Why I Post on Things

In a brief look back at what I've posted on, I have noted a couple of things which someone who does not know me might think are just hobby horses. They aren't. They go to the heart of smaller investors having a fair chance to achieve their own financial goals through access to the good returns which the financial markets can provide for those who invest wisely and patiently. You see, getting those returns is my business.

I have written frequently about hedge funds. There is room in the world for them I guess. But they have huge clout and very little restraint, and serious potential for actions damaging to their own and other investors. Yes, the market will deal with a hedge fund which invests poorly, but I would really rather not have the world's financial markets go through convulsions with them in their death throes, if you don't mind. We get enough of those anyway.

I have written also frequently on the subject of shareholders' rightful interest in not having the corporate enterprise's earnings slashed by utterly fantastic manager pay, excessive managerial stock options, not to mention unscrupulous or illegal abuse of same. Corporate directors are before anything else the trusted stewards of the shareholders' property (the corporation, if you please) and should not forget that. Whether the stockholders are investing to fund their retirements, college for their children, or just to gainfully deploy the financial resources they have accumulated, they have skin in the game. A managerial "hireling" with big pockets and a short-term employment horizon should be seen as having a radically lesser stake in the corporation's earnings. Mutual funds have largely supplanted individual shareholders, for many valid reasons, but they should never feel that they have no responsibility to vote their shares wisely, and in ways jealously protective of their portfolio holdings' long-term investor returns.

The common theme: we all, as investors, need and require orderly financial markets, and good directorial stewardship in the Board Room.

I know one person who is rather cynical sometimes about things. He's pretty smart. I can almost hear him saying, "...you know, that really is the way it's always been, and it's the only way it ever will be, and you're too old to be sooooo naive." Well I would just say that there are two world views through which you can see how things are. I will take a "half-full glass" view, acknowledge the imperfections of people and organizations and try to do what I can. There is power in reason, and in communication. Improving things, even if just incrementally, is possible. That other view is no fun at all.

Great Discussion of Protectionism vs. Trade Deficits - What they Really Mean to You and Me

It's over at Larry Kudlow's Money Politic$, by George Mason University's Economics Dept. Chairman Donald Boudreau. Why blog on this? It's something we need to know, to understand the world and national financial environment, at least a little. Politicians and media personalities demagogue this sort of thing all the time, playing on the feelings of people. Don't let them. Arm yourself with knowledge.



Kudlow's Money Politic$: Letter to Lou

While generally in agreement, I will add my two reservations to the ideas expressed in the post. First, I'd rather see American enterprises growing, rather than growing American employment by foreign-owned businesses, with growing foreign ownership of American industry. Secondly, while I am admittedly no expert on income taxation of multinational entities, I'd like to have a higher level of confidence that these foreign industries were paying similar amounts of taxes to those American-owned businesses pay, and not using accounting tricks to tell Uncle Sam that the American subsidiaries were breaking even or losing money, while all the profits "actually" are earned back at the parent company in Japan or wherever.

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"The New Populism and the iPod Economy" -- TCS

Some of the best, freshest thinking I find shows up at TCS Daily. In a single story, TCS Daily - The New Populism and the iPod Economy we get a good analysis of some flawed populist thinking by Senator-elect Jim Webb in his Wall Street Journal op-ed article, discussion of the future of the American workplace, and why different types of work give back different rewards, and what trends are working to change the way our children will prosper based on how they earn their living.

The take-aways: If our country does relatively less manufacturing, is it really a big disaster that fewer of our kids will grow up to work on factory floors? (Ask the parents who have worked on factory floors.) And as our economy revolves around more and more service-type businesses, what are the determinants of which services will be best-compensated? Will those who serve up one meal at a time, even a very fine meal, be less well-off than those who find a way to serve the entertainment needs of the many? How about the investment advisory needs of the many? A fine chef can only serve so many people, even with a great support staff. The writer contrasts the way that many iPods can play the music of the few most popular (and richest) musicians, leaving the multitude of musicians, even really talented ones, searching for an audience.

I wonder if there is an oversimplification here. My music may not be his music. His music may not be your music. I don't like Springsteen all that much. Sorry! The whole potential of the iPodization, if you will, of the services economy is extreme personal customization which is now possible. If everyone liked the same music, and had no real individuality, we would just be happy to listen to our old AM-FM radios. Of course, it could all just degenerate into a huge dead-end exercise in self-indulgence, but the potential exists for something better. After bingeing on each service industry's equivalent of Bruce Springsteen's music, will we evolve a broader, not a narrower taste in life? Think Chopin, and not just played by world-famous performers: How about a world where you can listen to the best student recitals of the year? Where you can choose what you want, the way you like it, to the extent you want, in a more informed way, and with the benefit of more competitive prices than ever before. Sounds pretty good, right?

If you think of the services you personally consume as all somehow residing on a sort of big iPod, I would urge that a big free market will be just as customizable as you make it with your exercise of free choices.

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