May 12, 2012 Wild Thing

Volume 118

THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.

"This diamond ring doesn't shine for me anymore
And this diamond ring doesn't mean what it meant before"---lyrics from "This Diamond Ring" by Gary Lewis and the Playboys

"When the music stopped I returned to my seat/But there's no stopping a duck and his beat
So I got back up to try my luck/Why look, It's Disco, Disco Duck"---lyrics from "Disco Duck" by Rick Dees

"I can tell by the way you dress that you're so refined
And by the way you talk that you're just my kind"---lyrics from "With a Girl Like You" by The Troggs

After JPMorgan's (JPM) stunning announcement Thursday evening that it had suffered a $2billion trading loss, Jamie Dimon, JPM's CEO, "doesn't shine for me anymore." JPM placed an irresponsible bet (excuse me, ahem, hedge)---one which will likely be banned when the Volker Rule is implemented later this year--and lost, big time. To me resistance to the Volker Rule no longer "rings" true. Indeed, such conduct by an institution whose major debt, bank deposits, is insured by the FDIC is outrageous.

JPM's news, on top of continued uncertainty from Europe, slowing growth in China and a general malaise stateside resulted in the worst week in the stock market for 2012---the Dow dropping 219 points. And no, I was not tempted to buy JPM on "bad news" as discussed last week. Indeed, my recent bad news gambles (CHK and CHKpD) ended badly as I bailed on both--one at a loss and the other at a small gain that was not off- setting. Some day I will stop speculating.

Stateside uneasiness is due, in part, to the impending "Fiscal Cliff" about which Fed Chair Ben Bernanke reminded Congress in a meeting this week. Come year end 2012, a host of jolts to the US economy are scheduled to occur: 1) the end of the Bush Tax cuts; 2) the end of the payroll tax cuts; 3) the end of extended unemployment benefits; and 4) the automatic imposition of spending cuts brokered as part of the debt extension compromise last summer. The cumulative effect of these jolts is a negative $500 billion to the economy. This "cliff" is of much greater significance than the debt ceiling crisis that sent the stock market tumbling last August. And, not one of these issues---not one---will be addressed by Congress before November's election. Then, once the electioneering "music stops", hopefully, a lame, Disco Duck Congress will try its "luck" at finding a solution to all four of these issues before year end. Yeah--right! Are you willing to bet your retirement account and life's savings on that likelihood? So, Dear Readers, I, for one, will likely be selling everything sometime in the next few months. With no encouraging news in sight, it may be sooner than later.

Enough negativity! Thanks to a reminder from a fellow subscriber, I bought more Calumet Specialty Products master limited partnership units (CLMT) this week on a dip occasioned by a large secondary offering. CLMT, run by fellow NCHS '69 grad, Fred Fehsenfeld, is one of my top performing stocks this year. This "refinery" of specialty petroleum products is "just my kind" of stock. It pays a 9 % dividend and has appreciated 11% this year.

In closing, this year's market, so far, reminds me of another song by The Troggs---"Wild Thing". It "moves me"---likely to the nearest exit.