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Thursday, May 20, 2010


Who Can Keep Up?

Blogging once a week is about all I have time for, but really I would like to put in two or three posts a week if I could, just to get a word in edgewise about all these amazing things that happen so quickly. I used to wonder why certain syndicated columnists could only produce one or two columns per week (and why they got paid so much for so little productivity) but after blogging these last five years or so, I understand. Of course if this was my job, and I didn't also do that other one, I think I could handle three columns a week.

Of course today's columnists also tend to double as TV pundits, authors of real books, maybe radio show hosts, etc. so they are just too busy also. So I am resigned to a weekly blog entry, which is how it's been for a while now, and that means that most posts are made up of brief observations of the items that I find at least semi-interesting.

Item: Tuesday primaries hard on party regulars. The Republican's party's pick to succeed Jim Bunning ran into a Tea Party juggernaut named Rand Paul, son of the libertarian Congressman, a somewhat loose cannon who really captured the mood of the moment. Despite an inclination to say the politically incorrect thing, or perhaps because of it, he is very likely to win the general election in November. Also, as predicted here when he switched parties last year, Arlen Spector was unable to win a primary in either party, losing badly in his adopted party to a liberal "real Democrat," Joe Sestac. Also Sen. Blanche Lincoln of Arkansas is headed for a runoff, a primary she could well lose, and even if she doesn't, she is a heavy underdog in the general election.

This may in fact be a year when incumbency is not the advantage it normally is, but we still believe the Democratic incumbents are much more vulnerable than Republicans.

Item: Cloture motion passes Senate to end debate on Financial Reform...but debate goes on. Senate rules seem more inscrutable than ever. We had it wrong in a previous post - the Senate really did require 60 votes to BEGIN debate on this bill. I'm not sure why - perhaps they had an objection to a unanimous consent motion to begin debate. Whatever, they finally got that, and have had a robust and actually substantive debate over how to regulate financial services. This notwithstanding an absolute plethora of ridiculous ideas that will ultimately hurt the economy. Anyway, after one defeated motion to end debate, Senator Brown became the third Republican to vote for cloture, offsetting two sensible Democrats who wanted to continue ad nauseum. Showing rare intelligence and bipartisan consideration, Senator Reid, pocketed cloture but has elected to continue debate for as much as another week so that additional amendments can be considered.

In the end, we are going to get over-regulation that deals with everything EXCEPT what really caused the financial crisis in the first place - the fraudulent activities involving Fannie and Freddie and their Congressional enablers, and the "issuer pays" business model employed by the rating agencies. All of the other problems identified are merely effects springing from those causes. Not that some shouldn't also be dealt with. Reasonable incentives for companies to install proper governance and executive pay limits should be put in place, and either the Volcker rule or some form of Glass Stegall rules needs to be put resurrected to separate FDIC insured banking operations from investment banking. Let's see what comes out of conference committee. Many still say the House bill has more of what we need than the Senate bill.

Item: Passings included Robin Roberts and Hank Jones. Hall of Fame pitcher Robin Roberts was among the most popular of Cooperstown immortals, especially in Philadelphia where he was the young ace of the 1950 Whiz Kids and a perennial 20 game winner even on the terrible Philly teams of the remainder of the decade. A power pitcher, Roberts went out there every fourth day, more often if needed as down the stretch in 1950 when he started something like 3 of the last 5 games. Half of his starts were complete games, throwing mainly high hard ones, so in a typical season playing in cozy Connie Mack Stadium, Roberts would have at least 40 decisions and be among the league leaders in innings pitched, strikeouts, and homers allowed. After losing the edge on his fastball, Roberts moved on to Baltimore and reemerged for a couple of decent seasons as a finesse pitcher.

Hank Jones was one of three great jazz playing brothers. Playing piano as a leader, or accompanying the greats like Ella Fitzgerald, Jones worked into his 90's and had been scheduled to headline at Birdland next week. Befitting his longevity there are Jones records available in all of the dominant jazz styles of the last 60 years, many featuring his wonderful touch and rhythmic virtuosity. His brother Elvin Jones was the great drummer for the classic John Coltrane quartet.

I have little to say about the Mets and their stinking road trip, a 2-6 affair. With Ollie Perez banished to the bullpen and the mysteries surrounding Jon Maine continuing (he only threw 5 pitches tonight, none of major league caliber, before spitting the bit), one has to wonder more than ever if this team has any managerial leadership at all. They come home to face the Yankees, who likely will be in a surly mood after a couple of games against the tough Tampa Bay Rays. So it is not likely that Jerry will be removed until at least after the subway series is over. If the Mets get swept by the Bombers, that might be it for Jerry and this mainly inept coaching staff.

Stock market corrections can be pretty nasty, and the trouble is that you really don't know whether you are in a correction or a bear market until it's over. What you do know is that your year - to - date gains are melting away. Like golf, investing has its humbling moments. We've been gradually de-risking for months now but still own plenty of stocks that are taking a pretty bad licking. The upshot is that our formula will have us buying, albeit a little less frequently, and that means more money siphoned off into preferred's, gold, and TIPS. Though the last inflation report was good, this is in keeping with Bob Prechter's analysis that says we should have some deflation before hyperinflation sets in. Since it is hyperinflation that concerns me more, we want inflation hedges.

In any event, we are happy we raised all that cash selling stocks into the March - April rally.

Last Friday, we bought 100 shares of Bunge (BG) at what seemed to be the bargain price of 51.50. As frequently happens in corrections, the cheap stock got even cheaper. On Monday, our risky zero buy was again Bank of Granite (GRAN), which I now hope will be taken over by another bank before it is commandeered by the FDIC. We bought 1400 shares at 1.45. Today, we bought 100 shares of Met Life Preferred
(MET.PR.B) at 22.89.

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