Desperate White House Lives

From what I've seen of the new Football Sunday version of West Wing it should be renamed West Wing Lite. This is barely a shadow of Aaron Sorkin's West Wing with its clippy, play-like dialogue and ripped from the Washington Post story lines. This show isn't even up to the standard being set by ABC (yes, Disney's ABC) with Commander in Chief, which is also well below Sorkin's standards. But I guess such is the life of the boob tube. Devolution is the order of things. Commercials take up an increasing percentage of broadcast time, production quality has generally declined, and so-called reality (not really) dominates. Thank goodness for books and, if the brain isn't functioning or you just want that Zen moment, DVDs.

What is Google (GOOG) Worth?

This is a very good company in a fast moving, rapidly changing and, therefore, highly risky sector. Assuming it can sustain rapid growth for the short term, then it is worth a lot of money per share, but how much? Is it worth its current price of about $350 per share? Is it worth the $450 that Lehmann has indicated? Or is it, as a discounted cash flow approach would indicate, worth somewhere between $200-$250? And this latter estimate assumes that Google has no more risk than Microsoft. If the risk is higher than Microsoft, then Google shares should trade in a much lower range. In any event, this is an overvalued stock, but not necessarily a bubble. As indicated in an earlier post (and thanks to Dale for pointing this out), Baidu is a real bubble stock of the present. Still, anyone paying current prices for Google are running a high risk of losing their money, even if the company continues to rock. Perhaps these investors have simply forgotten that these prices depend critically upon a long term future of positive cash flow growth stretching far beyond their own lifetimes and into a future in which technological change can hardly be predicted, but seems likely to create some serious challenges for companies like Google (and Microsoft, for that matter).

Doubled Position in Pfizer

The PFE drop has provided a nice opportunity. My only hope is that the market as a whole doesn't collapse. Based on a valuation range of $28-35, using current numbers, $21.25 is just too good to pass up for a company with a long history of generating positive free cash flow.

In this case, I see no reason to hedge, although I will sell covered calls, limiting the upside but reducing the portfolio risk.

A Crack in Civil Society

The decision of the Republican-led Congress to protect gun manufacturers (including our own Massachusetts' firms) from litigation indicates that these politicians do not understand civil society. The right to litigate is fundamental to civil society. Instead of taking the law into one's own hands, we evolved into a social arrangement whereby disputes (including charges of harmful behavior) are decided upon according to the rule of law, within appropriate court room settings. By blocking the right of citizens to litigate (and to collectively, through the court process, determine the validity of claims), the Congress is sending a message that citizens who have suffered harm should, instead, take the law into their own hands. Duels are not legal, so that's pretty much out, too, but there is nothing to stop an aggrieved party, with no other alternative, from getting his or her hands on one of those guns and then shooting the executives he or she thinks is responsible for the harm. Without the right to sue, this alternative becomes a more likely response.

I should also point out that this set of congressional leaders are also cheery picking who they want to protect from litigation, which has all the appearance of more cronyism. They are not, for example, protecting internet service providers or telecommuncations companies from litigation related to unlawful use of their networks to download pirated software, movies, music, etc. Instead, they're trying to protect industries that have given them lots of $$$ and other perks. If they genuinely wanted to stop litigation (which I do not think is consistent with civil society, as indicated above), then they should attempt to pass industry neutral legislation.

BOT 1000 shares of PFE @ 21.92

This looks like a definite undervalued equity, despite the recent earnings announcement and withdrawal of guidance. PFE was already trading down because of concerns and it looks like the slowdown in earnings (and, more importantly, cash flow) is more than baked in this cake (was already baked in at higher prices). Over 100 million shares of PFE traded today.

Harriet Miers and the Right's Distrust of Bush

On the other hand (see my earlier post on the Grand Ayatollah), the growing opposition by those who would probably self-label as "the Right Wing" may indicate some cracks in the iron support for Bush, as spiritual father. Have they stopped trusting him or is this a sign that the leadership of the so-called conservative movement may be divided about Bush's continuing utility and his servitude to their causes? They may be afraid Bush has strayed off the plantation. Bush, on the other hand, has called to his faithful to support him, pointing out that Miers is another hard-core conservative evangelical Christian (nod, wink) and, therefore, like himself, a true believer. Get down on your knees and pray for her confirmation!

I still think she will be confirmed, by the way (although the number of people trying to dig up some dirt on her just increased dramatically and now includes some pretty nasty folks, who have a long history of finding or manufacturing dirt when their political interests are served by doing so).

Bush: Our Grand Ayatollah?

One of the interesting aspects of the growing fusion of politics and religious zealotry in the U.S. (Actually, it isn't all that new and was the foundation for politics in the slave-marred southern states where demogoguery was standard operating procedure for politicians) is that it is not considered culturally appropriate to criticize religion, so linking religion and politics provides a sort of shield for all sorts of insanity. Bush's actions are not political, but spiritual. His beliefs are not political, but spiritual. In a way, this is the most insidious form of political correctness in U.S. culture. By branding himself as an evangelical Christian, Bush insulates himself from a lot of potential criticism that his administration is neither moral, nor consistent with either the spirit or the most common interpretations of the teachings of Jesus. As long as Bush says he is an evangelical Christian and wears this as a badge granting him supernatural political authority, then anything he does becomes consistent with his "deeply held" beliefs. It's a lot of hooey, of course. I'm quite sure that Bush is NOT all that devout. The level of corruption in this administration and its willingness to enrich a handful of companies, such as (yes!) Halliburton, is hardly a sign of spiritual purity. I would be more willing to believe the rumors that he's taken to drinking again than that his actions are guided by his spiritual beliefs (not that the latter would necessarily be a good thing! --- a real religious zealot may be more dangerous than a political hack pretending to be a religious zealot). The problem is that by pretending to be our version of the grand Ayatollah, he places himself above scrutiny, particularly by those who have bought into his branding (the genuine zealots out there who see Bush as Grand Ayatollah and who become enraged at any criticism of their leader --- what politician wouldn't want a core of supporters who are unquestioning of his motives and actions?). It's clever marketing, that's all. The best thing, of course, would be to keep religious beliefs off the political table. It is a personal issue, not something to be used to buy votes. But tell that to Karl Rove.

