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Monday, September 03, 2012


Post # 300 - The RNC 2012 Convention

According to blogger, this is our 300th post on redwavemusings and that is a milestone that would never have occurred to me as a rational possibility when I posted the first time.  So, again, thanks to the readership for maintaining interest and executing thousands of page views over that time.  You put up with a very irregular posting schedule and wade through a lot of drivel to get to whatever quality stuff there might be, and I appreciate that.

Some thoughts concerning last week's convention.  Given the weather induced cancellation of night 1, the GOP did a pretty good job of explaining why theirs is the better ticket and spotlighting the rising stars of the party.  That's about all that happens in conventions these days since the primaries generally settle matters in advance of the convention.  That's why network TV doesn't bother covering them, except for an hour each night.  Political junkies can always watch gavel to gavel on C-SPAN which I did on Tuesday night (but I was out and about the other nights and caught the major speeches on reruns) or on the internet.  Conventions were a lot more interesting and coverage worthy when the delegates actually came to pick a candidate.  The last time that really happened was in 1976 when Ford beat back Reagan's challenge. 

The media needs to be largely ignored while you make up your own mind about what you see and hear.  The speakers Tuesday night did not get much attention, and the press hated the We Built It theme, but I thought it was a very effective night.  The Obama machine has engaged its friends in the media to do a negative "fact check" hatchet job on Paul Ryan's speech, but to no avail, I think.  The VP candidate comes across as sincere, honest, clear eyed and concerned.  He is going to be a very positive force in the campaign and in the Romney Administration, assuming that occurs.

Governor Christie's keynote was generally panned by the media, but I don't know what they were expecting.  I guess most members of the working press these days are too young to remember real convention keynote addresses, and Christie's was certainly in that spirit - harshly critical, even sarcastic, concerning the other side, and of course aimed at firing up the base.   That's what keynoters are supposed to accomplish.  If anything, the speech included nods to bipartisanship that I would not have expected.  But this was consistent with the theme, "Obama's not a bad guy, he's incompetent, so it's OK to let him go."  This theme was also explored by Clint Eastwood in his dialogue with the empty chair that the mainstream media characterized as bizarre.    Frankly, I thought it was pretty hilarious and understated.  It did need to be shorter though, and I think part of the problem is that Clint is at an age now where he doesn't do anything very fast.  The worst part, as many expressed, including Ann Romney (whose own speech was pretty effective), was that the visual piece that had been prepared as an intro to Romney's speech was cut from the network broadcast.  Reportedly, that was an effective piece, and the campaign should consider buying time to show it nationally instead.

My decision would have been not to cut it, simply run over and dare the networks to terminate coverage in the middle of Governor Romney's acceptance speech.  I think they would have stayed with it, and equal time should not have been a problem, since the Dems will get an extra hour this week, unless there is another hurricane.  Senator Rubio's speech was widely considered the best of the convention, and it might well have been.  Certainly, his delivery was all but flawless.  He is definitely a formidable talent.  As for the Governor's acceptance, it was fine and forgettable.  Let's face it, this is not candidate charisma.  The other side thinks they have that.  What Romney represents is competence, leadership, and pragmatism.  Given that, there are a few things I would love to see him do early in the post convention runup to the election.

First, I think the Governor should make a strong statement about recharacterizing "carried interest" as ordinary income instead of capital gains.  That statement would take the air out of the Obama class warfare balloon.  It is also a position long espoused on this blog.  Second, it would be a good idea to confirm his agreement with the Ryan budget, and perhaps suggest reviving the Simpson Bowles group for another try at true tax and budget reform.  He might remind everyone that Ryan's vote against that work product was that it simply did not go far enough by addressing entitlements.  Maybe bipartisan support for such reform could emerge once the commission obtained a super-majority, which it just missed last time.  Finally, I think Romney needs to talk more about foreign policy than he has. While the Obama campaign thinks it's strong there, I think it has been terrible there, and that's an idea I think people are coming around to.  What's the popular mood around the Afghanistan venture, the Vietnam - like withdrawal from Iraq, and the unwillingness to take on authoritarians in Iran, Venezuela, and Russia more effectively?  Do Americans really want a President who leads from behind?

Well this week it's the Dems' turn, and I expect the usual progressive nonsense (like comparing Ryan to Goebbels), goofy belly aching about plutocracy and the rest.  They can only make Obama-Biden look worse - certainly more extreme than what the Republicans displayed.  Clearly the Obama strategy seems to be entirely negative - making the GOP look unacceptable, and they are pouring all their money and energy into that effort.  Right now, it looks like the public's not really buying it, and the polls show a little favorable momentum for the R's.  The Dems' task this week is to stop or even reverse that.

