Sid – Get the Book PCL and CRTX December 16, 2009March 16, 2017 PCL Ed Vail: “You’re holding your PCL? I thought you told us you sold, persuaded by the Schafer analysis?” ☞ Well, this is embarrassing – and a good reason the subscription fee for this site is set where it is. But also an excuse to tell my “Sid” story. Are you ready? A long time ago, when telephones had dials and stocks traded in eighths of a dollar (or “teenies” – sixteenths – if they were low-priced and “two-nies” – thirty-seconds – if they were outright skeevy), I had occasion to call my broker and ask him to sell “my 250 shares” of Something Or Other – “or do I have 275?” I apologized for not being certain how many shares I had … this was before personal computers, let alone real-time on-line access to your portfolio … and he said, “Oh, listen, that’s nothing. Did I ever tell you about [one of his big clients]?” One of his big clients, it seemed, was even older than I am now, and far richer than I will ever be, and spoke frequently with my broker. One day, as they were talking, something came over the ticker – my broker always talked with one eye on the ticker – about a big blue chip, American Cyanamid, let’s say (don’t hold me to the specifics), and it was pretty significant news, so my broker read the item to his client and asked, “Do you have any?” “Cyanamid?” asked his client. “I don’t think so.” But then, turning from the phone he shouted, “Sid – get the book.” Sid gets the book … my broker waits while his client leafs through the book … and then, after a little while, his client says, “Cyanamid. Yeah. Ten thousand shares.” My broker, in telling me this, could hardly spit out the punch line, he was laughing so hard. Can you imagine forgetting that you own 10,000 shares of what was then maybe a $60 stock? Can you imagine? For years – indeed, for decades – my broker and I have amused ourselves finding excuses to say, in the midst of some other conversation, “Sid – get the book.” So now I remember that in June of this year one of you did share that Oscar Schafer analysis of PCL with me, and, as I wrote in this space at the time, I did sell. But PCL has so long been etched in my brain as a very-long-term holding that … well, PCL stands for Plum Creek Lumber, and I just plum forgot. I’m embarrassed. Could I be getting as old as that client? I know I’m not as rich. That said, I do think – as I wrote last week (and as Dave Neal concurred the next day) – PCL makes a good very-long-term holding. If I get lucky, Schafer will be right and I’ll have a chance to buy it back cheaper. So far, though, it’s up 10% from where I sold it. CRTX Mark S.: “May I invoke your considered opinion regarding the condition of Cornerstone (CRTX). This company has weathered the economic storm and up until recently I have been reluctant to question my purchase of 1000 shares at $5.75. Could there be a reason for concern at this time? I was thinking of selling for a small loss (it’s $5 and change now) and buying more PCL.” ☞ Well, I’d have preferred you had paid $3.80 or so, which is where it was in April when Aristides’s Chris Brown told us it was “the best value he had ever seen in his life.” And as I wrote June 24 – I got out at $10. And as Chris told us a few days later, he got out even higher, close to $12. Not bad for two months. Yes, he did say he thought it was fairly valued and could be worth $16 in a couple of years … but at that point, having sold, he stopped following it. Indeed, he hadn’t looked at CRTX again until I passed on your query last week. To which he replied, candidly but I think instructively: I’m sorry to hear about Mark’s expensive lesson in CRTX. I don’t follow the company any longer, and can’t render specific advice to him as he is not my client, but I am happy to offer these two nuggets, which hopefully will provide him with comfort and maybe even profits in the long run: 1. If you own individual small cap stocks, you MUST (must!) look at the news flow on them every day. At a minimum, make a ticker list on Yahoo Finance and bookmark it. 2. Unless you feel that you understand a small cap company better than almost anyone else, the instant that you become aware that forward earnings have been revised downward, or that some dilutive corporate action is happening that will lower forward earnings, you generally are better off selling right there, even if the position has gone badly against you. You can follow earnings estimates each day or week on Yahoo Finance. Even better, you can both look at Yahoo Finance every day and also subscribe to Zacks investment research. They’ll e-mail you every day with earnings estimate changes on the companies you own (but only the ones they are aware of or are allowed to share, which is why you still need Yahoo, because sometimes the Yahoo data, from FirstCall, has estimates that Zacks doesn’t, and vice versa). CRTX’s estimates have been sliding for a long while. Remember, if you aren’t watching, professionals are. And they have more money, more research, and better trading platforms. The biggest advantage you have as an individual investor is that your positions are small enough that you can get in and out quickly on news, and if you aren’t watching like a hawk, you’ve given that advantage away. ☞ As for replacing CRTX with PCL, they are very different kinds of stocks. As you know from the previous item, PCL should be bought here only with a very long time horizon.
