UConn's Stanley Robinson will be the best player out of this year's NCAA class. My ideal draft order would be this:
1. UConn's Stanley Robinson (Update: he hasn't declared for this year's draft.)
2. Spain's Ricky Rubio (assuming he declares for the draft)
3. Carolina's Ty Lawson
4. Oklahoma's Blake Griffin
Ty Lawson is a wild card. He obviously carried Carolina to the championship, but it's hard to predict PG success based on college play. Just look at UConn's Khalid El-Amin and MSU's Mateen Cleaves. At the same time, he reminds me a little of Orlando's Jameer Nelson.
I am looking forward to seeing Blake Griffin's brother develop--he may become even better than his brother.
By the way, am I the only one who thinks DeJuan Blair might be the second coming of Robert “Tractor” Traylor?
"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
Wednesday, April 8, 2009
Tuesday, April 7, 2009
Hamed Haddadi
Today's WSJ (April 7, 2009) has an excellent article on Iranians and Hamed Haddadi, the first Iranian NBA player:
http://online.wsj.com/article/SB123906169774395129.html
Kudos to Joel Millman for writing a great article. Here's one snippet:
Iranians, over a million strong in North America, began coming to the U.S. in significant numbers in the 1970s, before Iran's Islamic revolution and the break in diplomatic relations with Washington. Among the most educated of all immigrants, Iranians -- or "Persian-Americans" as many prefer to be called -- are one of America's wealthiest immigrant communities per capita, according to demographers who crunch U.S. census data.
Mr. Millman definitely did his homework. I'm going to write him an email thanking him for the article right now.
Update: I am going to order Mr. Millman's book, The Other Americans.
http://online.wsj.com/article/SB123906169774395129.html
Kudos to Joel Millman for writing a great article. Here's one snippet:
Iranians, over a million strong in North America, began coming to the U.S. in significant numbers in the 1970s, before Iran's Islamic revolution and the break in diplomatic relations with Washington. Among the most educated of all immigrants, Iranians -- or "Persian-Americans" as many prefer to be called -- are one of America's wealthiest immigrant communities per capita, according to demographers who crunch U.S. census data.
Mr. Millman definitely did his homework. I'm going to write him an email thanking him for the article right now.
Update: I am going to order Mr. Millman's book, The Other Americans.
Net Worth Numbers
If you ever want to deal with a statistical nightmare, try attaining reliable average and median net worth figures. Below are a smattering of net worth numbers, all vastly different:
From Boston Globe (2009, Jenn Abelson, "The Loss Generation"):
35 and under group: $76,400 (average)
From All Financial Matters (2006):
35 and under group: $14,200 (median) $73,500 (average)
From WSJ (2004, Kelly Greene, "Golden Years"):
34 and under group: net worth of $7,240, including home equity.
So just for the 35 and under age group, we have net worth numbers ranging from $7,240 to $76,400. You'd think there would be a researcher in 2009 who would publish reliable net worth numbers and compare the different numbers published by others, but I haven't seen such a study. If anyone who knows of such a paper, please post a comment and link.
From Boston Globe (2009, Jenn Abelson, "The Loss Generation"):
35 and under group: $76,400 (average)
From All Financial Matters (2006):
35 and under group: $14,200 (median) $73,500 (average)
From WSJ (2004, Kelly Greene, "Golden Years"):
34 and under group: net worth of $7,240, including home equity.
So just for the 35 and under age group, we have net worth numbers ranging from $7,240 to $76,400. You'd think there would be a researcher in 2009 who would publish reliable net worth numbers and compare the different numbers published by others, but I haven't seen such a study. If anyone who knows of such a paper, please post a comment and link.
Monday, April 6, 2009
Asset Allocation based on Mohammad El-Erian
Here is an interesting article regarding an asset allocation model:
http://www.thestreet.com/story/10464086/1/an-el-erian-fund-for-the-masses-using-etfs.html
The author bases his ideas on Mohammad El-Erian's proposed investment model. Mohammad El-Erian was Harvard's former endowment fund manager. The following funds/ETFs are mentioned in the article:
LBNDX MUE NVG IJR IGOV DBA IGF
Personally, I am surprised DBC and TIP are not on this list. I currently hold some DBC and TIP and am looking to buy more. Whenever TIP dips below 100/share, I consider buying more.
Update on July 2, 2009: following El-Erian's belief that commodities will steadily increase in value over time, I bought UNG, WPZ, USL, GSG, COP, and SLV. I don't see human populations declining, which means that more resources will be needed.
Natural gas, on the other hand, is a unique commodity that may experience dramatic price fluctuations. Unlike oil and gold, there's plenty of readily accessible natural gas, but if Americans shift from oil to gas, natural gas prices should slowly increase.
Update on July 7, 2009: I added to the July 2 positions except for USL and SLV and opened a small WMB position. What a wild ride this week has been for commodities. I am holding all of these shares in a retirement account to minimize taxes on any dividends/distributions.
http://www.thestreet.com/story/10464086/1/an-el-erian-fund-for-the-masses-using-etfs.html
The author bases his ideas on Mohammad El-Erian's proposed investment model. Mohammad El-Erian was Harvard's former endowment fund manager. The following funds/ETFs are mentioned in the article:
LBNDX MUE NVG IJR IGOV DBA IGF
Personally, I am surprised DBC and TIP are not on this list. I currently hold some DBC and TIP and am looking to buy more. Whenever TIP dips below 100/share, I consider buying more.
Update on July 2, 2009: following El-Erian's belief that commodities will steadily increase in value over time, I bought UNG, WPZ, USL, GSG, COP, and SLV. I don't see human populations declining, which means that more resources will be needed.
Natural gas, on the other hand, is a unique commodity that may experience dramatic price fluctuations. Unlike oil and gold, there's plenty of readily accessible natural gas, but if Americans shift from oil to gas, natural gas prices should slowly increase.
Update on July 7, 2009: I added to the July 2 positions except for USL and SLV and opened a small WMB position. What a wild ride this week has been for commodities. I am holding all of these shares in a retirement account to minimize taxes on any dividends/distributions.
Update on July 22, 2009: yesterday, I sold most of the holdings mentioned above--some of them increased 20% in less than a month. I am not a greedy man, and I am concerned that the market may decline when unemployment benefits start running out and CIT experiences liquidity issues again.
The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.
The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.
Sunday, April 5, 2009
Bruce Lindsey Knows his Priorities
I love hearing about a fellow cheapskate:
"'Frugal' is not the right word for Bruce," suggested business professor Ed Westbrook, who befriended Lindsay. "He was real miserly."
And yes, those are affectionate words. Bruce Lindsey left millions of dollars to a small college. More below:
http://news.yahoo.com/s/ap/20090308/ap_on_re_us/university_donor
"'Frugal' is not the right word for Bruce," suggested business professor Ed Westbrook, who befriended Lindsay. "He was real miserly."
And yes, those are affectionate words. Bruce Lindsey left millions of dollars to a small college. More below:
http://news.yahoo.com/s/ap/20090308/ap_on_re_us/university_donor
Ted Anthony on a "Numbed Nation"
The AP's Ted Anthony has written a haunting, beautiful article:
http://news.yahoo.com/s/ap/20090404/ap_on_re_us/numbed_nation_analysis
Senseless violence: Two centuries from now, if we're not careful, it could be an epitaph for our era.
http://news.yahoo.com/s/ap/20090404/ap_on_re_us/numbed_nation_analysis
Senseless violence: Two centuries from now, if we're not careful, it could be an epitaph for our era.
Saturday, April 4, 2009
Bill Maher's Religuous
I just saw Bill Maher's film, Religuous. I really liked it, although some parts came across as cheap. Michael Moore's films are much more polished, and Moore at least attempts to includes pieces of the other side (even if he leaves out a lot of information). But I suppose Maher, as a comedian, gets a pass, because he's doing it for comedy's sake. His main point is that non-religious persons need to fight against a rising tide of ignorance before its ill-advised passion overwhelms and destroys all of us.
While I enjoyed the movie, one "deleted scene" disturbed me. Maher meets Howard Bloom, who goes on a rabid rant against Muslims. Maher doesn't contradict Bloom and seems to agree that Islam is a) focused on taking over the world; and b) an inherently violent religion. Sadly, it was like watching Maher's version of Protocols of the Elders of Mecca.
