Judges and Life Tenure

All federal judges (not magistrate judges) get lifetime appointments. It's a great job if you can get it, but if you think absolute power would breed corruption, you'd be surprised. In practice, federal judges and their clerks (at least in northern California) seem more detailed with their decisions, not because of any inherent superiority in intelligence, but because it is harder for litigants to get to federal court. The federal courts' more restrictive barrier to entry (federal courts are courts of "limited jurisdiction") leaves them with fewer cases and more time to analyze them. More time to do something usually leads to an increase in quality.

In contrast, state courts get flooded with lots of weak cases and after a while, most judges, unless they have exceptional work ethic, tend to become jaded and/or extensively delegate to their smart, hard-working clerks. (By the way, the Hon. Judge Kevin McKenney of Santa Clara Superior Court comes to mind as one of the hardest-working judges in California.)

The WSJ recently wrote an article about a Los Angeles federal judge who is said to be out of control. It's a major embarrassment to the system, but kudos to the WSJ for calling out government corruption when it sees it. Here's an interesting line from the WSJ's article today, 8/8/08 (A9):

"Is the federal system well equipped to deal with incorrigible behavior by judges?"..."No, not where the behavior doesn't rise to the level of impeachment."

That's not a good sign. Would America's founders tolerate a government that included virtually unaccountable judges? I don't think so--they would have wanted some substantive difference between a British king and a federal judge. What makes the issue complex is that America's founders also promoted the "separation of powers" doctrine--the Constitutional principle that gives judges their independence--precisely so that federal judges would feel insulated from public opinion and the executive and legislative branches.

I'm not sure how to balance the tension between judicial independence and government accountability. Judicial independence sounds good in theory, but the federal courts' interpretation of the Patriot Act seems to indicate that judges, despite lifetime appointments, tend to move in lockstep with the herd, waiting until abuses are rampant before stopping them. At the end of the day, the newspapers and the media may be the only entities that can keep judges from running amok.

Update on November 10, 2008: from the SJ Mercury News, 10/10/08, John Corvino:

It's worth remembering, however, that the courts follow social trends more often than they set them. When the U.S. Supreme Court struck down laws against interracial marriage in Loving v. Virginia, the majority of states already had repealed such laws.

More on judges and judicial power HERE.

China and Tibet

One point of this blog is to try to provide the full story, instead of just one side. China's attitudes towards Tibet have received much negative press. But in today's Wall Street Journal, Ma Yinjiang explains his stance:

"No leader could let Tibet go," he says. "If it goes independent, then Xinjiang will go, then Inner Mongolia. China will become like the Soviet Union. I think these people want this because they want to destroy China. They aren't really interested in human rights."

(WSJ, August 8, 2008, A10)

Mr. Ma has a point. To him, it's a civil war, and his side is the North trying to ensure the South doesn't secede.

Ann Killion's Article on Lopez Lomong

Once in a while, a story makes you stand up and say, "This is why America and Americans should be proud of themselves despite the Bush II presidency." When C. Rice is repeating now-disgraced Alberto Gonzales' canard that "[E]very day is Sept. 12th," some optimism is in order.

Ann Killion wrote an article in today's SJ Merc about Lopez Lomong, who was adopted by Americans and is now on the Olympic track and field team. See

http://www.mercurynews.com/annkillion/ci_10136928?nclick_check=1

For three days and three nights, the boys ran towards freedom [after being captured in Sudan]...When the Rogers [his adoptive parents] bought him a chicken sandwich at McDonald's, he brought part of it home: He was used to eating chicken only a bite or two of chicken twice a year, and was surprised to learn he could eat the whole thing.

Mr. Lomong will be representing America at the Olympics, both literally and figuratively.

Sexual Harassment Video

Here's a video on sexual harassment called "The Temptress":

http://www.youtube.com/watch?v=3b7QwYQRiqw

This video doesn't break new records on the unintentionally funny charts, but it's still worth a look-see because it's so lame, but takes itself so seriously. Why hire a lawyer when excellent, nuanced videos like this exist?

Piper Jaffray

Jamba (JMBA) is trading at about a dollar right now. On May 30, 2007, the firm of Piper Jaffray initiated coverage on Jamba Inc. (NASDAQ: JMBA) with an Outperform and $12 price target. On July 17, 2008, Piper Jaffray downgraded the stock from a buy to neutral. On August 7, 2008, Piper Jaffray downgraded again to "sell."

Let's take a look at this again. Here is where JMBA was priced at each interval:

6/01/07: $10.03 (outperform)
7/17/08: $1.15 (neutral)
08/7/08: $0.96 (sell)

The geniuses at Piper Jaffray waited until the stock had gone from around 10 dollars a share to a dollar before downgrading it, and then had the audacity to downgrade again at $0.96 a share. Jamba is trading at slightly over a dollar on August 8, 2008.