Three Cheers for Hope And Three Hopes to Cheer December 15, 2009March 16, 2017 The first cheer goes to “Invictus,” as uplifting and hopeful a story as you will find. See it! (If you already have, you might enjoy this four-minute clip with “the real Matt Damon.”) The second cheer goes to regenerative medicine, as shown this past Sunday on “60 Minutes.” Remember Ray Kurzweil’s notion that within a decade or so average life expectancy will be increasing by more than one year per year? Certainly the ability to grow new livers and hearts and such should help make that come true. And the third cheer? In yesterday’s list I referred to “the initiation of a much-lauded ‘educational race to the top.’” Now, from one of my favorite organizations – Democrats for Education Reform – comes this hopeful update: Who Would Have Guessed The Race Would Look Like This? Stunning. We don’t know how else to put it. Not just the New York State Board of Regents’ announcement today that it fully intends to be competitive in President Obama’s “Race To The Top” contest with a comprehensive reform package. (As a New Yorker whose kids attend NYC public schools, I was perplexed for months as to why we seemed so willing to walk away from hundreds of millions of dollars at a time when school budgets are being slashed all over – especially since the reforms needed to win shouldn’t be considered remotely controversial if you really think about them.) What is stunning is the tremendous wave of edu-political reform which has been unleashed by Education Secretary Arne Duncan and the Obama administration in such a short time. The president was swept into office by a strong demand for change. But who would have guessed that in less than one year we would be looking at such significant coast-to-coast policy changes at the state level. . . . [A state-by-state appraisal follows.] ☞ As 2009 (and ‘The Awful Aughts’?) draw to a close, we are in some very deep holes. And yet there really is a lot to be hopeful about. Tomorrow (which you can read today): PCL and CRTX
Big Stuff December 14, 2009March 16, 2017 Not to jinx it, but I think that, when the first full year of this Presidency is over, people will be able to look back on a remarkable, transformative string of accomplishments. Much of it has already happened – the sea-change in the way billions of our neighbors, and their leaders, see us; the impetus for stem cell research that may literally save our lives one day; the initiation of a much-lauded educational “race to the top”; the credit card reform act that will shortly take effect; the acceleration of increases in fuel-efficiency “CAFE” standards; the lifting of the global “gag” order on family planning information; passage of a long-stalled law that gives the FDA broad new authority to regulate tobacco; the extension of health insurance (over the “nay” votes of 80% of Senate Republicans) to millions of previously uninsured children; passage (over the “nay” votes of 90% of Senate Republicans) of the Lilly Ledbetter Fair Pay Act that, apart from its practical implications, sends a signal of respect to women; confirmation (over the “nay” votes of 77.5% of Senate Republicans) of the eminently qualified Justice Sonia Sotomayor that, apart from its practical considerations, sends a signal of respect to Hispanic Americans; passage of the Matthew Shepard Act (with the support of just 5 Senate Republicans) that sends a signal of respect to millions more. Plus billions of dollars in funding to stimulate alternative energy production – under the auspices of an Energy Secretary who is a Nobel-Prize-winning physicist, not CEO of one of the nation’s worst polluters. Oh – and we avoided economic collapse, despite virtual 100% Republican opposition to the various components of the bail-outs and stimuli required to do it. And more. And now, with five or six weeks still to go, things are heating up: Health care legislation that wins praise from such serious reformers as Howard Dean and Congressman Anthony Weiner may actually be headed toward enactment. It will not be perfect (and may still get derailed). But it will be a tremendous step forward if it gets done. Likewise, the financial regulatory reform that just passed the House.* Both of these are huge. The former, among much else, would mean you don’t have to worry about losing your health insurance. The latter, had it been in place a decade ago, would like have averted much of the housing bubble and last year’s near-collapse of the financial system. They’re not done yet, and they’re not perfect. That’s the nature of legislation in a democracy – not least because reasonable people may disagree on what perfect is. But this is shaping up to be one remarkable first year. *H.R. 4173 – The Wall Street Reform and Consumer Protection Act of 2009. One of its many features is a Consumer Financial Protection Agency. The Republicans voted unanimously for an amendment to kill it, but Democrats carried the day. If you are a consumer, this is good news. Click here to see how your Representative voted. MEANWHILE . . . Move over Paris and Berlin (and Winnipeg and Providence and Portland Oregon) – now Houston has elected an openly gay mayor, too. Ten gallon hats off to Annise Parker. And guess what? John Perez, who also happens to be gay, was just elected Speaker of the California Assembly. And if you think that’s a big deal, THE VATICAN may even be softening. A little. According to this: Scott Long of Human Rights Watch reported today that The Vatican said it opposes discriminatory penal legislation against gay people during a United Nations panel discussion on sexual orientation. Long says the people in attendance were “stunned.” According the Vatican’s statement, delivered by Father Philip Bene, legal attaché to the Holy See’s UN mission: “Thank you for convening this panel discussion and for providing the opportunity to hear some very serious concerns raised this afternoon. My comments are more in the form of a statement rather than a question. “As stated during the debate of the General Assembly last year, the Holy See continues to oppose all grave violations of human rights against homosexual persons, such as the use of the death penalty, torture and other cruel, inhuman and degrading punishment. The Holy See also opposes all forms of violence and unjust discrimination against homosexual persons, including discriminatory penal legislation which undermines the inherent dignity of the human person. “As raised by some of the panelists today, the murder and abuse of homosexual persons are to be confronted on all levels, especially when such violence is perpetrated by the State. While the Holy See’s position on the concepts of sexual orientation and gender identity remains well known, we continue to call on all States and individuals to respect the rights of all persons and to work to promote their inherent dignity and worth.” ☞ So condemn me to hell . . . but may I please have equal rights until I get there?
War and Peace December 11, 2009March 16, 2017 I had several other things to write about today but they can wait. Here’s what the President said in Oslo yesterday: December 10, 2009 Remarks by the President at the Acceptance of the Nobel Peace Prize Oslo, Norway THE PRESIDENT: Your Majesties, Your Royal Highnesses, distinguished members of the Norwegian Nobel Committee, citizens of America, and citizens of the world: I receive this honor with deep gratitude and great humility. It is an award that speaks to our highest aspirations — that for all the cruelty and hardship of our world, we are not mere prisoners of fate. Our actions matter, and can bend history in the direction of justice. And yet I would be remiss if I did not acknowledge the considerable controversy that your generous decision has generated. (Laughter.) In part, this is because I am at the beginning, and not the end, of my labors on the world stage. Compared to some of the giants of history who’ve received this prize — Schweitzer and King; Marshall and Mandela — my accomplishments are slight. And then there are the men and women around the world who have been jailed and beaten in the pursuit of justice; those who toil in humanitarian organizations to relieve suffering; the unrecognized millions whose quiet acts of courage and compassion inspire even the most hardened cynics. I cannot argue with those who find these men and women — some known, some obscure to all but those they help — to be far more deserving of this