Thoughts after the RNC and the DNC

(Disclaimer – I am a moderate, centrist Democrat; seemingly an endangered species.)

The parties are over in Cleveland and Philadelphia as both the Republican and Democratic National Conventions have have packed up and gone home. The cameras are gone, the balloons and confetti have been swept away and the placards have been sent out on the campaign trail. All that’s left now is the sprint to election day. Each side has their passionate  and detractors, whose votes are unlikely to be swayed, no matter what is said or done in the next three months. As a result, both candidates must now search in the middle for enough votes to put them over the top.

Before the conventions began I already knew that I would be voting for Hillary, which was as much a vote against Trump as for Hillary, but I still wanted to hear what the candidates and their supporters had to say, and to get a feel for the mood of each party. I believe you can glean a lot about a candidate, and what type of president they will be, by the agenda they lay out in their stump speeches, assuming of course, that anything they say can be believed. Like him or not, agree with him or not, President Obama laid out the objectives for his candidacy at the convention, and that’s basically what’s he’s attempted to accomplish over the past eight years. It has been similar for past presidents. So what do we make of Donald Trump and Hillary Clinton after the conventions?

I watched the speeches by all of the main players on both sides of the aisle, including, obviously, the candidates themselves. My overriding impression from the RNC was one of hate, ugliness, divisiveness and fear. Without being able to present any record of achievement in governance, or public service of any kind, Trump and his supporters chose to appeal to the lowest, most primal instincts of the disaffected members of our society. Rabid dog snarling fits from Rudy Giuliani and non-stop nastiness from pit-bull Chris Christie set the negative tone for the entire convention. Only the speeches from Trump’s wife and children leavened the proceedings at all. And while I thought that his children all did a very good job, it did not alter my perception of the man or his supporters.

Then there was Trump’s long-winded homage to himself. I think it’s pretty amazing that he plans to solve all of the world’s problems all by himself. He is so delusional, and egotistical, that he appears to truly believe that he, and he alone, has all of the answers to all of the problems that we face. If it weren’t so scary it would be laughable. And yet his supporters, some of whom are good friends of mine, eat it up. And I just can’t understand it. Are they not listening to the same words, spewing forth from that same orange face, that I am? Do they not hear the bile, the anger, the hatred, the intolerance, and the extravagant love of self in everything that he says? It’s a good thing we have a First Amendment to protect freedom of speech, at least until Trump sues someone for saying something negative about him. Even now. Trump has gone on the attack against Michael Bloomberg, a former mayor of New York that Trump formerly supported, for having the audacity to speak ill of The Donald at the convention. Never before has a candidate slung so much mud at his detractors.

After all the yelling, pontificating, name-calling and finger-pointing during the RNC, dispensed with almost a complete lack of any substantive proposals for how to fix all of the problems they decried, I was ready for a change of pace from the DNC, and they did not disappoint. I found the speeches, particularly those of Cory Booker, Michelle Obama, Joe Biden, Bill Clinton and President Obama, to be positive, inclusive, empowering and uplifting. The messages were forward-looking and upbeat, which was in severe contrast to the dire, negative and often hateful words being shouted at us in Cleveland. In truth, after four days in Philadelphia, I found myself feeling much more positive about voting for Hillary than I did before the convention began. And even more convinced, if that is possible, that electing Donald Trump, would be an unmitigated disaster for our country.

Trump has made a career out of self-promotion, flouting the rules whenever possible, looking out only for himself and showing interest only in his net worth. He has driven numerous businesses into bankruptcy. In fact, his entire empire teetered on the verge of collapse before being saved by some sympathetic lenders. He has also attempted to cheat on his taxes here in Westchester Country by claiming that his golf courses are worth almost nothing for property tax purposes, while at the same time lauding their tremendous value when boasting about his net worth. All this does is hurt the communities in which those properties reside by withholding necessary funds that would otherwise go to social services or school programs.If he’s so proud of the billions that he claims that he’s worth, he shouldn’t be so callous as to skim needed funds from the towns and cities that he works with. And speaking of his purported billions, when is he going to make his tax return public, like all the other candidates?