Bill Maher and Howard Bloom are wrong for many reasons. First, they are on the wrong side of the economic tide. Muslims represent around one billion people and are therefore an ample source of trade. Increasing globalization--if done properly--will temper any cultural or religious issues. As Robert Wright points out in The Atlantic (April 2009, page 50), "When economics draws people of different ethnicities and cultures into mutually beneficial relationships, inter-ethnic and intercultural tolerance often ensues. (How many ethnic slurs are heard in transatlantic business class?)"
Second, to call Islam inherently violent means to ignore history and Quranic text. See The Atlantic (April 2009, page 52), which confirms that "the Koran's description of Christians and Jews as 'People of the Book'--adherents of Abrahamic scripture, like Muslims--seem[s] to provide a basis for tolerance." The Prophet Mohammad also stated, "There is no compulsion in religion." It's impossible to reconcile that statement with violence unless one is deliberately trying to be obtuse.
What about "jihad" and other scary-sounding names? That's something that happened after the Prophet Mohammad died. The concept of "jihad," didn't exist until the mid-seventh century, "after the death of of [Prophet] Muhammad." (Id.)
As for the modern-day war of words between Iran/Persia and Israel? That's brand-new and unprecedented. "In the case of ancient Israel, the empire in question was the Persian Empire, which Israel became a part of in the sixth century B.C. Previously, Israel's brushes with empires had been largely unpleasant. [You have to love the author's gift of understatement.] The Israelites were tormented by the Assyrians and, more famously, by the Babylonians, who forced Israel's elites into exile in 586 B.C. And the Hebrew Bible has the belligerent, xenophobic scriptures to show for these experiences...But after the Persians conquered the Babylonians and allowed the exiles to return home, Israel was on the inside, not the outside, of an empire, and a pretty congenial one--an empire that respected its subject's religious autonomy." (Id.)
What appears likely is that Islam's so-called inherent violence is a modern-day invention used to justify various agendas. First, countries need enemies to keep themselves sharp and moving--utopia is bad for progress. Second, the government, which includes the military, has no incentive to stop the flow of taxpayer dollars to themselves; therefore, any enemy is useful to rally the troops and to justify increased revenue. In fact, an abstract enemy, like a "War on Terror," is better than a tangible enemy (i.e., Iraq), because people might actually protest if you haven't defeated a tangible enemy after several years. In addition, abstract enemies are perfect to keep the money spigot flowing, because in a perpetual war, spending has to continue infinitely. Anyone who says otherwise just isn't a patriot, right?
America's decision to allow excessive military spending, has real life consequences (aside from the foreign civilians dying in wars). If we believed we had no real enemy, would we really allow our representatives to spend trillions on defense instead of health care, parks, infrastructure, teacher salaries, and other domestic spending? Of course not. Our failure to protest our government's spending decisions is causing us to forgo substantial benefits at home.
By the way, Bill Maher has been absolutely wrong before. See this funny rant ("Ode to Government"), where Maher praises the Post Office, saying he'd love our country to be like the Post Office:
http://www.huffingtonpost.com/2009/03/07/bill-mahers-ode-to-govern_n_172724.html
And then read this article, which will give you some insight into why the Post Office chief has said, "We are facing losses of historic proportion. Our situation is critical." (The Post Office lost lost $2.8 billion last year.)
Ouch.
While I enjoyed the movie, one "deleted scene" disturbed me. Maher meets Howard Bloom, who goes on a rabid rant against Muslims. Maher doesn't contradict Bloom and seems to agree that Islam is a) focused on taking over the world; and b) an inherently violent religion. Sadly, it was like watching Maher's version of Protocols of the Elders of Mecca.
Bill Maher and Howard Bloom are wrong for many reasons. First, they are on the wrong side of the economic tide. Muslims represent around one billion people and are therefore an ample source of trade. Increasing globalization--if done properly--will temper any cultural or religious issues. As Robert Wright points out in The Atlantic (April 2009, page 50), "When economics draws people of different ethnicities and cultures into mutually beneficial relationships, inter-ethnic and intercultural tolerance often ensues. (How many ethnic slurs are heard in transatlantic business class?)"
Second, to call Islam inherently violent means to ignore history and Quranic text. See The Atlantic (April 2009, page 52), which confirms that "the Koran's description of Christians and Jews as 'People of the Book'--adherents of Abrahamic scripture, like Muslims--seem[s] to provide a basis for tolerance." The Prophet Mohammad also stated, "There is no compulsion in religion." It's impossible to reconcile that statement with violence unless one is deliberately trying to be obtuse.
What about "jihad" and other scary-sounding names? That's something that happened after the Prophet Mohammad died. The concept of "jihad," didn't exist until the mid-seventh century, "after the death of of [Prophet] Muhammad." (Id.)
As for the modern-day war of words between Iran/Persia and Israel? That's brand-new and unprecedented. "In the case of ancient Israel, the empire in question was the Persian Empire, which Israel became a part of in the sixth century B.C. Previously, Israel's brushes with empires had been largely unpleasant. [You have to love the author's gift of understatement.] The Israelites were tormented by the Assyrians and, more famously, by the Babylonians, who forced Israel's elites into exile in 586 B.C. And the Hebrew Bible has the belligerent, xenophobic scriptures to show for these experiences...But after the Persians conquered the Babylonians and allowed the exiles to return home, Israel was on the inside, not the outside, of an empire, and a pretty congenial one--an empire that respected its subject's religious autonomy." (Id.)
What appears likely is that Islam's so-called inherent violence is a modern-day invention used to justify various agendas. First, countries need enemies to keep themselves sharp and moving--utopia is bad for progress. Second, the government, which includes the military, has no incentive to stop the flow of taxpayer dollars to themselves; therefore, any enemy is useful to rally the troops and to justify increased revenue. In fact, an abstract enemy, like a "War on Terror," is better than a tangible enemy (i.e., Iraq), because people might actually protest if you haven't defeated a tangible enemy after several years. In addition, abstract enemies are perfect to keep the money spigot flowing, because in a perpetual war, spending has to continue infinitely. Anyone who says otherwise just isn't a patriot, right?
America's decision to allow excessive military spending, has real life consequences (aside from the foreign civilians dying in wars). If we believed we had no real enemy, would we really allow our representatives to spend trillions on defense instead of health care, parks, infrastructure, teacher salaries, and other domestic spending? Of course not. Our failure to protest our government's spending decisions is causing us to forgo substantial benefits at home.
By the way, Bill Maher has been absolutely wrong before. See this funny rant ("Ode to Government"), where Maher praises the Post Office, saying he'd love our country to be like the Post Office:
http://www.huffingtonpost.com/2009/03/07/bill-mahers-ode-to-govern_n_172724.html
And then read this article, which will give you some insight into why the Post Office chief has said, "We are facing losses of historic proportion. Our situation is critical." (The Post Office lost lost $2.8 billion last year.)
Ouch.
Friday, April 3, 2009
A Teacher Speaks Out
A local California schoolteacher has singled out excessive benefits as one reason for the her district's budget shortfall:
http://www.mercurynews.com/opinion/ci_11967689
Poor district leadership and an inadequate state budget are not the only reasons for East Side's problems. The sacred cow of the East Side Teachers Association is medical benefits that cost over $27.3 million a year. East Side is the only district of its size in Santa Clara County that pays 100 percent of employee benefits. Although admirable, this extracts an enormous financial toll. Add paid benefits for each member of the board of trustees and medical coverage for retirees under age 65, and the cost skyrockets.
Teachers' unions have set up a pyramid scheme where the older teachers reap the benefits of the system and leave scraps for incoming and younger teachers. It's time for a change, and unless more tenured union members are willing to cut their benefits or make sacrifices, children will continue to suffer.
http://www.mercurynews.com/opinion/ci_11967689
Poor district leadership and an inadequate state budget are not the only reasons for East Side's problems. The sacred cow of the East Side Teachers Association is medical benefits that cost over $27.3 million a year. East Side is the only district of its size in Santa Clara County that pays 100 percent of employee benefits. Although admirable, this extracts an enormous financial toll. Add paid benefits for each member of the board of trustees and medical coverage for retirees under age 65, and the cost skyrockets.
Teachers' unions have set up a pyramid scheme where the older teachers reap the benefits of the system and leave scraps for incoming and younger teachers. It's time for a change, and unless more tenured union members are willing to cut their benefits or make sacrifices, children will continue to suffer.
About Me: Superstitious Version
The Mouth of Truth apparently has these things to say about me:
You sometimes can't enjoy close personal relationships.