honor than I. But perhaps the most profound issue surrounding my receipt of this prize is the fact that I am the Commander-in-Chief of the military of a nation in the midst of two wars. One of these wars is winding down. The other is a conflict that America did not seek; one in which we are joined by 42 other countries — including Norway — in an effort to defend ourselves and all nations from further attacks. Still, we are at war, and I’m responsible for the deployment of thousands of young Americans to battle in a distant land. Some will kill, and some will be killed. And so I come here with an acute sense of the costs of armed conflict — filled with difficult questions about the relationship between war and peace, and our effort to replace one with the other. Now these questions are not new. War, in one form or another, appeared with the first man. At the dawn of history, its morality was not questioned; it was simply a fact, like drought or disease — the manner in which tribes and then civilizations sought power and settled their differences. And over time, as codes of law sought to control violence within groups, so did philosophers and clerics and statesmen seek to regulate the destructive power of war. The concept of a “just war” emerged, suggesting that war is justified only when certain conditions were met: if it is waged as a last resort or in self-defense; if the force used is proportional; and if, whenever possible, civilians are spared from violence. Of course, we know that for most of history, this concept of “just war” was rarely observed. The capacity of human beings to think up new ways to kill one another proved inexhaustible, as did our capacity to exempt from mercy those who look different or pray to a different God. Wars between armies gave way to wars between nations — total wars in which the distinction between combatant and civilian became blurred. In the span of 30 years, such carnage would twice engulf this continent. And while it’s hard to conceive of a cause more just than the defeat of the Third Reich and the Axis powers, World War II was a conflict in which the total number of civilians who died exceeded the number of soldiers who perished. In the wake of such destruction, and with the advent of the nuclear age, it became clear to victor and vanquished alike that the world needed institutions to prevent another world war. And so, a quarter century after the United States Senate rejected the League of Nations — an idea for which Woodrow Wilson received this prize — America led the world in constructing an architecture to keep the peace: a Marshall Plan and a United Nations, mechanisms to govern the waging of war, treaties to protect human rights, prevent genocide, restrict the most dangerous weapons. In many ways, these efforts succeeded. Yes, terrible wars have been fought, and atrocities committed. But there has been no Third World War. The Cold War ended with jubilant crowds dismantling a wall. Commerce has stitched much of the world together. Billions have been lifted from poverty. The ideals of liberty and self-determination, equality and the rule of law have haltingly advanced. We are the heirs of the fortitude and foresight of generations past, and it is a legacy for which my own country is rightfully proud. And yet, a decade into a new century, this old architecture is buckling under the weight of new threats. The world may no longer shudder at the prospect of war between two nuclear superpowers, but proliferation may increase the risk of catastrophe. Terrorism has long been a tactic, but modern technology allows a few small men with outsized rage to murder innocents on a horrific scale. Moreover, wars between nations have increasingly given way to wars within nations. The resurgence of ethnic or sectarian conflicts; the growth of secessionist movements, insurgencies, and failed states — all these things have increasingly trapped civilians in unending chaos. In today’s wars, many more civilians are killed than soldiers; the seeds of future conflict are sown, economies are wrecked, civil societies torn asunder, refugees amassed, children scarred. I do not bring with me today a definitive solution to the problems of war. What I do know is that meeting these challenges will require the same vision, hard work, and persistence of those men and women who acted so boldly decades ago. And it will require us to think in new ways about the notions of just war and the imperatives of a just peace. We must begin by acknowledging the hard truth: We will not eradicate violent conflict in our lifetimes. There will be times when nations — acting individually or in concert — will find the use of force not only necessary but morally justified. I make this statement mindful of what Martin Luther King Jr. said in this same ceremony years ago: “Violence never brings permanent peace. It solves no social problem: it merely creates new and more complicated ones.” As someone who stands here as a direct consequence of Dr. King’s life work, I am living testimony to the moral force of non-violence. I know there’s nothing weak — nothing passive — nothing naïve — in the creed and lives of Gandhi and King. But as a head of state sworn to protect and defend my nation, I cannot be guided by their examples alone. I face the world as it is, and cannot stand idle in the face of threats to the American people. For make no mistake: Evil does exist in the world. A non-violent movement could not have halted Hitler’s armies. Negotiations cannot convince al Qaeda’s leaders to lay down their arms. To say that force may sometimes be necessary is not a call to cynicism — it is a recognition of history; the imperfections of man and the limits of reason. I raise this point, I begin with this point because in many countries there is a deep ambivalence about military action today, no matter what the cause. And at times, this is joined by a reflexive suspicion of America, the world’s sole military superpower. But the world must remember that it was not simply international institutions — not just treaties and declarations — that brought stability to a post-World War II world. Whatever mistakes we have made, the plain fact is this: The United States of America has helped underwrite global security for more than six decades with the blood of our citizens and the strength of our arms. The service and sacrifice of our men and women in uniform has promoted peace and prosperity from Germany to Korea, and enabled democracy to take hold in places like the Balkans. We have borne this burden not because we seek to impose our will. We have done so out of enlightened self-interest — because we seek a better future for our children and grandchildren, and we believe that their lives will be better if others’ children and grandchildren can live in freedom and prosperity. So yes, the instruments of war do have a role to play in preserving the peace. And yet this truth must coexist with another — that no matter how justified, war promises human tragedy. The soldier’s courage and sacrifice is full of glory, expressing devotion to country, to cause, to comrades in arms. But war itself is never glorious, and we must never trumpet it as such. So part of our challenge is reconciling these two seemingly irreconcilable truths — that war is sometimes necessary, and war at some level is an expression of human folly. Concretely, we must direct our effort to the task that President Kennedy called for long ago. “Let us focus,” he said, “on a more practical, more attainable peace, based not on a sudden revolution in human nature but on a gradual evolution in human institutions.” A gradual evolution of human institutions. What might this evolution look like? What might these practical steps be? To begin with, I believe that all nations — strong and weak alike — must adhere to standards that govern the use of force. I — like any head of state — reserve the right to act unilaterally if necessary to defend my nation. Nevertheless, I am convinced that adhering to standards, international standards, strengthens those who do, and isolates and weakens those who don’t. The world rallied around America after the 9/11 attacks, and continues to support our efforts in Afghanistan, because of the horror of those senseless attacks and the recognized principle of self-defense. Likewise, the world recognized the need to confront Saddam Hussein when he invaded Kuwait — a consensus that sent a clear message to all about the