Many Happy Returns

The end of the year encourages retrospectives about financial markets.  So let’s match that up with what ‘financial experts’ were saying a year ago.

In December 2011, a Barron’s panel of ten stock market strategists and investment managers predicted the S&P 500 index to end 2012 some 11.5% higher.  There was so much for these forecasters to consider – and to get right.  The euro zone crisis, uncertainties over the growth of earnings, and the U.S. presidential election and ‘fiscal cliff’ were all major concerns.

Twelve months later, markets are still grappling with many of the same issues.  However, that Barron’s panel forecast, which the magazine said was ambitious, now looks conservative – the S&P 500 index was up 16.0% for the year.  International market returns were even stronger, generally speaking.

As usual, there are a few lessons here.  First, while ongoing news headlines can cause people to worry, it’s important to remember that markets are forward-looking and absorb information very quickly.  By the time you read about it in the newspaper, the markets have usually reacted, and gone on to worrying about something else.

Second, the economy and the market are different things.  Good or bad economic news is important to stock prices only if it is different from the information that the market has already priced in.

Third, forecasting the investment market is a challenge for the best of us.  If you are going to invest via forecasts, realize that not only must you correctly predict what will happen around the globe, but also correctly predict how markets will react to those events.

Everyone should take an interest in what is happening in the world, but care needs to be taken in extrapolating the headlines into investment decisions.  It’s far better to let the market do the worrying for you, and diversify around risks you are willing to take.

In the meantime, many happy returns! 

Lancing Lance

Like everyone else who cheered for Lance Armstrong, I'm disappointed.  Not that he doped, not even that he lied about it - only naive people would have thought differently.  That was the cycling culture, just like it was the pro baseball culture years ago.  But it is very disappointing to hear about the lengths he went to cover up the lies, the way he tried to destroy people.

However, while everybody is piling on their disgust, I still find myself asking why people want to pile on.  He's going to be ruined financially, and considered a cheat and a coward the rest of his life, but he can still inspire people with this story about beating cancer and rising to the top of his profession.

Consider how society looks at Tiger Woods now.  Nobody lost more than he did with his extra-marital shenanigans.  Lost wealth, lost family, even lost his professional edge, and still has not regained his form as the best golfer in the world.  Plus, and he lied to friends and angered fans in the process.

Yet, there are lots of people cheering for Tiger Woods in golf tournaments.  Just did a new TV commercial that has people talking.  Maybe people just want to like Tiger Woods.  And after a long while, people will start to want to like Lance Armstrong again, especially if he keeps up his anti-cancer work.

Both of those guys lied and hurt people.  They should suffer and be accountable for that.  Ultimately, though, isn't it likely Lance Armstrong will win fans back as Tiger Woods has?

People forgive and forget - especially forget.  We see it time after time after time.  There's no reason to think this won't be another American story of redemption.

Iowa Fund of Dummies

Over the past month, another taxpayer boondoggle in has been made public in Iowa.  It involves a state-created source of seed capital for companies interested in doing business in Iowa.

Called the Iowa Fund of Funds, it really just invests in other venture capital funds, using state tax credits to back its commitments.  However, there is no requirement for those funds to actually invest in companies doing business in Iowa.  (Huh?!)

Regardless, it's done a horrible job of getting any return on investment.  So horrible, in fact, the state had to negotiate a settlement that resulted in the loss of $26 million in tax credits.

I happen to personally know the chair of the board that manages the Iowa Fund of Funds.  He's a blowhard who has never worked in the private sector, and who loves to spend other people's money.  That board had a lengthy piece published in the Des Moines Register the other day, defending their actions.   I couldn't let it go, so I sent a letter to the editor about it.  Sadly, it wasn't published, but here it is:

In defending the Iowa Fund of Funds' current $26 million loss of tax credits (Read: taxpayer money) in his December 28th Iowa View article, administrative board member Tim Urban notes, "Since we began, our board of directors has never received one dime of compensation, taken no junkets at Fund of Funds expense and volunteered thousands of hours directing the Iowa Fund of Funds." So you see, fellow Iowa taxpayers, we're simply getting what we paid for - minus another $26 million.

2013

Around this time last year, a blog entry about a few things I'd like to see in 2012. Let's review what happened, with my new notes in ALL CAPS:

I said I'd like to see:

-Me take more time off.  (DIDN'T HAPPEN.  WENT THE OPPOSITE DIRECTION.)

-The insurance industry get into trouble for the individual products they sell to people as 'investments.'  (DITTO.)

-A warmer and earlier Spring.  (THIS WORKED OUT WELL.)

-The Minnesota Twins and Vikings not being among the worst teams in their respective sports.  Talk about low expectations!  (TWINS NO, VIKES YES.)

-The rejection of social conservatism.   (QUALIFIED YES TO THIS.  AT LEAST IOWA AND THE COUNTRY SEEMED TO VOTE THAT WAY.)

-The rejection of any further extensions to to unemployment benefits.  In other words, that my tax money stops being used to pay people to not work.  (THIS JUST IN - NO.)

-Jersey Shore get canceled when one or more of the cast is arrested and/or goes to rehab.  (OK, that is actually a prediction, not exactly something I want to see happen.)  (YUP, SAW IT.  I'D LIKE TO THINK SOMEHOW I MADE IT HAPPEN!)

-The Mayans exposed as just goofing around with their calendar.  (YES, SORT OF.)

So let's try the same exercise.  For 2013 I'd like to see:

-Me take more time off.  A repeat.  Hoping it happens this time.

-Compromise in the U.S. Congress.  After all, it's not an election year.

-A reduction in U.S. government spending and subsidies

-Fewer reality TV shows starring hillbillys.

-Successful planning and execution of all family weddings.

-An end to the central U.S. drought.