You are extremely sensitive and have fine taste.
You are deeply mystical and intuitive by nature.
You are sometimes over idealistic and you should learn to be more cautious to avoid disappointment.
Your success will give rise to envy; keep a sharp look out for the traps set for you.
Be very careful: you could be caught off guard by misfortune.
Well, I'll be damned. That Zoltar-lookin' thing might have me spot-on. Also, I score highest in "Health"; lowest in "Luck."
You sometimes can't enjoy close personal relationships.
You are extremely sensitive and have fine taste.
You are deeply mystical and intuitive by nature.
You are sometimes over idealistic and you should learn to be more cautious to avoid disappointment.
Your success will give rise to envy; keep a sharp look out for the traps set for you.
Be very careful: you could be caught off guard by misfortune.
Well, I'll be damned. That Zoltar-lookin' thing might have me spot-on. Also, I score highest in "Health"; lowest in "Luck."
Thursday, April 2, 2009
Krauthammer on the Disabled
I just re-discovered this little gem from Charles Krauthammer (SJ Merc, 7C, July 11, 1999):
To be sure, patronizing the disabled is not as offensive as...in-your-face mockery...But its effect is similar: to distance oneself, to give expression to the reflexive mixture of fear and pity that misfortune in others invokes in all of us.
Disability--like exile, the human condition it most resembles--neither ennobles or degrades. It frames experience. It does not define it.
In 1972, Mr. Krauthammer was paralyzed in a serious diving accident.
To be sure, patronizing the disabled is not as offensive as...in-your-face mockery...But its effect is similar: to distance oneself, to give expression to the reflexive mixture of fear and pity that misfortune in others invokes in all of us.
Disability--like exile, the human condition it most resembles--neither ennobles or degrades. It frames experience. It does not define it.
In 1972, Mr. Krauthammer was paralyzed in a serious diving accident.
Wednesday, April 1, 2009
Scott Herhold on Excessive Government Spending
The SJ Merc's Scott Herhold exposes some excessive government spending:
http://www.mercurynews.com/scottherhold/ci_12004635
The cost of all courtroom security in the county, which includes bailiffs, has grown from $17.2 million in 2000-01 to $30.8 million this year, an increase of 79 percent. Over those same eight years, inflation has been 21 percent.
Setting aside cost, the way courtroom security is handled makes no sense. When I walk into Santa Clara County's civil courthouses, I see four to five officers all within fifteen feet of each other. A violent person can use an automatic weapon to maim or kill all five officers, at which point he is in the courtroom ready to wreck more mayhem against defenseless lawyers and staff. Forget a gun--how about a homemade bomb? A violent person can waltz right into a courthouse with a homemade bomb and throw it within a vicinity of about forty people. I'm assuming the sheriffs and deputies aren't trained in dismantling bombs, so regardless of their salary, they're ineffective.
Basically, once a violent person is in a courthouse, it's too late. In order to justify having more than four officers at once, you need to set it up this way:
1. A security checkpoint must be maintained outside the courtroom, at least 100 feet away from the actual courthouse. Two officers would be in charge of this checkpoint, and both would be armed.
2. Two other officers--the second line of defense--would be inside the courthouse, ready to intervene if the first line of defense is dismantled. One officer would be at the entrance to the actual courthouse, while the other officer would be at the exit.
Doing it this way, the police can better justify paying officers lots of money to sit around and scan briefcases and small items. (So far, my most interesting experience with courtroom security has been when an officer confiscated my keychain bottle opener without telling me.)
Right now, courtroom security only protects us from stupid criminals. The smart criminals, if motivated, would have a field day in almost any courtroom in California, especially if two assassins/criminals work together (one slipping in from the exit door, which has no security checkpoint, while another comes through the front door).
Update: I forgot to mention that the Presiding Judge compared the highly paid and numerous officers to an insurance policy, i.e., you don't think you need all that coverage until you actually do. While that sounds reasonable, it doesn't really address the point of the SJ Merc article--namely, that taxpayers shouldn't be paying Cadillac rates for "insurance" when cheaper rates exist for the same or similar coverage elsewhere. It seems that we should either improve the actual security so taxpayers are getting their money's worth, or buy a cheaper "policy." We also shouldn't overpay for any service that is ineffective. If I was in charge of security, I would make improvements first in the family courts, then the criminal courts, and then the civil courts.
http://www.mercurynews.com/scottherhold/ci_12004635
The cost of all courtroom security in the county, which includes bailiffs, has grown from $17.2 million in 2000-01 to $30.8 million this year, an increase of 79 percent. Over those same eight years, inflation has been 21 percent.
Setting aside cost, the way courtroom security is handled makes no sense. When I walk into Santa Clara County's civil courthouses, I see four to five officers all within fifteen feet of each other. A violent person can use an automatic weapon to maim or kill all five officers, at which point he is in the courtroom ready to wreck more mayhem against defenseless lawyers and staff. Forget a gun--how about a homemade bomb? A violent person can waltz right into a courthouse with a homemade bomb and throw it within a vicinity of about forty people. I'm assuming the sheriffs and deputies aren't trained in dismantling bombs, so regardless of their salary, they're ineffective.
Basically, once a violent person is in a courthouse, it's too late. In order to justify having more than four officers at once, you need to set it up this way:
1. A security checkpoint must be maintained outside the courtroom, at least 100 feet away from the actual courthouse. Two officers would be in charge of this checkpoint, and both would be armed.
2. Two other officers--the second line of defense--would be inside the courthouse, ready to intervene if the first line of defense is dismantled. One officer would be at the entrance to the actual courthouse, while the other officer would be at the exit.
Doing it this way, the police can better justify paying officers lots of money to sit around and scan briefcases and small items. (So far, my most interesting experience with courtroom security has been when an officer confiscated my keychain bottle opener without telling me.)
Right now, courtroom security only protects us from stupid criminals. The smart criminals, if motivated, would have a field day in almost any courtroom in California, especially if two assassins/criminals work together (one slipping in from the exit door, which has no security checkpoint, while another comes through the front door).
Update: I forgot to mention that the Presiding Judge compared the highly paid and numerous officers to an insurance policy, i.e., you don't think you need all that coverage until you actually do. While that sounds reasonable, it doesn't really address the point of the SJ Merc article--namely, that taxpayers shouldn't be paying Cadillac rates for "insurance" when cheaper rates exist for the same or similar coverage elsewhere. It seems that we should either improve the actual security so taxpayers are getting their money's worth, or buy a cheaper "policy." We also shouldn't overpay for any service that is ineffective. If I was in charge of security, I would make improvements first in the family courts, then the criminal courts, and then the civil courts.
Personal S&P Target
For my own personal portfolio, I am setting a 950 price target for the S&P 500 within the next two to five months. Looking at the money flow data, investors are getting out of money market funds and returning to the stock market. The "herd" mentality will probably convince more financial "lurkers" to re-enter equities soon.
In addition, if the White House ushers GM and Chrysler into an orderly re-organization, foreign investors will be soothed. They will continue to buy our Treasuries, bolstering the U.S. dollar, hurting gold prices, and steadying commodity prices. Also, in three to five months, AIG should be able to sell off more assets, which will allow it to repay the government some portion of our money. If all goes well with GM, Chrysler, and AIG--and yes, that's a big "if"--I predict a short-term psychological "high."
Right now, uncertainty and indecision are killing the market. That's to be expected--we have a new administration, and it's been in office fewer than 100 days. As time moves forward, having the Obama administration more settled and more comfortable with the G-20 will calm investors' nerves. The stimulus packages will also impact sentiment, as people either access or see the effects of the increased money supply.
I realize I am focusing on psychological rather than fundamental factors. This is intentional. The market is currently so volatile, sentiment will lead the way in the short-term. Bears can talk about earnings per share, historical price/earnings ratios, and other technical factors all they want, it won't matter--at least not yet. Seeing a decisive end to the constant printing of money is paramount, and the Obama administration, by using the "bankruptcy" word, is signaling to the world that it will not print an endless supply of money to prop up institutions. That is a welcome development--it's the first time in months we've seen decisive action.
Again, I am hoping for an S&P target of 950 within the next two to five months, and I feel confident. After that, I have no set target. The April earnings reports won't be great, but they won't be dismal, either. The market is still priced for dismal numbers, and anything above abject collapse will increase positive sentiment. Good luck out there.
The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.
Update on July 20, 2009: today, July 20, 2009, the S&P 500 rose above 950; however, the rise may be short-lived--Bernanke speaks tomorrow.