Let me get this straight--these geniuses decide to initiate coverage, drop the ball entirely, and then someone probably pointed out, "Hey guys, you still have an outperform rating on a stock that has gone down about 80% since your recommendation...maybe you want to do something about this?" Then, oh yes, then, Piper Jaffray gets off its arse and starts downgrading like there's no tomorrow. Thanks, Piper Jaffray. Let me know your buy recommendations so I can consider a career in shorting.

On Commodities

From Donald Coxe, Global Portfolio strategist of BMO Financial Group:

This is not the end of the commodity bull market. Bear Stearns, F&F and other crises will one day seem trivial. The new global middle class that is repricing commodities never will.

I am behind the curve when it comes to investing in commodities. Right now, the only one that looks interesting to me is UNG. I did pick up very small amounts of GLD, GDX, and SLV today because I had no precious metals in my portfolio. ( I just thought of Gollum when I said "precious" metals--like I said, I'm really behind the curve.) Deep down, I think Swiss francs (FXF) represent a better hedge, and I own some FXF, but I see the merits of owning some Gollum, er, precious metals in an inflationary environment.

Stocks Update, 8/8/08

Numbers below are based on prices at mid-day on August 8, 2008. Positions below have at least a $2,500 basis or current value of at least $2,500.

I've had 175 of CCT for a while and am up 2.03%. If you don't want to invest directly in a company's preferred shares, check out PFF, an exchange-traded-fund containing a basket of preferred shares (I own shares in PFF also).

The market will be choppy for a while. These large swings we've had--up 300 points, down the next day, up 200 points the next day, etc., will continue until the experts feel prices have bottomed out. Unfortunately, the experts want to see more volatility before deeming a market bottom. Investor's Business Daily says we're in a confirmed rally, and even Barry Ritholtz said several days ago the Dow would temporarily go back to above 12,000.

I am not committing large amounts to the market yet, but am enjoying trading. The percentages below are deceiving--my short term trades involve far more money than my open positions. If I make 1% on a $50,000 trade each time, but am losing 8% on a $3,000 investment like IF, I am still up.

I sold WFR because I noticed many competitors jumping in the solar wafer business. When I saw SOLF and other Chinese companies enter the market, I thought to myself, "Let's see, WFR, competitive advantage, wide moat...hmmmm." And then I blanked. I sold the very next day, eking out a small gain.

I am also slowly adding commodities-related investments. I missed the boom and didn't have any commodities, but with their recent price decrease, they are slightly more interesting. To be more diversified, at least 15% of my portfolio should be in commodities-related industries or non-equities. I recently invested small amounts in UNG (bought more today), KOL, and JNK. I'm nowhere near 15% for diversification purposes, but will get there at some point. My friend recommended MRO, but the information about its spinoff or breakup of the company is already public knowledge. I am not sure the market is that inefficient.

In other news, the Olympics are here!

Open Positions
DUK = +1.11
EWM =-8.07 [will average down from here]
EZU = -0.57 (own 65 shares) [excluded from average, negligible movement]
IF = -8.01
YHOO = -2.89

[Average of "Open Positions": losing/negative average 4.46%]

Closed Positions:
Held more than seven days but less than one year (from May 30, 2008):
CNB = +10.0
EQ = -8.83
GE = -6.4
INTC = 0.0 (excluded from average; insignificant movement)
PFE = -5.5
PNK = -16.7%
PPS = -2.8
VNQ = +2.37 [sold 8/7/08]
WFR = +0.9 (approx; based on partial sales week of 8/4/08 in two separate accounts)
WYE = +2.4%

[Overall Record: Lost an average of 2.82%]

Held less than 7 days:
GE (1.0%); GOOG (0.8%) [7/28/08 - 7/29/08]; GRMN (-6.2%) [Sold 8/5/08]; ICE (2.0%), MMM (0.5%), MRK (0.1%), NVDA (8.0%) [8/12 to 8/13/08]; PFE (1.3%), SCUR (15%); SO (-0.3%) [Sold 8/5/08]; TTWO (4.3%) [partial sales on 8/5/08, 8/7/08, and 8/8/08]

[Overall Record: Gained an average of 1.85% (changed after NVDA sale)]

Daytrades:
PFE = +0.5%
GE = +0.5% (Updated on July 14, 2008; bought at 27.15, sold at 27.30)
XLF = +4.3% (Updated on July 15, 2008)

[Overall Record: Gained an average of 1.76%]

Compare to S&P 500: losing/negative 7.38%
[from May 30, 2008 (1385.67) to mid-day August 8, 2008 (1283.42)]

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.