cost of aggression. Furthermore, America — in fact, no nation — can insist that others follow the rules of the road if we refuse to follow them ourselves. For when we don’t, our actions appear arbitrary and undercut the legitimacy of future interventions, no matter how justified. And this becomes particularly important when the purpose of military action extends beyond self-defense or the defense of one nation against an aggressor. More and more, we all confront difficult questions about how to prevent the slaughter of civilians by their own government, or to stop a civil war whose violence and suffering can engulf an entire region. I believe that force can be justified on humanitarian grounds, as it was in the Balkans, or in other places that have been scarred by war. Inaction tears at our conscience and can lead to more costly intervention later. That’s why all responsible nations must embrace the role that militaries with a clear mandate can play to keep the peace. America’s commitment to global security will never waver. But in a world in which threats are more diffuse, and missions more complex, America cannot act alone. America alone cannot secure the peace. This is true in Afghanistan. This is true in failed states like Somalia, where terrorism and piracy is joined by famine and human suffering. And sadly, it will continue to be true in unstable regions for years to come. The leaders and soldiers of NATO countries, and other friends and allies, demonstrate this truth through the capacity and courage they’ve shown in Afghanistan. But in many countries, there is a disconnect between the efforts of those who serve and the ambivalence of the broader public. I understand why war is not popular, but I also know this: The belief that peace is desirable is rarely enough to achieve it. Peace requires responsibility. Peace entails sacrifice. That’s why NATO continues to be indispensable. That’s why we must strengthen U.N. and regional peacekeeping, and not leave the task to a few countries. That’s why we honor those who return home from peacekeeping and training abroad to Oslo and Rome; to Ottawa and Sydney; to Dhaka and Kigali — we honor them not as makers of war, but of wagers — but as wagers of peace. Let me make one final point about the use of force. Even as we make difficult decisions about going to war, we must also think clearly about how we fight it. The Nobel Committee recognized this truth in awarding its first prize for peace to Henry Dunant — the founder of the Red Cross, and a driving force behind the Geneva Conventions. Where force is necessary, we have a moral and strategic interest in binding ourselves to certain rules of conduct. And even as we confront a vicious adversary that abides by no rules, I believe the United States of America must remain a standard bearer in the conduct of war. That is what makes us different from those whom we fight. That is a source of our strength. That is why I prohibited torture. That is why I ordered the prison at Guantanamo Bay closed. And that is why I have reaffirmed America’s commitment to abide by the Geneva Conventions. We lose ourselves when we compromise the very ideals that we fight to defend. (Applause.) And we honor — we honor those ideals by upholding them not when it’s easy, but when it is hard. I have spoken at some length to the question that must weigh on our minds and our hearts as we choose to wage war. But let me now turn to our effort to avoid such tragic choices, and speak of three ways that we can build a just and lasting peace. First, in dealing with those nations that break rules and laws, I believe that we must develop alternatives to violence that are tough enough to actually change behavior — for if we want a lasting peace, then the words of the international community must mean something. Those regimes that break the rules must be held accountable. Sanctions must exact a real price. Intransigence must be met with increased pressure — and such pressure exists only when the world stands together as one. One urgent example is the effort to prevent the spread of nuclear weapons, and to seek a world without them. In the middle of the last century, nations agreed to be bound by a treaty whose bargain is clear: All will have access to peaceful nuclear power; those without nuclear weapons will forsake them; and those with nuclear weapons will work towards disarmament. I am committed to upholding this treaty. It is a centerpiece of my foreign policy. And I’m working with President Medvedev to reduce America and Russia’s nuclear stockpiles. But it is also incumbent upon all of us to insist that nations like Iran and North Korea do not game the system. Those who claim to respect international law cannot avert their eyes when those laws are flouted. Those who care for their own security cannot ignore the danger of an arms race in the Middle East or East Asia. Those who seek peace cannot stand idly by as nations arm themselves for nuclear war. The same principle applies to those who violate international laws by brutalizing their own people. When there is genocide in Darfur, systematic rape in Congo, repression in Burma — there must be consequences. Yes, there will be engagement; yes, there will be diplomacy — but there must be consequences when those things fail. And the closer we stand together, the less likely we will be faced with the choice between armed intervention and complicity in oppression. This brings me to a second point — the nature of the peace that we seek. For peace is not merely the absence of visible conflict. Only a just peace based on the inherent rights and dignity of every individual can truly be lasting. It was this insight that drove drafters of the Universal Declaration of Human Rights after the Second World War. In the wake of devastation, they recognized that if human rights are not protected, peace is a hollow promise. And yet too often, these words are ignored. For some countries, the failure to uphold human rights is excused by the false suggestion that these are somehow Western principles, foreign to local cultures or stages of a nation’s development. And within America, there has long been a tension between those who describe themselves as realists or idealists — a tension that suggests a stark choice between the narrow pursuit of interests or an endless campaign to impose our values around the world. I reject these choices. I believe that peace is unstable where citizens are denied the right to speak freely or worship as they please; choose their own leaders or assemble without fear. Pent-up grievances fester, and the suppression of tribal and religious identity can lead to violence. We also know that the opposite is true. Only when Europe became free did it finally find peace. America has never fought a war against a democracy, and our closest friends are governments that protect the rights of their citizens. No matter how callously defined, neither America’s interests — nor the world’s — are served by the denial of human aspirations. So even as we respect the unique culture and traditions of different countries, America will always be a voice for those aspirations that are universal. We will bear witness to the quiet dignity of reformers like Aung Sang Suu Kyi; to the bravery of Zimbabweans who cast their ballots in the face of beatings; to the hundreds of thousands who have marched silently through the streets of Iran. It is telling that the leaders of these governments fear the aspirations of their own people more than the power of any other nation. And it is the responsibility of all free people and free nations to make clear that these movements — these movements of hope and history — they have us on their side. Let me also say this: The promotion of human rights cannot be about exhortation alone. At times, it must be coupled with painstaking diplomacy. I know that engagement with repressive regimes lacks the satisfying purity of indignation. But I also know that sanctions without outreach — condemnation without discussion — can carry forward only a crippling status quo. No repressive regime can move down a new path unless it has the choice of an open door. In light of the Cultural Revolution’s horrors, Nixon’s meeting with Mao appeared inexcusable — and yet it surely helped set China on a path where millions of its citizens have been lifted from poverty and connected to open societies. Pope John Paul’s engagement with Poland created space not just for the