In addition, if the White House ushers GM and Chrysler into an orderly re-organization, foreign investors will be soothed. They will continue to buy our Treasuries, bolstering the U.S. dollar, hurting gold prices, and steadying commodity prices. Also, in three to five months, AIG should be able to sell off more assets, which will allow it to repay the government some portion of our money. If all goes well with GM, Chrysler, and AIG--and yes, that's a big "if"--I predict a short-term psychological "high."
Right now, uncertainty and indecision are killing the market. That's to be expected--we have a new administration, and it's been in office fewer than 100 days. As time moves forward, having the Obama administration more settled and more comfortable with the G-20 will calm investors' nerves. The stimulus packages will also impact sentiment, as people either access or see the effects of the increased money supply.
I realize I am focusing on psychological rather than fundamental factors. This is intentional. The market is currently so volatile, sentiment will lead the way in the short-term. Bears can talk about earnings per share, historical price/earnings ratios, and other technical factors all they want, it won't matter--at least not yet. Seeing a decisive end to the constant printing of money is paramount, and the Obama administration, by using the "bankruptcy" word, is signaling to the world that it will not print an endless supply of money to prop up institutions. That is a welcome development--it's the first time in months we've seen decisive action.
Again, I am hoping for an S&P target of 950 within the next two to five months, and I feel confident. After that, I have no set target. The April earnings reports won't be great, but they won't be dismal, either. The market is still priced for dismal numbers, and anything above abject collapse will increase positive sentiment. Good luck out there.
The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.
Update on July 20, 2009: today, July 20, 2009, the S&P 500 rose above 950; however, the rise may be short-lived--Bernanke speaks tomorrow.
Thomas Jefferson on Banks
From Thomas Jefferson, paraphrased:
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
President Jefferson's modern-day equivalent would have to be Mr. Ron Paul.
Note: the Jefferson quotation cited above has no credible source. It is apparently a paraphrasing of two separate Jefferson statements:
And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale...Bank-paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs.
From Thomas Jefferson to John Taylor, Monticello, 28 May 1816. [Ford 11:533] and Thomas Jefferson to John Wayles Eppes, Monticello, 24 June 1813. [Ford 11:303]
Ford = Ford, Paul Leicester, ed. The Writings of Thomas Jefferson. New York: G.P. Putnam’s Sons, 1892-99. 10 vols.
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
President Jefferson's modern-day equivalent would have to be Mr. Ron Paul.
Note: the Jefferson quotation cited above has no credible source. It is apparently a paraphrasing of two separate Jefferson statements:
And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale...Bank-paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs.
From Thomas Jefferson to John Taylor, Monticello, 28 May 1816. [Ford 11:533] and Thomas Jefferson to John Wayles Eppes, Monticello, 24 June 1813. [Ford 11:303]
Ford = Ford, Paul Leicester, ed. The Writings of Thomas Jefferson. New York: G.P. Putnam’s Sons, 1892-99. 10 vols.
Tuesday, March 31, 2009
Basketball and Lawyers
Today's WSJ has an article about Idan Ravin, an attorney who helps train NBA players. Check this out:
After law school he [Idan] started coaching boys basketball at the local YMCA in San Diego to take his mind off his dreary day job as an attorney.
That's exactly how I ended up coaching youth basketball several years ago. I needed an outlet for my stress, and coaching basketball really helped. Idan Ravin now counts Carmelo Anthony and Chris Paul as clients, so maybe my NBA hoop dreams aren't completely outlandish. Hamed Haddadi, if you're reading this, shoot me an email. I've got some ideas on how you can improve your game.
After law school he [Idan] started coaching boys basketball at the local YMCA in San Diego to take his mind off his dreary day job as an attorney.
That's exactly how I ended up coaching youth basketball several years ago. I needed an outlet for my stress, and coaching basketball really helped. Idan Ravin now counts Carmelo Anthony and Chris Paul as clients, so maybe my NBA hoop dreams aren't completely outlandish. Hamed Haddadi, if you're reading this, shoot me an email. I've got some ideas on how you can improve your game.
My Meeting with FusionAnalytics
Fans of Barry Ritholtz might enjoy this post. As most of you know, Mr. Ritholtz is the CEO and Director for Equity Research for FusionIQ, an independent quant research firm. He works with Kevin Lane and Michael Conte of FusionAnalytics Investment Partners, LLC. I happened to meet Mr. Lane and Mr. Conte yesterday morning.
Mr. Lane provided some details about his background. He started with MFS and then became Redwood's Chief Market Strategist. When margins on the trade execution side of the business diminished, Mr. Lane shifted gears into market research. Mr. Lane appears to focus part of his research on answering the following three questions:
1. What are the underlying fundamentals?
2. Are we in the right sector?
3. What is the overall market environment?
Mr. Lane is a quant--someone who relies on numerical ("quantative") techniques to time the market and to determine market risk. I asked his thoughts on LTCM, the most famous quant-based blow-up in Wall Street history (read the book, When Genius Failed, for more on this topic). This is where Mr. Lane differentiated his product from other quant-based tools. Many quants believe so religiously in their system, even when the data in front of them tells them a trade isn't working out, they ignore it. In contrast, Mr. Lane mentioned human error and being able to recognize when you've made a mistake. Though he didn't come out and say it, he implied that LTCM fell prey to hubris. Mr. Lane also said that when his own bets on Tempur Pedic International Inc. (TPX) and La-Z-Boy Inc. (LZB) went awry, he exited those positions. His decision to take the loss sooner rather than later saved his investors from more downside movement. Overall, I found Mr. Lane to be upfront and professional. He clearly had passion for his work, and his eyes lit up when he began talking about his investment strategies.
I then spoke with Mr. Conte. If Mr. Lane is the gravitas of the operation, then Mr. Conte is the suave go-getter, the East Coast stud who brings energy and drive to every meeting. Mr. Conte talked about the FusionAnalytics program and how it sought to minimize investment risk. He used the term, "tilt," instead of portfolio "re-balancing," saying it was important to allocate assets in the right direction rather than just haphazardly. Actually, he said it more colorfully--he said that rebalancing doesn't make sense, because you could be rebalancing into toxic assets, except he used a scatalogical term for "toxic assets," which made me laugh.
Mr. Conte also talked about conflicts of interest and how many brokers and advisors had no incentive to protect their clients' money. For example, let's say you recommend a stock to your clients. A few months later, the technical indicators show that the stock is poised for a dive. In most firms, there's no incentive to go back to your clients and tell them you were wrong a few months ago and they should sell. That's because many Wall Street firms don't prioritize protecting their clients' money--their models are based on getting as much money as you can and giving your clients bullish tips. Mr. Conte said FusionAnalytics avoided this conflict of interest by charging a percentage of assets under management, allowing them to focus on results.
As I've written several times before, it's important for investors to see investment advisors and corporate executives in person to gauge their credibility. Human intuition, honed for thousands of years, may not always be correct, but it can sometimes save investors a lot of grief. One reason Madoff might have secluded himself from his investors and created an exclusive (read: isolated) existence is probably because he knew his lies would produce tell-tale signals. Mr. Conte and Mr. Lane both came across as credible, decent men. I wouldn't be surprised to see them doing very well in the future. In a world where a Madoff can exist, it's nice to know that a Mike Conte and a Kevin Lane can also thrive.
One final note: during my chat with Mr. Conte, we experienced a 4.3 earthquake. This was Mr. Conte's first earthquake, and I got to share it with him. It's always good to see how investment advisors operate under pressure. Mr. Conte's face got a little red when he realized what was happening, but he kept his composure. Mr. Conte, welcome to California.
FYI: here is an article re: Mr. Lane's timely calls:
http://www.businessweek.com/magazine/content/02_50/b3812104.htm
Mr. Lane provided some details about his background. He started with MFS and then became Redwood's Chief Market Strategist. When margins on the trade execution side of the business diminished, Mr. Lane shifted gears into market research. Mr. Lane appears to focus part of his research on answering the following three questions:
1. What are the underlying fundamentals?
2. Are we in the right sector?
3. What is the overall market environment?
Mr. Lane is a quant--someone who relies on numerical ("quantative") techniques to time the market and to determine market risk. I asked his thoughts on LTCM, the most famous quant-based blow-up in Wall Street history (read the book, When Genius Failed, for more on this topic). This is where Mr. Lane differentiated his product from other quant-based tools. Many quants believe so religiously in their system, even when the data in front of them tells them a trade isn't working out, they ignore it. In contrast, Mr. Lane mentioned human error and being able to recognize when you've made a mistake. Though he didn't come out and say it, he implied that LTCM fell prey to hubris. Mr. Lane also said that when his own bets on Tempur Pedic International Inc. (TPX) and La-Z-Boy Inc. (LZB) went awry, he exited those positions. His decision to take the loss sooner rather than later saved his investors from more downside movement. Overall, I found Mr. Lane to be upfront and professional. He clearly had passion for his work, and his eyes lit up when he began talking about his investment strategies.