On this blog, I have occasionally talked about Irving, my first stockbroker who taught me so much about stock picking and timing, technical analysis, options and the ways of markets.  In those days, brokers typically worked in large open office space, with adjacent desks so that they could trade ideas and observations.  Irving was one that everyone who worked with him always paid special attention to.  I used to love taking my lunch hour in his office, watching "the tape" go by (on the wall, there was no CNBC yet) while we showed each other our charts, and waited for earnings reports or other news that would move our stocks and option positions.  He had many pithy sayings and beliefs about the market that were true more often than not, like his belief that market moves on Mondays were often head fakes, but that "pivotal Tuesday" moves would often set the tone for the rest of the week.

Irving retired decades ago, and passed away a couple of months ago in California at age 92.  If he had ever read this blog, and especially the last two posts on options, I hope he would have liked it.  I'm sure he could have added some thoughts that would have made those posts better. 

We will do the last installment of the option series on index options in post # 301.

General Motors, that manufacturing and marketing subsidiary of the United States of America, operated largely for the good of the United Auto Workers, announced last week that Volt production is being shut down for four weeks "to work off inventory."  In other words, electric cars ain't selling.  Earlier this year, the plant shut down for five weeks.  Only 10,666 Volts had been sold year-to-date according to the announcement. 

Why this would surprise anyone is beyond me.  Who would want a car with a four hundred mile or so range, after which it needs to be plugged into the wall for 12 hours before it is ready to run again? And why does anyone think this helps the environment?  What's the difference whether gasoline runs the car directly, or carbon based fuel runs it indirectly after first generating electric power at the utility plant?  We're still burning carbon either way.

Anyway, it doesn't matter because in spite of the government's subsidization of such purchases, and the money Volt owners allegedly save on gasoline, the dogs just won't eat the dog food.  Meanwhile, Ford announced it has begun exporting Lincolns to China.

A recent passing we meant to note was that of bass guitarist Bob Babbitt, one of Motown's great Funk Brothers studio musicians who backed up their classic vocal artists on those great hits from the 60's and early 70's.  Babbitt, like most others, considered himself second string to James Jamerson, considered Motown's greatest musician.  But second string to James was a necessary and busy position due to Jamerson's unfortunate alcohol habit that caused him to be not always reliable.Babbitt was one of  the very few white musicians who played on those records as part of Motown's studio group of jazz musicians moonlighting in the greatest backup band ever.  For more information on Babbitt, simply google him, or better yet, see him and the other then living Funk Brothers in the great documentary movie, Standing in the Shadows of Motown, which should be easily available on DVD.

Lots of transactions to catch up on.  On Aug 16, we sold 100 shares of Shulman (SHLM) at 23.27.  We paid 23 for these on 10/4/06.  On 8/17, we sold 1100 shares of Frozen Food Express (FFEX) at 1.95, as the stock continues its recovery.  We paid 2.13 for 400 of these shares on 9/30/11, and 1.25 for the other 700 on 11/10/11.  On 8/20, we sold 800 shares of Serius XM at 2.60.  We paid 4.97 on 3/1/06 for 400 and 3.19 for the other 400 on 7/24/07.  I am a little concerned about this stock given the looming transaction with Liberty and insider sales transactions by CEO Mel Karmazin.  We may be making a decision to sell the rest and remove the stock from the buy/hold list if we don't like these corporate developments.  We have nice gains on many of the remaining shares.  On 8/21, we sold 400 shares of FSII from the IRA at 6.1805, since it will actually be more expensive to pay E Trade to tender the shares.  The tender offer has now begun, and we will tender the balance of the shares we own.  For these 400, we paid 2.04 on 9/7/11.  On 8/22, we sold 100 shares of ITW at 59.02.  We paid 42.54 on 6/6/05.  On 8/24, we bought 600 shares of USA Trucking (USAK), a zero buy at 3.74.  On 8/27, we bought 50 shares of Cincinnati  Bell Preferred (CBB.PR.B) for the IRA at 44.50.  This is a new addition to the portfolio.  On 8/29, we bought 300 shares of Alcoa (AA), which has been long the Dow's worst performing stock.  We paid 8.50 for this "value."  Don't try this one at home.  On 8/31, we bought 100 shares of Raven Industries (RAVN) at 30.68.  Remember, nothing mentioned here is necessarily suitable for anyone else, and this site and its author are not investment advisors.      

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