Sunday, June 29, 2008
Ahem. Citygroup, to my dismay, closed at $17.25 on Friday, having dipped into the $16s interday - about a 20% haircut for me, to this point. Trying to pick a bottom for beaten down stocks in a bear market is a fool's errand, and this time I'm the fool. Trying to find 'value' in this environment is folly. When in a bear market, stick with what's working until it's clear it doesn't work anymore. Currently that would be oil, natural gas, coal, steel, agriculture, railroads, materials; in other words, all the sectors that benefit from the global infrastructure expansion. If you drop it on your foot and it hurts, buy it. Luckily, most of my money is in these sectors, and City is my only major mistaken play over the past few months.
So, if a stock in a beaten down sector is still heading south, like City and almost every other financial, don't even think about buying it. Don't touch it until there is clear evidence that it's moving up and the bad times are over. Yes, you may miss the initial pop back up but that's okay. You'll avoid idiotic trades like my City fiasco.
I still think City could work over the long term. I went into it a few weeks ago thinking it could be a double in five years, and who knows, it still might be. But I'm far less confident now than I was, simply because I'm far less confident about the economy, and the market, in general. With oil prices where they're at, and probably heading higher, I think we could be in a long-term range-bound market, like the 1970s. During the 1970s, high energy prices, inflation (which is again on the horizon) and global instability put a hammer lock on the U.S. economy, and the world economy as a whole (while the ties are still there, the world economy was far more reliant on economic conditions in the U.S. then than it is now.) The stock market ended that awful decade at approximately the same level it began. If we are indeed entering into such an environment again, sticking your money in an index fund that tracks the general market is a bad play - your money goes nowhere, and gets devalued by inflation. You'll end up poorer.
But, as the saying goes, there is always a bull market somewhere. The smart investor will be on the lookout for these money-making opportunities. So my advice to myself is, again, find out which sectors are working and stick with them until they no longer work. Pay attention - you can't simply look at your account once a year and expect everything will work out. But you don't have to analyze every company out there either. If you pay general attention to the economy and the markets, you can invest in ETFs that track the sectors that are working. Forget S&P index funds. In an inflation-laden, range-bound market, they won't work.
DISCLAIMER: I'm strictly an amateur investor. The notions in this post are not meant to be advice to any reader on how to handle your own money. They are simply my own musings about the market and how I myself intend to proceed. Anything you do, you do at your own risk.
Saturday, June 28, 2008
The bill's main sponsor, Rep. Bart Stupak, Democratic chairman of the House Energy and Commerce Committee's Subcommittee on Oversight and Investigations, said excessive speculation was "killing our economy."
Speculation usually accounts for only $8 to $9 per barrel to the cost of crude, but in current markets, he said, speculation is adding about $65 to $70 a barrel -- almost half the price of oil.
"We don't mind people making money," Stupak said. "We're not saying end speculation. We're saying end the excessive speculation that continues to put a higher and higher floor (on oil prices)."
Democratic Rep. Jay Inslee said the law of supply and demand, which some have cited as causing the rise in oil prices, are not at work here.
Whew! Just in time. Are you as relieved as I am? Now everything will be just fine. Oil prices will be cut in half in no time; gasoline prices will plummet; and We The People shall rejoice. Our saviors on Capitol Hill have rescued us once again from impending doom. Such is the genius of our elective representatives, you see, that they are able to know the precise price level when speculation becomes 'excessive.' Such is their ability to judge market forces that they know to a certainty the amount speculation usually accounts for in the price of a barrel of oil; normally $8-9 dollars, now $65-70. Who knew! Furthermore, their skills at fine-tuning the economy are so acute they know the exact modifications to be made to crude markets so that speculation is still allowed but none that is 'excessive.' Well, why would anyone be surprised? These are the very folks, after all, who know the exact level whereby a profit becomes, not just a profit, but a 'windfall' profit. Finally, regarding the quote from the estimable Mr. Inslee, apparently the laws of supply and demand have been repealed. I had missed that.
My cynicism, when it comes to these clowns, clearly knows no bounds.
However, their is no need for the rest of us to remain as ignorant on these issues as the ladies and gents on Capitol Hill. To learn more about speculation, why the term should not be used as a pejorative, and why it is critical to the smooth and efficient operation of markets, take five minutes to read this excellent article by Rick Newman that originally appeared in U.S. News and World Report. You will then almost surely have spent more time attempting to understand speculation than the man or woman who represents you in Congress.
