regarding the politics of the matter, the liberals appeasement drumbeat that Guantanamo should be closed and the prisoners either tried or released has again been shown to be what it is by the revelation that one of the prisoners released in2005 has died a suicide bomber, taking about a dozen other lives with him. Guess he really was a terrorist after all.


In case anyone was wondering why I haven't been quoting many WSJ columns in this blog recently, it's not because there hasn't been an awful lot of great material there. It's a shame that some WSJ readers only see the weekday editions and miss out on the weekend edition columns that include Peggy Noonan's. Last weekend's edition featured a great column by Michael Ledeen of the American Enterprise Institute called "Iran and the Problem of Evil", highlighting the parallels between the West's failure to deal with Iran now and Nazi Germany in the run up to World War II. He effectively points out that both Germany and Iran made no secret of their intentions to commit mass murder and aggressive war, yet neither has been taken seriously by Western intellectuals. Pretty frightening stuff.

The Israeli's of late have been equally explicit about the probability that they will have to make a preemptive strike on Iran's nuclear facility, and soon. This reality has also been echoed by President Bush in the last few days, sort of a verbal wink and nod. I know that thought strikes terror in the hearts of the Bush Haters, and even he is smart enough to let the Israeli's do the heavy lifting, but the prediction here is that it is likely to happen sometime in 2008.

Meanwhile, we are not doing enough to replenish our weapons and fighting forces and that only emboldens our enemies, including North Korea, which continues to stall on its promises regarding its nuclear program. An Obama administration given this international situation is a pretty worrisome prospect.


Another really provocative column was Brian Wesbury's "Change We Can Believe In Is All Around Us" from yesterday's op ed page. The theme here is that rather than embracing change, represented by the globalism of the economy and productivity gains, the Obama campaign represents a longing for a past that cannot be restored. The last two paragraphs constitute a great summation:

"In contrast to what some people seem to believe, having the government take over the health-care system is not change. It's just a culmination of previous moves by government. And the areas with the worst problems today are areas that have the most governmental interference - education, health care, and energy.

"The best course of action is to allow a free market economy to reallocate resources to the place of highest returns. In the midst of all the natural change, the last thing the US economy needs is more government involvement, whether it's called change or not."


On 6/6 I sold 100 shares of Axsys Technologies (AXYS) out of my IRA for 62.78. These were shares I bought on 5/1/06 at 16.80. I have said before that in slippery markets like we are now enduring, it is more important than ever to take some profits, reinvesting in stocks that have less downside risk. This is a philosophy I share with Mad Money host Jim Cramer, although he never would have had the patience to wait until this became a virtual 4 timer. With me, it's not patience either, it's our still-working formula. On Monday we were back to the buy side, adding 20 more shares of Precision Castparts (PCP) at 104.35, one of our infamous "zero buys.". Yesterday, we averaged down again in Hauppauge Digital (HAUP), buying a 1000 shares at 2.06. There's got to a bottom somewhere for a company with zero debt, doesn't there? If this doesn't seem like less downside risk, well that's a good point, but I refer you to the HAUP and PCP charts for perspective.

Repeating the Musings disclaimer, neither this blog nor its author is an investment advisor, and in fact, the stocks mentioned here may not be suitable for anyone, least of all, me.

Thursday, June 05, 2008


Post Frisco Musings

Exactly a year after my last visit, this time I was prepared for the fall-like conditions of San Fran in early June. Yes, it was windy and very cool again all five days, but I had a fall jacket and pullover sweatshirt so at least I wasn't shivering this year. I returned to most of my favorite haunts in the area around Market Street - the Jazz Bistro (where I renewed my multi-year acquaintance with sax-man/ teacher Bill (Doc) Webster), Foley's Irish Pub, and of course Dave's (twice) for lunch. Also, Annabelle's where they were serving an excellent Silver Oak Cabernet. In addition I had an excellent meal at an Indian Restaurant and the best meal of the week at Boundaries, across the street from the Bay.

