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Wednesday, December 29, 2010


Farewell, 2010

One week to go in the NFL regular season and unlike most years, there's just not all that much to be decided. In the AFC, New England clinched home field, somehow the Chiefs won the hapless West, and the Jets and the North loser (Steelers or Ravens) will be the wild cards. The Steelers and Ravens still have to decide the North, with one getting a bye, the other a wild card. Indy is at home against Tennessee, needing a win to leave the overachieving Jags on the outside looking in.

In the NFC, the Eagles won the East but not a bye. Instead, the byes likely go to Atlanta and Chicago, with the defending champs New Orleans getting one wild card. The other is in doubt since Green Bay needs to beat Chicago on the frozen tundra, assuming the Giants can turn things around in Washington. Of course, Tampa Bay can complicate the tie breaks by scoring an unlikely upset in New Orleans.

The Giants are that incredible poster child for what can happen to an otherwise good team that can't protect the football. I remember when a good Redskins team had that same disease when Sonny Jurgensen threw multiple interceptions every week. When Sonny was injured, Bill Kilmer took over, threw possession passes, and the Skins went on a tear.

But the Giants' answer is not that simple. Not only is Ely vulnerable to the interception, the running backs also seem prone to fumble. One wonders if the freedom in Coughlin's offense that allows skill players to freelance also makes the team vulnerable to turnovers. In any event, I expect the Giants to be more disciplined Sunday and give the Redskins another good thrashing, following the Skins all out upset win last week (and Jets fans thank them). However, it simply may not be enough, though the Bears are motivated enough. Given the problems the Bears' defense is having lately, I don't know if they will beat a desperate Green Bay team in Wisconsin.

If the G-Men miss the playoffs, they are likely to be considered the best non-playoff team since the format went to 12 teams. Small consolation.

If we thought Obama had righted the re-election express by signing onto the tax cut deal, we have had second thoughts since the administration moved to regulatory cram-down mode as its new method for carrying out the progressive left-wing agenda. In short order, we have had EPA move to regulate carbon, the FCC move to adopt net neutrality rules, and now Medicare announce they will reimburse physicians for end- of- life counseling.

Let's put these in perspective.

Though the Clean Air Act authorizes the EPA to regulate gases and other contaminants it finds (after study) to be dangerous, the determination that carbon is a danger to man rests solely on the dubious proposition that it is a greenhouse gas causing global warming. In exchange, the EPA rules will cause significant job loss and economic expense which could not possibly be justified by any "savings" achieved by its regulations. Furthermore, the EPA has conducted none of the required cost benefit studies as prerequisite to its authority.

When President Obama said that cap-and-trade's failure was no big deal - there are "other ways to skin the cat," this is apparently what he had in mind.

So, contrary to the expressed wishes of Congress (even that last awful Congress), and relying on contrived models purporting to show human causes of global warming (as opposed to any direct evidence), the EPA intends to legislate by means of regulation. It will be interesting to see the reaction in the new Congress. One could envision a veto proof bi-partisan majority reining in the EPA on this one. While they're at it, how about amending the Clean Air Act to prevent any further nonsense of this kind.

With respect to net neutrality, this blog has commented before on this misguided over-regulation. Frankly, anything the FCC has done in the last 20 years is pretty much suspect as far as I am concerned. Believe me, I have no love for the cable companies or any of the other DSL providers, but this is one area where we do not need interference from the Feds. I don't know too many consumers who are actually concerned about the prioritization rules enforced by internet providers.

On the other hand, end-of-life counseling - the living will concept - is an important area of discussion for doctors and patients to address. Frankly, it already occurs routinely. I don't see what's wrong with medical practitioners billing Medicare for this time. This is different from the "death panels" excised from the health reform bill, which were aimed at denying doctor recommended treatments to elderly patients. The problem here is that the Medicare bureaucracy attempted to slip this change in without public notice. More abuse of process.

