Farewell

Last winter, I reported that I had some medical problems. I had to take a break and undergo treatment. Sadly, the therapy has worked a little bit. But not completely. I must face the facts - my condition is terminal. (Yes, even doctors can experience denial.) I have reached the point where walking or a severe coughing spell can leave me breathless and cyanotic. (My lips and fingers turn blue.) This is really distressing to a man who used to run marathons and could bench press over 300 lbs!

So now, I must make the decision to spend my remaining time with my family. I can no longer devote time to this blog. I honestly don't know what will happen when I finally go off-line. Perhaps someone with greater knowledge than I can suggest a way to keep it "alive." Or, someone could assent to hosting this blog so that others might be able to benefit from it.

For those who feel that this blog has been of benefit, may I ask if you could make a modest donation in my name to:

Christ United Methodist Church 1639 Keeaumoku St.
Honolulu, HI 96822-4399

This is the church that my grandfather, Rev. Hong Chi-Pum founded in 1912.

Aloha and Mahalo.

Can We Decide to Stop Being Morons?

Wall Street and Business in general is frequently accused of being short-sighted. Namely, that they focus too much on quarter-over-quarter performance and not on the long-term strategic vision. The Japanese are felt to have an advantage in this respect. Perhaps, and perhaps not. Name-calling and finger-pointing is not the issue here. That's looking backwards. Let's commit to looking forwards, instead. Let's commit to looking at a future in which there is increasing population and therefore, increasing pressure upon resources. What should our strategy be in that case?

Here, we must look at what "Green" means. To me, that does not mean committing to greater use of biofuels. Diverting land from food to biofuels is not a solution. We are just now starting to see what that implies and what future pain that could result in. No. I am talking about true green businesses which do not steal from the already famished and impoverished in order to fuel our consumption. Here, we are talking about high-tech, to some extent, but not YouTube, I-Pods and Electronic Games. Now, we must liik at high-tech or alternative ways of energy production. And, of investing in those companies that are already ahead of the curve in terms of energy conservation.

So now I'm going to suggest a green investment basket of stocks. I'll start it off with Toyota and Honda as leaders in automotive economy. I'll add MEMC Electronics. MEMC is the leading producer of silicon wafers that are used in solar energy production. I'll add Florida Power and Light (FPL) which is making substantial investments in wind and solar power. Consider adding GE, which is also investing in wind power generation. AeroVironment (AVAV) and Otter Tail (OTTR) are pure wind generation plays. And here, I'll ask for input. Many of the leaders in alternative, renewable energy sources are not here in the USA, but in Europe. Perhaps some of the readers of this blog from Europe, Asia and Australia can suggest some other renewable energy plays. Here's one site that I'm looking at: Renewable Energy World.com

Let's see if we, as a cummunity, can come up with a forward-looking investment plan that looks not just at next quarter's results, but at the next decades' and the next energy crisis' performance. Let's see if we can do better in the vision deartment than the Big Three and President Bush and Rep. John Dingle.

The Face of Fear

This is what fear looks like. Bond yields have plummeted. Even a paltry 3.69% 30 year Bond yield is preferable to the uncertainty that traders are seeing in the market. And it doesn't look as if there's any way to turn the herd. The Big Money wants the safety of US Treasuries and is busily buying them, and bidding them up. Just look at what happened to the broader market, the last time bond prices reached this level in September.

Breaking News!

Rep. Waxman new head of House Energy and Commerce Committee

"Rep. Henry Waxman of California has been elected the new chairman of the powerful House Energy and Commerce Committee, replacing veteran lawmaker and Detroit-ally Rep. John Dingell. The 137 to 122 vote by Democratic lawmakers on Thursday marks a significant shift in congressional leadership, and opens the door to stronger environmental standards for the auto industry. Dingell, a staunch supporter of the U.S. auto industry, has successfully blocked tighter regulations for carbon emmission standards" from MarketWatch

Maybe they read my blog? :-)

More on Morons, Imbeciles and Idiots.

Yesterday, I discussed Piaget's famous Conservation Experiment. Children usually grow out of it and, above age five or so, can recognize that the volume of water in the two glasses are equal. But only after they are shown to be equal. But this primitive heuristic still remains with us. Manufacturers know this and know that they can charge the same amount for a taller, thinner, 12 ounce glass of a beverage as they can for a short, squat 14 ounce beverage. When they downsize a box of cereal, they don't make the box smaller, they make it taller! Then, they just put less cereal into it. As much as we can intellectually know certain things, we are still caught by the glamor of the bigger, taller package.

