Below are 10 random thoughts you might find interesting.
1) Last weekend’s Boston Globe had a big story on Foxwoods, the Connecticut casino complex that began as a bingo hall in 1986 and has grown into the largest casino in the world. Owned by the Mashantucket Pequot Tribal Nation (and creditors), the casino is struggling to deal with a $2 billion debt load. It’s laid off more than 700 employees in the past year (6% of its workforce), but revenues have dropped faster. When the Native American operation began, part of the logic was that the enterprise would bring economic improvements to a population damaged by centuries of oppression. It certainly has. And in an unforeseen bonus to the tribe, should the casino fail to honor its debts, lenders may find that because the casino is on reservation land that is considered, under federal law, part of a sovereign nation, the usual remedies of foreclosing and taking ownership are not available.
2) In an interview with the New York Times last month, when Arlo Guthrie was asked, “Have you ever seen “American Idol?”, he answered, “No, I have never watched it. But I’m thankful we’re living in a world where we can actually afford to waste your time. What a great thing that is.” I’m thankful for that, too, but I often think people should spend a little more time thinking.
3) For example, I sincerely think a tax on soft drinks, and eventually other junk food, is the best way to fix America’s weight problem. High cigarette taxes, combined with public education, have dramatically reduced smoking and the same tools can work to tackle obesity. Step # 2 is to eliminate the government corn subsidy. Today, the Federal government spends $40 billion to subsidize corn growers, so that corn syrup can replace cane sugar. But because high fructose corn syrup doesn’t satiate hunger, the U.S. ends up obese and diabetic. And diabetes costs us more than $200 billion a year! If the movement to tax soft drinks gains momentum, it could spell trouble for Coca-Cola, among others … and KO might be a great short sale. But I wouldn’t short until the chart confirmed my thinking. Right now, the chart of KO looks healthy.
4) What does it mean that 75% of drivers in the U.S. say they’re more careful than most other drivers? Simply that at least 25% of us are delusional.
5) Technologically and economically, I’m excited about the revolutions under way in both the automobile industry and the energy industry. These are both very large industries, so change will be slow at some levels. But because these industries are pervasive, much will change in our lives. And change brings opportunity. I like American Superconductor (AMSC), Echelon (ELON), Maxwell Technologies (MXWL) and UQM Technologies (UQM) and I’m looking forward to the IPO of A123 Systems. (But we don’t advise buying IPOs. We want to see at least a few weeks of trading activity first.)
6) Gold stocks are strong; in fact most natural resource stocks look good. And traditionally, that argues for inflation. But I continue to believe that the deflation of the credit bubble has ushered in a sea change in our habits (borrowing less and saving more) and that as a result, inflation will be a thing of the past for a very long time.
7) It’s a darn shame that so many politicians care more about perpetuating the power of their party and less about the truth, and what’s good for America. Here in Massachusetts, for example, the Democratically controlled state legislature is working to change the law to allow Governor Deval Patrick to appoint someone (it really doesn’t matter who) to fill Ted Kennedy’s Senate seat and vote the party line (especially on health care) until we can have a real election in January. This power to appoint belonged to the governor just five years ago, but the state legislature took it away when it looked like John Kerry might become the next President and Republican governor Mitt Romney would appoint a Republican to fill his seat. Apparently, desire for power trumps ethics and the power of shame.
I believe strongly in education … but I think the National Education Association is one factor responsible the low achievement of our elementary and secondary schools. The union members care more about their jobs than they do about the children. I believe the best teachers should be paid more (everyone in a school knows who those teachers are) and I believe the worst should be replaced. Meritocracy works. (Interestingly, you can’t even discuss this with most teachers because they don’t acknowledge the power and wisdom inherent in market forces.)
9) Here in Massachusetts, this summer brought the warmest ocean water temperatures of my life … and no one can explain why. The calculations involved in understanding and predicting large-scale weather patterns are infinitely complex. But the swimming was great!
10) I never got to eat at Tavern on the Green in Manhattan’s Central Park, and now that it’s closed I never will. But I never had any desire to. Once places get that famous, their value lies not in the food but in the experience of being in a place that’s famous because it’s famous. I’d much rather eat at a smaller place where the owners really care about their food. In the stock market as well, I find the best-known stocks are never the best investments. For example, everyone knows Google, but a far better investment this year has been Baidu (BIDU), “the Google of China.”