I note Republican leaders have been treating this last proposal with the delicacy and fair handedness it deserves, and not reflexively reviving the death panel discussion. That's good. The public is going to recoil at the high handed process abuse of Obama's regulatory initiatives, but there is no need to pour gasoline on the fire by opposing rules that make sense. If the GOP can build a sense of evaluating policy issues from the standpoint of serving the public, it will be in position for more gains in 2012, including the White House.


I happened to catch the MLB presentation of the original film of the 7th game of the 1960 World Series, with Bob Costas interviewing Bill Virdon, Dick Groat, Bobby Richardson and Hal Smith between certain innings. I remembered this game vividly, and recall persuading (with considerable difficulty) our 5th grade teacher to put it on the radio during the school day. We tuned in in time to hear Berra's homer and then Smith's homer. I think I was home in time to see the Mazeroski walk-off.

What a game this was! It had everything, and the world owes Bing Crosby for saving this print (NBC did not!?). To see Clemente, Mantle, Maris, Law, and all the other great players who participated again was really something. Also to hear Bob Prince and Mel Allen, play -by -play magic!

It was Casey's last game as Yankee manager, and maybe for the first time I understood why he was let go at age 70 after the game: pitching Ford in games 2 and 6rather than 1, 4 and 7 against Law, the quick hook on Bob Turley, letting Bobby Shantz bat in the 8th (though he was a good hitting pitcher), he just left himself open to a lot of second guessing. The bad hop that injured Tony Kubek on a double play ball that turned the game - just fascinating to see it replayed.

I am sure this will be shown again. If you get a chance to see it, you should.

----------------------------------------------------------------------------------- We did get 17.8 cents for our last 200 Blockbuster shares - good riddance - versus a purchase price of 17.10 in 2003. Not the way to get rich, but it will lock up our max $3,000 tax deduction for 2010. On 12/22, we bought 300 shares of Pulte Homes (PHM) at 7.34, even as housing seems headed for a double dip. Don't try this at home. On 12/27, we sold 100 shares of CRDN at 31.55, bought for 31.02 on 3/3/08. Of course, our average cost is well below that, but we use FIFO and in this case, it keeps our gains to a minimum. No matter here since it was sold from the IRA. Just following the formula. On 12/28, we bought 100 shares of Aegon Preferred (AEH) at 20.70. Today, we bought 300 shares of Presidential Life (PLFE) at 10.02, a value buy. Two more trading days left in 2010, and one more transaction to put through, probably another sale. Despite the realized losses in out taxable accounts, we offset a lot of those with gains in the IRA, so things have been relatively tax efficient. But mainly 2010 has been a big up year. Remember, the market has discounted an improving economy in 2011, so guard against irrational exuberance. However, typically the third year of a Presidential cycle is also up. We'll see.

In 2010, we cleaned out most of the dogs, took our losses but registered a solid portfolio gain while adding conservatism in the form of preferreds, and inflation protection in the form of TIPS and GLD. Here's wishing a Happy and prosperous New Year to all Musings readers.

Tuesday, December 21, 2010


Jets Need one more for Playoff Berth

One truism I long ago learned about pro football is that things are always darkest before the dawn. How many would have suspected that the Jets coming into Sunday's game in Pittsburgh even had a chance to win there for the first time in franchise history? Yet, the experienced NFL bettor would have been on guard against the temptation to bet the ranch on the Steelers. For one thing, it figured to take two weeks for the Jets to adjust to the key loss of Jim Leonhard, and they had been through that. For another, the team's skill players figured to bounce back with a strong performance after two invisible weeks. Pittsburgh was also coming off a couple of maximum efforts and was susceptible to a let-down week.

Still, just as one should not have been overly depressed by the Jets' losses to New England and Miami, it would be a mistake to get too optimistic based on Sunday's impressive win. This team still does not dominate on either side of the line, even in victory. Also, the coaching continues to be a mystery in many ways. The Jets did have success in the first half running off tackle, but mysteriously did not continue that in the second half, running almost exclusively between the guards. On their last two possessions, the Jets misfired on three passes when they should have been working the clock and forcing the Steelers to use their time-outs. In one situation, they had a nice run by Greene to set up second and four, but instead of inserting Tomlinson to pick up an easy first down off tackle, they tried to surprise the defense with two passes, resulting in a punt without forcing time-outs or running down the clock.