There is no question that Donald has done a great job creating the “Trump” brand, building golf courses around the world and developing and branding luxury properties. And while not all of his ventures have succeeded, that shouldn’t be held against him as failure is often the result of entrepreneurial effort. Unfortunately, none of his successes in business, such as they are, qualify him to be the President of the United States. The truth is that he is short-tempered, mean-spirited, thin-skinned and ego-maniacal. None of these characteristics are what you want in a president.

Can you imagine him trying to negotiate a bill with Congress, or a treaty with Mexico or China? What rapport do you think a man born into significant wealth, who hasn’t done anything for anyone other than himself his entire life, has with the middle-class or Middle America? What has he done to support workers, people of color, or those without enough education to apply for a job at a Trump construction site, or enough to eat to afford a phony Trump education? What kind of man says the misogynistic, racist, ugly and bullying things he says, then threatens to sue anyone who confronts him? Again, is that really who we want to lead our nation for the next four years?

Contrast all of this with Hillary Clinton, who is by no means a perfect candidate. And for some reason, many people (myself included, to some extent), just dislike her. I can’t put my finger on exactly why that’s the case, but it seems to be true. Could it be the qualities in her that we don’t like would otherwise be acceptable if she was a man? Or perhaps it’s that she has simply been in the public eye for so long and it’s easier to find fault with her than appreciate her good qualities. Either way, her seeming lack of “likability” certainly doesn’t disqualify her from the job as there have been many highly unlikable people that have held elected office and done a very good job. And she has certainly made her fair share of mistakes over the past few years, most notably with Benghazi and her emails. But let’s put that aside for a moment as the issues have been beaten to death. And remember, show me any public figure who has not made decisions, or taken actions, that they would later regret. That’s simply the nature of the beast. I believe candidates should be viewed not for a single event, but for the totality of their service.

So let’s put aside the negatives and instead consider a woman who has dedicated her entire adult life, more than 40 years, to selfless public service. Ponder that for a moment, and contrast it with a lifetime of self-promotion for Donald Trump. She has battled to give a voice to the voiceless and to help the helpless. She has fought for education, healthcare, women, children, minorities and virtually every other citizen of our country. She has worked with our military as well as the leaders of almost every country in the world. Is she perfect – no. But I would take her 40+ years of service against his 40+ years of self-aggrandizement any day.

So who do you want negotiating trade deals on our behalf? Who do you want working with Congress (notice I said “working with Congress”, rather than trying to do it all by himself) to create more jobs? Who do you want with their finger on the trigger of our nuclear arsenal? Who do you want to speak for your daughters, sisters, wives and mothers? Who do you want to protect your right to love whoever you want? Who do you want to fight for some reasonable, enforceable gun legislation, so that we can begin to minimize the almost daily occurrences of horrific mass shootings?

The Democrats do not have all the answers, and I don’t agree with all of the planks of their platform. I would prefer a different approach to taxes and business, but I can live with it as Congress will prevent anything too extreme from being passed. I also don’t agree with a free education; there should be some cost involved so each student feels accountable for their efforts and actions. But there’s no question that higher education should be more affordable and shouldn’t leave student deep in debt upon graduation. But looking at the big picture – climate, Supreme Court, women’s rights, human rights and more – I believe Hillary and the Democrats are on the correct side of the key issues that transcend the individual; that affect all of humanity.

Finally, I strongly believe that we must vote for Hillary Clinton in the upcoming election. There is simply no justification for a Trump presidency. He is not a symbol for change. He is a vote for division, isolation, bullying, chaos and nastiness. And that is not an environment in which I want to live, or raise my family. I hope that, over the course of the next three months, the majority of Americans will really listen to what Trump has to say, and how he says it, so that they will wake up and see him for who he truly is. If they do, then his candidacy is doomed and Hillary Clinton will be our next president.

Advertisements

What I’m Thinking Today

In honor of the extra day in February this year, and on the eve of Super Tuesday, I thought it was a good time to jot down some random thoughts on the market, the economy and the election. So, in no particular order, here goes . . .