Thursday, June 26, 2008
I can remember times, just not recently. When I was in my late-teens, I discovered Pauline Kael's movie criticism, and I devoured it. Those books sit on my bookshelves still, old, tattered, revered. My copy of I Lost it at the Movies is itself a tribute to my love of Ms. Kael's writing: the binding has come apart completely, so often has it been opened, and what was once a book is now just a stack of loose sheets of paper. To read it one must pick up each individual sheet from the right-hand stack of papers, read it, turn it over, read that, then place the sheet atop the opposite left-hand stack. I will not - I cannot - part with it; it is one of the building blocks of my adolescence, and it contributed greatly to my lifelong love of old movies. At the age of fifty, I don't take her word as gospel as I did when I was twenty - I have my own views these days - but no other critic could so ruthlessly and entertainingly pan a movie the way she could, and no one could explain why a great movie was great like her. She died a few weeks before 9/11, and, in the answer to where were you when the planes hit the Trade Center, I was in my office at my old job, reading some of the online tributes to her, when the phone rang. Seven years after her death, she remains a controversial figure - a lot of people loved her, some hated her - but what is also true is, though she has thousands of imitators, she remains the greatest movie critic of them all.
Later, as I've mentioned before, during the years of my political zeal (from about my mid-twenties until I was near thirty) I eagerly read all of George F. Will's political writings. I still read his columns, and he remains as engaging as ever. No one shaped my thinking on political and cultural ideas as Mr. Will has. Again, I disagree with him now here and there - he remains a Burkean conservative, while a libertarian streak seems to be predominant in my thinking these days - but he was (and is) the profoundest thinker among the pundits, the most interesting prose stylist, and, like Ms. Kael, can be entertainingly ruthless when provoked. Again, if we were ranking modern political thinkers and writers, it would be hard not to place Mr. Will at the top, or very near to it.
It was in one of George Will's columns where I first heard the name of Peter DeVries, perhaps the finest comic novelist in America during the mid-twentieth century. I've read some twenty of so of Mr. DeVries' books, each and every one delightful. My wife used to say she always knew when I was reading Peter DeVries because it was the only time when I laughed out loud every few minutes (though she'll have to revise that thought now that Mr. Epstein is on the scene.) DeVries is for the most part out of print, which is a shame. His books may seem to some a bit dated now because they rely heavily on the sexual and cultural zeitgeist of the periods they were written, but he remains readable for his humor and his humanity, and the sheer fun of it all.
I would also place Janet Flanner is my pantheon of favorites. Ms. Flanner was the New Yorker's correspondent in Paris from the magazine's founding in 1925 until her retirement in 1975. For half a century she informed New Yorker readers of the goings-on in the City of Light in her biweekly "Letter from Paris", filed under the pen name "Genet" (Harold Ross, the magazine's founder and first editor, who hired Ms. Flanner for the post, apparently thought "Genet" was the French version of Janet.) I'd heard of her before we travelled to Paris in 1998 but had never read her. It was the following year, in a small used-book store on the Upper West Side in New York City that I discovered her. Actually, my wife stumbled upon one of her Paris Journal's and brought it over to me. I read the first few pages and I was hooked. I bought the book and, over the next few years, read all her published writings, including her reports from other areas of Europe, and the collection of her letters. She was at her best in the early years, before left-leaning politics started informing her thoughts, but through it all there is the clear, crisp, lucid prose detailing her unsentimental observations about the city she loved. I too fell in love with Paris during the eleven days we spent there and her writings help spark my continued interest. Indeed, one of her essays so captured my fancy that it became the basis for my first screenplay. Along with a few other titles, I plan to reread her entirely, taking notes as I go, before our next trip to that most lovely of cities.
Would I love all these writers as I do had I picked them up now rather than at the time I did? Probably not. Ms. Kael came along when I was young, impressionable, and eager to learn. The sparkle, the rhythm, the fever, in her prose spoke to me at the time. It might seem a little overheated to me if I were to be introduced to her now. Mr. Will, as I've mentioned before, came along during, if fact was instrumental in, my conservative awakening. Ms. Flanner came at a time when Paris was still fresh in my memory; my ardor for the city had not yet begun to subside. Discovering her when I did, as I did, was a bit serendipitous. Peter DeVries, well, he was just good, naughty, fun, which I still, and hope I always will, have a taste for.