I then spoke with Mr. Conte. If Mr. Lane is the gravitas of the operation, then Mr. Conte is the suave go-getter, the East Coast stud who brings energy and drive to every meeting. Mr. Conte talked about the FusionAnalytics program and how it sought to minimize investment risk. He used the term, "tilt," instead of portfolio "re-balancing," saying it was important to allocate assets in the right direction rather than just haphazardly. Actually, he said it more colorfully--he said that rebalancing doesn't make sense, because you could be rebalancing into toxic assets, except he used a scatalogical term for "toxic assets," which made me laugh.
Mr. Conte also talked about conflicts of interest and how many brokers and advisors had no incentive to protect their clients' money. For example, let's say you recommend a stock to your clients. A few months later, the technical indicators show that the stock is poised for a dive. In most firms, there's no incentive to go back to your clients and tell them you were wrong a few months ago and they should sell. That's because many Wall Street firms don't prioritize protecting their clients' money--their models are based on getting as much money as you can and giving your clients bullish tips. Mr. Conte said FusionAnalytics avoided this conflict of interest by charging a percentage of assets under management, allowing them to focus on results.
As I've written several times before, it's important for investors to see investment advisors and corporate executives in person to gauge their credibility. Human intuition, honed for thousands of years, may not always be correct, but it can sometimes save investors a lot of grief. One reason Madoff might have secluded himself from his investors and created an exclusive (read: isolated) existence is probably because he knew his lies would produce tell-tale signals. Mr. Conte and Mr. Lane both came across as credible, decent men. I wouldn't be surprised to see them doing very well in the future. In a world where a Madoff can exist, it's nice to know that a Mike Conte and a Kevin Lane can also thrive.
One final note: during my chat with Mr. Conte, we experienced a 4.3 earthquake. This was Mr. Conte's first earthquake, and I got to share it with him. It's always good to see how investment advisors operate under pressure. Mr. Conte's face got a little red when he realized what was happening, but he kept his composure. Mr. Conte, welcome to California.
FYI: here is an article re: Mr. Lane's timely calls:
http://www.businessweek.com/magazine/content/02_50/b3812104.htm
Monday, March 30, 2009
"Beat" Poet
Whenever I feel despondent, I've tried to get out of my funk by exercising or playing video games. Lately, however, one simple quote attributed to Lawrence Ferlinghetti has brought me quick happiness:
"Mankind is too stupid and greedy to save himself."
There's something in the statement's inevitability that brings an immediate lightness to the moment. More on Ferlinghetti after the jump:
http://www.redroom.com/authornewsitem/lawrence-ferlinghetti
"Mankind is too stupid and greedy to save himself."
There's something in the statement's inevitability that brings an immediate lightness to the moment. More on Ferlinghetti after the jump:
http://www.redroom.com/authornewsitem/lawrence-ferlinghetti
Legal Pot Sales in California
According to The Atlantic, April 2009, p. 23 (Joshua Green):
Given California's well-publicized budget crunch, it's worth noting that legal pot sales generate $100 million in state tax revenue a year.
That's a lot of dope.
Given California's well-publicized budget crunch, it's worth noting that legal pot sales generate $100 million in state tax revenue a year.
That's a lot of dope.
Sunday, March 29, 2009
Governor Mark Sanford
It's Sunday, so let's visit Gov. Mark Sanford, who's been getting a bad rap in the mainstream press:
[T]he Bible says, “Let your light so shine before men that they may see your good works and give glory to your Father that’s in heaven.“ Hopefully, by the way in which you act. The way in which you make decisions.
Here's another quote from the interview, regarding the stages of democracy and civilization:
Sir Alex Francis Taylor studied history for all of his life. When he came to the end of his life, the quote attributed to him was that a democracy can not exist as a permanent form of government. It can only exist until voters discover that they can vote for them selves largess of the public treasury with a result that democracy always fails under loose fiscal policy and is generally followed by dictatorship. The average age of the world’s great civilizations has been 200 years for a nation to progress to a sequence from bondage to spiritual faith, spiritual faith to great courage, great courage to liberty, liberty to abundance, abundance to selfishness, selfishness to complacency, complacency to apathy, apathy to dependence. And from dependence back again into bond age. And so what I’m saying is some of what’s going on here is probably a reflection of where we are as a people.
More here.
[T]he Bible says, “Let your light so shine before men that they may see your good works and give glory to your Father that’s in heaven.“ Hopefully, by the way in which you act. The way in which you make decisions.
Here's another quote from the interview, regarding the stages of democracy and civilization:
Sir Alex Francis Taylor studied history for all of his life. When he came to the end of his life, the quote attributed to him was that a democracy can not exist as a permanent form of government. It can only exist until voters discover that they can vote for them selves largess of the public treasury with a result that democracy always fails under loose fiscal policy and is generally followed by dictatorship. The average age of the world’s great civilizations has been 200 years for a nation to progress to a sequence from bondage to spiritual faith, spiritual faith to great courage, great courage to liberty, liberty to abundance, abundance to selfishness, selfishness to complacency, complacency to apathy, apathy to dependence. And from dependence back again into bond age. And so what I’m saying is some of what’s going on here is probably a reflection of where we are as a people.
More here.
Saturday, March 28, 2009
California Economy
I almost missed this Washington Post article about Southern California's economy. Mr. Pearlstein sounds like a member of California's Tipping Point Club.
Friday, March 27, 2009
How Did My X-Mas Shopping Go?
On December 18, 2008, I posted my personal X-Mas shopping list for stocks. Although I intended to hold the stocks for at least a year, I made some changes, taking some losses to raise cash and to buy Berkshire Hathaway (BRK.B). Let's review:
12/18/08
CSCO = 16.66
EWZ = 35.95
INTC = 14.26
KO = 45.18
MXIM = 12.00
WFC = 29.65
S&P 500 = 885.28
DJIA = 8,604.99
Nasdaq = 1,552.37
3/26/09
CSCO = 17.31 (+3.9%)
EWZ = 40.85 (+1.3%)
INTC = 15.82 (+10.9%)
KO = 44.85 (-0.7%)
MXIM = 14.11 (+17.58%)
WFC = 15.95 (-46.2%)
S&P 500 = 832.86 (negative 5.9%)
DJIA = 7924.56
Nasdaq = 1587.00
Overall, the return on the above portfolio is a negative 2.2% (not including dividends). This return beats the S&P 500, but my victory is admittedly Pyrrhic. If I had avoided Wells Fargo, I would be doing quite well. In fact, I bought Wells Fargo stock all the way down to 9 dollars and recently sold at around 14 dollars, taking a loss. I just sold Intel and Maxim, too, but plan on buying them back at lower prices. The recent run-up seems too much, too soon. Even so, my major holdings, all in mutual funds, are untouched and mostly in stocks.
I am worried about the T. Rowe Price Latin America mutual fund (PRLAX) and iShares MSCI Brazil Index (EWZ). Despite its name, the T. Rowe Price Latin America fund holds Brazilian stocks. I am concerned because Brazilian government projections seem overly optimistic; demand for commodities continues to be soft; and political rivals appear all-too-willing to undermine President Luiz Silva's authority.
Right now, the above list is not representative of my major holdings. I continue to trade actively in my retirement accounts.
The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.
Update on 3/27/09: an astute seekingalpha.com reader points out that my math above is incorrect (and in my favor):
"You need to check your math. On EWZ, a price move from $35.95 to $40.85 is 13.63%, not 1.3%."
That, my friends, is why I'm a lawyer. I leave the math to the professionals and the expert witnesses.