  • I hope you listened to my pleas in the last few newsletters not to panic and sell your quality holdings into the correction. If you didn’t, you’ve enjoyed a gain of almost 1,000 since a bottom was made on February 11.
  • I don’t think February 11 was “the bottom” for the year. We’re likely to have at least one, if not two more, corrections this year. That being said, I do believe the market will be higher over the next few years.
  • I would substantially overweight, or even limit, your investments to blue-chip, dividend paying, U.S.-based equities as most of the rest of the world is a mess and income is at a premium.
  • Although I’m happy to see oil prices firming above $30 I don’t think the pain is over. There is still way too much oil sloshing around the world and not enough demand to soak it all up. When the stories of bankruptcies in the oil patch begin to dominate the national media, that will be time to start buying stocks in the energy sector.
  • Large-cap pharmaceutical and biotech stocks have been too beaten up; some great values are starting to present themselves.
  • There is almost zero chance the Federal Reserve will raise rates this year. The greater chance is that they’ll cut rates, although I don’t think that will happen either, at least not in the next few months.
  • When times get scary, and you aren’t sure what to do, it’s ok to do nothing. Outside of some family accounts, in which I bought some stocks during the downturn in January (which proved too early), I have made next to no trades in 2016. And that’s just fine. Sometimes the best trades are the ones you don’t make.
  • When you’re an investor, it’s paramount that you recognize that markets go up and down. There are good times and bad. Up cycles and down cycles. The sooner you accept reality the better. Then you’ll be able to accept the down down with some equanimity and the good times with humility. Investing properly is a marathon, not a sprint.
  • The stock market does not like uncertainty and one of the greatest uncertainties right now is the election. Notwithstanding Bernie’s surprising resilience, I think most people would agree that Hillary will be the Democratic nominee for President.
  • Less certain, though increasingly likely (and I can’t believe I’m writing this), is that Donald Trump will be the Republican nominee. If he sweeps the majority of the #SuperTuesday states tomorrow, his coronation will be virtually assured. And no sane person could really want that to happen. The closer Trump gets to the presidency the more likely the stock market is to be rattled. And that’s not good.
  • All of the Trump supporters out there who think a vote for Trump is a vote for change (“throw the bums out”) and that he will “Make America Great” again, should stop for a minute, listen closely to what he’s actually saying (or more to the point, what he’s not saying) and ask if he is really the person we want leading this country for the next four years. Perish the thought.
  • Tell the important people in your life how much they mean to you. Spend more time with your friends and your kids. Go out and do the things on your bucket list. Don’t wait to drink that great bottle of wine. Life is too short and too precious to waste a moment of it.
  • Give more of your time and/or your money to those less fortunate and count your blessings for how lucky you are; I do every day.

I’m Back – Time To Speak Some Truth

After a long absence from blogging, it’s time for me to return to writing more frequently. Between the upcoming election and the turmoil in the stock market, there is plenty to write about. So let’s get to it.

To start things off, I’d like to comment briefly on the election. I will certainly be writing at greater length and frequency in the coming months.(Disclaimer: I am a registered Democrat with fiscally conservative leanings, so nobody is speaking for me in this process.)

On the Republican side, I must admit that I’m surprised that The Donald has made it this far. I completely discounted, and underestimated, the appeal of this loudmouthed buffoon. That being said, it looks like he’ll stick around for a while. I’m also surprised by the appeal of the religious zealot, Ted Cruz. There is very little hope for a centrist candidate in this field of “how far right can we lean” candidates. Iowa and New Hampshire managed to winnow away almost all of the pretenders; Ben Carson remains the only Walking Dead remaining in the Republican Field. I imagine he will be gone by the end of the month. That will leave Trump, Cruz, Rubio, Kasich and maybe Bush to wage battle into March. My intuition says the Bush will be the next one to go, leaving the Final Four to duke it out over the remaining few months until the nomination.

The picture on the Democratic side isn’t much better. All of the pretenders have already dropped out of the race, leaving the equally unappealing Hillary and Bernie. Notwithstanding his big win in New Hampshire, I still don’t think Bernie has any chance of getting the nomination. Which means a very flawed Hillary Clinton will likely oppose an equally flawed (and potentially very scary) Donald Trump or Ted Cruz in the general election. The prospect of having to choose between either one, knowing that the winner will become President of the United States has me rethinking my citizenship.

