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Monday, October 21, 2013


Truce in DC

 Historians will tell you that the Korean War never ended.  A truce was called and is still in effect, however uneasy, but a treaty was never signed.  The parties in DC are in much the same position following the "compromise" that ended the Federal Government shutdown and avoided a debt default.  In reality, there is an agreement among a majority in both houses to talk about how to proceed, and the government is "funded" until early 2014.  But that's it.  There is no real agreement about much of anything, except that we don't want to actually default.  Where the Administration fits into all this is anyone's guess since, whether the subject is the Middle East, North Korea, or the other end of Pennsylvania Avenue, President Obama insists on "leading from behind," which is to say, not leading at all.  At this point, the President is out-whimping Carter.
With three plus years left to endure, how can this President be any weaker?

 Make no mistake, there is disunity in both parties.  Just as the Tea Party elephants are making the Speaker's life miserable, the progressive wing of the Dems is causing grief for their leadership.  They hate the compromise and dearly wanted to stuff revenue measures down Republican throats.  You won't hear much of that in the mainstream media, who is maxing out the opportunity to make the GOP look as bad as possible.   But the echoes of James MacGregor Burns 1963 book (The Deadlock of Democracy) about four party politics in America still resound.

Imagine if, instead of holding Obamacare hostage to the debt limit, Republicans had taken responsible opposition to raising it by offering serious budget and entitlement discipline proposals instead.  Today, what would be dominating the news cycles would be the incompetence surrounding the Obamacare implementation.  Dems would be begging for a year's postponement.

Will Washington suddenly find its bearings and take serious action concerning entitlements and the nation's fisc in time to forestall the next debt standoff?  The smart money says no.  But there is a way forward.  There is much that was helpful in the Simpson - Bowles Commission recommendations.  Though Paul Ryan's opinion that it did not go far enough was probably correct, the Commission's plan is the most realistically workable that has yet been proposed and Congress should ram it down the President's throat.  If the wings of either party actually wanted a solution, that's the one we would get.  

The other interesting news item involves the players boycott at Gambling State which resulted in that proud football program forfeiting last Saturday's game.  Most fans don't care since the Tigers are suffering through an uncharacteristic winless season, but the fact is that the episode is one more leading indicator of big changes in football as we know it at all levels of play.

To review, Grambling players' grievances include the firing of popular coach Doug Williams, mold and other problems in the players locker and training areas, staph infections possibly caused by contaminated laundry equipment, and claims of inadequate diagnosis and  treatment for concussions.  So when they felt ignored once too often, the players simply blew off Saturday's bus trip for the scheduled road game and didn't play.

To a greater or lesser degree, most college football programs have exploited and abused their athletes, in my opinion.  Add to the Grambling list, prohibitions against compensation, scholarships arbitrarily ended, insufficient time allocated for academic work, high handed and arbitrary NCAA enforcement decisions which punish players and students for coaches' recruiting errors, and on and on.  Their is increasing questioning by college faculties about the propriety of a sport that routinely traumatizes players brains at institutions whose core mission is to develop and prepare those brains for lifetime achievement.

The problems are also bad on the high school level where sometimes incompetent coaching leads to devastating injuries.  If you've ever attended your local team's practices, how many times have you've heard coaches yell out to players, "stick your head in there!"  Such cringeworthy "advice' is too often the rule rather than the exception.