Remember the nurse I talked about yesterday? She knew that her Ford Explorer was impractical for a singe woman. She knew that it handled like a pig and wasted gas. But she loved the height and later, the massiveness of the SUV. And I've already mentioned how many times I've seen women behind the wheels of these behemoths. Usually running single-occupant errands to the grocery store. And I've never seen them buy so much that it all couldn't be placed into the trunk of your standard Honda or Toyota. No, they all had to have the largest, tallest, most massive cars ever made. What does that say about the status of women in our society? But that's another discussion, isn't it? I would sometimes tease some of them that I could gas up for $20 a week while they took $70 to $100 a week. And then the gas crisis hit. When I had to carry around $50 bills to gas up, what were they spending?

Now we can blame Detroit for their stupidity and lack of foresight. They went through the energy crisis of the 70's and learned nothing from it. As soon as gas prices drifted back downwards, they dropped all their fuel-efficient lines and concentrated all their energies on the big, truck-based, wasteful and gas-guzzling SUV's. When I saw Chrysler bringing out their Magnum V-8 and the Hemi engines, and when the bulk of auto advertising was on the Ford, Chevy, GMC and Dodge trucks, of all things, then I knew, even before the energy crisis hit, that Detroit was in for a disaster. Even the prototype energy efficient cars and electric hybrid vehicles that they had in development were scrapped in their single-minded pursuit of profits from the most fuel-wasteful class of cars ever produced.

And now, here's the truly nasty, dirty little secret. Detroit didn't produce these wasteful cars in a vacuum. They had help! They had a ready market, a source of demand for these behemoths. As much as I would like to dump on the Detroit executive suites, I have to hold back. We, the
American public, responded like Piaget's five-year olds. We chose bigger over better. We chose the tall 12 ounce glass over the shorter 14 ounce glass. Even worse, when we stopped to think about it, many of us recognized that we were making impractical choices. But we just couldn't silence and outgrow that little five-year old!

And worst of all, we had legislators, led by Representative John Dingle of Detroit, who blocked every attempt at reform of the auto industry. They voted against seat belts, air bags, roll-over and crash safety standards. They voted against raising fuel mileage standards (CAFE standards have not been raised in almost 20 years!) These legislators, mostly from Michigan and Ohio, fueled by lobbyist money for their campaign war-chests, have come from both political parties. Indeed, John Dingle, a 27 term Congressman from Detroit has been called "a one man speed bump" in Congress. And guess who heads the House Energy Committee? Who's Who In The Battle Over Auto Efficiency standards?

And so, as much as I would like to blame and punish Detroit, I have to admit, there's just too much blame to pass around. We have all acted in short-sighted, self-serving ways. We have all failed to consider the future in which limited resources shall play and ever increasing role and will demand an ever increasing price to pay. And that is the topic of the next article in this series.

30 Year Bond Yield Drops Below 4%!

This has happened twice before since October. And each time, this was followed by a steep sell-off. Not a prediction. Just an observation. Past performance is no guarantee of future performance, yada, yada, yada.

A Lesson From Piaget.

This illustration shows a famous experiment performed by the Swiss Philosopher and Child Developmental Psychologist, Jean Piaget. In the 1950's, he performed his famous Conservation experiment. Here, two equal amounts of water are presented to a child. Then, the contents of one glass is poured into a tall, thin glass. The child is asked which glass holds more water. If the child is five-years old or less, it will typically point to the taller glass.. It will do this consistently, even as you pour the water back and forth to demonstrate that it is absolutely equal. Here, the child is basing its judgment solely on the height of the water in the glass.

And now, a story. I've always driven small, responsive, sporty and economical sports coupes and sports sedans. Over the years, I've owned VW Rabbits, Mazdas, Nissans, Subarus, BMW's and Infiniti G20's. Then, in the late 80's, a nurse I know enthused about her new Ford Explorer. This five foot-three inch, 104 pounder said she loved the height and improved visibility that it gave her. I gave it a test drive and I was appalled at its sluggish handling, poor road feel and the feeling that I was about to tip over with every turn. This, by the way, was to become a frequent problem with this class of SUV's. So I stayed with my small, responsive and economical automobiles.

But this nurse, who was single and did not need to buy tons of groceries or ferry dozens of children around, stayed with her SUV's. And, I noticed that many of the people driving these huge behemoths around, were women! Later, when crash data came out, this nurse gleefully stated that if she ever got into a crash, it would be the other person who died - not her! Imagine that! A nurse; caring, nurturing, and a caregiver openly gloating that it would be the other person who would die!

Now yesterday I talked about the Morons, Imbeciles and Idiots occupying the seats of upper management in Detroit. (I know that it's not politically correct to use these terms any more. But in these days of economic turmoil, these terms are just sooo emotionally satisfying.) And now, in my next article, I'm going to talk about a truly nasty and dirty little secret. See you tomorrow.