So what is a fiscally conservative, socially liberal voter to do? Well, outside of the slim possibility that Michael Bloomberg will run, I honestly don’t know. I’m not optimistic. And I believe that collectively, the stock market feels like I do. I think a lot of the poor stock market action can be attributed to the uncertainty surrounding a presidential election with no good candidates. And if that’s true, we could be faced with months of market turmoil ahead. Add to that the slowing growth in China, the plunging price of oil, currency devaluation around the globe and a relatively weak domestic economy and you have a recipe for stock market disaster.

That being said, I want to be clear about something. It is not time to panic. Things are not nearly as dire as they were leading up to the crash in 2008. Outside of the negative consequences of a too-strong dollar, corporate revenues, profits and balance sheets are in very good shape. It is part of the normal and natural part of the stock market cycle that after a prolonged period of gains that we must experience a year or two of negative returns. Then, when the gloom and despair have peaked, it will be time for the next rally to begin.

So stick with your plan. In the world of virtually zero interest rates, owning a diverse basket of blue-chip, dividend-paying stocks, returning an average yield of at least 2%, is your best way to secure your financial future. So buckle up and prepare for a bumpy ride. I’ll try my best to guide you along the way.

Prepare For Year-End, Not the Fiscal Cliff

There are three weeks left in the year and the world won’t be coming to an end, literally or figuratively, regardless of what the various doomsday prognosticators have to say. It’s impossible to turn on the television or open a newspaper without being assaulted with dire warnings about the impending disaster that is the “Fiscal Cliff”. It’s gotten to the point where I can only watch CNBC is when it’s on mute.

For those of you who’ve been living under a rock, the Cliff is the December 31st deadline after which substantial tax increases and mandatory spending cuts will take effect. The tax increases are largely from legislation passed by President Obama to pay for his health care program along with the end of the Bush tax cuts. The spending cuts were mandated during the last failed deficit negotiations. It’s been estimated that should all of these tax increases and spending cuts come to pass, it will shave 4%-5% from GDP growth, sending the country into a deep recession.

While I’m growing more and more angry and frustrated (if that’s even possible) at the intransigence emanating from both parties in Washington, I honestly don’t think the looming fiscal cliff is really the nightmare everyone is saying it will be. It is HIGHLY UNLIKELY that every tax increase and spending cut will, in fact, come to pass. Some compromises will certainly be made by our leaders in Washington, despite the radical bleatings of the far right and far left.

Whether the deal is brokered in the next two weeks or the next two months, I’m confident a deal will be made that will leave both sides less than happy but will stave off the worst result, which would be simply doing nothing. It is truly in the best interests of everyone, other than perhaps that fiscal terrorist Grover Norquist, to get a deal done. There is simply too much self-interest in Washington, especially in the House of Representatives, where they must stand for re-election every two years, to allow a fiscal calamity to happen on their watch. That’s a great way to get thrown out of office by a pissed off electorate.

So if we’re able to drown out the noise about the cliff, what should you be truly focused on between now and the end of the year? Given all of the current uncertainly, there are no simple answers, but here are a few suggestions for you to ponder:

  1. If you have large unrealized gains, consider realizing some of them this year to take advantage of the low capital gains tax rate, which is likely to rise next year.
  2. If future capital gains taxes aren’t really an issue, don’t forget to match gains with losses where possible to minimize your tax bill this year.
  3. Check your portfolio to see if your holdings need to be re-balanced. Avoid having any one position be too large a percentage of your overall holdings. I generally like using 10% as a maximum position size. Similarly, either add to, or get rid of, positions that are simply too small to make a difference.
  4. If you have a large estate, consider making gifts of up to $5.1 million before year-end to take advantage of the large estate tax credit that expires this year. Unless a compromise is reached, it reverts back to $1 million next year.
  5. Speak with your adviser to make sure your investments are suitable for your financial objectives and risk tolerances. Times and conditions often change, and our investment approaches sometimes must change as well.
  6. If you don’t have a will; write one. If you have a will, but haven’t updated it in more than five years, it’s probably time to look at it again.
  7. If you haven’t already done so, consider giving some of your time and/or money to a worthwhile charity. There are so many organizations out there that desperately need your help, especially during the holidays. So open your heart and your wallet and make a difference for those in need.

