Wednesday, July 3, 2013

Bond Market Shrugged

We live in the land of opportunity. This fact has never been more true in our history, yet ironically it has never been more doubted. In a speech to the House of Commons in November, 1947 Winston Churchill offered these words..."No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried". If you were surprised by Edward Snowden's "revelations", you have not been getting full use of your History Channel subscription. Our government has been snooping, lying, cheating, and stealing (taxing)since its formation in 1776. In 1963 Attorney General Robert F. Kennedy authorized the FBI to wiretap the telephones of the Reverend Martin King Jr. because he believed one of King's closest advisers was a member of the American Communist Party. A slush fund tied to a committee for the Re-election of the President was linked to the 1972 break-in at the Democratic National Committee headquarters in the Watergate office complex. Read my lips no new taxes, Iran-Contra, I did not have sex with that woman are all poignant reminders of our governments lifelong struggle with the truth.
Ofcourse, it is our citizenry that makes this country great. We are a cantankerous lot, prone to outbursts over injustice, and visionaries to the core. Life is good, but we can make it better. As the Revolutionary war began, the British were puzzled by our willingness to fight. From their perspective we were 13 prosperous and peaceful colonies relative to the rest of the world, why on earth would we risk this? Very simply, it was unjust to tax us in order to finance British wars in other parts of the world and we thought we could do better ourselves. I'm no miniature flag on the suit guy, as modern day patriotism has at times leaned toward jingoism, but this is why I love our country. Our people. The United States was founded on risky ideas and built on the backs of people who wanted more, and thought they could do better. This is why I am a trader and my wife is a restaurant owner. Not exactly the safest career choices, but we've accepted the risks and the challenges and we are guided by the desire to make the world a better place for our son. It would have been safer to build our 401Ks from the halls of Lucent Technologies and the Bank of New York, but all too often safer is not better.
Pounce, seize the day. Awaken your inner American. I promise you there are more opportunities than you have time for. Most of the time they just slap us right in the face, and we ignore them as we glide through our days in a narcissistic haze. I've learned to watch for them, but I'm still learning. The other day at Stop and Shop the cashier says to the guy in front of me who's checking out, "would you like to donate $1 to help fight childhood cancer?". I'm like, c'mon dude, do's right in front of you, the opportunity to be a better person with the press of a button. The inevitable comes, as the man says no and rattles off the 3 charities that he and his wife already provide handsomely for. I'm behind him calling bullshit in my head, that's just a cleverly concocted line he uses to avoid that dreaded task of giving $1 to sick kids. I'm behind him, just raring to go like a kid at his first track meet, ready to announce proudly that "yes, I would like to donate $1 where do I press?". Like Jim Carrey's character in "Yes Man", just start saying yes and see what happens. See how you feel, see what changes, as the returns from these layups that life gives us are exponential.
So I still haven't written about the guy in the picture, Bill Gross. For those unfamiliar, he is the bond market King and the founder of PIMCO the world's largest bond manager. Look closely at that picture, does he look like somebody who would let the bond market go to hell in a hand basket? This guy ran six marathons in six consecutive days and finished the last 8 miles of one marathon with a busted kidney. The global industrial Wall Street media fear complex has attempted to get everyone in a tizzy over higher interest rates and "crashing" bond markets. A nice thesis for the faint of heart, investing ignorati, and the criminally insane but the bond market is just fine thank you. There is no inflation, no stagflation, no halt in US treasury buying by China, Japan or anyone else. I'm not a chest-thumping re-hasher of past prognostications because I am often wrong and our own recollection of history as it pertains to us is inevitably flawed, but I talked a bit about the opportunities in regional banks caused by the move higher in interest rates. There were more opportunities than I had imagined, as each day a new regional bank jumps to 52 week highs like watching popcorn cook from beginning to end.
As you stare into the fireworks today and tomorrow with you friends and family, instead of thinking about problems, think about opportunities. Embrace some of the risks you'll have to take by remembering the risks that those who founded our Country took. Between my eating and drinking on this excellent holiday, I will be scouring the wasteland of information in my head, trying to come up with ideas for the coming trading week. Have a happy and healthy Fourth of July with your loved ones.


  1. The problem is you are speaking to the choir. We won't change but the choir is a smaller percent of the population than ever and declining at a rapid rate. Never has there been more drag and obstacles on the ability to achieve one's goals.

  2. Yes, I understand your frustration but this is partly my point, that all the opportunities are still there but we have to look a bit harder these days. At the end of the day, human beings are creatures of light. I've spent time frustrated, in the darkness and the thing is you never get anywhere. It's just dark. I build my optimism and hope around my four year old son, and I am determined to make the world a better place for him.