Rocky never provides investment advice. But for once he’ll violate this rule and offer some advice to Congressman Ron Paul.
Members of Congress must file financial disclosure forms which show all of their assets and investments. Rocky studied Rep. Paul’s portfolio from 2003 to the present.
Ron Paul’s portfolio violates every principle of sound money management. It is not prudent. It is not sensible. It is volatile. It is speculative. And it may give a window into Ron Paul’s perspective on the economy and free enterprise.
From 2003 to the present, Ron Paul’s stock portfolio owned only gold stocks. He owned some real estate. He had some cash. And he owned mutual funds that make money ONLY WHEN the stock market declines. He did not own any gold bullion. And more recently, he purchased more gold mining stocks and added to his bearish bets on the stock market using leveraged bearish funds.
In 2003, the value of his portfolio was between $860,000 and $2,300,00. (The disclosure form only provides a range of values.) In 2010, his portfolio grew to $2.4 million and $5.5 million. (Gold stocks have declined between 15% and 30% in 2011, so his portfolio has declined commensurately. He will declare that loss next year.)
So, over an an 8-year period his portfolio has appreciated by about 12%/year. (And after this year’s losses for gold mining stocks, it will be a bit less than that.)
Not so bad, eh?
If, instead of being such a wiseguy, he had instead just purchased gold bullion, his return would have been 55% better — returning an impressive 18.5% per year! (It’s very strange that Ron Paul doesn’t own any bullion. And a skeptic might wonder whether he owns bullion, but failed to disclose it.)
[Disclosure: If one extrapolates the profile of his portfolio, one must conclude that he either nailed the bottom of the gold market, or he has really lousy long term performance. Remember that (even after this 10 year old rally) gold has appreciated at only about 5% for the past 30 years, while stocks have returned about 11%, and long bonds have returned high single digits. More troubling, however, is the notion that a President of the United States would personally profit from a DECLINING stock market and a declining economy! Even Barack Obama's assets include some S&P Index Funds....]
Rocky received an email that Shore Bank had been seized by the FDIC, and his account had been safety transferred to “Urban Partnership Bank.”
Rocky previously sang the praises of Redneck Bank which sends new depositors a free beer can holder, pays 2% on its money market account, and has NOT been seized by the FDIC. Redneck Bank is from a “red” state.
In contrast, Rocky surmises that Chicago-based Shore Bank got “in too deep” with the loan “sharks,” and was eventually was swept out to sea. Some news reports even suggest that the Chicago-based bank had questionable ties to President Obama and other pols. See:
The email from Urban Partnership Bank isn’t too promising either. It begins:
It has been a very busy Monday here at Urban Partnership Bank, formerly ShoreBank. We are pleased to share with you that our new bank remains committed to meeting your banking needs and to the mission of serving low and moderate income communities. We will also continue to support energy efficiency and environmentally-friendly development.
[Disclosure: Rocky wishes that the "mission" of taxpayer-funded FDIC-insured banks was to lend money only to credit-worthy individuals and businesses. Instead of focusing on energy efficient lightbulbs, perhaps checking the loan documents should be a higher priority? Rocky also notes that without FDIC insurance, he would not have an account at Shore Bank. This is an example of "moral hazard." ]
Rocky’s primary computer contracted a horrible virus yesterday from a website which re-printed the speech.
If this was a political conspiracy, then Google is behind it too — as Google directed Rocky to this insidious site. And, if Al Gore “invented” the internet, then President Obama’s speech just un-invented it (for Rocky.)
Several websites advertise repairs for the virus ($39.95), however after consulting with Computer Man, Rocky learned that the virus is essentially irreversible. And the software vendors are simply extorting money.
[Disclosure: Rocky's primary computer was rebuilt from scratch, and his backup systems worked fine. Thanks to Computer Man for his expert advice. No thanks to President Obama. Rocky wonders whether a Republican President's State of the Union might result in a "red" Screen of Death?]
Having rented a beach house on Martha’s Vineyard, a highly improbable quirk of scheduling left Rocky and the entire Humbert Clan as President Obama’s neighbors for the week. As a “proud American”, Rocky did not complain when his tea (and tee) time were delayed by the Secret Service.
However, far more onerous than the Presidential Motorcade is Rocky’s experimentation with his vacation house’s Subzero Ice Machine.
Upon arrival, the beach house ice machine was set to “thick ice,” with cubes ideal for gin and tonics. But as Rocky likes to live dangerously, he changed the setting to “thin ice.”
Several hours later, Trophy Wife asked Rocky, “What happened to the ice machine? There’s no ice.”
Sure enough, the ice was so “thin,” it was entirely gone. Chastised for his irresponsible adventures, Rocky restored the settings to “thick ice,” and retired for the evening….
[Disclosure: Rocky has noticed that the markets experience high volatiltiy when Rocky is away from his trading screens. Rocky currently has high speed internet, and so long as the internet remains functional, Rocky expects a quiet week in the markets. But if his internet connection goes down, then there will be huge price movement.]