Stayed at the Palomar across the street from the Marriott (the host hotel), saving my company more than $100 per night, but also enjoying the quieter, classier hotel with a room equipped with a CD/DVD player, etc. This was a very good choice.

Since the Giants were in town this time, I was able to take the 20 minute walk to AT&T Park twice - on Friday (an extra inning Giants loss to the Padres despite an eighth inning round the horn triple play) and Monday night's thumping of the weary Mets, who had arrived in SF at five in the morning after a game at Shea Sunday night.
The ball park is quite friendly and fun, despite the constant wind (and frigid June temperatures). I enjoyed being able to walk there and back.

Despite their bad night on Monday, the Mets have shown signs of life lately, though they still are playing pretty sloppy defense. Don't want to be chasing the Phillies all year, I can tell you that.

Hillary is throwing in the towel at the insistence of party leaders, though I am sure her every instinct tells her to keep her delegates through the convention, hoping for an Obama implosion that would turn the super delegates around. The fact that Obama and McCain are polling in a virtual dead heat spells trouble for the Dems, since they have had all the visibility and spent all the money. That might make Obama turn to Hillary as a VP candidate to try to hold her women voters in place, even though the last thing he wants to do is to include the Clinton's in his administration. I don't think she wants that job anyway, since she will be inevitably marginalized if forced upon him. However, it goes, I still think the Dems have eliminated Hillary by means of their usual circular firing squad.

So that makes Virginia Governor Kaine the favorite, I guess, since that is a battleground state Obama needs and can win with a little help. I guess Kansas Governor Sibellius is also a possibility, pandering to the women voters. Or, to counter his own inexperience, Obama might reach out to Senator Biden or Dodd, though neither comes from a battleground state. Governor Richardson would be a shoo-in except for his too colorful personal life.

On the Republican side, I think McCain is likely to surprise, not picking Pawlenty, Crist, Hutchinson, or even Sanford, the current favorite. I wonder if Condie Rice might surface again as a possibility. Or General Powell. They are talking a lot about Louisiana Governor Jindal but I think he is too young.

One thing the Dems believe they have going is that regardless of the outcome of the Presidential race, the new voters brought into the process by Obama will assure them of big pickups in Congress. The question is, how many of the new young voters are in districts where the Dems don't already have easy wins, and how many will maintain their enthusiasm in the voting booth to look beyond Obama's name on the ballot. My guess is there is less here than meets the eye. In fact, I think all of the election races will depend on whether the GOP can turn out their own voters again. Right now, their enthusiasm is pretty low, but that could change, especially if Iraq keeps going better and the economy starts to improve. They need to recruit better candidates though.


Significantly, the Fed's Bernanke changed the economic climate the other day, committing to higher interest rates and a stronger dollar. Could Ben be a closet Musings reader? Don't look for the economy to come roaring back, but the new Fed policy increases the chances of avoiding serious inflation and is healthier long term than were the inflationary tactics of "Helicopter Ben."

Whatever happens, it is high time for the Congress and the new administration to get our nation's fiscal policy back in order, starting with ending all these senseless subsidies (for ethanol, corporate welfare, etc.) and finalizing a reasonable permanent policy on the estate tax so people can do some actual planning again. I would like to see the "tax cuts" (not really cuts while we have the AMT) made permanent, but at least the 15% dividend and long term gains rates need to be preserved if nothing else is.


On 5/28, I bought 6 shares of Alleghany Corp (Y) again at 371.92. Yesterday, returning to action, I bought 900 shares of Hauppauge Digital (HAUP) at 2.26, hoping for its seasonal rally in the fall. Today, I was back buying the hapless Cardiodynamics again (CDICD), 1200 shares at 1.80. This was another limit order, but I got my whole order executed, albeit in five pieces. As long as all the pieces happen the same day, E - Trade charges only one commission.

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