Wednesday, November 19, 2008

Currencies

You can now buy almost all the major foreign currencies through a U.S. brokerage account: 

FXE: Euro 
FXC: Canadian dollar 
FXF: Swiss franc 
FXM: Mexican peso 
FXY: Japanese yen 
XRU: Russian ruble 
BZF: Brazilian real 
CYB, CNY: Chinese yuan 
ICN, INR: Indian rupee 

Although you can trade currencies, it doesn't mean you should. Personally, I own some FXC and FXF, but my positions may change at any time, and I am *not* qualified to give investment advice.

I view the Canadian dollar as a diversification tool because it is indirectly linked to commodity prices. The U.S. imports most of its oil through Canada, Mexico, and Venezuela. 

The Swiss franc should do relatively well, despite Swiss banking problems, because war is the #1 destroyer of economies, and the Swiss have historically avoided war. In contrast, the U.S. has Iraq; China has Taiwan; Russian has Georgia; India has Pakistan (over Kashmir); and Mexico has internal corruption so terrible, it may lead to civil war. Brazil's egregious income inequality makes it difficult for me to invest too much of my money in the country, despite its independence from OPEC and recent economic growth. 

I have heard several Southeast Asians say that Malaysia is doing better than its neighbors Cambodia and Vietnam primarily because Malaysia avoided war and Cambodia and Vietnam did not. The general theory makes sense. Aggression and war destroy economies because they lead to a lack of stability, which drives away investment. Thus, peacenik Americans who crave stability are left with the Euro, which is going to be devalued because of future expected interest rate cuts; the Canadian dollar; the Japanese yen; and the Swiss franc. 

If Tyranny and Oppression come to this land, it will be in the guise of fighting a foreign enemy. -- James Madison

Tuesday, November 18, 2008

S.F. Judge Reprimanded

Interesting article on an S.F. judge:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/18/BAAV147BAP.DTL

I've never met the judge, but he sounds like a former District Attorney.

I just checked--Judge McBride was a former assistant D.A. and a police officer. According to the S.F. Sentinel, "[Judge] McBride has previously been named Judge of the Year by both the San Francisco Trial Lawyers Association and the San Francisco Bar Association’s Barrister Club." Judge McBride was also elected the S.F. Court's presiding judge this year.

Nothing against Judge McBride, but in states where voters can elect judges, I recommend voting against former district attorneys if they lack private sector experience handling non-criminal cases. Some great judges were former D.A.s, but generally speaking, D.A.s tend to see the world in black and white. Also, while former district attorneys seem to have a better work ethic than non-criminal lawyers, this extra energy is usually caused by a Superman complex. What do I mean by a Superman complex?

Most D.A.s become D.A.s to protect society from criminals and bad elements. To place yourself in a role where you can single-handedly protect your fellow man by locking up citizens (some of whom may be innocent), you have to be comfortable playing God or Superman. But people who view power cautiously or who are mindful of their lack of omnipotence will be fearful of wielding any kind of substantial power. This means that the most confident lawyers, the ones who are comfortable playing Superman, will gravitate towards the D.A. role.

In fact, good D.A.s must have supreme confidence to function, especially after seeing horrors like rape, homicides, and infanticides up close. The average person who sees an 18 year old mother microwave her baby probably won't want anything to do with that situation; a D.A., however, must not only get involved, s/he must convince a jury to throw the young mother in jail. If the D.A. thinks about the mother's personal background, her poverty, or some other random factor, it makes his job more difficult. In short, the ability to see gray areas complicates throwing a fellow human being in jail, because a person may realize that in some alternate universe, given the same set of circumstances, it could be him or her across the aisle in the courthouse. Of course, someone has to prosecute unfortunate souls along with the hardened criminals, so you want D.A.s to be tough, supremely confident, and comfortable playing God with people's lives. At the same time, it's important to recognize that kind of attitude works best in criminal law, not civil law.

Many meritorious civil cases involve gray areas without hard evidence (i.e., a smoking gun, fingerprints, DNA). For example, employment cases sometimes involve nothing more than he-said/she-said scenarios, such as where a female employee alleges sexual harassment. Thus, much of the time, a civil judge has to decide whether a case has merit based solely on sworn statements from different people. Although the law requires judges to send cases to a jury if a reasonable person could see genuinely disputed material facts, after seeing so much hard evidence in criminal cases and so many criminal cases involving severe harm, former D.A.s tend to be less sympathetic to cases that lack obvious physical harm.

You will notice that Judge McBride was named Judge of the Year by the San Francisco Trial Lawyers Association. Those associations are usually run by personal injury lawyers, who bring cases involving physical injuries. Thus, it is not unusual for former D.A.s to be well-liked by trial lawyer associations, because personal injury cases usually involve obvious physical harm and more black-and-white facts than other cases--such as securities litigation or labor law--which don't appeal to a D.A.'s experience of associating meritorious cases with blood on the ground.