Football has had serious injuries and fatalities as long as it has been played, and arguably it has never had more fans.  However, change is coming, and if the equipment can't be improved to limit serious injury, I would see the rules revamped in the not too distant future to make the game much less physical.  It won't be as popular, but if it doesn't happen, only Division 1 schools will have programs, and maybe not many of those.
On a happier note, we have Boston and St. Louis in the World Series again (the fourth time in the post war era) and this year, these have been the two best teams.  The Red Sox look like a team of destiny and they have the odd home game, but the Cards starting pitching is a little better and I look for a long series either way.  As a National League fan, I have to admit a bias for the Redbirds, let's say in 7.
 On 9/20, we bought 200 shares of the new News Corp (NWS.A) at 16.92, a value buy, and 100 shares of Newmont Gold (NEM) at 29.34, a "zero buy." On 9/23, we bought 100 shares of SanDiego Gas and Electric preferred (SDO.PR.A) at 24.13 and sold our remaining 8900 shares of FFEX at 2.10 (actually, they were tendered and the cash finally came in.) That transaction generated a small profit but overall, it was a stock that treated us well over the years and provided entertaining ups and downs. On 9/27, we bought 200 shares of Marine Max (HZO) at 12.20. On 9/30, we were back to buying News Corp., 200 shares at 16.20. We started the 4th quarter on 10/1 with a new gold ETF, buying 200 shares of the I shares (IAU) at 12.60. Then on 10/2, we added 300 shares of Genie (GNE) at 9.17. We also bought 100 shares of Xcel (XEL) at 27.71. On 10/7, we bought 100 shares of FPL Preferred (NEE.PRC) at 24.06. Then on 10/9, we were back to buying News Corp again, another 200 shares for 15.80. Then on 10/11, we bought 100 shares of Diebold (DBD), a zero buy at 29.55. Columbus Day, the markets were open and we finally switched to the sell side, trimming 300 shares of USA Trucking (USAK) at 8.92.(It's already moved a lot higher now).  We had paid 7.81 for 200 on 8/25/11 and 6.26 for 100 on 5/21/12. We also sold 300 shares of Tat Technologies (TATT) for 7.95. We bought these shares when it was Limco Piedmont on 12/17/08 for 2.85.

On October 15, we were greeted by the news of the redemption of San Diego G & E's preferred shares at 24.  We had 800, and took a meaningless capital loss on the transaction, certainly much less than the dividends we have received.  Since we also sold 100 shares of streaking Belden Corp (BDC) from the IRA at 66.09, we are left with a lot of cash to deal with.  The BDC shares were purchased for 21.25 on 11/05/08, when you couldn't give stocks away.  That's the time to buy of course, and that's what our formula is designed to do.  On 10/15, we also found a new preferred issue to start buying, Wells Fargo (WFC.PR.P) and we bought 100 shares at 21.64.

If you own and trade individual stocks, this is a good time to think about tax motivated transactions before the street tanks your losers in anticipation.  To do this, you need to know your taxable capital gains (or loss) position year-to-date.  Of course, my formula makes no allowance for tax considerations, but that doesn't mean I have to be stupid and completely ignore obvious tax savings.  I have already picked a stock or two that I am ready to throw in the towel on anyway, and November will be time to kick the dogs out of the kennel.

Tuesday, October 01, 2013


Got the Government Shutdown Blues?

