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Wednesday, January 26, 2011


The State of the Union...Better, Needs Improvement

The President's annual report card to Congress met the usual high standards of Obamaesque rhetorical skill, as the President continued his charm offensive aimed at independents and conservatives. However, it should be realized that other than reluctantly agreeing to extend all of the Bush tax rates, the President actually has done nothing helpful, and nothing really to depart from the progressive agenda.

Sure, progressives are moaning like jilted lovers, but that's because they are believing what they are hearing. On the right, we are skeptical and then some. As Bill Russell famously remarked about sizing up golfing buddies, "don't worry about their swing, just watch where the ball goes."

Take the regulatory review the President has promised. Digging a little further down, it appears we are merely going to eliminate outmoded verbiage on the books that no one has paid much attention to for decades. Are we going to see actual deregulation where it could help the economy, where it could aid in establishing energy independence, where we could actually become more efficient? Don't bet on it. Though the freeze on new off-shore drilling supposedly ended months ago, not one new well has been given the OK yet. Expedite natural gas from shale? Forget what you heard about natural gas last night. Finally get the trade agreement done with Colombia? What's taken so long? And still no treaty without imposing our work rules and other regulatory standards on our trading partner.

In the end, Obama will not do much of anything without the OK from his friends in labor, the plaintiffs bar, and the environmental activist community. And their basic premise is all about anti-industrialism. And people wonder why we have fewer manufacturing jobs.

What about education, our "sputnik moment." When push comes to shove, this administration is not going to buck the teachers' unions. So, just as Michelle Rhee was making great progress in turning around the worst school district in the nation, Washington D.C., out goes the maverick Democratic Mayor who appointed her in a primary. End of the Rhee reforms. Why? Because the D.C. unions opposed them. These are the President's allies. Mr. Obama made insightful comments about educational role models, but the black community has had one of the best for many years in Thomas Sowell, who has been decrying the anti-intellectualism and other causes of the patterns of failure in that community for years. Yet, rather than hold someone like him up as a model, they have made Mr. Sowell persona non grata in progressive circles for as long as I can remember.

In short, let's watch where this administration goes. Actions are what counts. For all the words aimed at raising Obama's poll numbers among independents, nothing has happened yet that will actually help. When this administration starts to make policy changes in the right direction, not merely talk about them in general terms that it can subsequently disregard, then I'll be the first to give them props.

Meanwhile it comes out that the government sent 89,000 stimulus checks to the dead and the incarcerated.

While we are dealing with such crappy weather this winter here in the northeast (which I'm sure my liberal friends believe is somehow due to global warming), it is useful to remember that Florida has now escaped serious hurricane landfall for five years. I'm not sure what the cause of such good fortune is, and not especially interested. I do note though that it has delayed the day of reckoning for Florida's underpriced public homeowners insurance provider of last resort.

Imagine if instead of creating a state owned entity to provide underpriced insurance, Florida had allowed private insurers to charge adequate premiums. Five very fortunate years later, those companies might have built up the reserves to handle the storms that will inevitably come. Instead, there is Citizens Property, which will surely become insolvent when that happens. Florida taxpayers will bear the load.

Truly, a lost opportunity.

Like Rex Ryan, I don't believe the Jets really came out flat Sunday night. I think they missed a lot of tackles they were in position to make in the first half, which I would ascribe to the extreme cold and to the Steelers' excellent blocking schemes and execution, not to mention a very good running back.

Rex did have a point about the difficulty of playing three hard road games versus a team that had a bye in the first round, but Green Bay won three road games against good teams and they will play in the big dance.

As for the second half, the Jets played terrific football. About the only bad moment was failing to score on the goal line, and I didn't like the pass call on third down of that series. Also, I would tip my hat to Big Ben for a great game (forget the stats) and those two clutch passes on the last possession.

So, I know the Jets are disappointed, and so are a lot of their fans, but I have to say it was a great season, a great championship game, and some kind of job by the coaching staff to take the team as far as they did given their obvious season-long deficiencies, which were pretty numerous (placekicking, so-so line play, inconsistency, stupid penalties, etc.)

For the Super Bowl, I think the Steelers came out of that game a little beaten up, losing a pro-bowl center, etc. Aaron Rogers is playing so well right now and so is the Packer defense, so my pick is Green Bay even though I am an AFC fan. That's just the way I see it.