Catholic Church, but for labor leaders like Lech Walesa. Ronald Reagan’s efforts on arms control and embrace of perestroika not only improved relations with the Soviet Union, but empowered dissidents throughout Eastern Europe. There’s no simple formula here. But we must try as best we can to balance isolation and engagement, pressure and incentives, so that human rights and dignity are advanced over time. Third, a just peace includes not only civil and political rights — it must encompass economic security and opportunity. For true peace is not just freedom from fear, but freedom from want. It is undoubtedly true that development rarely takes root without security; it is also true that security does not exist where human beings do not have access to enough food, or clean water, or the medicine and shelter they need to survive. It does not exist where children can’t aspire to a decent education or a job that supports a family. The absence of hope can rot a society from within. And that’s why helping farmers feed their own people — or nations educate their children and care for the sick — is not mere charity. It’s also why the world must come together to confront climate change. There is little scientific dispute that if we do nothing, we will face more drought, more famine, more mass displacement — all of which will fuel more conflict for decades. For this reason, it is not merely scientists and environmental activists who call for swift and forceful action — it’s military leaders in my own country and others who understand our common security hangs in the balance. Agreements among nations. Strong institutions. Support for human rights. Investments in development. All these are vital ingredients in bringing about the evolution that President Kennedy spoke about. And yet, I do not believe that we will have the will, the determination, the staying power, to complete this work without something more — and that’s the continued expansion of our moral imagination; an insistence that there’s something irreducible that we all share. As the world grows smaller, you might think it would be easier for human beings to recognize how similar we are; to understand that we’re all basically seeking the same things; that we all hope for the chance to live out our lives with some measure of happiness and fulfillment for ourselves and our families. And yet somehow, given the dizzying pace of globalization, the cultural leveling of modernity, it perhaps comes as no surprise that people fear the loss of what they cherish in their particular identities — their race, their tribe, and perhaps most powerfully their religion. In some places, this fear has led to conflict. At times, it even feels like we’re moving backwards. We see it in the Middle East, as the conflict between Arabs and Jews seems to harden. We see it in nations that are torn asunder by tribal lines. And most dangerously, we see it in the way that religion is used to justify the murder of innocents by those who have distorted and defiled the great religion of Islam, and who attacked my country from Afghanistan. These extremists are not the first to kill in the name of God; the cruelties of the Crusades are amply recorded. But they remind us that no Holy War can ever be a just war. For if you truly believe that you are carrying out divine will, then there is no need for restraint — no need to spare the pregnant mother, or the medic, or the Red Cross worker, or even a person of one’s own faith. Such a warped view of religion is not just incompatible with the concept of peace, but I believe it’s incompatible with the very purpose of faith — for the one rule that lies at the heart of every major religion is that we do unto others as we would have them do unto us. Adhering to this law of love has always been the core struggle of human nature. For we are fallible. We make mistakes, and fall victim to the temptations of pride, and power, and sometimes evil. Even those of us with the best of intentions will at times fail to right the wrongs before us. But we do not have to think that human nature is perfect for us to still believe that the human condition can be perfected. We do not have to live in an idealized world to still reach for those ideals that will make it a better place. The non-violence practiced by men like Gandhi and King may not have been practical or possible in every circumstance, but the love that they preached — their fundamental faith in human progress — that must always be the North Star that guides us on our journey. For if we lose that faith — if we dismiss it as silly or naïve; if we divorce it from the decisions that we make on issues of war and peace — then we lose what’s best about humanity. We lose our sense of possibility. We lose our moral compass. Like generations have before us, we must reject that future. As Dr. King said at this occasion so many years ago, “I refuse to accept despair as the final response to the ambiguities of history. I refuse to accept the idea that the ‘isness’ of man’s present condition makes him morally incapable of reaching up for the eternal ‘oughtness’ that forever confronts him.” Let us reach for the world that ought to be — that spark of the divine that still stirs within each of our souls. (Applause.) Somewhere today, in the here and now, in the world as it is, a soldier sees he’s outgunned, but stands firm to keep the peace. Somewhere today, in this world, a young protestor awaits the brutality of her government, but has the courage to march on. Somewhere today, a mother facing punishing poverty still takes the time to teach her child, scrapes together what few coins she has to send that child to school — because she believes that a cruel world still has a place for that child’s dreams. Let us live by their example. We can acknowledge that oppression will always be with us, and still strive for justice. We can admit the intractability of depravation, and still strive for dignity. Clear-eyed, we can understand that there will be war, and still strive for peace. We can do that — for that is the story of human progress; that’s the hope of all the world; and at this moment of challenge, that must be our work here on Earth. Thank you very much. (Applause.) END
Bruuuuce! December 10, 2009January 2, 2017 A SERIOUS MAN Fun! (In a dark sort of way.) And totally different. See it this weekend? PCL Dave Neal: “I agree that lumber is definitely a long term hold. PCL also produces a nice dividend (4.7% at today’s price according to Yahoo finance). I own all three timber REITs: PCL, PCH, and RYN as long term (permanent?) holdings. RYN has outperformed the S&P for the last year. RYN and PCH are up for the last year and PCL is under water, as Brian points out. Overall, they more or less track each other, but owning all three smoothes out the ‘individual stock’ risk (management problems, individual plant problems, forest fires, etc.). This is one asset class that is easy to own via individual stocks, rather than index funds, saving on the expenses. I use it for roughly 5% of my portfolio. . . . By the way, of the nine asset classes I own, timber reits are the lowest performing this year. I have found that when this is the case, the asset class tends to outperform in the next year. For example, my two lowest performing asset classes in 2008 (emerging markets and international reits) are my top two this year. So I would personally rate the timber reits as a buy right now. (In 2008, timber was my top performer, losing “only” 33.2%. In 2007, it was middling, gaining 10.4% for me, excluding dividends in both cases.)” ARE YOU A VETERAN? Ralph: “Your readers who served in the military might be interested to know that USAA recently expanded their eligibility criteria to include anyone who has served at any time, in any branch of the military. (When I first heard about them, their membership was restricted to Army officers.) I’ve only heard good things about the products and services USAA sells. Their Service Ratings on their wiki page lists many awards they have received. They have an excellent full-service website. I love the fact that they allow individuals to deposit checks by scanning them via their home computers. Probably best for those, like myself, who do their banking online.” ARE YOU FROM NEW JERSEY? Bruuuuuuuce! The boss himself – Springsteen! – says same-sex marriage should be legal. Let’s see if the legislature listens. (They were supposed to vote on this today, but have delayed it.)
