Sunday, August 31, 2008

Transformative Candidates

A few days of digesting Obama's acceptance speech in Denver has brought some perspective "transformative" candidates.   Everyone talks about how X or Y is "transformative" as a candidate.   That is utter B.S.  A candidate is never transformative, only when elected do they have the ability to become that by action, not deed.

Barack Obama is NOT a transformative politician.   He is quite conventional in many ways, but he is exceptional in his ability to give prepared speeches.  His acceptance speech was quite conventional, the laundry list of liberal programs, criticisms of the current administration and candidate, and platitudes of hope and unity going forward.  

Transformative politicians change the political roadmap for generations.  They are few and far between.  Examining U.S. presidents, the truly great ones changed the political landscape for generations.  Think Lincoln, FDR, and Reagan.  Obama's record and rhetoric shows he only wants to transform America into a socialist state.

Monday, August 25, 2008

Classic Bob Hope

I almost forgot this priceless Bob Hope clip.

H/T Dirty Harry's Place.

Thursday, August 21, 2008

Barack Obama = Ron Burgundy??

I'm telling you right now - Barack Obama is Ron Burgundy. He will read anything on a teleprompter like a god among men, but is useless without one. Ron Burgundy will read anything put in front of him. I'm wondering when "the one" will have his moment like poor Ron above.

Friday, August 08, 2008

Accounting gimmmickry...

For those of you who like to invest in individual stocks in the market: read the financial statements. I am a traditional Graham-Dodd value type (most of the time) who likes to dig through the financial statements and find equities that trade below "intrinsic value" so that I have a margin of safety in a down market.
In light of the downturn in financial stocks as of late, and the corresponding collapse in the housing bubble, there are buying opportunities out there to purchase solid companies at discount prices. But, not all companies are created equal.
One of my biggest negatives on a company are accounting issues. During the tech bubble, a lot of companies (i.e. Nortel) were playing fast and loose with revenue recognition rules to front load as much of it as possible. Others were playing with the valuation of officer stock options. Others just took accounting policies that were too aggressive or down right misleading.
Case in point: Wells Fargo (WFC/NYSE) came out with stronger than expected second quarter earnings (i.e. a profit) on July 16th and the stock price jumped from $20.51 at the close of the prior day to $27.23. However, upon further examination of their earnings, things were not a rosy. A little change of their accounting policy for home equity loans explains it. In prior quarters, Wells Fargo would write off any home equity loan that was in arrears for greater than 120 days. However, at the start of the second quarter, they changed this to 180 days. My changing the criteria of when a loan was to be written off, they essentially added roughly $265 million to their earnings - turning a loss to a gain in the case of Wells Fargo's second quarter.
The worse part of this is that considering how many home equity loans they had in the housing bubble epicenters of California and Nevada, where the drop of home values they loans are essentially now unsecured, that the better accounting policy would be to more aggressively write off these positions? Wouldn't you, as a shareholder or depositor, show you a "worst case" balance sheet where there is less likelihood of downward surprises rather than overly optimistic guesses that have read downside?
As I said earlier, I don't like companies that play games with their accounting, as it reflects poorly on management in terms of performing their fiduciary duty to shareholders.