Alarmed that Obama’s error could drastically curtail the demand for leg amputations, the American College of Surgeons immediately issued a press release:
“President Obama got his facts completely wrong. He stated that a surgeon gets paid $50,000 for a leg amputation when, in fact, Medicare pays a surgeon between $740 and $1,140 for a leg amputation. This payment also includes the evaluation of the patient on the day of the operation plus patient follow-up care that is provided for 90 days after the operation. Private insurers pay some variation of the Medicare reimbursement for this service.” The full Surgical Press Release is here:
Although $1,000 for a leg amputation ”feels” like a good price, Rocky wonders whether the Surgeons might consider offering an amputation volume discount? Or, how about, “buy one, keep one free!”
[Disclosure: Rocky admits that he is prone to hyperbole and exaggeration. He now realizes that the President may be guilty of the same offense. The primary difference is that the White House website lacks the proper disclaimer. See:
“Where’s John Kerry?” That was Rocky’s reaction upon learning that AIG sued the US Government over a disputed $306 million in taxes, interest and penalties. AIG sued while simultaneously negotiating an additional $30 Billion in US Government bailout funds. Click here for the full article from the Wall Street Journal.
AIG defended the suit to the WSJ: “AIG is taking this action to ensure that it is not required to pay more than its fair share of taxes,” said a company spokeswoman.
The irony is beyond words.
Too bad that Rocky cannot buy stock in American Law Firms. They are the only winners.
Rocky suddenly realized that Obama’s executive pay cap may be a conspiracy orchestrated by the Boston Red Sox.
The plan caps salaries at $500,000 for executives at firms that accept “extraordinary assistance” from the government.
It turns out that the New York Yankees can be included in this category.
From Jim Dwyer’s NY Times article on 1/9/09:
“Now, beyond all sense or sensibility, the New York Yankees have appeared with a request for $370 million in new taxpayer-backed financing for a new baseball stadium that will open in April.
This is more. New. In addition to. On top of the $942 million in previous financing, and $660 million that the city is pitching in to replace parkland sacrificed for the new stadium and transportation improvements.
What is the team going to spend the new $370 million on?
Here are some items on the submission filed with the city’s Industrial Development Agency: $10.5 million for “suite level upgrades,” and $5 million more for “public washroom upgrades,” and $1.1 million to “upgrade suite seats, field seats” and areas where disabled fans will sit. For a better sound and television system in the building, new mounts and screens, a video system and scoreboard, they want $34 million. And $3.9 million for “extensive cabling necessary to accommodate multiple, domestic and international broadcasters.” To enclose the press box and build a dining room for employees, they’re going to spend $3 million. They also plan to spend $137 million for “food and beverage build out.”
Alex Rodriguez tops the MLB salary table at $28 million per year. The average MLB player now earns $3 million per year. If the Yankees were forced to cut A-Rod’s pay to “only” $500k, he would presumably move to a higher-paying team that receives no government funds. Alternatively, if every MLB franchise had a $500k cap, fewer people would choose baseball as a career, and the quality of the game would suffer.
It’s easy to see why, when the government starts setting salary limits, it’s a slippery slope. With unintended consequences.
The Curse of The Bambino may have been broken. But it is being replaced with a new curse.
Rocky just read the most brilliant idea to create new jobs in this post-financial crisis world.
Jan. 30 (Bloomberg) … Earlier today, Senate Democrats took the first step toward limiting pay for workers at companies receiving federal bailouts. Senator Claire McCaskill of Missouri introduced legislation to restrict compensation at such companies to $400,000, the equivalent of the U.S. president’s salary. Another measure being proposed would create a court to restrain executive compensation.
Rocky observes that if the government “caps” compensation on the best and brightest employees at a company, those employees will quit. The capped employees will then either launch or join an unregulated company.
Once they settle into their new positions, these employees will count as “new jobs created” in the monthly statistics of the Labor Department (even though they are just moving around). The old positions will not count as “job losses.” (Although the regulated company performance will deteriorate faster, that’s a problem for the Treasury Department, not the Labor Department.)
Perversely, the lower the cap, the more jobs that will be “created.” So, if Obama wants to “create” millions of jobs, he can pick random industries, force them to accept a few government dollars, and just keep lowering the salary cap!
Note to Senator McCaskill: You wrote that the $400k cap is based on the salary of the President of the United States. Does your cap for executive compensation permit the following tax-free FREE perks: Company Residence (White House); private chef and dining room; private jet (Air Force One); private helicoptor; 34 member domestic staff; private security detail; and a personal “needs” expense account, which total tens of millions of dollars each year?
McDonalds is bringing back the boneless McRib Barbeque Sandwich in selected markets. Rocky believes that lobbying by the Boneless Pig Farmers of America for their piece of the “pork” in Obama’s $800 Billion stimulus package may explain this controversial culinary development.
From today’s Wall Street Journal:
“When you’ve got 800-plus billion dollars to spend, you’ll have an equal number of opinions on how it should be spent,” said Chris Galen, spokesman for the National Milk Producers Federation, the dairy industry’s main lobbying group.
Rocky respectfully disagrees with Mr. Galen’s comment. The world population is only 6.7 Billion, and there are far too few economists amongst that total to create 800 billion opinions.
Nonetheless, Rocky believes that much of the lobbying may be for naught. No matter what Obama tells him to drink, Rocky still prefers a Diet Coke with his McRib, rather than a pint of milk.
The Official website of the BPFAA (Boneless Pig Farmers of America):
is well worth a visit.