Jack, George – We Barely Knew Ye December 9, 2009March 16, 2017 PCL Brian Clark: “I bought some PCL a year or so ago and took a beating on it. While it has rebounded, I am still down 20+%. Is this a buy, sell, or hold?” ☞ Anything could happen, especially in the short run, but I’m holding mine for the very long term. The trees keep growing, the population keeps growing … and over the long run, lumber is likely to keep its value better than the dollars you’d get if you sold the stock. JACK I’ve just read Jack and Lem, by David Pitts, about the lifelong friendship of two Choate boys – a straight one who went on to be President of the United States, bedding scores if not hundreds of women along the way … and a gay one who adored him, was virtually adopted by his family, and had a room at the White House. The book’s web site is here. And here is the recording of a brief phone call between them of no significance at all, except as a way to hear the two voices. It is a view of Kennedy, and of a world before “gay liberation,” from an unusual and interesting angle. GEORGE And then there’s Family of Secrets, by Russ Baker, discussed in this author’s presentation. Oh, my. Oh, my. Oh, my. “Shocking in its disclosures, elegantly crafted, and faultlessly measured in its judgments, Family of Secrets is nothing less than a first historic portrait in full of the Bush dynasty and the era it shaped.” – Roger Morris, former senior staff member, National Security Council, and author of Richard Milhous Nixon: The Rise of an American Politician and Partners in Power: The Clintons and Their America
Cheap Sleep December 8, 2009March 16, 2017 WORLD CLOCK Timothy Byers: “The World Clock was a great link. I have posted it to my Environmental Studies online course. I do have one sort of nerdy observation though: the world is rotating in the wrong direction. It should be going West to East.” NEW ZEALAND Samuel Caldwell: “Thanks for the reference to that swearing in. What a great country we have when a thing like that can happen. It makes me proud to be an American and proud of Obama.” CHEAPER THAN PRICELINE Stay on the cheap in more than 1900 cities in 101 countries. Betsy Massar: “I LOVE this concept – wish I were traveling more to take advantage.” As explained in this New York Times review, “AirBnB.com, a Web site started in 2007, connects budget travelers with locals who are offering anything from an air mattress in their living room to a private bedroom in a luxury loft — for a fee. It’s a cross between CouchSurfing.com [where your stay is completely free] and the vacation rentals section of Craigslist.” One good feature: Whether you pay by credit card or PayPal, the host doesn’t actually get the money until after you’ve checked in – so the place is likely actually to be there and available when you arrive. Another: You can stay with fellow alumni, fellow yoga enthusiasts, fellow architects – their list of “groups” is growing. Some of the AirBbB listings seem to be a bit more commercial – but can you beat $21 a night on South Beach? Free mojito on check in, free wireless? Definitely a cut above a homeless shelter. CHEAPER STILL Tom Anthony: “Visit Pompeii for free with no travel, crowds or airline hassles and guaranteed perfect weather. Click on white arrows that appear when you move your mouse to navigate around Pompeii. I saw more using this than when I was actually there.”
The Ultimate in Readability Also: The Message of a New Ambassador December 7, 2009March 16, 2017 SCARY This is what the mayor of Arlington is telling his 1,600 Facebook friends. Fortunately, it’s Arlington, Tennessee (pop. 4,000), not Arlington, Virginia (pop. 210,000). But still. (Thanks, Rex.) WORLD CLOCK Lots of buttons to click for different ways to see the rise in debt, population, bicycle production, poultry slaughter, diabetes, forest loss, desert gain, oil pumped – and on and on. (It’s also a way to see what time it is anywhere in the world – New Zealand, say.) (Thanks, Paul.) AMBASSADOR TO NEW ZEALAND AND SAMOA Watch this swearing in. It sends a warm message. TREES Rolfe W.: “You’ll probably get a bunch of emails on Friday’s column but the best time to plant a tree in the northern hemisphere is not spring, it is fall: Gives some time for new root growth to take advantage of rain in spring with better odds of surviving the drier and hotter summer.” BRCI I’m a little embarrassed that this stock – that I told you Thursday I was paying 2 cents for – traded as high as 8 cents Friday, before closing at a nickel. I was so focused on telling you not to pay crazy commissions if you decided to take a flyer on it (and even then, only with money you could truly afford to lose) that I forgot to say the most obvious thing: paying 2 or 3 cents for something is different from paying a nickel, let alone 8 cents. It may not seem that way, because anything less than a dime these days seems not even worth the trouble to stoop down and pick up. But paying 8 cents instead of 2 cents for a stock is exactly the same as paying $80 instead of $20. Right? With 150 million or so shares outstanding, the whole company was valued at $3 million if you paid 2 cents, but $12 million if you paid 8 cents. If things go well, it could be worth even more. That’s my hope. But this highly speculative gamble was clearly better at 2 or 3 cents than at 5 cents or 8. Always use “limit” orders when you go to buy a thinly traded stock. I haven’t sold any of mine, but I bought so many shares at 2 cents, I might sell a quarter of them at 8 cents (if it someday trades there again) to recoup most of my bet and thereafter play with “house money.” READABILITY Tom Anthony: “Did you try Readability on your own page? It eliminates most of your column!” ☞ Finally – an editor!