There were some imaginative trick plays so we saw the best and worst of coaching decisions, but in the end, the Jets played very well to get in position to win, only to be very lucky that they held on.

As for the Giants fourth quarter swoon, there is really not a lot you can say. They beat up the Eagles for 3 quarters plus, and suffered a coaching and execution melt down that simply wasted that effort. I don't think it helps matters that Coach Coughlin loses his cool in such situations. He spent literally the last eight minutes berating his players, not that they didn't deserve it, but how was that helpful? This after creating a game plan and preparing his team to win despite the loss of his key receivers. It will be interesting to see how the Giants react next time out.


No sooner do I go crazy for the Knicks than they lose three straight, albeit still playing hard, entertaining basketball. What's a little worrisome is that the team is suffering through a rash of minor injuries to key players that might slow it down for a while. This would be a good time for Coach to give his bench players some extra minutes.

President Obama never looked better than at the tax rate extension signing ceremony. it is key for him to declare his independence from the progressive base that threatens to drag him down from the White House even as they are marginalized. Nancy Pelosi, the gift that keeps on giving, seemed stubbornly irrelevant during the tax debate, mindlessly repeating the inane talking points that she had distributed to her followers in a speech that made me wonder if she might be suffering dementia.
She had to repeat herself several times, running way over her allotted minutes without adding anything to the discussion.

The left wing bloggers continue to act as if nothing happened last November as they pursue their last few trinkets from this hapless Congress, including Don't Ask, Don't Tell (Don't Care), and worry about whether Bradley Manning is being tortured in his military brig (presumably, he is not getting enough exercise or writing paper; for the left, that now constitutes "torture"). They and Nancy are about to re-learn that there is hardly a form of animal life on this planet lower on the food chain than the minority party in the lower house of a bicameral legislature.

The US is sadly overextended militarily. Say what you will about George W., and whether Iraq was the correct adventure to embark on, he instinctively knew not to open up a second front in the quagmire that has always been Afghanistan. Obama left himself few options after campaigning on the "war of necessity" versus the "war of choice." I would say that was a mischaracterization of both, but the more important understanding is that to take them on simultaneously is foolhardy.

Equally foolhardy is to start on a military commitment while imposing an arbitrary deadline on yourself, but that's exactly what Obama did in Afghanistan. This immediately put time on the side of the Taliban. Joe Biden, he of the "foot in mouth" disease, reiterated the administration's commitment to the timetable last weekend, even as the administration has been trying to come off it. Can't anybody here shut him up? (answer - No).

What brought all this to mind was the near blow-up in Korea, where surprisingly, cooler heads did prevail, at least for now. We have a REAL commitment to South Korea, and what were we supposed to do if a shooting war actually occurred? Believe me, there aren't enough gays trying to get into the military to make us effective on three fronts.

It seems to me this administration is going to have to figure out a military strategy that makes sense in this dangerous world. Our battles have to be picked more intelligently and less politically. We've also got to figure out an effective strategy for dealing with the real threats, and that would mean Iran and North Korea. I don't believe we are getting much benefit for the sacrifice of blood and treasure we are making in the so-called war of necessity.


Interesting to see in the WSJ that people are already repeating my thought that the Fed should consider buying Muny Bonds instead of Treasuries. That's better than handing the states money in the form of stimulus payments from the Federal Government. If you own municipal bond funds, you should expect to see a grim statement at the end of December. Don't let it throw you. That's why we diversify.