Viacom buys ifilm

Viacom's MTV division has acquired ifilm.com, a web-based source of video (much of which is free). The struggle over control of Cyberspace continues.

China's Space Program: Another Step in the Modernist Vision

The modernist Marxist leadership in China has pushed its modernization program to a new level. They have announced an ambitious program of space development that includes a space station and a manned flight to the moon. The roots of the modernist vision that guides the current leadership can be traced back to former premier Zhou Enlai, one of the most revered leaders in the post-1949 Communist Party of China (CPC) controlled government. The Maoists were the primary opponents of the modernists, fighting to place "class struggle," rather than the adoption of "advanced" technology, at the center of Party politics and governmental action, but the death of Mao in 1976 was quickly followed by the downfall of the Maoist leadership and the rise of the modernists, led in the early stage by Deng Xiaoping. Zhou had promoted what he called "the Four Modernizations," which remains the foundation of modernist Marxism, Chinese style. The current leadership is dominated by engineers and others with a technological determinist bent. The space program, like the rapid development of other signs of modernity, is critical to making their vision a reality. It serves both as technological driver of Chinese economic development and as an ideological model of the modernist vision of the road to communism/prosperity.

I discuss these issues at greater length in my forthcoming text, Chinese Capitalism and the Modernist Vision.

Asian spice shows promise in combating cancer, other ailments

Yet another reminder that the cures for many human ailments may be out there in "nature" waiting to be found and, sadly, many cures may have been lost as we have destroyed plant species in our push to pave over or dig up the planet. As the song goes, "You don't know what you've got 'till it's gone." Actually, some things we've lost we never knew we had.

Turmeric Story

What Ever Happened to Wesley Clark?

Check out this site to find out:

Securing America

Big Pharma: How Can You Not Like Them at These Prices?

Okay, I know all the criticisms of big pharma. Nevertheless, that's where the legal drugs are and the baby boomers aren't getting any younger. I bought Pfizer and recently Merck (despite the law suits) recently. I'm going to buy more. My valuation model indicates these firms are (on a discounted cash flow basis) among the most undervalued blue chips available. Yes, Virginia, I plan to profit from the behavior of these "evil" doers. (My daughter's first job after college was with Pfizer and I believe many of the criticisms depend upon an essentialist view of these firms --- firms whose creative talent and hard working researchers generate products that really do save a lot of lives.)

Cold and High Energy Prices: Dorothy Should Stay in Oz, Kansas is Going to Get Hit by a Cold Energy Price Twister

People in New England, as well as people in Kansas and any place where winter means bone chilling cold, are going to have their backs against the financial wall due to the sharp rise in energy prices. (CPI numbers came out today and the CPI was up 1.2% in September, a rate higher than any seen since 1980, and with an over 12% rise in energy prices.) I still can't figure out why anyone would have expected anything but higher energy prices after electing and then reelecting two guys with close ties to the oil industry.

Dodged a Bullet?

Tried to buy Refco at a limit of $9.90 but the trade didn't execute. I was planning to couple a long position in the stock with a purchase of Refco May 2006 puts. Trading was halted before I could get my hands on either one. This is an interesting case, nevertheless. Either the company will get financing and pull out of this mess (created, it would seem, by criminal behavior) or my decision to start taking a long position in stocks may turn out to be a mistake. If Refco dies, it WILL have repercussions in the larger market, despite (or because of) all the protestations to the contrary.

Cautiously Returning to the Long Side of the Market

Despite all the negatives, I now suspect that the market has hit a short term bottom and we should see positive movement in the November thru early January period. I will gradually shift back to long positions over the rest of this month, increasing stock holdings on an exponential curve (largest percentage inflow will occur on the final trading day of this month). One indication that this may not be the month of the big one is that more and more of the stock market pundits seem to be turning negative. I don't usually like being on the same side as those guys. In any event, as always, time will tell.

*****If Google and Microsoft are REALLY interested in AOL, then Time Warner (TWX) is a buy. I believe all the hype will result in Time Warner finally getting some value out of this questionable asset. Three cheers for CEO Parsons!!!

The Next President

Senator John McCain wants to be president so badly it must hurt. But I'm not so sure he is the best the Republican Party can put forward. Former Tennessee Senator Fred Thompson has that all important charisma factor and would very likely trounce any of the potential Democratic contenders.

Bill Clinton had charisma and that, more than anything else, is why he was so hated by hard core Republicans. But for the most part the Democratic Party has been charisma challenged in presidential elections. Al Gore and John Kerry were symptomatic of a death wish, if you ask me. I ask again, where is Joe Kennedy when the country needs him. He could beat almost any Republican candidate, except Fred Thompson.

Prediction: Harriet Miers Will Be Confirmed

It's the first Monday in October and sorry to sound like a broken record, but unless Harriet Miers has something negative hidden in her past (that can be uncovered by a docile press or a slightly less docile Congress), then she will be confirmed to the Supreme Court and take over the seat vacated by Sandra Day O'Connor. As with John Roberts, I can see no compelling reason for any senator to vote against her (other than the usual political ones --- voting against Roberts was an exercise in exorcism, pols distancing themselves from any embarrasing decisions or opinions that might come from a Chief Justice Roberts). It looks like we will have a full Supreme Court soon.