Do Blinking Web Ads Annoy You? There's a Zap For That December 4, 2009March 16, 2017 SHIFTING PRIORITIES Much as we need giant new HDTVs, what we really need are things on our roof that will one day make each of us a mini clean-energy power plant. According to this, Panasonic gets that. (“Panasonic Shifts To Solar Panels As TV Business Slows.”) It’s early for most people to be buying solar panels – the prices are still so high (so how about those LEDs?). Or for putting windmills on their roofs. But the general idea is sound: the next couple of decades need to be about infrastructure and efficiency, not stuff we don’t really need. (Sorry, QVC, but it’s true.) Instead of buying a Christmas tree this year, why not buy an avocado tree or a mango tree, if you live in a Southern clime, or an apple tree? (Actually, according to this, if you want apples, you’ll need two apple trees. Who knew?) Since this may be a rotten time of year to plant where you live, set the cash aside to buy and plant in May. But … right? One way you spend money cutting down a tree; the other way you spend money to grow one; and possibly look forward to a freezer full of mango-slice-filled baggies a few years from now. Shifting priorities. What to get your folks? Or Grandma? A certificate promising to plant the tree of their choice in the Spring. They get the fun of choosing with you the variety of tree they want and the anticipation of seeing you in the Spring when you’ll come plant it – and will think of your thoughtfulness every time thereafter that they look at it. READABILITY New York Times columnist David Pogue recommends this to eliminate ads on the web pages you read. “Basically, it makes any Web page look like a printed book page or a Kindle page, and it’s glorious.” You also get to set the type size. Free. “It completely transforms the Web experience, turning your computer into an e-book reader. I think I’m in love,” he writes. (And, yes, he addresses the “then how are the content providers supposed to make any money?” question.)
Optimism December 3, 2009March 16, 2017 BRCI I bought a little BRCI at 22 cents last year and quite a bit more at exactly one-tenth that – two point two cents – last week. It is, of course, a complete speculation, to be considered only with money you can truly afford to lose. But it’s run by my friend Bryan Norcross, who is widely credited in South Florida with having been the hero of Hurricane Andrew – anticipating the need for a secure broadcasting bunker (so he could stay on the air when others didn’t) . . . anticipating the storm itself and talking people through the worst of it, as it leveled thousand of homes. NBC even made a TV movie about it all. Of course you, not being from South Florida, have never heard of Bryan. When you think of hurricanes, you think of Key Largo – now there was a movie! – and of Max Mayfield, who for years was the face of the National Hurricane Center. (So when there was a storm, all the networks turned to him. Even if you lived in Minot, North Dakota, you’d see Max predicting the course of the storm). I tell you all this because Norcross and Mayfield have teamed up to launch America’s Emergency Network, the principal holding of BRCI. All of which could certainly go down the tubes – but maybe not: These are pretty smart guys. AEN is billed as a dedicated, robust, satellite-based system that communities and government agencies can use to send LIVE video news briefings to the public, the media, and other agencies instantly, even when terrestrial phone, cell phone, and Internet systems have failed. At two cents, this startup company is valued at less than $4 million. I am prepared to lose them both. (If you do take a flyer on this, be sure to use a broker that charges a flat commission regardless of the number of shares – e.g., Ameritrade charge me $8 to buy half a million shares.) MICROSOFT TUESDAY Rob Myhre: “Okay, I know you’ve received a zillion emails similar to this one, but I had to write. Why is your computer left on when you ‘hit the hay?’ It’s not that big of a deal. Save your stuff, shut it off, and start fresh the next day. Even better, have the computer and all the peripherals on a power strip and turn ALL of it off. And come to think of it, haven’t you advised the rest of us to do that in one of your columns? You of all people. Jeez.” ☞ Well, good question. I do turn off the monitor whenever I’m not using the computer. And sometimes I send the laptop itself into hibernation mode. But it takes forever to shut down and later start up my computer; and there are back-up things I like it to do when I’m asleep. MAULDIN George Hamlett: “Eternal optimist that you are, I’m surprised you haven’t mentioned John Mauldin’s latest column on why he’s an optimist. If you missed it, down in your Wintel cave, here it is.” ☞ Indeed. The oft-referenced Kurzweil notions that got me so worked up two years ago (“Oh, Boy”) still do. I share both John Mauldin’s pessimism and, for sure, his optimism. He writes in part: . . . Long-time readers know that I think we are in the midst of a secular bear cycle, much like 1966-82. The next decade is likely to produce less than average growth, due to structural problems and the bad choices we have made with personal and government debt. I am perfectly cognizant that unemployment will be over 10% for a protracted time. That is tragic for those unemployed and underemployed. I realize the entire developed world has huge and seemingly insurmountable pension and medical obligations over the next few decades, which we cannot possibly hope to meet. The level of angst that we will live through as we adjust will not be fun. But the point is, that is just what we do – we live through it. In spite of the problems, we get up every day and figure out how to make it. Would it be better if we could get our act together in (pick a country) and not be forced to adjust because we have come to the end of the line? Yes, I know we will likely have some very tumultuous times ahead of us, making business and investment decisions more than a little difficult. So what? The future is never easy for all but a few of us, at least not for long. But we figure it out. And that is why in 20 years we will be better off than we are today. Each of us, all over the world, by working out our own visions of psychic income, will make the real world a better place. THE MILLENNIUM WAVE Let’s look at some changes we are likely to see over the next few decades. My view is that we have a number of waves of change getting ready to erupt on the world stage. The combination of them is what I call the Millennium Wave, the most significant period of change in human history. And one for which most of us are not yet ready. Some time next year, we are going to see the three-billionth person get access to the telecosm (phones and internet, etc.). By 2015 it will be five billion people. Within ten years, most of the world will be able to access cheap (I mean really cheap) high-speed wireless broadband at connection rates that dwarf what we now have. That is going to unleash a wave of creativity and new business that will be staggering. That heretofore hidden genius in Mumbai or Vladivostok or Kisangani will now have the ability to bring his ideas, talent, and energy to change the world in ways we can hardly imagine. When Isaac Watts was inventing the steam engine, there were a handful of engineers who could work with him. Now we throw a staggering number of scientists and engineers at trivial problems, let alone the really big ones. And because of the internet, the advances of one person soon become known and built upon in a giant dance of collaboration. It is because of this giant dance, this unplanned group effort, that we will all figure out how to make advances in so many ways. (Of course, that is hugely disruptive to businesses that don’t adapt.) Ever-faster change is what is happening in medicine. None of us in 2030 will want to go back to 2010, which will then seem as barbaric and antiquated as, say, 1975. Within a