Last night at Birdland, I saw Hub - Art, a tribute to the great trumpeter Freddie Hubbard, whose career spanned the bebop and hard bop eras. Out front, playing Freddie's instrument, was the leading practitioner of the day, Nicholas Payton. The legendary Donald Harrison was advertised to be on tenor sax, but that turned out to be in error; in fact Javon Jackson was the very capable, though not yet legendary saxman. But the rhythm section was in fact a collection of legends who frequently played with Hub - George Cables on piano, Dwayne Burno on bass and Lenny White on drums. Besides the music, a highlight for me was the opportunity to sit with the band at the bar before the set and hear them exchange hilarious stories (mostly told by White), many about their experiences with the great bassist Ron Carter.

There's just no place like Birdland. Hub - Art can be seen and heard through Saturday night.

On January 18, we bought 200 shares of Graham (GHM) for the IRA, a "zero" buy at 23.28. (For those new to musings, "zero buys" refer to the smallest holdings on our buy/hold list, and are not purchased necessarily because they are undervalued. Those are "value buys.") On Jan. 20, we bought 100 shares of MetLife preferred (MET.PR.B) at 24.72. On 1/21, we bought 10 shares of Allegheny Corp (Y) at 306.00, a value buy. Monday, we bought 100 shares of AAON, another zero buy at 26.76. Today, we sold 100 shares of Hubbell (HUB.A) at 56.93 out of the IRA for a nice profit (I'll provide the purchase date and price in the next post).

Monday, January 17, 2011


Public Unions, Jets and Other Phenomena

I've just about read all the nonsense I can stand about how our overheated political debate is the environmental cause of the Arizona shootings. In fact, the real cause seems to be that an untreated schizophrenic got it in his head to shoot the Congresswoman. Period. The fact that he may have leaned politically left seems to me to be a red herring. In fact, like many of his generation, he seemed to be largely apolitical. None of this has stopped those on the left, particularly from academia, and from the New York Times, from somehow blaming conservatives and tea partiers. This has become reflexive. if you want to see which side's discourse is actually more inflamatory, go visit a left wing blog sometime.

Still, they are no more to blame than we are. If we want to stop this kind of violence, we will need to be more aggressive about identifying mentally ill individuals and seeing to it that they are in treatment.

Martin Luther King Jr. left a magnificent legacy and was perhaps the greatest statesman of the 20th century. But under the heading of nobody's perfect, his belief that public workers should be unionized and bargain collectively, a position espoused and enacted by liberal politicians around the country, has done immense harm and is the basic reason states and municipalities are in such hopeless fiscal difficulties today.

Unions were important in preventing private business from exploiting workers, but public workers have never needed such protection from taxpayers. More to the point, strikes by workers in essential services could be disastrous for local economies and public safety. Even after public worker unions were allowed to form, strikes by those unions were illegal for most of the 20th century. When the annual New Years Eve drama surrounding renegotiation of NY's Transit Workers Union contracts resulted in a strike, it was always accompanied by pictures on the 11 PM news of union leader Mike Quill being escorted to jail.

I don't have a problem with public workers having an association, or union or whatever they want to call it, but I am in favor of limiting or eliminating their collective bargaining rights. And certainly, teachers, transit workers, uniformed services, and other public employees should not be allowed to strike. As it is, the rich pension and benefit plans now in place in many jurisdictions will have to be severely cut back, especially for all new workers. New Republican Governors in Ohio, Wisconsin, and other states are already cranking out such proposals.

This will also break the unholy feedback loop, wherein liberal Democrats have negotiated sweetheart contracts with public unions, in return for generous campaign donations.

In another related development, the National Labor Relations Board is actually suing several states whose citizens passed amendments to their state constitutions guaranteeing workers secret ballots for union certification votes. The essence of the suits is that since card check is one of several allowable voting procedures under federal guidelines, it can't be prohibited by the states. This, even though Democrats and their union allies have been unable to get mandatory card check passed in Congress.

This will be an interesting case that will test whether states can provide higher level rights than are provided federally. Whatever the outcome, I can't believe that this kind of regulatory zeal is going to make the Obama Administration very popular in states where such amendments passed overwhelmingly. Despite Obama trying to look more "centerish" in his approach to Congress, his reliance on regulators to push his left wing agenda is not being lost on the Tea Party and on independents. If it continues, his reelection campaign is doomed before it starts.


