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Monday, March 23, 2009

 

Left Coast Musings

I hate to admit it but I enjoyed San Diego this trip, although 5 nights is a long time to be away on business. But I had three really first - rate meals, beautiful weather, though it starts to get boring when there is NO variation, and some fun on St. Patrick's Day at Dublin Square Pub in the Gaslamp District. They actually try to make a big deal of St. Patrick's Day in San Diego, closing off a two square block area and bringing in some bands for a $25 dollar cover. I passed in favor of the nearby Irish Pubs, and was suitably rewarded for making the right call. It was so beautiful out that I hung with the smokers out on the patio. One of the characters was a Seth Rogen look-alike, sound-alike, act alike. It definitely felt like I had been dropped into a Judd Apatow movie.

Anyway, it's even better to be home, especially now that we are getting very close to golf weather. And I have to do my taxes.

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Instead of a blue Monday, we had fireworks today, and big Monday moves are rarely sustained, so we need to tread carefully the rest of the week. However, the upturn we forecast is very much in tact, our target of a 2500 point move still in the wood as the bowlers might say. Market watchers attributed the move to Gaithner's plan for dealing with toxic assets, but critics were out there and I am less sure it was that then it was a general feeling that the financials and energy have bottomed (and maybe even housing!). Employment lags, as we know, so we still have some pain to endure.

Some folks are concerned that we are saving instead of consuming, but I think this is a good thing. Long term, we need to move our savings rate from 0% to something north of 5%, even 10%. We can get healthy serving growing consumer demand from other countries and continents. We got into this mess from too much debt, both private and public, and hair of the dog is NOT the cure. So we don't need banks to resume lending on all four cylinders, just enough to allow business to refinance inventory, roll over debt, and for the housing market to gradually recover. Beyond that, banks should exercise lasting prudence (remember Forbes columnist Ashley Bladen?).

So there is reason for hope, and recovery may come in spite of the administration's left wing agenda and the profligacy of the states. The two policy mistakes that do concern me in terms of stifling recovery would be much higher taxes and protectionist measures. That's where depressions come from.

One such protectionist measure already being put in place is the restriction / prohibition of Mexican trucks, a blatant Dem payoff to the teamsters. Mexico, rightly immediately slapped tariffs on much of the goods we export to them. All of this makes a shambles of NAFTA, arguably one of the true success stories in our recent economic history.

Another way we are failing our southern neighbor is by continuing our insane war on drugs, while at the same time doing nothing to stifle our domestic demand. This has caused extremely violent and ruinous drug wars in Mexico. Meanwhile, illegal drugs come into this country, seemingly without limit. It's time to decriminalize possession and usage and nationalize the supply and sale. That's right, nationalize the drug trade, not the banks. How's that for a slogan?

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On March 20th, I bought 400 shares of Gencor (GENC) at 6.311, a value buy, and 103shares of Home Diagnostics (HDIX) at 5. That's right, 103. As you might guess, this was simply another limit order snafu. The order was for 400 @ 5, 103 executed off the bat and that was it. Today, I was much smarter, putting in an order for Bank of Granite (fearlessly) under the terms all or none. The limit order of 1100 shares of GRAN executed at 1.92, well below the opening, but alas, a little above the close, one of the few stocks to lose ground today. Badly timed idea, well executed. Nobody's perfect.

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