But I'm off track - what else is new? I began this post by mentioning that I needed someone really good to follow up on Joseph Epstein. Again, I wasn't expecting anyone as good as Mr. Epstein - who could be? - but just your ordinary writer simply would not do. I never expected to discover someone who approached Mr. Epstein in style, wit, talent, and sheer readability.
There is a Border's Book Store about a ten minute walk from my place of work. I pass it every day when out on my after-lunch strolls. I suppose you could call me a regular there. I don't stop in every day - some days it's simply too pretty to stop and browse through books - but I'm there a lot. Most often I'm looking at the new releases to see what's up. On other days I just browse the stacks, trying to find something that catches my ever-changing fancy. I'll pick up a few titles, find a comfortable chair, and scan through the first few pages of my selections, hoping something I've chosen engages me.
I stopped in a few weeks ago with the intent on finding something new. A Big History perhaps? You know, one of those thousand page tomes which cover a subject in its entirety. I've read a lot of these and when they're good I have no problem with the length; I let myself sink into the book, knowing I'll be living in that world for the next month or so. There are a few out that I'm interested in. I also browsed through some classic literature; Dostoevsky and Dickens. But it's just not the time for any of these; it's summer, I've just come off reading Mr. Epstein's delightful essays, and these possibilities all had an air of heaviness about them. Better I wait for the fall or winter for something so serious.Then I found myself in the Travel section and saw this on the shelf: H.V. Morton's A Traveller in Rome. I'd never heard of the man but something intrigued me about the book immediately. I found my easy chair, opened the book - and I was hooked before the plane that carried Morton to Rome was even past the Alps. Published in 1957, it remains useful to any intelligent person who would travel to Rome and is interested in its past. You will not find recommendations here on where to stay, or what restaurants to eat at, nor will you find opening and closing times of the museums. Those things can be found elsewhere. But if you want to get the feel of Rome, to understand Rome and Romans, then there is no better place than this. Displaying an encyclopedic knowledge of the city's history and culture, sprinkling in some humor, wit, and an appropriate sense of awe, Morton takes you on a trip around the Eternal City that could not be more delightful. Every step he takes seems to evoke a memory, or a story from the city's past. Even a walk up the stairs with Morton, after a few confrontations with his hotel's balky elevator, is a delight:
For these reasons I often preferred to walk up the five flights of beautiful marble stairs. The exquisite steps of Rome are among my first memories: steps of marble and travertine, shallow Renaissance steps, so much kinder on the leg muscles than the steep steps of ancient Rome: steps curving left, right and centre from the Piazza di Spagna, as if to show you what steps can do if given the chance; noble steps up to S. Maria in Aracoeli; elegant steps to the Quirinal; majestic steps to St. Peter's and to innumerable churches, fountains, and palaces - the most wonderful steps in the world. Even the stairs in my pensione were poor relations of the Spanish Steps, and their marble treads and gentle gradient compensated me for those moments when the lift was cantankerous.
Later, we get this:
I could never tire of the old streets near the Tiber, to the west of the Corso. There is something worth looking at and thinking about every two yards....[o]ne is willing to forgive the Renaissance Popes many of their sins for the sake of the beauty they created and the genius they nourished. A great deal of the haphazard charm of old Rome is that its ground plan is mediaeval. The palaces of the sixteenth century were erected in the narrow streets of the fourteenth. Many of the great palaces have elbowed their way in apparently by sheer strength of character, and stand like great galleasses towering above some little mediaeval harbour. To pass, for instance, from the Campo de' Fiori to the Farnese Palace is to traverse several centuries in a few yards.
The second sentence in this last entry, to me, describes the entire book: "there is something worth looking at and thinking about every two yards". Every paragraph, every sentence, every step of Morton's journey, abounds with engaging and often fascinating observations, memories, and anecdotes. It is nothing less than an informal history of Rome, told by a man who has class, style, and erudition. We spent four days in Rome in 1997, not nearly long enough, but we visited many of the places Morton describes and oh, how I wish I had this book back then. How much more we would have gotten out of our trip. My wife picked up the book and read the first twenty or so pages - I've had to steal it back from her - but it hooked her too. We both badly want to go back now.
Morton, who died in 1979 at the age of 86, wrote dozens of other books, most of them travel writings of this type. He covered all of Italy, all of England (including a book exclusively on London, which sits on my table waiting to be read next), Turkey, and the Holy Land. I've got a lot to look forward to but for the time being I am content on my Roman Holiday, with Mr. Morton along as my guide and my friend.