As my daughter and I watched a tired, flat Knick team lose to the inept Sacramento Kings in front of a capacity MSG crowd Friday night, my explanation was "that's why they play the games." The same could certainly be said for the football playoff games over the weekend.

We started with the Ravens defense dominating the first half against the Steelers, as I expected. However, the Steeler offense warmed to their task in the second half. The Raven offense never did. Green Bay continues to impress, with yet another maximum effort. But this was more than effort. The Packer offense, featuring a red hot QB, completely outplayed the Dirty Birds.

The Pack will get a rematch with Chicago, their intradivisional rivals who gave them a major scare in Green Bay the last week of the season, almost keeping them out of the playoffs and putting the Giants in. Giant fans should be forgiven for thinking about what might have been, now that they have seen the Pack cruise through two games on the road. This time, the game will be in the windy city, which appeared to be very unfriendly confines for the overmatched Seahawks. However, it should be pointed out that the Bears' defense did not play all that well in the second half.

Finally, there was my team, the Jets, making the key plays, getting fortunate on a few (particularly some uncharacteristic drops by Patriot receivers), and being the beneficiaries of a strangely ill-timed and really poorly executed fake punt by the Pats. But we also enjoyed the rare sight of a clearly unnerved Tom Brady, and a poor coaching job by the revered "Bellychuck," allowing his team to run down the clock on an overlong second half possession, when trailing by more than one score.

The only winner we managed to predict was the Bears, which was just fine with me. So the question is who can I jinx this week. You have to pick the Packers and the Steelers based on logic. The Pack's offense is on a roll and the Bears D, while generally excellent may be vulnerable. In Pittsburgh, the Jets won a big game on their way to the playoffs. However, the Steelers arguably were without their best defensive player that week and are now pretty much at full strength. So beating them AGAIN on their field will be a challenge. It will be quite a hat trick of opposing QB's for the Jets to take down if they beat Big Ben on Sunday. Not impossible, just not probable.

But that's why they'll play the game.

On Friday, we sold 100 shares of Bristow Group (BRS) from the IRA at 47.64. We bought these on 3/7/06 at 29.40. BRS is one our Tulane Portfolio stocks.

The numbers are in for 2010. On a total return basis, we grew the portfolios
21.2%, another very satisfactory year of recovery from the 2008 debacle. Our formula, with only a few tweaks, has carried us through the financial crisis and recovered all of that lost ground and then some. We know that it is important to have respect for the vagaries of financial markets, and make no assumptions about performance in 2011. We'll stay in the game and hope for the best.

Thursday, January 13, 2011


Combining Business and Touring

Back today from my visit to the D.C. area for our leaders meeting. Though a bit hackneyed, these meetings can be some fun, particularly when, as in our case, there are co-workers from parts far away, like the UK, Australia, Spain, etc. We had some very good outside speakers too, headlined by former Comptroller of the Currency (during the Clinton years) Eugene Ludwig. He and his brother, playwright Ken Ludwig, are fellow college alumni, and Ken is a classmate, so we had something to talk about after the session.

We also got a chance to go into town for some semi-organized sightseeing. Believe me, when you are staying at one of these mammoth Gaylords, you don't pass up any reasonable chance to escape the grounds, though the hotel is quite nice. This was my third or fourth stay there. Anyway, on Tuesday afternoon, we had our business session at the Newseum, and then had several hours to review the exhibits. This is one I would recommend, as there are quite a few entertaining things to read, watch, and listen to. The most compelling exhibit is the 9/11 area but there was quite a lot more that was also of great interest. One I did not understand was the disproportionate space allotted to an Elvis Presley exhibit. But there's news and there's news.

Yesterday, my museum of choice was the Spy Museum, and this is also quite a bit of fun as well as being educational. I think I covered it pretty well in about 2 and a half hours. A lot of very interesting World War II and Cold War stuff.

Congress pretty much took the week off in recognition of the bedlam that took place in Tucson last weekend. It is amazing that liberals and academics reflexively blame conservative talk radio whenever there is a tragedy of this kind. The fact is that there are plenty of disturbed people around, we see them every day, and the wonder is that we have so few of these mishaps, not so many.