On December 13, we bought 20 shares of Lubrizoil (LZ) at 106.22, a "zero buy." On December 15, we bought 100 shares of FPL preferred (NEE.PR.C) for the IRA at 24.32. On 12/17, we think we sold our last 200 shares of Blockbuster at something like 18 cents (and still don't know what would possess people to bid it up that high) but we haven't got the price confirmation yet. Not that it matters, we figure to net close to zero. On 12/20, we bought 200 shares of Bryn Mawr Bank (BMTC) at 17.57.

Sunday, December 12, 2010



In open societies where political majorities tend to form around the middle of the bell curve of opinion, the theory of triangulation says that under normal circumstances, you want to be positioned in or near the middle to win elections. It is unusual when fringe candidates have an opportunity to win, though it does happen. But a reliable strategy for survival is triangulation.

In recent times the masters of this approach were Bill Clinton and Tony Blair. Clinton ran as a "New Democrat," a kind of socially liberal but economically middle of the road candidate, one who had a very good ear for the public's view and a willingness to pay attention to opinion polls. After winning the Presidency, he took a lurch to the left, probably driven by his wife's and advisors' policy preferences, but after a couple of disasters (especially Hillarycare), he recaptured the center in time to win re-election and ride a Republican Congress to a budget surplus. This enabled him to overcome his most outrageous personal behavior.

Tony Blair led "New Labour" into government after more than a decade in Parliament's wilderness, and won a second term despite the lack of any defineable strategy for running the government. In fact, it was his ad hoc approach and search for the moderate solution to every problem that enabled him to be so dominant. The Conservatives and Liberal Democrats actually fed into his strategy since they adopted fringe positions on the right and left respectively. Always looking moderate by comparison, Blair's tenure actually depended on restraining the true believers in his own party. Eventually, they called him on his pre-arranged deal with Gordon Brown, his partner in government, to turn over the reins. But Blair's luck held again. He got out of government in time to miss the worst of the financial crisis and is having a successful career as a peacekeeper and elder statesman. Brown, captured by his party's left, was defeated quickly by a Conservative candidate who more successfully adopted the Blair strategy.

Last week, we saw President Obama make his first real concerted effort to implement a triangulation strategy. In reaching a compromise tax rate extension with Republicans, Obama, really for the first time, attempted bi-partisan engagement. In part, this was simply a bow to reality since Republicans will be taking over the house in January, and might have passed a similar bill in the Senate. If that happened, it would be difficult for Obama to veto.

Interestingly, the House Democrats were the ones excluded from the table, and they howled. We expected the social democrats (who call themseleves "progressives") in academia, labor unions, and moveon.org to howl and they did not disappoint. Already, there were accusations that Obama was a conservative, a closet Republican and other equally ridiculous assertions, followed by the inevitable conjecture about primary challenges in 2012.

For all his rhetorical skills, Obama seems to be an essentially poor communicator. It's all too academic, too self-sure, and lately, way too antagonistic. This time it was sort of... I hate to do it but I have to deal with hostage takers on the right and purists on the left, and this was the best deal I could get...

So now, everybody hates him.

We said this was going to be the solution, it was inevitable, and frankly, the estate tax deal also strikes middle ground fairly well. For those D's who think Obama gave away the store on that one, the government will still be confiscating one-third of taxable estates, consisting mainly of our AFTER TAX savings. I would say Obama struck a more than fair deal for his redistributionist fans.

The reality is that the left's commitment to their class war goal of punishing the "wealthy" and their belief that elites should run our society by means of an ever growing federal government, can not be exaggerated. If you don't believe that, just read the breast beating comments on the progressive blogsites. If Obama is ever going to have a chance in 2012, he will have to show he can separate himself from those folks. Though he made a move away from them this week, I am not convinced that he can ever be a successful triangulator, since he seems to be a true believer too. He has not been convincing about much of anything recently.

So a couple of bombs go off in the vicinity of Iranian nuclear scientists, killing one, and the best the Iranians can do is blame the U.S. or Israel, they don't know which. Sadly, the U.S. seems to have neither the will nor the capability to pull off this type of operation. I would like to believe the Israeli's still do.