Post Election Traumatic Stress Disorder

This is an excerpt from my latest newsletter.

About the only good news these days is that the election is FINALLY over. In my Fearless Forecast edition back in January I said “I believe President Obama will defeat Mitt Romney in a relatively close election as a divided GOP is unable to coalesce behind Romney. The Tea Party is marginalized and the Senate remains in Republican control. Fiscal austerity, job creation and tax policy are the main debate points.” I’d say I nailed that one right on the head. Now, Obama and the lame duck Congress MUST figure out a way to avoid pushing this country over the “fiscal cliff”. Should every possible tax increase and spending cut go through, the 4-5% reduction in GDP would push the United States into a deep recession. But I believe that the self-preservation instincts of our politicians won’t allow that to actually happen. Somehow they will figure out how to avoid the cliff. It’s likely that they’ll compromise on some easy tax increase wins and entitlement cuts then push the harder decisions into next year to let the next Congress fight it out. And the sooner they do this, the better for the stock market, which hates uncertainty.

At the end of the day, I don’t think the results of the election will change things very much. We still have a left-leaning president with no real mandate and a divided Congress with a weakened Tea Party. That’s a great prescription for more of the same where there’s lots of talk and very little real action. I think the best we can hope for, in the short run, is some modest compromise and lots of procrastination. Looking longer term, I truly hope the President looks to his legacy and makes a real effort to articulate a tax and spending policy that makes sense. If he does, the Republicans will be forced to the table and maybe a plan that can save us from becoming Greece and Spain can be shaped. Or not.

What is really sad is how little confidence I, and so many people I talk to, have that our leaders will really work together to shape an intelligent policy that will hurt everyone a little in the short run but help us all in the long run. There will have to be tax increases. There will have to be spending cuts. There will have to be reductions in entitlement programs. Many good programs will have to be cut back or eliminated. People will lose their jobs, especially those in the government.

Unfortunately, standing in the way of what must be done are the special interests and the lobbyists, the ones with the real money and power. These groups have too strong a voice in what happens in this country. It really is no longer about “we the people”; it’s “we with influence”. Maybe someone in Washington will show some courage and leadership and prove me wrong and do what’s right, even if it isn’t what’s popular. I hope so, but I’m not hopeful.

Thoughts on the 3rd Presidential Debate

I don’t know about you, but I’m glad that’s over with. We’re in the home stretch now with only two more weeks until the general election. Then we’ll have two whole years until the machinery cranks back up again for the next one.

Let me start by saying that sitting presidents have a major advantage when it comes to a debate on foreign policy because unlike their opponents, they can run on what they’ve actually done, rather than on what they say they’ll do. And as we all know, it’s much easier to be a Monday morning quarterback than to actually put troops in harm’s way. They also get to call themselves the Commander-in-Chief, as Obama did a few times.

That being said, I’d say President Obama had the slight edge although Mr. Romney didn’t cause himself any harm. I found that the candidates had shared much fundamental common ground and had to look for specific areas in which they differed. They also both spent a lot of time pandering to the Jewish/Israeli vote. Each one claimed to be Israel’s best friend. It got a little sickening after a while.

Romney started the debate trying to take the high road but Obama quickly went on the attack, after which Romney retorted that “attacking me is not an agenda”. I thought that was a good line on his part. I thought Romney also made a great statement when he said that it is America’s role in the world to defend freedom and promote the principle of rights, freedom, etc. and that we must be strong to lead. His other good soundbite came when he said “America has not dictated to other nations, it has freed nations from dictators”. I wonder who wrote that for him?

Obama blamed Romney for “wrong and reckless policies” and tried to associate him with Bush and Cheney, which is time we’d all like to forget.

Romney said he would pay for his increase in the defense budget by eliminating Obamacare and other (unnamed) unnecessary programs. Obama rightly pointed out that the math simply didn’t add up and that we’re already spending more than the next largest 10 countries combined and that he’s increased the budget every year in office. Obama kept pointing out that Romney wants to increase the budget when the military leaders haven’t even asked for the increase. Obama clearly won that argument.