I do think there is a legitimate concern about how easily schizophrenics and other dangerous characters can obtain weapons and ammunition. I don't pretend to know the answer, only that it's a fair question. The tension between society's right to be armed and its right to be protected is one that requires a constitutional resolution, but clearly we are not there yet.

All this followed a very exciting weekend of pro football. When the Colts kicked a 50 yard field goal to take the lead with a minute to go (it would have been good from 65 by the way), there was deep depression in our basement, but I did reassure my daughter that 53 seconds was plenty of time for the Jets to get in field goal range. Sure enough it happened, the kick was good, we scoured the field for penalty flags, but somehow, the Jets' curse was not operating that day. Chalk up another winning two (er, one) minute drill for Sanchez, and now comes a rematch in Foxboro.

After only going 2-2 last week, but making the call that only one home team would win (who could have imagined it would be the Seahawks?), I am not really sure the world is anxiously awaiting my picks this week. But here goes anyway, keeping in mind that the second playoff week is traditionally when favorites, particularly after a week off, tend to do well.

In the AFC, my heart says Jets but my brain says Pats. They have been hitting on all cylinders and are at home after a week off. The Jets are coming off a difficult emotional win, and will be missing a player or two. I think an upset is possible and will be rooting for one, but it would be an upset if the Jets move on. I do expect a much better effort than the last time in Foxboro.

Ravens v Steelers is another intra divisional rivalry, and we all know how hard it is to beat the Steelers at home. Still I like the Ravens in this game.

In the NFC, the Seahawks played their best game of the year last week, but I also think it's fair to say that the Saints' defense just did not show up. That won't be the case in Chicago, you can take that to the bank. So I like the Bears. The Packers are really on a roll, you just have to wonder how many weeks they can keep going. I think their win streak ends here, since the Falcons have so much speed and are coming off a bye.

We are still waiting on a couple of year end statements so we can give you all a final number for the gains in 2010 for the redwavemusings portfolio, but it was clearly a very good year. It's not unusual for the stock market to have its rally before the economy does, since what the market does is discount the future. I think the market is telling us that 2011 is going to be pretty good for the economy, though there will be inflation (and, in fact, if you ignore the indexes the Fed seems to be obsessed with and just look at prices, we had some meaningful inflation in 2010). In fact, the big concern that could short circuit the economy is that the Fed has assured too much inflation. The other concern will be the fiscal health of states and localities, with a real chance that there will be defaults in the tax free sector of the bond market.

Our job is to go on our merry way, following our investment formula, considering tweaks to it when necessary. No tweaks for now. On 1/5, we sold 100 shares of Devon Energy (DVN) at 77.64. This was a gain from the 65.61 our IRA paid for it on October 25. On 1/7, we bought 20 more shares of TIP, our Treasury inflation protector at 107.42, for the IRA. On Monday, we put in two transactions knowing I was going to be away from my computer for a few days. First, we bought 100 shares of Schulman (SHLM) at 20.39. Then we sold 100 shares of CRDN from the IRA at
34.54. These were purchased for 27.89 on St. Patrick's Day, 2008.

Tuesday, January 04, 2011


2011 - Off and Running

The Knicks had their little let down period and are lately back to serious point accumulation, tonight piling up a cool 128 in an entertaining dispatch of the San Antonio Spurs who have the best record this side of Duke. They now head west for a few games, and when they return on the 14th, my daughter and I will be at the Garden, courtesy of Stubhub (don't even ask how much). We are stoked!


The Jets played it like an exhibition Sunday, starting the special team players and dressing the practice squad, and still thrashed their in state rivals (actually the only team that plays its home games in New York state), the Bills. So we come in at 11-5, definitely acceptable given the schedule and if you set aside some of the serendipitous adventures along the way. The wild card game will be indoors at Indy, Peyton Manning's personal echo chamber, where the Colts ended our playoff run last year.

It's hard to play Peyton anywhere, but particularly in the dome, where the fans lower the decibel level when the Colts are on "O" and there are no ill winds to disrupt the passing game. By rarely huddling, and calling his play only after looking over the defense, Peyton can tire defenses out since they have to be ready for the snap for virtually the entire time between plays. Defensive substitution windows are also narrower.