Saturday, June 21, 2008
Don't think it couldn't happen. What we have here is the convergence of two things that are anathema to the left: oil and profits. The left is against lifting the ban on off-shore drilling not because they are primarily concerned about the ecological consequences, but because they are against oil itself, against drilling in all forms. They would prefer there be no drilling, and no oil, and much government-subsidized alternatives. They are not really concerned about the drastic consequences this would have on the economy; many of them look forward to it as a good thing, for they hate capitalism and the lifestyle it affords to so many of us. Indeed, I believe that for many the whole global-warming scam is simply a front for their hatred of capitalism. They are for whatever regulation, taxation, penalization, or outright nationalization that can be done in the name of global-warming - even if there is little real evidence of man-made global warming, and even if the policy they advocate has little chance of success - because it means more government control, less private enterprise, and the reduction and/or the elimination of corporate profits. Profits, you see, are bad, and so too are oil companies. The combination of the two, for those who think this way, are an evil incarnate equal to nothing else in this world except perhaps George W. Bush.
Has the glow dimmed on the political messiah? I think this latest reversal may have permanently crippled that feeling of phenomenon and returned Obama to Earth as just another politician. Unfortunately, Obama has nothing else to offer but that sense of difference — and if he’s lost that, he’s in big, big trouble.
Now, I myself have touched on the theme that Obama, rather than being something new under the sun, is just another politician, so I know where the Captain is coming from. Obama is not only just another politician, he's very nearly become a caricature of the evasive, dissembling, pol. His answers when trying to explain past actions are so transparent that he would be embarrassed if he had a sense of shame. His answers when talking policy, whether foreign policy, energy policy, or tax policy, reveal a man who understands little of world affairs, economics, or money markets. Obama has not spent his life thinking deeply about the these issues; he's spent his life mouthing the left-wing dogma on these issues that he learned during his university days and early days in Chicago. That's why his policies seem so retro-1970s, why he never strays from the tired orthodoxies of the left. It shouldn't take long for someone with even a modicum of knowledge in these areas to conclude that Obama is an empty suit who is utterly unfit for the presidency.
But it appears right now, notwithstanding Captain Ed's and my own observations (and the observations of thousands of others who've reached the same conclusions) that Obama will indeed by our next president. The Hillary voters, so upset a few weeks ago that their girl was repudiated, are already making their way back to Obama. The Rust Belt states - Pennsylvania, Ohio, West Virginia, Indiana, Michigan - that Obama did so poorly in during the primaries, and which he will certainly have to carry in order to win the presidency, are now polling in his favor. So the two non-policy issues I thought McCain had going for him, a rift among pro-Hillary and pro-Barack Democrats, and the reluctance of older, white, blue-collar Democrats to vote for a left-wing black man with an exotic name, both appear to be non-issues, at least at this point. Of course, there is always the Bradley-effect or, as some call it, the Dinkins-effect, in which both Tom Bradley in L.A. and David Dinkins in New York City both led in the polls but were defeated soundly on election day; i.e. the tendency of more non-black voters to tell pollsters they will vote for a black candidate than will actually do so. And, of course, there is still a campaign to be waged. McCain, so far as I can tell, is a pretty bad campaigner but at least he has a persona that the American public respects, plus a career with some solid accomplishments behind it (no matter how much I disagree with many of those accomplishments.) Will Obama be exposed for what he is during the campaign through his sheer incompetency? Or will the mainstream media's continued bias towards Obama help shield his limitations and views from the American people through election day? Time will tell.
Sunday, June 15, 2008
What I can say is that Tiger has to be considered the overwhelming favorite today. If not for the knee, he'd be a shoe-in. Lee Westwood is a solid golfer who could throw in a nice 67 or 68 and beat Tiger, but for anyone else to win I think Tiger has to falter. And I don't expect that, knee or no knee. The man has a knack, like no one else ever has, to get done what needs to be done in order to win - yesterday was just the umpteenth example. I think he'll be hoping to shoot around par today - not taking too many chances, balancing out the inevitable U.S. Open bogies with a few birdies on the five pars - and watch while everyone else disintegrates around him, i.e. the Nicklaus major championship strategy. Right now, and only because of the knee, I give Tiger an 80% chance of victory, Westwood a 15% chance, and the rest of the field a 5% chance.