Again, I don't know Judge McBride, so I cannot comment on him specifically. The only reason I write this post is to encourage voters to consider voting for a non-D.A., a public defender, a solo practitioner, or a lawyer with private practice experience when it comes time to choose a judge.

Bonus: an Illinois judge jails a man for making a yawning noise in his courtroom. See here.

Steve Malanga on State Governments

Steve Malanga, senior editor of the Manhattan Institute's City Journal, is my new favorite writer. The WSJ included an opinion piece by him in today's paper:

http://s.wsj.net/article/SB122697315476635963.html

A study...by the Employee Benefit Research Institute estimated that the average public sector worker earns 46% more in total compensation than his counterpart in the private sector, largely because government employers spend 60% more per worker on benefits than counterparts in the private sector. States have collectively ranked up some $731 billion in unfunded liabilities for pensions and other retirement benefits, according to a study...by the Pew Charitable Trusts' Center on the States...


California state and local governments are paying some $12.8 billion a year to finance public employee pensions, up form $4.8 billion in 1999.

You know who's on the hook for all those benefits, don't you? We, the taxpayers, and our children. What is the reason government employees, on average, receive more benefits than private sector workers? It is becoming increasingly apparent that our elected representatives believe that we should work for them, instead of the other way around.

The next time you vote to give more money to government programs, just remember what we were told as kids: "Money doesn't grow on trees." Perhaps these days, it should read, "Money may not grow on trees, but what's wrong with getting money through bond sales?" Well, remember OCM--Other Countries' Money? Other countries are and have been the major buyers of our bonds, meaning they have become American Express, while we have become debt-holders, working each month to pay them off. I guess our own government is selling us out to other countries. Who can blame them? Other countries are the ones effectively paying for their benefits and for their inefficient programs (Bridge to Nowhere, etc.) through the purchase of municipal and Treasury bond sales. Although I am opposed to unnecessary regulation of private citizens, that doesn't mean an irresponsible government doesn't deserve to be regulated. Maybe we should require all public sector bond sales to have at least 51% American citizen ownership before being offered to other countries--once Americans realize we don't have the money to buy back our own debt, much less our future debt, we might become more frugal.

Update on Transmeta (TMTA)

On September 18, 2008, I wrote that Transmeta was a potential takeover target:

If you're looking for a growth story, this isn't it; however, as long as its patent portfolio remains viable, TMTA may be a potential takeover target or value play at the right price.

http://willworkforjustice.blogspot.com/2008/09/transmeta-tmta-shareholder-meeting.html

On November 18, 2008, Novafora acquired Transmeta:

http://biz.yahoo.com/ap/081117/novafora_acquisition.html

This appears to be a good outcome for Transmeta. Kudos to the Board of Directors and to the officers for selling the company in a professional, transparent manner.

Now a Good Time to Invest?

A lot of you have been on the sidelines, waiting for a good time to buy stocks. I'm not making any recommendations, but I just bought between 55 to 250 shares of some tech stocks, including NVDA, ERTS, INTC, STM, SYMC, and CSCO. I realize my financial outlay isn't much, but perhaps these shares will be worth much more five years or more from now.

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.

Homes v. Stocks as Investments

According to an article in Charles Schwab on Investing, Fall 2007 (p. 7), which looks like it was written by Matt Wood, stocks are a better investment than housing:

[R]esidential real estate provided an annualized return of 8.6% during the period from 1978 to 2004, compared with 13.4% for the S&P 500 Index (citing Jack Clark Francis et al, Contrasting Real Estate with Comparable Investments, 1978-2004, April 2007)

In some cases, [owning a home costs] as much as three times the purchase price [due to insurance premiums, maintenance costs, and property taxes]...Robert Shiller says real estate's historic real returns are closer to zero after adjusting for inflation. [David Crook, "Your Home Isn't the Nest Egg That You Think It Is," WSJ Online, March 12, 2007]

I refused to buy any property during the last five years, believing that everything in California was overpriced. Now, however, I am not so sure. Housing and other hard assets might not be a great investment, but they no longer appear to be flagrantly overpriced.

Monday, November 17, 2008

Poem: Lola Haskins

I finally dumped my 8 years old wallet and replaced it with a new one I had in my drawer (it's been there for the last 5 years). In the process of emptying out the old wallet, I found a short poem, by Lola Haskins. It's titled, "Love":

LOVE

She tries it on, like a dress.
She decides it doesn't fit,
and starts to take it off.
Her skin comes, too.

This was one of two poems I had in my wallet. Not sure why I had that particular one in there, other than the fact that it's one of the most poignant poems I've ever read. Can't you just feel the unnamed woman's anguish? I am still in awe of how the last line creeps up on unsuspecting readers, only to bludgeon them so matter-of-factly in the end.