Obama also scored points by rightly pointing out that Al Qaeda is weaker now than when he entered office. That is simply inarguable.

I also loved it when Obama quipped that Romney kept “trying to airbrush history” when referring to Romney’s position on letting Detroit go bankrupt during the financial collapse in 2008. The speechwriter who came up with that one should get a raise.

They each went on to talk tough about China and what they’re doing or what they’d do to bring big bad China to heel. The reality is that there is little they can do or will do. We cannot dictate economic policy to China as they are our largest creditor and our largest supplier of goods. We’re lucky China continues to trade their goods for our declining currency.

Again, no new policies or character traits were revealed. Each candidate stuck closely to their well rehearsed platforms and tried whenever possible to steer the discussion back to the domestic economy and their rivals failings. It was decent theater; nothing more.

Before I finish this I’d like to share an interesting theory being discussed today on CNBC as the market plunged almost 250 points. There is a thought floating around that a win by Romney would be bad for the stock market because he would likely replace Fed Chief Bernanke with someone less inclined to continue the current policy of quantitative easing. And if that’s the case, that could precipitate a dramatic plunge in the market as the punch bowl will have been taken away. I’m not sure if this is a valid premise or not, but it’s food for thought.

Thoughts on the 2nd Presidential Debate

Wow. That was more fun than the desultory first debate. Both candidates came out swinging. I thought President Obama did a much better job, and not just by showing more energy and more fire. I thought he was more articulate and passionate when describing his vision, and he more clearly laid out the differences between he and Governor Romney. Indeed, I thought we was simply more Presidential. Here’s what I came away from the debate thinking:

I simply can’t listen to Romney drone on any longer about his “Five Point Plan” and his ridiculous boast that he’ll create 12 million jobs in his first four years in office. It’s just too preposterous to be credible. Even less likely is his claim that he can balance the budget in four years while cutting trillions worth of taxes with offsets only in certain entitlements and deductions. The math simply does not work.

Romney attacked Obama for price increases at the gas pump over the past four years. The fact is, as Romney knows all too well, that market forces create prices, not the government. And Obama correctly pointed out that prices were much lower when he took office because of the financial collapse. Shortly before that, prices were equally high.

Romney was absolutely correct when he pointed out that the middle class has been hit by rising prices and falling real incomes. But it simply isn’t possible to eliminate all taxes on interest, dividends and capital gains for the “middle class” (however that’s defined). That was simply pandering. Obama, on the other hand, stuck to his message that he wants to raise taxes on the top income earners to help pay for tax cuts for that nebulous “middle class”. I wish someone would define that group for me. And explain how the middle class is the same in Nebraska as it is in San Francisco. I also wish the President would wake up and realize that increasing taxes on the top earners won’t even make a dent in the deficit. Only broadening the tax base, by increasing jobs, will do that. And raising taxes does nothing to help create jobs.

Both candidates evaded clear answers to the questions on women’s pay, immigration and guns because they feared any honest answers might offend their bases. How anyone can morally oppose strict regulations on the sale of automatic weapons is beyond me. Immigration policy is difficult but I believe that it’s in the greater good of the country to welcome productive people to this country and allow them to work. And I think Obama handled the question on Libya forcefully and with just the right amount of indignation.

One topic that was not addressed was the issue of women’s reproductive rights. I hope that this is raised in the final debate as the candidates should be compelled to state clearly their positions on this important issue.

Finally, when asked about his last four years, Obama was clear and concise when detailing each of his accomplishments and the promises he’s kept. Romney was equally cogent in his description of those areas where Obama didn’t keep his promises and where he has “failed”, most importantly with an economy that he grown at an every slower rate over the past three years. That might be the most damning argument against Obama at this point.

Ultimately, I’m not sure this debate will change anyone’s mind about who they’re voting for. I think what it likely did was simply make their positions more clear. And the reality is that much of what happens in the  economy is simply beyond the control of our Chief Executive. Market forces dictate the ebb and flow of the economy, and those forces are not quick to change. So I think we are left to vote on moral, or conscience, issues.