As far as WikiLeaks publication of all those secret cables is concerned, I think that constitutes an obvious felony, but whether I am right about that or not, the bigger concern is, how was it able to happen? Wouldn't you think there would be some kind of fail safe security procedures to prevent such leaks? Is there any adult supervision anywhere in this government?

We expected last Monday night's football game to be a disappointment and as Jets fans, had no illusions about our underdog status for the night. That having been said, the Jets continued their season-long difficulties on both lines of scrimmage, and were not really competitive. It's good to be 9-3, and having Miami and Buffalo still at home should get us to 11-5, but how deep can you go in the playoffs if you can't protect the quarterback, run the ball, and get to the other guy's quarterback?

The Knicks' roll continues, home, away, it doesn't matter. Get the ball, outrace the other team to the basket, then get it back again. It's all offense, all the time under Mike D'Antoni. When was the last time you saw the Knicks over 100 points every night?

On December 15, 1949, Birdland opened, fittingly with the Charlie Parker Quintet. The drummer for that gig was Roy Haynes. Last Thursday, night, I was privileged to see that same Roy Haynes, 85 years young, leading his quartet at Birdland. Still fit enough to bounce around the stage, pounding his drums from seemingly all angles, hands and feet in simultaneous motion, Haynes presence dominated while still generously leaving room for almost all of the solos to his much younger bandmates. All aquitted themselves brilliantly and the packed house (almost packed for the second set as well) was clearly engaged from the start and aware they were enjoying something really special in jazz. This was among the most memorable of so many great shows I have attended at Birdland.

John Pizzarelli comes in this week, I believe. Check your local listings. Reservations probably a must.

When we sold 1542 shares of ADC Telecommunications on 12/3 at 12.73, part from the IRA and part not, we took about a $5,000 profit on those shares purchased between 2001 and as recently as 2010 (at 6.27). That cut into previously taken losses over the years on this stock and on its options ( this was a covered call disaster similar to the Enron debacle). I thought the takeover bid was too low, and would have preferred seeing ADCT continue to recover on its own, but it was not to be.

On 12/6, we bought 50 more shares of Honeywell (HON) at 51.28. On 12/8 we bought 15 shares of GLD for the IRA. Our gold position keeps growing, and so does the price, which this time was 135.89. On 12/10 we bought 200 shares of Pfizer (PFE) despite the musical chairs game in the CEO office. The drugs have become income stocks and that's OK with me. Speaking of income stocks, we got a few more dividend increases last week including GE for the second time this year!

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Friday, December 03, 2010


D.C. Hi-Jinx

The Pelosi - Reid show has moved from high drama to low comedy in this lame duck session as the Dems stage show votes to demonstrate to the public that they really want to preserve the Bush tax rates for those with incomes up to $250,000. Never mind that they would screw investors at all income levels by allowing tax rates on dividends and capital gains to rise, or that the people they claim to help would be the ones losing jobs when small business owners decide to lay off workers in order to offset their own increased withholding. Of course, the public is well aware of the D's position, having just gone through a campaign where it was reiterated ad nauseum, and then having decided to repudiate those same Dems. No wonder 20 Dems in the House refused to even go through the motions of voting Yea on the Pelosi proposal, voting Nay instead; those folks (many forced into retirement by their constituents) having got the public's actual message loud and clear.

Assuming you've been to this site before, you already know how this ends, with all of the current rates staying in place for 2 or 3 more years, and with Obama keeping the 99 week unemployment benefit in place for another year in exchange. Of course if anything is going to keep our unemployment rate at 9% or more, that's it, but never mind, we'll throw him that bone, he's so pitiful we just have to do something for him.