However, injuries have depleted Manning's supporting cast so even with the Colts improved defense, it took them until the final week to nail down their division. Since many of the Jets starters had last week off and had a chance to heal up, the possibility that Gang Green can move on to the second round is real. I actually give the Jets a slight edge in this one.

As for the other games, Kansas City is another home team that is going to have its hands full. Believe me, no one wanted to play the Ravens in the first round. In the NFC, New Orleans will rightly be favored on the road against a Seattle team that was 7-9 even though they had two games each against the Niners, Cards, and Rams. I am one who believes a division championship should mean something and don't begrudge the Seahawks their playoff appearance, but this game should be a "Brees" for the visitors.

Normally I would pick Green Bay over Philly given the way the two teams ended. The Eagles were thoroughly routed by the Giants until those last amazing 7 minutes, then lost to the Vikings. The Pack won thanks to two maximum defensive efforts at home against the G-Men and the Bears. Can they put together a third huge effort, this time on the road? I doubt it. So I think the "Igles" will be the only home team that advances this week.


New York's two wretched tabloids, the Post and the Daily News, have a lot of fun one - upping each other every day to create the cutest headline. So imagine the chagrin the headline writers felt yesterday. Both papers' front page stories concerned an unfortunate suicide attempt in the form of a jumper from a ninth floor apartment, who survived when he landed in a pile of garbage bags left on the street (since the sanitation department hadn't picked up any garbage since before Christmas due to the snow removal efforts). And so we had the rare event where the headlines from both papers were identical - "Trash Landing." We'll call that day a standoff.

Of course, the clear winner today went to the headline writer referencing the lawsuit filed by a female masseuse against Brett Favre and the Jets for his offensive sexual advances toward her - "No Happy Ending."

New Year's Eve was very pleasant. First, a very nice house party - local so that pedestrians and other drivers were basically safe - complete with a 7 piece rock band. Later a quick stop at the Sea Cliff bonfire, which came up small this year. One wag described it as more of a camp fire. Then a brief, and fairly dull stop at the local Irish Pub for a nightcap, then home to watch marathon Marx Brothers movies on TMC until the wee hours. It really is amazing that 75 year old movies that you practically know by heart can still be so funny, but they are.


The January NYC jazz lineup is just super and if you have any affinity at all for America's only true original art form, you really should get off your duff and join us at one or more of these great venues. My recommendations (which barely scratch the surface) include Peter Bernstein, Larry Goldings and Bill Stewart at Smalls this weekend, Tenor Sax Joe Lovano at the Village Vanguard Jan 11-16, Chantale Gagne with Lew Nash and Peter Washington at Kitano Jan 14-15, "Tain" Watts quartet with pianist Dave Kikoski at Jazz Standard (great barbecue too) Jan 21-23, the Lew Nash quintet at the Vanguard Jan 18-23, Hub Art featuring Nicholas Payton and Donald Harrison at Birdland Jan 25-29, the Helen Sung Trio at Kitano Jan 28-29, and the Eric Alexander quartet at Smoke Jan 28-29.


Next week, I go road warrior again, this time to the DC area, from where I might have time to post. In view of our irregular posting schedule, it has been suggested that I e-mail regular readers after posting to let them know some new musing is up. If you want to be on that list, and if you suspect I might not already have your e-mail (or don't know that you are a closet visitor to this site), simply send your e-mail address to me at redwave72@yahoo.com.


Our year end transaction was on 12/30 and we sold 200 shares of our Australian aluminum company AWC at 10.12. These shares were purchased for 5.99 on 1/22/10.
We began 2011 with a purchase of a new name, Graham Corp (GHM) suggested by my full service Stiefel broker. The price for 200 shares was 20.16. This week was a good illustration of something I learned from my very first broker about Mondays that start off with lurching gap openings in either direction. They are almost always head fakes. Tuesday ("Pivotal Tuesday" he called it) much more often sets the accurate tone for the remainder of the week. And despite the small gain for the Dow today, the market was actually really cruddy, another bad sign when the generals are out in front of the soldiers. Nothing to panic about, but we are guarding against irrational exuberance.

Time for the periodic disclaimer. Neither redwavemusings nor its author is an investment advisor and the securities mentioned here should not be considered recommendations. They are likely to be unsuitable investments for all of us.

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