How Will the Election Turn Out, and More Craziness!!!!

With 10 days to go until the 2012 Presidential election, the country stands divided about nearly everything political. Big government vs small government, big business vs unions, pro-choice vs right to life, foreign policy strength vs apology tour, and on and on it goes. However, the reality is one side will win, and one side will lose. The country will still be divided after it has a winner, and the process of governing will be very difficult. In so many ways, every part of the election has become sadly pathetic. From the unbelievable reality each side will raise nearly 1 billion dollars to run, to the farce that is the debates and how little time is spent on them. Throw in a dash of media malpractice and moderator meddling and you just have to shake your head. To top it off, we have the United Nations telling us they are going to check the fairness of our voting process. If I wanted to, I could not make this up. Still, every 4 years our grand country has an election, and we are oh so close to having one, for better or for worse.

Turning to another realm where hearts get broken on a daily basis, the stock market continues to be concerned about poor corporate earnings. Quite a few companies have announced more layoffs, like Kimberly Clark, and Dupont, just to name a few examples. All is rosy in the world, uh huh, which is why these companies are laying off workers. The market is just punishing as any company must prove it is worthy of investment dollars. If not, it gets sold off in a big way. For example, I own a company which had revenues up 38% and profits up 45%, but one small division gave guidance which indicated it would not be operationally profitable. The stock fell 11% that day because of the confusion. I have seen companies raise the dividend 50% and get sold off. Others have profits up 30% and raise guidance, and again they get sold off. Things are tough all over, and the stock market is another place where only the strong survive.


On a personal note, regardless of what happens in the election, I think it is important to focus on the great things about daily life. If you have a loving family and you have your health, you are blessed with a great deal. Neither of the presidential contestants are going to call you to ask you what to do if they win, I would bet on that. Consequently, the results of the election are going to be important, but life will go on, and it is important to maintain a realistic perspective about what really matters. Now, who are you going to vote for?


Money transfers are a huge business, and here is a startup trying to help inform consumers-http://www.businessweek.com/articles/2012-10-26/a-startup-that-aims-to-be-the-kayak-for-money-wiring


Apple is planning a new music service for 2013-http://techcrunch.com/2012/10/26/watch-out-pandora-apples-streaming-radio-service-could-launch-in-early-2013/?icid=wym1&grcc2=9cd03ed9f064903720ea82e6acfa2acf~1351270797765~


Capital allocation decisions are crucial for corporations. Take a look at how B of A is still paying for the Countrywide acquisition-http://dealbook.nytimes.com/2012/10/25/tallying-the-costs-of-bank-of-americas-countrywide-nightmare/?ref=business

Finally, I hope everyone has a great weekend and a happy, healthy, and safe Halloween!!!!

Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charterholder.

Here are some articles written about specific companies by Yale Bock at Seeking Alpha-
http://www.y-hc.com/resources/newsletters/50-seeking-alpha-research.html

Election Thoughts, Earnings Season, and Mobile Growth-

The second presidential debate took place last night at Hofstra University in Utica, NY, and any interested observer was probably a bit uncomfortable. Without question, whether you are a Democrat or a Republican, I would imagine most people who have watched the debates might agree there has to be a better way to inform the public than what we currently have. You have two people who are auditioning for the highest office in the United States, which is probably the most powerful job anyone can have. Under any foreseeable circumstance, these people are going to be strong willed. Interruptions, a lack of respect for the other participant and general viewing audience, and certainly, very little cooperation with the supposed moderator were all noticeable during the first three debates. As a result, there has been a lack of order in these debates. In addition, using one moderator as a filter to ask questions leaves the process vulnerable to questions of partisanship. Why not have a panel of moderators, from say the NY Times, Wall Street Journal, Reuters, Bloomberg, and the debate commission, and have them set up rules for the participants to agree on? Alternative questions, time limits, buzzers, whatever, there has to be a better format than what we have.

Moreover, more time should be spent on subject matter so candidates can properly explain their views about important concerns. For example, Obamacare is a piece of legislation that much time and effort was devoted to. Health care comprises over 15% of the economy. It affects every person in the country at some point in their lives. I cannot recall one question on it, other than in the health care segment in the first presidential debate. How much sense does that make? There are plenty of other subjects which certainly could use an extensive discussion but we are stuck with 90 minutes at a time. There is a reason why we get the fighting and interrupting- because the structure lends itself to a cramped, rushed, talking point oriented, sound bite based result. You reap what you sew- and I would imagine quite a few people are incredibly turned off by these debates.

Regarding the state of the presidential election, anyone who thinks they can forecast how this turns out is engaging in a fools errand. The demographics of the country and the electoral college favor the Democratic candidate. One never knows how these important events play out. Monday night is the next debate on foreign policy and it is moderated by Bob Scheiffer of CBS News. He is a long time veteran of the political reporting class and could do a good job in maintaining an orderly debate. I am sure you will be watching and so will I.

The stock market has performed pretty well as earnings season arrived. The money center and investment banks have exceeded expectations, and anything housing related shows continued strength. One of the reasons why you want to own a diversified portfolio is to have exposure to plenty of different industries. When one goes down, another one goes up, or at least, that is the rationale. During the 2008 downturn, everything went down except cash. Many investors look at correlations to try and structure their portfolios in such a way so they will always benefit from what the market does. In that light, they try to find strongly negative correlated companies or industries with the general market. However, and here is the cruelty of the market, what often happens is your longs go down and your shorts go up, thus negating your attempt to outstrategize the market. The market is not easy, and it is not supposed to be.

We have reached the point of the year where what has worked, will continue to work. What has not performed will get sold off. Now is the time to really focus on companies which have been beaten down which you want to own, for whatever the reason. Good luck in your efforts!!

The mobile area is massive and continues to grow-http://www.bloomberg.com/news/2012-10-17/smartphones-in-use-surpass-1-billion-will-double-by-2015.html

With the housing market booming investors are looking to take advantage of the rebound-http://www.bloomberg.com/news/2012-10-17/private-equity-in-atlanta-after-picking-phoenix-clean-mortgages.html


Facebook has over a billion users and they have a sharp guy running the show. Here is their latest approach to help their business, already a very good one- http://techcrunch.com/2012/10/17/facebook-mobile-app-install-ads/

I hope everyone has enjoyed reading the blog, and has a good week. If you have any comments or questions about the blog, please post them.

Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charterholder.

Here are some Seeking Alpha articles Yale Bock has written about specific companies.