Ugh, ugh, ugh.  Words fail.

But these were written before the bombs went off, so — meaning no disrespect to my beloved Boston, or her victims — I guess I’ll let them go live as scheduled.

Yet . . . such a sad day.

Utterly senseless.

Come back and read tomorrow if, as would be understandable, just not in the mood today.



Mark Coppola:  “I followed Less Antman’s advice from your January 11, 2011, column and invested in EWEM and EWEF.  EWEF and EWAC have both recently closed and EWEM is on ETF Deathwatch, all due to low assets under management.  I was wondering if there were other equal-weight alternatives in the international market that are worthy of consideration to replace EWEF and (possibly) EWEM?”

ETF is short for Exchange-Traded Fund, and the EW in each of those symbols stands for “equally weighted.”  As readers of my book know (in no small part thanks to Less), most index funds weight their holdings by market cap — so they own a ton of Exxon or Apple and relatively little E-Trade or Airgas.  Equally-weighted funds would own (say) $1 million worth of each.

Less responds:  “I have to confess surprise at the lack of interest in international versions of the equally-weighted S&P 500 index ETF, RSP.  Since its inception in 2003, RSP has produced an annualized return of 10.3% vs the 7.6% return of SPY, even though these two funds invest in the exact same 500 stocks, only differing in the weighting scheme.  Unlike all the academic theories that stopped working as soon as an investment vehicle to exploit the theory was created, this theory has worked exactly as predicted, even after all expenses of trading and management, yet it still hasn’t caught fire (although RSP itself has over $4 billion in assets). . . .  Nonetheless, the lack of interest is clear. . . . The good news is that virtually any alternative weighting scheme for an index should benefit from the “noisy market hypothesis” on which I based my suggestion.  [Not familiar with that hypothesis?  See page 166. — A.T.]  This includes the fundamentally-weighted indexes of WisdomTree, PowerShares, and Schwab, any of which could serve as substitutes for the equal weighting no longer available internationally.  My personal favorites, however, are the minimum volatility offerings of iShares, including EFAV, the iShares MSCI EAFE Minimum Volatility ETF (expense ratio 0.2%) and EEMV, the iShares MSCI Emerging Markets Minimum Volatility ETF (expense ratio 0.25%).  These weren’t available when we made our bet, so we might have to clone them to the decedents in order to figure out who ultimately wins the bet.”


An American college chum who has been doing nonprofit work in Venezuela for what must be going on four decades by now writes of this past weekend’s election:

As I write this, I can barely hear myself think, owing to the loud racket of clanging pots and pans from thousands and thousands of windows and apartments across the land, overwhelmingly so in the major cities like Caracas, and in every little provincial city like our own, in a national protest owing to the refusal of the electoral commission to count the votes.

The widespread assumption here is that there was just enough fraud with the silent acceptance and perhaps direct complicity of the strongly-biased government electoral commission, in order to squeak through a marginal victory and keep themselves (the current government) in power. The opposition candidate is demanding a recount and the streets are indignant with the sense of fraud. There are protests all over the country. This morning, a forum of international election observers, as well as the head of the OAS, stated that the presumed winner (Maduro) should NOT be inaugurated today until a full paper recount is done. The electoral commission has refused to do the recount (increasing the suspicion that the opposition did indeed win), Maduro was hurriedly proclaimed president this afternoon, and there are many denouncements that complicit military elements are already burning and otherwise disposing of boxes of the ballots, saying the election is over.

The opposition candidate Capriles and his team did a simply phenomenal job, reducing the enormous government favoritism from 20+% following the death of the iconic Chavez (a completely over-rated but supposedly charismatic leader) and his chavismo movement, to basically ZERO in an extremely short campaign frame of one month. The government presumably won by 1+%, but they actually may have lost by slightly more than that. The government’s formidable vote-getting machine has always been significantly driven by intimidation, direct threats and bribery — this I can substantiate both in my personal experience  and nationally. In contrast, each opposition vote was cast by an individual acting on his/her own with an underlying measure of fear in defiance of an increasingly autocratic state.

I think it is fair to say that with this election, the back of “chavismo” has been broken. Chavismo  as a movement can no longer count on a majority to win elections. In strong contrast to the past, the current Chavismo government is now borderline illegitimate, and no longer has the support of half or more of the population. This is an enormous step forward, but not enough — the opposition should be assuming power TODAY!

The opposition candidate Capriles is demonstrating real leadership, extremely popular but with no assurance of victory in an extremely unfair scenario, carrying forth 100% at real personal risk. He has now built a strong political coalition that is the first serious alternative to Chavismo in fifteen years, and bodes well for the imminent future.

What’s next:

Many analysts doubt that the “elected” candidate Maduro, who is neither charismatic, nor has proven particularly competent to date, will be able to sustain this government, much less keep the highly diversified and conflicted Chavismo movement within his fold. The country faces enormous concrete problems (I mean, MAJOR) that are going to provoke considerable instability quite soon. It is not clear that Maduro will be able to keep it together, to say the least. (Some people have actually argued that it is better that Maduro inherit these problems produced by his own ideology, and then collapse on his own, rather than that Capriles have to face this – much as Obama had to resolve at considerable political cost the enormous problems that Bush left.)

What is clear to me is that this is probably as non-trivial an electoral event as I have been witness to in my lifetime, like Germany tottering indecisively before Hitler in the 1930’s — one of those historical moments when a thin remaining margin of democracy faces the whole military and governmental apparatus of the autocratic state.  If democracy loses, we can soon expect the few remaining independent media outlets to succumb, and the free press will continue fading away, so that even the basic information available in this brief report will not be easily available.


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