12/18/08
CSCO = 16.66
EWZ = 35.95
INTC = 14.26
KO = 45.18
MXIM = 12.00
WFC = 29.65
S&P 500 = 885.28
DJIA = 8,604.99
Nasdaq = 1,552.37
3/26/09
CSCO = 17.31 (+3.9%)
EWZ = 40.85 (+1.3%)
INTC = 15.82 (+10.9%)
KO = 44.85 (-0.7%)
MXIM = 14.11 (+17.58%)
WFC = 15.95 (-46.2%)
S&P 500 = 832.86 (negative 5.9%)
DJIA = 7924.56
Nasdaq = 1587.00
Overall, the return on the above portfolio is a negative 2.2% (not including dividends). This return beats the S&P 500, but my victory is admittedly Pyrrhic. If I had avoided Wells Fargo, I would be doing quite well. In fact, I bought Wells Fargo stock all the way down to 9 dollars and recently sold at around 14 dollars, taking a loss. I just sold Intel and Maxim, too, but plan on buying them back at lower prices. The recent run-up seems too much, too soon. Even so, my major holdings, all in mutual funds, are untouched and mostly in stocks.
I am worried about the T. Rowe Price Latin America mutual fund (PRLAX) and iShares MSCI Brazil Index (EWZ). Despite its name, the T. Rowe Price Latin America fund holds Brazilian stocks. I am concerned because Brazilian government projections seem overly optimistic; demand for commodities continues to be soft; and political rivals appear all-too-willing to undermine President Luiz Silva's authority.
Right now, the above list is not representative of my major holdings. I continue to trade actively in my retirement accounts.
The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.
Update on 3/27/09: an astute seekingalpha.com reader points out that my math above is incorrect (and in my favor):
"You need to check your math. On EWZ, a price move from $35.95 to $40.85 is 13.63%, not 1.3%."
That, my friends, is why I'm a lawyer. I leave the math to the professionals and the expert witnesses.
Thursday, March 26, 2009
Joseph Cardinal Ratzinger on Economics and Morality
My Catholic readers are going to love this link:
http://www.acton.org/publications/occasionalpapers/publicat_occasionalpapers_ratzinger.php
Pope Benedict XVI is too traditionally conservative for my tastes, a comment a real Catholic ought to consider a compliment. Regardless of his political beliefs, the Pope's 1986(!) essay makes some very good points. Take this paragraph, for example:
The great successes of this [free market] theory concealed its limitations for a long time. But now in a changed situation, its tacit philosophical presuppositions and thus its problems become clearer. Although this position admits the freedom of individual businessmen, and to that extent can be called liberal, it is in fact deterministic in its core. It presupposes that the free play of market forces can operate in one direction only, given the constitution of man and the world, namely, toward the self-regulation of supply and demand, and toward economic efficiency and progress.
What the Pope is saying seems all too prescient, given the recent collapse of the banking sector. The Pope continues to make some common sense points when he quotes Peter Koslowski: “The economy is governed not only by economic laws, but is also determined by men.” In other words, the free market may be a relatively good path, but men have flaws, and their decisions impact the free market. It sounds so simple when the Pope says it, you almost want to resurrect Milton Friedman for a debate.
The Pope's main point is that free market systems require self-restraint, and religion provides self-restraint. As a result, a free market system without religion probably won't be ethical and won't include self-restraint. Extrapolating from these points, the Pope is arguing that religion is required to inject ethics and discipline into the ethics-less enterprise of the free market.
Again, the Pope no doubt makes excellent points. Ethics can flow from religion, but he veers off-course when he argues that self-restraint and discipline are necessarily tied to religion. It is true that religion can produce self-restraint and discipline; however, self-restraint can be learned without religion. Given America's wise policy of separating church and state, we need to determine how to effectively teach all of our children self-restraint and other ethical behavior without using religion.
Law schools have attempted to teach ethics without religion, but almost every law school ethics course is a joke amongst students. This is because too much of the course relies on counter-intuitive case studies, such as defense lawyers who know where a body is buried but cannot reveal the location because of attorney-client privilege. Since lawyers have failed to create broadly applicable ethics courses, we need to go back to the time when ethics was a central part of education.
How do we do this? At first blush, it seems simple, because the subject matter already exists. Learned philosophers, which would certainly include religious philosophers, have written volumes on ethics. Sadly, most high school and college students lack the reading or analytical ability to study Immanuel Kant, Socrates, and Thomas More. Ultimately, the problem isn't available content, but the willingness to read and to spend time reading complicated texts. I hate to sound so stodgy, but television bears much of the blame. Given the way humans are designed--with traces of the hunter in all of us--visual stimulation is more powerful than the written word. As long as children are exposed to hours of television on a daily basis, their ability to read and to have the attention span to read profound works will evaporate. Even among the children I coach in basketball, I can see a discernible difference in attention span among the parents who restrict television time and the ones who do not.
But it's not just television that's the problem--the intellectual value of all visual media has declined precipitously. For example, I love old movies. I notice they are slower in pace, but I don't mind. More importantly, Hollywood designed the dialogue of older films for educated adults; consequently, movies challenged audiences and forced children and teenagers to evolve to a higher linguistic standard to keep up with mainstream culture. Just compare Who's Afraid of Virginia Woolf? and A Man for All Seasons with most of the films in today's theaters. Outside of David Mamet's films, intelligent dialogue is a rarity in most modern films.
How does a society stop the corrosion of intellectual discourse, which includes ethics, when major media channels are dumbing down dialogue everywhere? I don't know the answer, but I do know this: when we implement a culture that prizes reading and books above television, we will be on the right path. Reading great books used to be automatic for society's elites, the college-educated, and the upper class. Today, it's hard to imagine George Bush or Sarah Palin fully understanding Shakespeare or Erich Maria Remarque. Pope Benedict XVI is correct that the free market needs disciplined practitioners to prevent itself from turning excessive. It's too bad he sees only one (unlikely) path to get to the promised land of self-restraint.
© Matthew Mehdi Rafat (2009)
http://www.acton.org/publications/occasionalpapers/publicat_occasionalpapers_ratzinger.php
Pope Benedict XVI is too traditionally conservative for my tastes, a comment a real Catholic ought to consider a compliment. Regardless of his political beliefs, the Pope's 1986(!) essay makes some very good points. Take this paragraph, for example:
The great successes of this [free market] theory concealed its limitations for a long time. But now in a changed situation, its tacit philosophical presuppositions and thus its problems become clearer. Although this position admits the freedom of individual businessmen, and to that extent can be called liberal, it is in fact deterministic in its core. It presupposes that the free play of market forces can operate in one direction only, given the constitution of man and the world, namely, toward the self-regulation of supply and demand, and toward economic efficiency and progress.
What the Pope is saying seems all too prescient, given the recent collapse of the banking sector. The Pope continues to make some common sense points when he quotes Peter Koslowski: “The economy is governed not only by economic laws, but is also determined by men.” In other words, the free market may be a relatively good path, but men have flaws, and their decisions impact the free market. It sounds so simple when the Pope says it, you almost want to resurrect Milton Friedman for a debate.
The Pope's main point is that free market systems require self-restraint, and religion provides self-restraint. As a result, a free market system without religion probably won't be ethical and won't include self-restraint. Extrapolating from these points, the Pope is arguing that religion is required to inject ethics and discipline into the ethics-less enterprise of the free market.
Again, the Pope no doubt makes excellent points. Ethics can flow from religion, but he veers off-course when he argues that self-restraint and discipline are necessarily tied to religion. It is true that religion can produce self-restraint and discipline; however, self-restraint can be learned without religion. Given America's wise policy of separating church and state, we need to determine how to effectively teach all of our children self-restraint and other ethical behavior without using religion.
Law schools have attempted to teach ethics without religion, but almost every law school ethics course is a joke amongst students. This is because too much of the course relies on counter-intuitive case studies, such as defense lawyers who know where a body is buried but cannot reveal the location because of attorney-client privilege. Since lawyers have failed to create broadly applicable ethics courses, we need to go back to the time when ethics was a central part of education.
How do we do this? At first blush, it seems simple, because the subject matter already exists. Learned philosophers, which would certainly include religious philosophers, have written volumes on ethics. Sadly, most high school and college students lack the reading or analytical ability to study Immanuel Kant, Socrates, and Thomas More. Ultimately, the problem isn't available content, but the willingness to read and to spend time reading complicated texts. I hate to sound so stodgy, but television bears much of the blame. Given the way humans are designed--with traces of the hunter in all of us--visual stimulation is more powerful than the written word. As long as children are exposed to hours of television on a daily basis, their ability to read and to have the attention span to read profound works will evaporate. Even among the children I coach in basketball, I can see a discernible difference in attention span among the parents who restrict television time and the ones who do not.
