I have noticed of late a disturbing lack of civility in the
world. Keep in mind this is coming from me. I couldn’t wait to grow older as I
ASPIRED to be a curmudgeon. I am far from politically correct and have been known
to be moderately to excessively foul mouthed at times. I call a fool a fool and
will call you out for stupid statements if you insist on making them. Even with these truths, at a
basic level of society I see all pretense of civility and basic kindness to
others disappearing at a raid rate.
I blame the internet. You can be anyone anywhere on social
media and this emboldens folks to say things they would not have to balls to
say in person. Some think that being a semi arrogant asshole is hip. One such character suggested the other night
that I perform physically difficult sexual acts upon my person in response to a
fairly innocuous, and certainly not insulting, remark. In the ensuing exchange
we ended up blocking each other’s accounts. It’s a shame as the person in
question occasionally had some interesting salient points to make but his need
to embrace his inner asshole overrode any value he may have provided. I don’t
care how brilliant you are, or imagine yourself to be, life is too short to put
up with assholes.
The trend towards uncivil conversation is most marked in
political discussions. I am appalled by
the things those on the other side tend to call each. Nazi and communist are two
of the nicer labels tossed around.
Incredibly it is the least informed that yells the loudest and resort to the
most base of insults. Volume replaces intelligence and fuck you stands in for
actual policy statements. I love a good argument or spirited political
discussion. I happen to think both parties are evil personified and delight in
hoisting their adherents on their own petard any chance I get. However I have
never lost a friend or resorted to base insults as part of the discourse. I
have certainly never insulted someone I have never or just met over their political
beliefs. I may think it but civility demands I get to know them better before informing
them of their intellectual shortcomings.
It has spilled over into everyday life. I may be happy and
quick to tell a Red Sox fan that they root for a slime encrusted scum sucking baseball
team but in my day to day life I try to be civil to those whose path I cross.
Please, thank you, have a nice day, excuse me, pardon me are all phrases that
are disappearing form the world. People seem to think that being rude to a
server or store clerk is a birth right. Pushing and shoving through crowds is
the norm not the exception at most venues. By the way I can now confirm that this
is indeed truer in the North than the South.I heard thank you and excuse me
more in the first week in Orlando than in a year in the Mid Atlantic.
I am never going to be the nicest guy in the world. I will always
have a foul mouth. I will never suffer
fools easily. But I do manage to get through the day without going out of my
way to antagonize, belittle or insult those I meet along the way. Unless they
really deserve it. You do not have to be a milquetoast but there is no need to
be a random and constant asshole either. Save that shit for your friends like I
do. They are used to it. Especially
those who root for the Red Sox and believe in growth stocks.
Warren Buffet has caused a bit of furor in the municipal bond
markets in the past week. The sage exited his portfolio of credit default swaps
on munis to the extent that he could. He still holds some but any he could
contractually cancel were cancelled by his insurance companies. This caused
quite the conversation and lit some of
the investment oriented social media networks on fire. Is he concerned about
state and local government finances? Some speculated it was a reallocation of
assets to a higher return vehicle but since they have cash to the tune of $40
billion that they have been unable to deploy I doubt that is the case. I think
it is simple math. If there is a 20% chance of a muni financial meltdown then
writing the swaps has a huge negative expectation. Simply put the squeeze is no
longer worth the juice and Berkshire wants out.
We will not hear from Warren on this matter unless we get widespread defaults.If that occurs Warren will come out and in a self-deprecating grandfatherly fashion
inform us that his extraordinary common sense has once again saved him from a grievous
error. If nothing happens we will never hear another word about the decision.
Some postulate that this indicates that we are on the verge
of a huge meltdown in the muni market. Dear God I hope so. Right now long term
municipal bonds yield a little over 3%. That’s not worth the risk of owning for
long term investors. I would love to see a sell off in this market place. Muni
yields of 5% or higher are a long term conservative income investors best
friend. I do not think we will see a sell off as a result of Warrens moves but
interest rate movements and government policy may push yields higher over the
next few years.