More interesting to me is that Obama's deficit commission, which was set up to fail of course, actually turned in an 11-7 vote for a program of serious spending constraints and revenue enhancers that represent breaks with political third rails here, there and everywhere. of course, it could not reach the impossible bogey needed of 14 votes to actually send a formal recommendation to Congress, but 11 votes are not bad, especially considering there was a pretty equal bipartisan split among the supporters. It should also be pointed out that several of the no voters like Congressman Ryan opposed, not because they thought the program too draconian, but because they felt it did not go far enough on restricting entitlements. I love Ryan, but this time, he may have erred by letting the perfect be the enemy of the good. Imagine if they had attained the unreachable 14 votes! That would have set Congress and the administration on its ear. The liberals seem to be the ones bleating about these proposals and they would have been beside themselves if they had passed, something that Ryan and allies might have considered.

Anyway, just having come this close puts some really important changes in play, like eliminating many "treasured" (but useless for most people) deductions and considering whole programs and departments for elimination. Man, if it was up to me, I'd take a meat cleaver to this federal edifice. For starters, we could lop off Energy, the FCC, Education, all support for public broadcasting, etc. etc. Let's decriminalize drugs and distribute them as legal but controlled substances. Let's review and eliminate all manner of federal subsidies - agriculture, higher education, etc. No more earmarks. Let's really bring entitlements back to earth - raise the full retirement age for social security, rationalize medicaid, start over on health reform. The savings would be all but incalculable. The deficits we are running today are criminal, and they will undermine this country if we don't address them soon. The public's message delivered on November 2nd is clear - we're ready to start. At least the commission seemed to hear it, even if liberal D's have not.


Thanksgiving night, my daughter and I went to the Meadowlands new stadium to see the Jets, and enjoyed a relatively (by recent standards) comfortable win. The new stadium is fine, although there was nothing wrong with the old stadium from a fan's perspective. Presumably there were not enough luxury boxes to suit the team owners. Anyway we had a great time.

This week shapes up as the Monday night GAME OF THE YEAR - SO YOU ARE HEREBY WARNED - a letdown is likely. But at least going in, the Jets are reasonably healthy and highly motivated. The Pats will be unbelievably motivated. Picture yourself as a player on that team and having to face Coach Bullycheck after losing TWICE to the Jets. Man, that's a little too ugly to comprehend. So the Jets will really have their hands full.

As for NY's other team (sorry, Giants fans), they had some first half red zone problems, but otherwise wore down the over achieving Jaguars. When the Jags had the ball in the fourth quarter, almost every play looked like a jail break as Giant pass rushers all but inundated the quarterback time after time. So that had to hearten the Big Blue faithful, maybe there won;t be a second half swoon this season after all. When the Giants look good, they are very good indeed.

New Yorkers don't quite know what to make of the Knicks' recent winning ways. Is this an aberration or has the D'Antoni "all hands on offense" style finally taken hold. Frankly, it's no matter. At least run and gun is fun to watch. Maybe we'll even go to a game when my daughter comes home for semester break.

Well, I've been busy, and not just with work. On November 24, we bought 50 more shares of Honeywell (HON) for 49.91, still a zero buy but one performing quite well. We elected not to trade on Black Friday, since the market figured to be a bit thin, but on Monday, we were back at it buying 25 shares of Con Ed preferred for the IRA (ED.PR.A) at 93.90. On the same day, we sold the remaining 500 shares of Ladish (LDSH) from the IRA at 46.50. This stock is subject to a takeover offer, part cash and part stock, as I have previously reported. We paid 13.19 for 200 of these shares on 12/31/08 and 9.51 for the other 300 on 2/17/09, for which I say thank you to "full service broker"" for that recommendation. By the way, some might think it took courage to step up and make those purchases in the midst of the financial meltdown, but what it really took was the discipline to follow our formula, which said buy, not sell, all during the depths of that awfulness.

On 12/1, we bought 400 shares of TAT technology (TATT) for the IRA at 5.50. This Israel based defense contractor may prove to be a lemon, but we are stubbornly following the formula, and this is a value buy. Today, we dumped the rest of our ADC Telecommunications, also the subject of a takeover, and we'll have the details of that transaction in the next post. Sorry for the teaser.

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