Month: November 2005

The New Yorker: Scowcroft’s View of Bush II: Rise of the Idiot

Some excerpts to whet your whistle:

Scowcroft does not believe that the promotion of American-style democracy abroad is a sufficiently good reason to use force. “I thought we ought to make it our duty to help make the world friendlier for the growth of liberal regimes,” he said. “You encourage democracy over time, with assistance, and aid, the traditional way. Not how the neocons do it.”

The neoconservatives—the Republicans who argued most fervently for the second Gulf war—believe in the export of democracy, by violence if that is required, Scowcroft said. “How do the neocons bring democracy to Iraq? You invade, you threaten and pressure, you evangelize.” And now, Scowcroft said, America is suffering from the consequences of that brand of revolutionary utopianism. “This was said to be part of the war on terror, but Iraq feeds terrorism,” he said.


Google Update

Goog_112905 Down 4.7% on over 2x average volume.  Worst percentage drop since 6.7% on 11/16/04.  First  close below 10-day moving average since start of most recent rally.  This is something to watch — GOOG investor or not — since Google is a primary market bellweather.  Cheers!

Portfolio Update

See below for list of position and brief commentary.  I expect to rebalance, reduce, and probably concentrate the portfolio be the end of the year (transferring from Fidelity to consolidated account with better service and many free trades to utilize for rebalance).  Ideal portfolio, for me, is between five and fifteen stocks.  Cheers!


Weekly View of the Cubes

Qqqq_112505w On the 6-month chart we see declining volume for the past three weeks.  That last week is hard to read due to the holiday-shortened week (closed all day Thursday and closed at 1:00 PM Friday).

On Freedom

I believe there are more instances of the abridgement of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpation.

-James Madison

I think what he’s trying to say is our freedom is being incrementally eroded, usually in the name of patriotism or safety/security, and almost always sold with the fear sell, the patriotic sell, or the "if you’re not doing anything wrong then you have nothing to worry about" sell.

Dude, What Happen to My Home Equity?

Here we see what the mainstream media, and economists, do best, which is take about six months to figure something out, in this case that the housing market topped a long time ago.  Yes, Virginia, that’s right, you sold too late…  again.  Bye, Bye.


Wrong Way Intl. Flows Calling Top? Again??

In February 2000, many months or even years into a bull market, foreign investors snapped up a record amount of U.S. equities.  A month later the U.S. stock market topped and the Nasdaq fell into the mother of all bear markets (for the Nasdaq), falling 78.4% from its March 10, 2000, intra-day peak of 5,132.52 to its October 10, 2002, intra-day low of 1,108.49.  Many former high fliers collapsed 95% plus.

In September 2005, thirty-seven months into a bull market, foreign investors snapped up a record amount of U.S. equities ($24.6 billion).  A month later _________.  While we won’t know what goes in that blank spot for at least a month, the record inflows should be duly noted.


Alan’s Bubbles, The Book (Published Book Authors, Inquire Within)

2005_11_09t180953_450x363_us_bush_medal_2 “Alan’s Bubbles” by ChrisCo and [insert front man/woman author here]. We’ll take care of the catchy subtitle later (maybe “And the Chairman’s New Clothes”?). Yes, there will be scores of books written about Alan Greenspan and his legacy, but ours will be the one written for independent thinkers by independent thinkers. The conventional wisdom will be unmasked, the fallacies that built these bubbles, and ultimately lead to their demise, will be exposed. Of course it’s already too late to prevent the coming rinse cycle, but it must be written about nonetheless. We’ll cover Sir Alan’s entire life, with special attention to how his avoidance of minor bumps lead him to create excess liquidity, which combined with other factors to enable excess confidence and risk taking by everyone from the president on down to the college kid on his third investment property who thinks real estate prices can only go up and interest rates can only go down. Sprinkle in some fraud and a rogue president and you really have a recipe for disaster. I think the cover of our book will have a picture like the one above, which is from Reuters and In any event, just give me an email if you’re qualified and want to be a part of this project. Cheers!


On Judgement

A wise man/woman makes his/her own decisions; an ignorant one follows public opinion.

-Grantland Rice (journalist)

NYT Editorial: Decoding Mr. Bush’s Denials

November 15, 2005

To avoid having to account for his administration’s misleading statements before the war with Iraq, President Bush has tried denial, saying he did not skew the intelligence. He’s tried to share the blame, claiming that Congress had the same intelligence he had, as well as President Bill Clinton. He’s tried to pass the buck and blame the C.I.A. Lately, he’s gone on the attack, accusing Democrats in Congress of aiding the terrorists.

Yesterday in Alaska, Mr. Bush trotted out the same tedious deflection on Iraq that he usually attempts when his back is against the wall: he claims that questioning his actions three years ago is a betrayal of the troops in battle today.

It all amounts to one energetic effort at avoidance. But like the W.M.D. reports that started the whole thing, the only problem is that none of it has been true.


On Admitting Mistakes

Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.

-John Kenneth Galbraith

Keeping the Golden Goose Alive

See the following excerpt (on the next page of this posting), which came this afternoon, after this morning’s record trade deficit figures came out.  Indirect bidders, mostly foreign institutions, continue to support the U.S. government and American consumer, both of whom are living beyond their means, as evidenced by the twin deficits (government and current account) on the one hand and the home-equity-financed spending spree on the other.

This government and consumer spending are the golden goose of the world economy.  And if foreigners take away their bond bids then the goose gets sick.  If the housing market comes down too much, the goose also gets sick.  If the goose gets sick it can’t buy as much stuff from abroad.  If it can’t buy as much stuff from abroad then foreign merchants feel pain.  If foreign merchants feel pain their economies also feel pain.  If foreign economies feel pain they can’t buy so many American dollars, stocks, bonds, etc.  If they feel a *lot *of pain or sense the music stopping soon, they start selling American stocks, bonds, and dollars to bring money back home.  If foreigners bring money back home at the same time as: (a) the American consumer is feeling pain and not spending, (b) corporate profits are taking a hit, (c) unemployment is rising, (d) tax revenues are going down due to economic slowdown, and (e) government spending is going up due to wars and continued mismanagement, then you have a recipe for some real problems up to and including a crash.  And if we ever even get close to this type of scenario coming about then money will start moving in advance of these events, which of course will actually help bring the events to pass.

How soon could something like this happen?  As soon as 2006, after Bubbles Greenspan is gone and so is the artificial support the dollar is getting as corporations take advantage of the Homeland Investment Act (part of last year’s American Jobs Creation Act).  The HIA encourages U.S.-based companies to bring overseas profits back home to the U.S., but for about 80% of eligible corporations, the deadline for doing so is 12/31/05.  This deadline is putting a bid under the dollar and dollar-denominated assets, as a premium is extracted from those poor souls who thought waited to the last minute or bet on a dollar slide to scrape a few points.  Oops, time’s about up and it’s gonna cost to close those bets.  But after they are closed, what do you think might happen?  Where will the support be?  Who will feed the golden goose?  Cheers!




So odd to see Google (GOOG) hitting new highs the past two days on diminishing volume.  But, of course, that doesn’t matter until it matters.  Still, GOOG is *the* bellwether stock, so you need to keep your eye on it, at least until the eventual day comes when revenue growth decelerates and margin expansion decelerates or reverses.  Cheers!