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Tuesday, May 15, 2012

 

May Musings

Last week I spent three pretty nice days in our nation's capital, enjoyed a good meal or two, and also took a nice long walk from Metro Center to Georgetown via M Street. My intended destination was the 10 PM show at Blues Alley, a New York style jazz club with first rate headliners. I saw Arturo Sandoval's sextet, who put on a truly memorable show. Sandoval, of course, is a top rank trumpet player and composer, and his show (and latest CD) is a tribute to his idol, Dizzy Gillespie. Besides trumpet, Sandoval took several turns on percussion, another on synthesizer, played piano on one song and sang another. So the night was pretty memorable. Next week, Roy Haynes comes into Blues Alley and this summer's headliners include Pat Martino and Freddy Cole, neither of whom should be missed if you are in D.C. M Street is alternately a lively night life magnet and then a quiet, upscale residential area. Coming into Georgetown is a revelation as the architecture, restaurants, shops and bars combine to provide a truly welcoming neighborhood. I expect to be back. ----------------------------------------------------------------------- The power and reach of the internet is at once awesome and humbling. If you go to the end of our last post, you will see that we received a very nice comment from a reader in India. I like to think that the blog is honest, fun and has enough variety to occasionally please a wide audience. But I never imagined it could be that wide. ------------------------------------------------------------------------------ I don't have much to say about the J P Morgan episode that you haven't already read in the conservative press. I reject the Dodd-Frank mentality that every corporate action and misstep is a matter for regulation, on the grounds that taxpayers will have to bail out the banks and auto dealers again. They shouldn't have been in that position before, and in fact, J P Morgan was quite literally forced to take Federal money it neither needed or wanted. Jamie Dimon is a stand - up guy and he has given a candid assessment of the poorly executed hedging trades that will ultimately cost Morgan between 2 and 4 billion dollars. However, in their zeal to put regulators in charge of everything, Rep. Levin and his cheerleaders in the liberal media have jumped all over this opportunity to argue for strengthening the Volcker rule and implement the most draconian aspects of Dodd Frank. in the long run, that will only hurt the country. We should always keep in mind that corporate stupidity and poor execution does not equal criminality. In fact, some corporations will wildly succeed even as others blunder. The chips fall where they may, and that competition is what drives our incentive driven capitalist system. That said, I am not really opposed to the Vocker Rule, agreeing that corporations that provide FDIC protection for customer assets should not be risking that capital for their own trading profits. It was a mistake to repeal Glass Steegal by passing Graham Leech Bliley, and the Volcker Rule simply corrects that mistake. But let's put what happened in perspective. In a three trillion dollar portfolio, we are agonizing over a loss of, let's say 3 billion. Now I'm not saying that's not real money, but it comes to a loss of about one-tenth of one per cent. I wish my down days on the stock market were only that bad. In a day when one per cent moves in the stock market are considered routine, it seems to me that Morgan's paper loss is a tempest in a teapot. It's not only not a scratch, it's not even a nick. So, Jamie, maybe you should think twice the next time you have this urge to give so much money in support of Democratic candidates. ------------------------------------------------------------------------ Last night, my daughter and I went to see the Mets, and despite the drizzle and the breeze and the shaky work by the Mets' alleged closer, we had a grand old time. Baseball is fun again at CitiField, tonight's one-sided loss notwithstanding. I just love Terry Collins and the job he's doing with his largely home grown team. The Mets are not baseball's only feel good story, of course. There are the revived Orioles, also led by a terrific manager, Buck Showalter. Don Mattingly's Dodgers have picked up where they left off last year and are all but unbeatable at home. The Braves are back too, on a good run on Chipper's farewell tour. And the Rangers are well prepped to make a third run at a world series. The Cardinals have a new manager, they don't have Albert, but the winning tradition continues. Pretty exciting stuff, all around. ----------------------------------------------------------------------------- I don't think gay marriage and Obama's "new position" will have an iota of impact on what will be another very tight election. I do think the whole scenario did nick his credibility, especially the way he was outed by his loose cannon Veep. Who really believes that this position evolved? The political calculus behind this administration's every pronouncement (at least the ones that are planned) is now so obvious, it no longer needs to be pointed out. As the Obama credibility factor erodes, it has and will have an impact so gradual it may not be noticed until it is too late to reverse. When you consider the level of viciousness in the attacks by Obama on Romney, it is really bracing to see that the polls are showing the race to be in a virtual dead heat. ------------------------------------------------------------------------------ On May 4, we bought 100 shares of Ceradyne for the IRA at 25.06, a value buy. On May 7, we bought 200 shares of Harsco (HSC) at 19.39. After taking the rest of the week off (but doing business) in Washington, we bought 100 shares of Hartford Preferred for the IRA yesterday at 20.37, completing our positioning in that issue. Today, we bought 600 shares of Alumina (AWC) at 3.80, making a longshot bet on the Australian economy to recover. It is likely to take time, and this stock could go lower from its already depressed level. But it's a value buy, and we've never made money playing scared.

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