Category Archives

Archive of posts published in the category: Business

The Covid Market

When the vast amount of money from the Fed is dropped on the economy it does not matter where it is directed, much of it will find its way to the service providers and producers where the money will be spent. When trillions of dollars are pulled from thin air and dropped on the economy it is inevitable that much of it will find its way into the stock market.

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Covid Thoughts 2020 04 18

Shuttering large swaths of the economy is a huge unquantifiable cost we would only consider in such a dire health care scenario.  It appears that new information reflects a significant overestimation of the mortality.  When we referred to the mortality, we compared the number of deaths to the number of DIAGNOSED cases and compared that rate to the last flu which measures the number of deaths to the number of ESTIMATED cases, understanding that many who have the flu that never see a doctor. 

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The Opposite of Stock Repurchases

While we need to be concerned about the financial condition of essential industries, we should not lose sight of the need to be concerned with the financial condition of the nation they want to bail them out.

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Thoughts on Buybacks

When CEO bonuses were paid in 2008 after the bailouts America was justifiably outraged and it is reasonable to include conditions to avoid this outcome again.  It is equally outrageous and irresponsible to load this bill with unrelated political swag and enforce long term changes in corporate governance and other purely political agendas in order to address a very short-term set of problems.

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Winning the Race to the Bottom

“Being poor is the worst kind of competitive advantage to have, and only two kinds of people pursue that advantage as a matter of national policy. “

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The Guilty Conscience of the Business Roundtable

No business is likely to prosper by neglecting its employees, customers, suppliers, or the community, but none of these ‘stakeholders’ can benefit unless the business can turn a profit and provide a suitable return to its shareholders. These actors who assume otherwise are either a)ignorant of business dynamics and the function of prices and profits or b) suffering from a guilty conscience and projecting their own moral compromises onto others.

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Unfettered Government is the Greater Threat

Capitalism works best when knowledge and power meet.  Government is power without knowledge; regulation strips power from knowledge. It is suspicious when the answer to unfettered capitalism which does not exist is  unfettered government which is the greater problem.  It is hard to conceive of distant parties with no skin in the game making wiser decisions than people who have to face the consequences of their choices.  The problem is political actors who want to dispense benefits without paying for them.

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Nationalizing Bad Outcomes

Imagine the compromises when 100 Senators and 435 Representatives bargain to get their piece of the health care allocation in an atmosphere where bitter partisanship rules every issue.  In other words what seems to work in Europe is not easily transferable to a radically different political and economic environment.   And the complete comparative picture is not as clear as we are led to believe.  Maybe we spend more on health care because we want to.

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Deregulation and Antitrust

“Mr. Philippon is no fan of regulation. On the contrary, in his view political lobbying ensures that regulatory regimes benefit the status quo by limiting the entry and growth of small firms that might become challengers to big market players.”

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The Wealth Curse

Class warfare as political policy negates the need to articulate limits, acknowledge tradeoffs, understand the process of wealth creation, or do real math that measures and acknowledges real costs and revenues.

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Are Property Taxes Regressive?

The contest between the sales tax and the property tax obscures the true problem: a government that spends too much and tries to hide from its responsibilities with these shell games.

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Bi Partisan Corporatism

“Left and Right alike are partly or wholly captive to the fantasies of managerial progressivism and neo-mercantilism, with the Left imagining that Washington can intelligently direct energy and labor markets and much of the Right falling in behind protectionism, “managed trade,” and corporate welfare for everybody from Boeing to Foxconn.”

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The Real Purpose of a Bailout

Pouring money into a problem without fixing the underlying problem accomplishes the political task of surviving an election cycle.  The people who voted for this nonsense are long gone and no longer held to account.

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The Longest Bull

The tariffs and the growing debt are threats, but bull markets do not require perfection. They just require sound fundamentals and a dearth of alternative investments.  

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Internet Sales Tax Ruling

Many small businesses that ship online will be hurt by this ruling. Complying with the tax codes for 48 states that charge sales tax will be crippling for many of them.  There will be a need for a third party to manage the sales tax issue for thousands of small online businesses. This will likely serve to make Amazon and other large online retailers bigger and more powerful in the internet sales arena. 

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Humble Capitalism- Observation on the Berkshire Hathaway Meeting

Patience is a virtue and a vice for Americans.  We can be suckers for simplistic formulas, excess leverage, and delusions of certainty. Buffet and Munger avoid these traps.  Our obsession with finance distracts from the effective and efficient production of goods and services, engagement with the customer, and the patience and faith to adhere to sound principles.

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The Limits of Rent Seeking

from Garry, Patrick M.. The False Promise of Big Government: How Washington Helps the Rich and Hurts the Poor (Kindle Locations 336-343). Intercollegiate Studies Institute. Kindle Edition. In 2015 the Capital Research Center reported that GE had spent more than $300…

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Passive Aggressive Investing

from Barron’s and Randall Forsyth, Is It Time to Return to Active Stock-Picking? What’s needed, say some outspoken active investors, is a return to old-fashioned Houseman–Smith Barney securities selection, rather than the tide of passive investing washing over the financial…

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Focus on Growth not Trade Balance

From the Wall Street Journal Editorials,  About That Obama Boom: A closing word to Trumpians who will point to the fourth-quarter decline in net exports that subtracted 1.7% from GDP. Part of the explanation is that a bumper crop of soybean…

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Prosperity and Inflation

from Steve Forbes, The Fed Needs A New Leader–And New Policies, Too: Yellen openly and unapologetically made clear that our central bank still hews to the discredited theory that prosperity causes inflation. “The economy is operating relatively close to full…

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