But it's not just television that's the problem--the intellectual value of all visual media has declined precipitously. For example, I love old movies. I notice they are slower in pace, but I don't mind. More importantly, Hollywood designed the dialogue of older films for educated adults; consequently, movies challenged audiences and forced children and teenagers to evolve to a higher linguistic standard to keep up with mainstream culture. Just compare Who's Afraid of Virginia Woolf? and A Man for All Seasons with most of the films in today's theaters. Outside of David Mamet's films, intelligent dialogue is a rarity in most modern films.
How does a society stop the corrosion of intellectual discourse, which includes ethics, when major media channels are dumbing down dialogue everywhere? I don't know the answer, but I do know this: when we implement a culture that prizes reading and books above television, we will be on the right path. Reading great books used to be automatic for society's elites, the college-educated, and the upper class. Today, it's hard to imagine George Bush or Sarah Palin fully understanding Shakespeare or Erich Maria Remarque. Pope Benedict XVI is correct that the free market needs disciplined practitioners to prevent itself from turning excessive. It's too bad he sees only one (unlikely) path to get to the promised land of self-restraint.
© Matthew Mehdi Rafat (2009)
Amartya Sen on Adam Smith
Amartya Sen agrees that trust is the necessary foundation of successful capitalism:
Even though people seek trade because of self-interest (nothing more than self-interest is needed, as Smith famously put it, in explaining why bakers, brewers, butchers, and consumers seek trade), nevertheless an economy can operate effectively only on the basis of trust among different parties...
[I]n his [Adam Smith's] first book, The Theory of Moral Sentiments, which was published exactly a quarter of a millennium ago in 1759, that he extensively investigated the strong need for actions based on values that go well beyond profit seeking. While he wrote that "prudence" was "of all the virtues that which is most useful to the individual," Adam Smith went on to argue that "humanity, justice, generosity, and public spirit, are the qualities most useful to others."
Profit-oriented capitalism has always drawn on support from other institutional values...
The moral and legal obligations and responsibilities associated with transactions have in recent years become much harder to trace, thanks to the rapid development of secondary markets involving derivatives and other financial instruments. A subprime lender who misleads a borrower into taking unwise risks can now pass off the financial assets to third parties—who are remote from the original transaction. Accountability has been badly undermined, and the need for supervision and regulation has become much stronger.
I like almost everything Mr. Sen writes. Even when I disagree with him, I see his point of view. I also like Mr. Sen's idea that all Americans deserve basic healthcare: "The failure of the market mechanism to provide health care for all has been flagrant, most noticeably in the United States." Still, I don't see how he gets "the need for regulation" from "accountability has been badly undermined." I suppose it depends on the definition and scope of "regulation"; even so, Congress cannot solve the problem of attenuated responsibility by written fiat. It seems that Mr. Sen gets the root cause (attenuated profit-making) right, but the solution (Congressional acts) wrong. More on this topic here.
Even though people seek trade because of self-interest (nothing more than self-interest is needed, as Smith famously put it, in explaining why bakers, brewers, butchers, and consumers seek trade), nevertheless an economy can operate effectively only on the basis of trust among different parties...
[I]n his [Adam Smith's] first book, The Theory of Moral Sentiments, which was published exactly a quarter of a millennium ago in 1759, that he extensively investigated the strong need for actions based on values that go well beyond profit seeking. While he wrote that "prudence" was "of all the virtues that which is most useful to the individual," Adam Smith went on to argue that "humanity, justice, generosity, and public spirit, are the qualities most useful to others."
Profit-oriented capitalism has always drawn on support from other institutional values...
The moral and legal obligations and responsibilities associated with transactions have in recent years become much harder to trace, thanks to the rapid development of secondary markets involving derivatives and other financial instruments. A subprime lender who misleads a borrower into taking unwise risks can now pass off the financial assets to third parties—who are remote from the original transaction. Accountability has been badly undermined, and the need for supervision and regulation has become much stronger.
I like almost everything Mr. Sen writes. Even when I disagree with him, I see his point of view. I also like Mr. Sen's idea that all Americans deserve basic healthcare: "The failure of the market mechanism to provide health care for all has been flagrant, most noticeably in the United States." Still, I don't see how he gets "the need for regulation" from "accountability has been badly undermined." I suppose it depends on the definition and scope of "regulation"; even so, Congress cannot solve the problem of attenuated responsibility by written fiat. It seems that Mr. Sen gets the root cause (attenuated profit-making) right, but the solution (Congressional acts) wrong. More on this topic here.
Wednesday, March 25, 2009
Judges and Francis Bacon
Francis Bacon has written eleven rules on how to be a good judge. Click here for more.
The first is this: "You should draw your learning out of your books, not out of your brain."
My favorite? "That you should be truly impartial, and not so as men may see affection through fine carriage."
The first is this: "You should draw your learning out of your books, not out of your brain."
My favorite? "That you should be truly impartial, and not so as men may see affection through fine carriage."
Not Just Guantanamo Bay
If you believed America considered "due process" an imaginary term only in Guantanamo Bay, you'd be wrong. See this story, about Ali Al-Marri. The United States held him, a legal U.S. resident, "without charges for more than five years at a Navy brig in South Carolina." (See WSJ, 3/24/09, A7). Apparently, President Obama has finally ordered a trial.
I've said it before, and I'll say it again. The rule of law isn't America's saving grace--the law always arrives last to an important event. If I'm wrong, then Mr. Al-Marri would have had a trial at some point in his five years in jail. People who place their faith in the law do not have recent history to support them.
I've said it before, and I'll say it again. The rule of law isn't America's saving grace--the law always arrives last to an important event. If I'm wrong, then Mr. Al-Marri would have had a trial at some point in his five years in jail. People who place their faith in the law do not have recent history to support them.
Incredible Romantic Movie
I highly recommend the 2005 film, Sweet Land. It's not a chick flick, but a sincere, heartfelt film about love in early America. Relevant links are below:
Movie's website: http://www.sweetlandmovie.com/
Interview with director: http://www.movienet.com/sweetland.html
The world really is a small place and, as we move around it and commingle, we have the ability to recognize our similarities, to go beyond tolerance toward acceptance, to redefine communities and humanity out of new combinations of people, sounds, stories and, of course, food.
Movie's website: http://www.sweetlandmovie.com/
Interview with director: http://www.movienet.com/sweetland.html
The world really is a small place and, as we move around it and commingle, we have the ability to recognize our similarities, to go beyond tolerance toward acceptance, to redefine communities and humanity out of new combinations of people, sounds, stories and, of course, food.
Tuesday, March 24, 2009
Hamiltonian Wisdom
I've always favored Jefferson over Hamilton, but this Federalist Papers excerpt is making me reconsider my anti-Hamilton stance:
http://avalon.law.yale.edu/18th_century/fed01.asp
It has been frequently remarked that it seems to have been reserved to the people of this country, by their conduct and example, to decide the important question, whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend for their political constitutions on accident and force...
So numerous indeed and so powerful are the causes which serve to give a false bias to the judgment, that we, upon many occasions, see wise and good men on the wrong as well as on the right side of questions of the first magnitude to society. This circumstance, if duly attended to, would furnish a lesson of moderation to those who are ever so much persuaded of their being in the right in any controversy. And a further reason for caution, in this respect, might be drawn from the reflection that we are not always sure that those who advocate the truth are influenced by purer principles than their antagonists. Ambition, avarice, personal animosity, party opposition, and many other motives not more laudable than these, are apt to operate as well upon those who support as those who oppose the right side of a question. Were there not even these inducements to moderation, nothing could be more ill-judged than that intolerant spirit which has, at all times, characterized political parties. For in politics, as in religion, it is equally absurd to aim at making proselytes by fire and sword. Heresies in either can rarely be cured by persecution...
On the other hand, it will be equally forgotten that the vigor of government is essential to the security of liberty; that, in the contemplation of a sound and well-informed judgment, their interest can never be separated; and that a dangerous ambition more often lurks behind the specious mask of zeal for the rights of the people than under the forbidden appearance of zeal for the firmness and efficiency of government. History will teach us that the former has been found a much more certain road to the introduction of despotism than the latter, and that of those men who have overturned the liberties of republics, the greatest number have begun their career by paying an obsequious court to the people; commencing demagogues, and ending tyrants.