few years, it will be hard to keep up with the number of human trials of gene therapy and stem cell research. Sadly for the US, most of the tests will be done outside of our borders, but we will still benefit from the results. I spend some spare study time on stem cell research. It fascinates me. We are now very close to being able to start with your skin cells and grow you a new liver (or whatever). Muscular dystrophy? There are reasons to be very encouraged. Alzheimer’s disease requires somewhere between 5-7% of total US health-care costs. Defeat that and a large part of our health-care budget is fixed. And it will be first stopped and then cured. Same thing with cancers and all sorts of inflammatory diseases. There is reason to think a company may have found a generic cure for the common flu virus. A whole new industry is getting ready to be born. And with it new jobs and investment opportunities. Energy problems? Are we running out of oil? My bet is that in less than 20 years we won’t care. We will be driving electric cars that are far superior to what we have today in every way, from power sources that are not oil-based. For whatever reason, I seem to run into people who are working on new forms of energy. They are literally working in their garages on novel new ways to produce electric power; and my venture-capital MIT PhD friend says they are for real when I introduce them. And if I know of a handful, there are undoubtedly thousands of such people. Not to mention well-funded corporations and startups looking to be the next new thing. Will one or more make it? My bet is that more than one will. We will find ourselves with whole new industries as we rebuild our power grids, not to mention what this will mean for the emerging markets. What about nanotech? Robotics? Artificial intelligence? Virtual reality? There are whole new industries that are waiting to be born. In 1980 there were few who saw the rise of personal computers, and even fewer who envisioned the internet. Mapping the human genome? Which we can now do for an individual for a few thousand dollars? There are hundreds of new businesses that couldn’t even exist just 20 years ago. I am not sure where the new jobs will come from, but they will. Just as they did in 1975. There is, however, one more reason I am optimistic. Sitting around the dinner table, I looked at my kids. I have seven kids, five of whom are adopted. I have two Korean twins, two black kids, a blond, a (sometimes) brunette, and a redhead. They range in age from 15 to 32. It is a rather unique family. My oldest black son is married to a white girl and my middle white son is with a black girl. They both have given me grandsons this year (shades of Obama!). One of my Korean daughters is married to a white young man, and the other is dating an Hispanic. And the oldest (Tiffani) is due with my first granddaughter in less than a month. And the interesting thing? None of them think any of that is unusual. They accept it as normal. And when I am with their friends, they also see the world in a far different manner than my generation. (That is not to say the trash talk cannot get rather rough at the Mauldin household at times.) I find great cause for optimism in that. I am not saying we are in a post-racial world. We are not. Every white man in America should have a black son. It would open your eyes to a world we do not normally see. But it is better, far better, than the world I grew up in. And it is getting still better. My boys play online video games with kids from all over the world. And the kids from around the world get on the internet and see a much wider world than just their local neighborhoods. Twenty years ago China was seen as a huge military threat. Now we are worried about them not buying our bonds and becoming an economic power. Niall Ferguson writes about “Chimerica” as two countries joined together in an increasingly tight bond. In 20 years, will Iran be our new best friend? I think it might be, and in much less time than that, as an increasingly young and frustrated population demands change, just as they did 30 years ago. Will it be a smooth transition? Highly unlikely. But it will happen, I think. I look at my kids and their friends. Are they struggling? Sure. They can’t get enough hours, enough salaries, the jobs they want. They now have kids and mortgages. And dreams. Lots of dreams. That is cause for great optimism. It is when the dreams die that it is time to turn pessimistic. I believe the world of my kids is going to be a far better world in 20 years. Will China and the emerging world be relatively better off? Probably, but who cares? Do I really begrudge the fact that someone is making their part of the world better? In absolute terms, none of my kids will want to come back to 2009, and neither will I. Most of the doom and gloom types (and they seem to be legion) project a straight-line linear future. They see no progress beyond that in their own small worlds. If you go back to 1975 and assume a linear future, the projections were not all that good. Today you can easily come up with a less-than-rosy future if you make the assumption that things in 20 years will roughly look the same as now. But that also assumes there will not be even more billions of people who now have the opportunity to dream up their own psychic income and work to make it happen. We live in a world of accelerating change. Things are changing at an ever-increasing pace. The world is not linear, it is curved. And we may be at the beginning of the elbow of that curve. If you assume a linear world, you are going to make less-than-optimal choices about your future, whether it is in your job or investments or life in general. In the end, life is what you make of it. With all our struggles, as we sat around the table, our family was content, just like 100 million families around the country. Are there those who are in dire distress? Homeless? Sick? Of course, and that is tragic for each of them. And those of us who are fortunate need to help those who are not. We live in the most exciting times in human history. We are on the verge of remarkable changes in so many areas of our world. Yes, some of them are not going to be fun. I see the problems probably more clearly than most. But am I going to just stop and say, “What’s the use? The Fed is going to make a mess of things. The government is going to run us into debts to big too deal with? We are all getting older, and the stock market is going to crash?” Even the most diehard bear among us is thinking of ways to improve his personal lot, even if it is only to buy more gold and guns. We all think we can figure it out or at least try to do so. Some of us will get it right and others sadly will not. But it is the collective individual struggles for our own versions of psychic income, the dance of massive collaboration on a scale the world has never witnessed, that will make our world a better place in the next 20 years. All that being said, while I am an optimist, I am a cautious and hopefully realistic optimist. I do not think the stock market compounds at 10% a year from today’s valuations. I rather doubt the Fed will figure the exact and perfect path in removing its quantitative easing. I doubt we will pursue a path of rational fiscal discipline in 2010 or sadly even by 2012, although I pray we do. I expect my taxes to be much higher in a few years. But thankfully, I am not limited to only investing in the broad stock market. I have choices. I can be patient and wait for valuations to come my way. I can look for new opportunities. I can plan to make the tax burden as efficient as possible, and try and insulate myself from the volatility that is almost surely in our future – and maybe even figure out a way to prosper from it. A pessimist never gets in the game. A wild-eyed optimist will suffer the slings and arrows of boom and inevitable bust. Cautious optimism is the correct and most rewarding path. And that, I hope, is what you see when you read my weekly thoughts. . . .