Friday, June 13, 2008
Besides being gracious, Mr. Zimmerman's comments were well-timed too. I've been wondering lately whether I should keep this blog up. You might have noticed posting has been light lately. While this has to do somewhat with the fact that I've been busy at work, it's also true that I haven't really felt like blogging. No surprise because summer is here and my interest in intellectual matters seems to wane with the warm weather. I'd rather be out on the golf course.
Speaking of which, the U.S. Open set up at Torrey Pines seems eminently fair, unlike many other years when the rough has been made overly punitive. This doesn't surprise me much. The USGA's ideas on how to set up a golf course to identify the world's finest golfers have evolved over the past decade and I think they've finally got it right. I would point back to the 1999 Open at Pinehurst as the beginning of this new thinking. There, for the first time in years, they shaved the areas around Pinehust's bowl-shaped greens, allowing approach shots that weren't struck properly to run off the sides. This penalized bad approaches but also gave the player a chance to recover with an excellent shot. It also gave a player who hit a wayward tee shot the opportunity to run the ball up towards the green - again, it provided the opportunity to recover, rather than the old hack-and-hope approach of previous years. In short, it gave the players an opportunity to play golf and to show off their talents. As a result, the 1999 Open was terrifically entertaining and it must have opened some eyes at the USGA. Over the past few years, the idea of a graduated fairway rough has also taken hold, i.e a fringe, then a first cut, then a second cut, each progressively longer and therefore more difficult to extricate oneself from - the worse the tee shot, the worse the penalty. For years at the Open the longest rough was just off the fairway. A well struck tee shot might barely trickle into five inches of hay and the player had no choice but to hack a wedge out to the middle of the fairway. Not only was this boring golf, it was completely unfair and went against the USGA's purported goal of identifying the finest golfers in the world. The folks at the USGA seems to have learned their lessons though, for we've had a number of fine setups over the past decade and Torrey Pines looks like another. I expect an excellent tournament.
With Tiger and Phil paired together for the first two rounds, now would be the perfect opportunity to add my two cents. But what else is there left to say? I'll only repeat the old story about Jack and Arnie, which seems to apply to Tiger and Phil forty years on. The story goes that Jack and Arnie are walking down the fairway side by side when God taps Jack on the shoulder and says, "You will be the best." Then He taps Arnie on the shoulder and says, "But they will love you more."
Sunday, June 1, 2008
So Obama, on a number of issues, is caught between a rock and a hard place, trying to remain loyal to those who supported him on the way up while at the same time trying to seem palatable to the general population which he hopes will elect him. He's trying to find a middle ground, as typical politicians always do. But the church issue, which threatens to destroy his entire campaign, reared its ugly head again this week. Obama, his campaign, and apparently the super delegates planning on voting for him at the convention, know that this can't keep up. Too many more outbursts by lunatic churchmen from the pulpit of the Trinity Church will eventually bring Obama down for good.
But is it too late? Does Obama's decision yesterday to leave the church actually do more harm than good? Captain Ed thinks so and I would tend to agree. While Obama has somewhat insulated himself from any further claptrap emanating out of Trinity, he's also waited too long to make his move out of there. At this point, everyone knows that the preaching of Reverend Wright, Otis Moss, and now Michael Pfleger is standard fare at Trinity. Week in and week out, nonsense such as their's can be heard from the Trinity pulpit. It's what the people come for. Take a look at the congregation's reaction to any of these guys. The more outrageous the message the more enthusiastic the reaction from the pews. Are we to believe Barack Obama sat there silent for twenty years while everyone around him was yelling "Amen!"?
Again, this decision by Obama reveals once again that he is nothing more than your standard politician. His supporters who claim he's different, that he's the man who can bring about change in this country, are fooling themselves. They've let their fervor for Obama blind them. They fail to see that he is a politician, through and through, making deals, cutting corners, and shading the truth whenever necessary in order to be elected. They further fail to recognize that his policy proscriptions rely on nothing more than standard left-wing 1970's strategies - big-government, economy-killing strategies that are proven failures. There's nothing new there. They also don't see that Obama is astonishingly naive when it comes to foreign policy, indicated nowhere so much in his continued insistence that he would meet with the likes of Ahmadinejad. As Charles Krauthammer says, "What started as a gaffe became policy. By now, it has become doctrine. Yet it remains today what it was on the day he blurted it out: an absurdity." Read the whole thing, if you've yet to be blinded by the Obama light. If you have been, it's probably of no use - no amount of evidence of Obama's unfitness for the presidency will sway you at this point.