Hours from a shutdown due to the inability to pass the needed expenditure bills to open the fiscal year, Congress is putting the American people through this kabuki dance as a reflection of the districting mess. Because there are so few competitive congressional districts, the typical House member is far more concerned about a primary challenge than about the opposing general election candidate. The result is the need to demonstrate conservative or liberal bona fides for the folks back home. So no meaningful negotiations take place. One can't imagine the Dems giving up Obamacare so easily anyway, not after more than 50 years of effort to pass it. The resulting paralysis plays right into the President's hands, since he can use the bully pulpit and his alleged oratorical skills to defame the Republican brand. The reality is both sides are equally at fault, and there is a pretty good argument that the President wanted this shut down from the beginnning. Regardless, I expect this to peter out tonight, with the Republicans caving on Obamacare, although there is the vague possibility the Dems will chip in to repeal the very unpopular tax on medical devices. The whole thing has been a tactical blunder by the Tea Party types. The GOP should have simply funded Obamacare and watch the chaos unfold. Instead, they have found a way to share the blame for the mess that is sure to ensue. The next big time bomb will be the fight over the debt ceiling, which needs to be raised within the next few weeks to avoid a Federal bond default. Most of the talking heads have determined that is a much more important problem to deal with than the shut down. Obama will say default is not an option and the debt limit is an inappropriate item to leverage. Yet, when he was a US Senator, the Dems did the same thing to George W., and Obama voted against raising the debt limit. So there is more than enough hypocrisy to go around. By the way, according to the WSJ, it is still undetermined if the thousands of Federal workers to be furloughed if there is a shut down will ultimately be paid for that time. But if they are going to be paid, what is the point of the furlough? Where are the savings? We might as well keep them all at work if we are going to pay them anyway. Personally, I would just as soon see this out of control Justice Department and EPA furlough their 150,000 employees without pay. That may sound callous until you think about the entitlement those workers and their appointed bosses demonstrate with respect to our tax dollars. ------------------------------------------------------------------ Before I get off my political soapbox, I just have to say that the ineptitude of our Administration's foreign policy is more than matched by their ability to tell the silliest lies with a straight face. One of the oft repeated Obama lines is how the drone program and other counter-terrorism tactics employed by his Administration have enfeebled the terrorists. But those bad guys are doing a lot of damage for a group supposedly on the run. The latest doings in Africa brought this to our front pages, but less well known is the extent to which the Syrian rebels are now dominated by Al Queda. And still, no one is held responsible for the murder of our diplomats in Libya. As if all this wasn't embarrassing enough for the Obama folks, you now have the new Iranian President snubbing our President at the UN. Where is JFK when we need him? Now, U.S. prestige really is at an all time low, as he famously charged in that long ago (1960) campaign. In November, when the 50th anniversary of his assassination is commemorated, we will see the images of a real leader on screen again. Yes, JFK was young, inexperienced and error prone just like the current incumbent, but there was a clarity of purpose and determination completely missing now. -------------------------------------------------------------------- Saw Sara Evans at Westbury and thoroughly enjoyed her show. She ran through a lot of her hits as well as some new songs. Leading off was 25 year old Ayla Brown, accompanying herself on acoustic guitar in a solo performance. Without a band to sing over, her compositions were quite refreshing and well received. She is a Boston College product that you might remember from American Idol and she was working though quite a line of customers buying her autographed CD's after the show. Last Friday night, Tommy Igoe returned to NYC for the first time in two months to direct the Birdland Big Band at their home club. The Big Band will again work New Years Eve at Birdland and headline there through the first week of January. Freddy Cole is also moved back to January to make room for a two week Birdland gig for Michael Feinstein. Sounds like some must see shows. Vince Giordano and the Nighthawks have taken their Monday and Tuesday gigs to a new home, the Iguana on 54th and Broadway. They did a terrific show before a very large crowd outdoors in Westbury Gardens in August. In Philadelphia for a night recently, I stopped in at Chris' Jazz Cafe and caught a very nice young quintet headed by two flute/piccolo players! This was followed by a sensational young quartet that played into an open mike session that was lots of fun. The Philly jazz scene is driven by Temple University and the Philadelphia Academy of Music where there are aspiring young players with a great club to play in. They also have a great role model in veteran guitarist Pat Martino, who headlined at the CJC last weekend. When Eydie Gorme passed away recently, I recalled that my father, also a professional singer, always said that she was the purest and best pop singer of her time. Husband Steve (Lawrence)and Eydie were a can't miss act for 40 years. -------------------------------------------------------------------- The one really nice thing about the New York primaries a few weeks ago was the discerning public's clear rejection of low life candidates Anthony Weiner and Eliot Spitzer. Towards the end of the campaign, a heckler called Weiner a "scumbag," inadvertently insulting Trojans everywhere. ----------------------------------------------------------------- Fall baseball began with tonight's play-in game between Tampa and Texas. It will be lots of fun as there are real good teams in both leagues. I am so not yet into football. Fittingly, I am off to Cooperstown on Wednesday for our annual trade association meetings, with a little golf on the side at the famous Leatherstocking Course at the beautiful Otesaga hotel. ---------------------------------------------------------------------- On September 4, we bought 50 shares of Cincinatti Bell preferred (CBB.PR.B) at 43.63. On 9/6, we bought 200 shares of Safeguard Scientifics (SFE), a value buy at 14.73. We also bought 100 more shares of BioReference Labs (BRLI) at 29.06. On 9/9 we bought 20 shares of the TIP ETF at 109.56. All of these purchases are being funded by the flurry of takeover sales we are enjoying. We accepted another bid on 9/12, letting go of all 700 shares of Kaydon (KDN) at 35.53. This was quite a bit more than we paid on shares purchased as long ago as 2001, when we paid less than 21 for 300 shares. On 9/13, we bought 200 shares of News Corp. (NWS.A) at 17.06. It took me a while, but I finally decided to restore the print half of Murdoch's empire to the buy list. Then on 9/16, we bought 25 shares of Deere (DE) at 83.50. This is a zero buy of course. And on 9/17, we added 100 shares of the Sabra preferred (SPRAP) at 24.75. We'll catch up on the rest of the September transactions, including more takeover news, in the next post.

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