-The siding on my house to be repaired.

It Doesn't Mean Anything

In the past decade or so, we have become an nation of symbols for causes.  These symbols might come in the form of ribbons or wristbands (think LiveStrong, for cancer awareness), or even something as simple as a color (think pink, for breast cancer awareness).

People often show off many different symbols for many different causes, but they all have one thing in common:  They don't often help the cause.

I've always thought the best example of this is people who put magnetic 'I Support Our Troops' ribbons on their vehicles.  This got to be a big deal while Americans were fighting in Iraq and Afghanistan, and it was all very nice, but it didn't do a single thing for the soldier or his/her family.  Not one thing.  But hey, that vehicle is supporting the troops, right?

Another more recent example are the various symbols to show support for the families (or is it the victims?) of the Newtown, CT shooting.  Yes, it was a terrible tragedy, but prayers and ribbons aren't going to do anything for either the families or the victims.  If people really want to do something that matters, they need to speak out publicly against a crazy gun culture that allows the sale of semi-automatic weapons.  That will not completely stop these types of killings, but it would at least save some lives, and maybe at least one good thing can come from those deaths.

Full disclosure - I've been a long-time wearer of the yellow LiveStrong wristband, a symbol for cancer awareness, the one that started the entire wristband craze.  While I wear it to remind me of those I know who had/have cancer, I also actually do something about it by donating every year to the American Cancer Society.  I get a kick out of all the people who simply stopped wearing it once it lost it's cache', and again this year once Lance Armstrong fell from grace.  Do they suddenly not care about cancer?  Or maybe they only care when the cause or its leader is popular?

So if you wear red or pink or purple, or a ribbon or a wristband or a magnet, stop for a moment and ask yourself:  Are you truly making things better for those you say you support, or are you really just pretending, as a way to make yourself look better?

Words Now That There Are Words

Now that we've had a week to absorb the mass murder of children and teachers at a Connecticut grade elementary school, as well as a week to listen to the pundits and politicians, let's just agree on one thing:

It will probably happen again.

Regardless of all of the talk about doing more in the area of mental health, it's almost certain that America won't do anything.  It isn't even a priority in a good economy; it surely won't be one now.  Short of imprisoning everyone currently on a mind-altering prescription drug, what could be done to absolutely ensure someone won't do something crazy?

Regardless of all of the talk about gun control and banning assault weapons, it's almost certain that America will stay the same.  Did you happen to see the NRA presser today, where they called for an armed guard at every school, which they would help train free of charge?!  Ladies and gentlemen, I give you another sign of the apocalypse, ironically on the same day many Mayan-worshipers predicted!

Regardless of all of the talk about how we'll never forget this, it's almost certain that America will slowly file this into the recesses of our collective minds, along with all of the other senseless mass killings by mentally unstable people.  We eventually will go days, then weeks, then months without thinking about it.  That's how human beings roll, excepting those directly affected.

My wife is a teacher, and despite all of the safeguards in place, a person would have no difficulty obtaining access inside the school.  Even if the system was foolproof, the windows would have to be bulletproof, so crazies like the Connecticut killer couldn't just shoot them out and enter that way.

Let's get real - the loss of freedoms to which Americans would have to agree, in order to absolutely prevent further school shootings, is something our dysfunctional, polarized culture is not willing to accept.  And if we aren't willing or able to do something while this multiple-child killing is on our collective consciousness, we aren't ever going to do it.

So, another school shooting is bound to happen again.  Not sure when, but it will, and that's the brutal reality for those with children, and for those who teach them.

Words When There Are No Words

STATEMENT BY THE PRESIDENT

ON SCHOOL SHOOTING IN NEWTOWN, CONNECTICUT

James S. Brady Press Briefing Room

3:15 P.M. EST

This afternoon, I spoke with Governor Malloy and FBI Director Mueller.  I offered Governor Malloy my condolences on behalf of the nation, and made it clear he will have every single resource that he needs to investigate this heinous crime, care for the victims, counsel their families.

We’ve endured too many of these tragedies in the past few years.  And each time I learn the news I react not as a President, but as anybody else would — as a parent.  And that was especially true today.  I know there’s not a parent in America who doesn’t feel the same overwhelming grief that I do.

The majority of those who died today were children — beautiful little kids between the ages of 5 and 10 years old.  They had their entire lives ahead of them — birthdays, graduations, weddings, kids of their own.  Among the fallen were also teachers — men and women who devoted their lives to helping our children fulfill their dreams.

So our hearts are broken today — for the parents and grandparents, sisters and brothers of these little children, and for the families of the adults who were lost.  Our hearts are broken for the parents of the survivors as well, for as blessed as they are to have their children home tonight, they know that their children’s innocence has been torn away from them too early, and there are no words that will ease their pain.

As a country, we have been through this too many times.  Whether it’s an elementary school in Newtown, or a shopping mall in Oregon, or a temple in Wisconsin, or a movie theater in Aurora, or a street corner in Chicago — these neighborhoods are our neighborhoods, and these children are our children.  And we're going to have to come together and take meaningful action to prevent more tragedies like this, regardless of the politics.

This evening, Michelle and I will do what I know every parent in America will do, which is hug our children a little tighter and we’ll tell them that we love them, and we’ll remind each other how deeply we love one another.  But there are families in Connecticut who cannot do that tonight.  And they need all of us right now.  In the hard days to come, that community needs us to be at our best as Americans.  And I will do everything in my power as President to help.

Because while nothing can fill the space of a lost child or loved one, all of us can extend a hand to those in need — to remind them that we are there for them, that we are praying for them, that the love they felt for those they lost endures not just in their memories but also in ours.

May God bless the memory of the victims and, in the words of Scripture, heal the brokenhearted and bind up their wounds.

END           

3:20 P.M. EST