I am not a muni expert by any chance but I have learned
enough over the years to know a few things. From 1953 to 1980 muni yields rose almost
continuously. From 1980 to today yields have fallen in similar fashion. Buying
during recessions has always been a solid profitable trade for muni buyers. GO
default rates are very low even when times are horrible. Buying individual
binds works better than funds. Unless you can buy a closed end municipal fund
at a double digit discount. Yield chasing in lower rated or unrated binds is a
horrible idea unless you have very specialized local knowledge. Municipal bear markets
are usually the result of a rising interest rate environment. Sell offs are usually
a result of a lack of buyers rather than widespread selling. Most munis are
held by individuals, funds and insurance companies that are very slow to sell
in volume. From 1970 to 2009 there were 54 muni defaults. Only three were General
Obligation bonds. The default rate of AAA binds over that period was 0. From
1970 to the end of 2011 there were a total of 71 defaults by rated bond
issuers. 2450 unrated bonds defaulted. Don’t buy unrated bonds without in depth
specialized and local knowledge. Never ever buy muni closed end funds on the
IPO or at a premium to NAV. Wait for those rare occasions when they sell at
large discounts and buy the higher quality portfolios with great abandon.
The day to day minutiae and movement of the muni market is
over my pay grade. For individuals the rules are simple. Buy when we are in a
recession, interest rates have risen and you can lock in yields of 5% or
greater. Buy when Muni funds trade at discounts. Ignore what Warren Buffet says
or does. You are not Warren and contrary to his persona he does not give tow shits
about you or your portfolio. That goes for every other guru and talking head.
Think for yourself and go opposite the crowd in all markets.
Looking at baseball
the standings tell me we have an interesting Spetmeber coming up. All of the divisions
are fairly close with no lead being more than 6.5 games. In the NL East it is
Washingtons to lose and I do not think they will. Even if they shut Strasburg down
early to save him for the playoffs they have the best pitching staff in the
league. They have a team ERO of just 3.24 and teams are hitting an enemic .232 against them The bats aren’t bad either.
The team is fifth in the NL for batting average and fourth for home runs. Atlanta
has a shot and the teams play six more time before the end of the year but I don’t
think they can do it. Davy Johnson and crew will make a playoff run and I would
not be shocked ot see them in the series.
No one is going to catch the Reds in the Central Division.
They are sixth in average and second in home runs. The pitching staff is third
in ERA. They have a tough schedule but Votto will be back for September and I
think they finish s strong. Pittsburgh will make a run but I do not think they
can catch the Reds.
The Giants and Dodgers have five games left to play against each
other. The Dodgers need to sweep them as the Giants have a far easier schedule
to finish the year. I think they do and the Boys in Blue are playing ball in October.
The Giants will be there as well. I think they beat
Pittsburgh for the Wildcard.
In the AL West the Angels are going to have make an
incredible run to make the playoff picture. They have the talent. They have the
talent but do not seem to have the will. If Oakland continues to win the most talented
team on paper will miss the play-offs. Texas wins the division going away.
Chicago is second in the AL in home runs but Detroit is
hitting for a much better average. The pitching staffs are close with both
hovering around a 4.0 ERA. They have seven games left against each other.
Whoever wins that series wins the division and goes on to the playoffs. I think
it is Chicago this year. The Robin Ventura story and Adam Dun comeback are just too good for the baseball gods to ignore.
In the East it’s the Yankees once again. Tampa Bay has a
pitchers chance and may make it interesting but the Yankees just have too much
offense. With a fifth in the league ERA the pitching staff is not terrible and
they will hold off the pesky Rays. Baltimore has chance f the pitching staff
holds up and they can continue to hit the long ball. The September schedule in
the AL East is brutal and that favors the Yankees.
There is a very good chance that the Orioles and Rays play
the wild card game. If that happens I think the baseball gods will honor the 15
years of sacrifice and send the Orioles to the next round. If they fold then
the Rays will probably face the second place Central division team and get
homered into postseason oblivion.
That is all for today. To sum up:
Be Fucking Nice.
Buy munis with over 5% yields or when the CE funds trade at
a double digit discount. Ignore the noise.
The Orioles have a shot at this thing.
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