Risk/Reward Vol. 125
THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.
"The object of the Rules of Order is to assist an assembly to accomplish in the best possible manner the work for which it was designed"---quote from the Preface to Robert's Rules of Order (1915)
"You'd better stop, stop, stop/Using me up
You'd better stop/Cause I've had enough"---lyrics from "Stop" by Matchbox 20
"God of freedom, all victorious/Give us Souls serene and strong
Strength to make the future glorious/Keep the echo of our song"---lyrics from "North Dakota Hymn" (state song)
As I am sure my writings betray, I am a fiscal conservative. I do not like the idea, let alone the specifics, of Obamacare. That said, I recognize that it was duly passed by Congress and signed into law by the President. It is bad legislation, but it IS legislation. And, if it is to be amended or repealed, it should be done by legislative act---not by judicial fiat. Therefore, I applaud Justice Roberts for exercising judicial restraint---restoring, if you will, an appropriate, "Robert's" rule of judicial order where justices explore every plausible legal theory to UPHOLD legislation, not to overturn it. After all, that is the proper role of the judiciary (in effect, "to assist an assembly to accomplish... the work for which it was designed"). The United States Supreme Court should not to be a foil in the political battles of the day. I have two further observations on the ruling. First, isn't it refreshing to know that at least one of the branches of government can keep a secret? And, second, no practicing lawyer who regularly argues motions, tries cases or takes appeals would ever have the temerity to predict a decision based upon questions from the bench.
As significant as the Obamacare ruling may have been, it did not move the market---not like the news from the Eurozone summit reported on Friday morning. FINALLY, Italy and Spain stood up to Germany, and proclaimed "Stop, Stop, Stop/ I've had enough" At the outset of this week's Euro summit, the leaders of those two battered countries announced that they would block any and every Eurozone initiative unless and until the mounting and immediate problems with their banks and sovereign debt were addressed. In return for begrudgingly acquiescing to direct capital infusions into those banks and sovereign debt purchases by the European Financial Stability Fund (and ultimately its successor, the yet to be formed European Stability Mechanism or ESM---both of which are heavily subsidized by Germany), Chancellor Merkel extracted a commitment that a strong centralized Eurozone banking authority would be established. In reality, however, Germany's bluff was called. As recent financial news stories have highlighted , the biggest loser if the Euro implodes would be Germany because a highly valued, independent deutsche mark would kill German exports--its economic lifeblood. Indeed Germany's heretofore intransigence has aroused sentiment that in lieu of expelling Greece, maybe Germany should be given "das boot", freeing the rest of the Eurozone to inflate its way to solvency. Mein Gott, that would throw a flame on the Matchbox! Well, whatever the reason, what happened late this week looks and feels like real progress toward a stable Euro. Oh, don't get me wrong, Europe's greatest problem--its fiscal mess (its members spend more than they receive in revenue)---still exists (P.S. same for the U.S.) However, stability of the Euro is all that I needed in advance of my re-entry into the stock market, and I think I got it.
Friday's good Euro news came the same day an article was published about the jobs boom in North Dakota, where unemployment is so low even immigrant labor is at a premium. All of this is due to an oil and gas exploration bonanza there resulting from fracking. Hopefully, this wonderful technology will provide us with energy independence some day--"freedom, all victorious"--from the OPEC cartel. Can you imagine how "serene and strong" our Souls will be then--"all victorious"? As I have written repeatedly, I love domestic gas and oil and, good to my word, my first foray back into the market was in US based energy: AMLP, an exchange traded fund holding a nice sampling of oil and gas pipeline master limited partnerships (mlp) but in a vehicle that makes it suitable for ownership in a deferred income account. I have owned stock in individual mlp's in the past through my personal (non retirement) account, but I am keeping my retirement account in cash pending some visibility on the tax aspects of the looming Fiscal Cliff (discussed at http://www.riskrewardblog.blogspot.com/ vol. 118 ). AMLP fits very nicely into my 401k account. I also bought the preferred stock of Magnum Hunter Resources (MHRpD, paying 9%), and some Conoco (COP). I also bought shares in JPC, a closed end fund holding the preferred shares of several banks and insurance companies which should be more stable in light of the Eurozone actions announced this week.
I left the stock market in mid May reaping a nice profit. Had I stayed put, I would be further ahead today for sure--- but not as well off as I would have been had I exited in April. Was I right? Was I wrong? Can one time the market? Who knows, but I sure slept well these past 6 weeks. I do believe something substantive and positive occurred in Europe on Friday, and I am really glad to be back in the game, albeit if only dipping my toe. The lack of progress in Europe will surely depress second quarter earnings which will begin to be reported in 10 days or so. But those reports should set up buying opportunities.
Like Matchbox 20 sings, it has been a "Mad Season"
"I feel stupid, but I know it won't last for long/And I been guessin', and I could have been guessin' wrong" (Or maybe not)
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