Hamilton's ideas triumphed over Jefferson's. As a direct consequence of Hamilton's writing and influence, America received its foundation for modern governance and economic regulation. Could Hamilton envision, at the time he was writing, the kind of country we have today? Of course not. He had, at most, general ideas with no specifics. He could not have known that he was putting in place a framework that would eventually produce the modern car, iPhones, eBay, and other economic wonders. It just goes to show you that when you're doing something, even if you know it's historic, you can never know the full panoply of potential ramifications.
It is a shame that The Federalist Papers are not required reading at every American high school. Unfortunately, it was not until after I graduated law school that I bought a copy and read it. How can we be graduating so many Americans who have little idea of their own country's founding principles? If the test of an enduring empire is whether its citizens know and respect its history, America's longevity may be in question.
http://avalon.law.yale.edu/18th_century/fed01.asp
It has been frequently remarked that it seems to have been reserved to the people of this country, by their conduct and example, to decide the important question, whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend for their political constitutions on accident and force...
So numerous indeed and so powerful are the causes which serve to give a false bias to the judgment, that we, upon many occasions, see wise and good men on the wrong as well as on the right side of questions of the first magnitude to society. This circumstance, if duly attended to, would furnish a lesson of moderation to those who are ever so much persuaded of their being in the right in any controversy. And a further reason for caution, in this respect, might be drawn from the reflection that we are not always sure that those who advocate the truth are influenced by purer principles than their antagonists. Ambition, avarice, personal animosity, party opposition, and many other motives not more laudable than these, are apt to operate as well upon those who support as those who oppose the right side of a question. Were there not even these inducements to moderation, nothing could be more ill-judged than that intolerant spirit which has, at all times, characterized political parties. For in politics, as in religion, it is equally absurd to aim at making proselytes by fire and sword. Heresies in either can rarely be cured by persecution...
On the other hand, it will be equally forgotten that the vigor of government is essential to the security of liberty; that, in the contemplation of a sound and well-informed judgment, their interest can never be separated; and that a dangerous ambition more often lurks behind the specious mask of zeal for the rights of the people than under the forbidden appearance of zeal for the firmness and efficiency of government. History will teach us that the former has been found a much more certain road to the introduction of despotism than the latter, and that of those men who have overturned the liberties of republics, the greatest number have begun their career by paying an obsequious court to the people; commencing demagogues, and ending tyrants.
Hamilton's ideas triumphed over Jefferson's. As a direct consequence of Hamilton's writing and influence, America received its foundation for modern governance and economic regulation. Could Hamilton envision, at the time he was writing, the kind of country we have today? Of course not. He had, at most, general ideas with no specifics. He could not have known that he was putting in place a framework that would eventually produce the modern car, iPhones, eBay, and other economic wonders. It just goes to show you that when you're doing something, even if you know it's historic, you can never know the full panoply of potential ramifications.
It is a shame that The Federalist Papers are not required reading at every American high school. Unfortunately, it was not until after I graduated law school that I bought a copy and read it. How can we be graduating so many Americans who have little idea of their own country's founding principles? If the test of an enduring empire is whether its citizens know and respect its history, America's longevity may be in question.
Monday, March 23, 2009
Thoughts on Reno, Nevada
I just got back from Reno, Nevada. Some thoughts on my short vacation:
1. Not including the more isolated Peppermill and Atlantis hotels, the best downtown Reno buffet is El Dorado, especially if you have a sweet tooth. Their dessert options were incredible. Fruit tarts, cakes, little chocolate pies, flan, more tarts, and gelato.
2. When factoring cost, the best overall Reno restaurant is Harrah's Cafe Napa. I had a wonderful steak and shrimp scampi there ($9.99) and a rib-eye steak the next day. (The Peppermill would be a close second, but it's not really on the downtown strip).
3. I discovered a new drink, the "Brandy Separator." I don't usually drink at all--I order virgin pina coladas and mineral water with lime when gambling--but when I saw this milky concoction, I had to try it. Absolutely yummy. Otherwise known as "Gorilla Milk," it's 1 1/4 parts brandy, 3/4 part Kahlúa liqueur, and 3/4 part heavy cream.
4. The first two rounds of 2009's March Madness were fantastic. At one point, two games were in OT, and then one of them went to double OT. That, my friends, is why you want to be in Nevada during March Madness. You can watch all the games on the multiple casino screens instead of relying on CBS to switch you to a particular game.
One complaint? I hated the refereeing. Some calls were atrocious. Not to take anything away from Siena, but one foul call against an Ohio State player during the last twenty seconds might have cost Ohio State the game. (The player never touched his man.)
Best coached team? Utah State. Every single play was perfectly executed. If their two best players hadn't fouled out at the last minute, they would have won. (See comment about refereeing above.)
Softest team? Wake Forest, i.e. this year's bracket buster. Wake Forest had no defense whatsoever. They could shoot well, but couldn't guard anyone. Wake hasn't produced a Final Four team in several decades, despite counting Tim Duncan and Chris Paul as alumni.
Biggest heart? University of Northern Iowa. After barely making it to the dance (they had to mount a miraculous comeback in an OT conference game to get an invite), they pushed Purdue to the limit. If some calls had gone UNI's way, we'd be looking at a potential Cinderella.
UNI also has the player with the coolest name: Ali Farokhmanesh.
MVP so far? UNC's Ty Lawson. Without him, UNC would be at home right now, watching the games on television. At one point, he was the only UNC player who scored in a four minute time span, which stopped the other team's run.
5. Best Reno sportsbook? Club Cal Neva (not to be confused with Tahoe's CalNeva). Club Cal Neva, during March Madness, had everything a guy and his buddies would want. Two girls in skimpy outfits offering jello shots; huge nachos for five bucks; multiple pitchers of beer everywhere; three rooms of television screens and plenty of seating; and drawings for sports memorabilia. If it wasn't March Madness, though, I'd probably go to Harrah's. They have a classy joint, and it shows.
1. Not including the more isolated Peppermill and Atlantis hotels, the best downtown Reno buffet is El Dorado, especially if you have a sweet tooth. Their dessert options were incredible. Fruit tarts, cakes, little chocolate pies, flan, more tarts, and gelato.
2. When factoring cost, the best overall Reno restaurant is Harrah's Cafe Napa. I had a wonderful steak and shrimp scampi there ($9.99) and a rib-eye steak the next day. (The Peppermill would be a close second, but it's not really on the downtown strip).
3. I discovered a new drink, the "Brandy Separator." I don't usually drink at all--I order virgin pina coladas and mineral water with lime when gambling--but when I saw this milky concoction, I had to try it. Absolutely yummy. Otherwise known as "Gorilla Milk," it's 1 1/4 parts brandy, 3/4 part Kahlúa liqueur, and 3/4 part heavy cream.
4. The first two rounds of 2009's March Madness were fantastic. At one point, two games were in OT, and then one of them went to double OT. That, my friends, is why you want to be in Nevada during March Madness. You can watch all the games on the multiple casino screens instead of relying on CBS to switch you to a particular game.
One complaint? I hated the refereeing. Some calls were atrocious. Not to take anything away from Siena, but one foul call against an Ohio State player during the last twenty seconds might have cost Ohio State the game. (The player never touched his man.)
Best coached team? Utah State. Every single play was perfectly executed. If their two best players hadn't fouled out at the last minute, they would have won. (See comment about refereeing above.)
Softest team? Wake Forest, i.e. this year's bracket buster. Wake Forest had no defense whatsoever. They could shoot well, but couldn't guard anyone. Wake hasn't produced a Final Four team in several decades, despite counting Tim Duncan and Chris Paul as alumni.
Biggest heart? University of Northern Iowa. After barely making it to the dance (they had to mount a miraculous comeback in an OT conference game to get an invite), they pushed Purdue to the limit. If some calls had gone UNI's way, we'd be looking at a potential Cinderella.
UNI also has the player with the coolest name: Ali Farokhmanesh.
MVP so far? UNC's Ty Lawson. Without him, UNC would be at home right now, watching the games on television. At one point, he was the only UNC player who scored in a four minute time span, which stopped the other team's run.
5. Best Reno sportsbook? Club Cal Neva (not to be confused with Tahoe's CalNeva). Club Cal Neva, during March Madness, had everything a guy and his buddies would want. Two girls in skimpy outfits offering jello shots; huge nachos for five bucks; multiple pitchers of beer everywhere; three rooms of television screens and plenty of seating; and drawings for sports memorabilia. If it wasn't March Madness, though, I'd probably go to Harrah's. They have a classy joint, and it shows.
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