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.
"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
Thursday, April 2, 2009
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
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