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June 29, 2006
The Washington Post Goes Litigator
My friend Peter Baker is following the President around on the campaign trail. This morning's report from a Missouri fundraiser for Senator Jim Talent contains this technically accurate but deeply dishonest paragraph:
Sharpening his rhetoric as the midterm congressional campaign season accelerates, Bush offered a robust defense of his decision to invade Iraq even though, ultimately, no weapons of mass destruction were found, and drew standing ovations for his attacks on those who question his leadership of the war or the fight against terrorists.
The only merit in this sentence is that it so neatly encapsulates the MSM's storyline on Iraq and the politics surrounding it. And the only thing that allows the Post to publish something like this without abject shame is their years-long ostrich-like refusal to publish anything that doesn't fit.
Saying that, "Bush offered a robust defense of his decision to invade Iraq even though, ultimately, no weapons of mass destruction were found," is like saying that, in 1778, Washington defended the Revolution even though there was trade with Mexico, meaning that George III hadn't quite, "cut off trade with all parts of the world."
Never mind that they have been found. Never mind that the WMDs were merely one reason for going to war in the first place. Never mind Iraq's running a pre-war bed-and-breakfast for Islamist terrorists. Never mind the Duelfer Report's findings that Saddam was planning to restart his WMD production after his hos on the Security Council got sanctions lifted. The war was all about WMDs, and the fact that we haven't found Castle Anthrax makes it a failure.
The second half of the sentence is no better. The President takes hits all the time for his "leadership of the war." What he's objecting to here is something very specific - the attempt by politicians to run the war by PERT chart, or at least to score points by appearing to try to do so.
The Post is trying to narrow the focus of the war to a point it can pretend it's won, while broadening the President's presumed response into Ray Bolger.
And no Post political story about the President would be complete without the obligatory Bush-as-Rove's-sock-puppet reference:
In his appearance in this St. Louis suburb, he said directly that some Democrats want to surrender, adopting the more cutting approach of his senior political adviser, Karl Rove.
The fact that this is exactly the take that Congressional Republicans, in one of their few recent moments of lucidity, used exactly the same language is of no moment whatsoever. Pay no attention to the man behind the curtain.
This is how the MSM and the Post will make use of the narrative they've established.
June 28, 2006
No Surprise Here
Your results:
You are Spider-Man
| Spider-Man |
| 80% | | Green Lantern |
| 70% | | Hulk |
| 70% | | The Flash |
| 60% | | Superman |
| 60% | | Iron Man |
| 50% | | Supergirl |
| 45% | | Batman |
| 45% | | Robin |
| 42% | | Catwoman |
| 35% | | Wonder Woman |
| 20% |
| You are intelligent, witty,
a bit geeky and have great
power and responsibility.
 |
Click here to take the Superhero Personality Test
Hat Tip: Professor Bainbridge
Imersion Educacional en la Ingles
In theory, we're all pro-assimilation. And in theory, even the CEA agrees that Latino kids ought to be learning English. So naturally, the same education professionals who brought you "whole language" and the New Math oppose English immersion programs:
A proposal to immerse students who don't speak English into intense English-instruction classes for a year before they return to mainstream classrooms is not educationally sound and could be harmful to students, educators and critics say.
"This (proposed state constitutional) amendment is one-size-fits-all, regardless," said Sheila Shannon, a professor in the School of Education at the University of Colorado.
At issue is the "Education of English Learners" ballot initiative proposed by a Weld County-based committee, English for Colorado. It calls for placing kids learning English into language classes for a year, without lessons in math, science, social studies or other topics.
After that year, the student would return to mainstream classrooms, said Weld County Commissioner William Jerke, who is leading the initiative effort. Parents of students 10 or older can request a waiver.
...
But there is division on whether those programs are working.
The research on bilingual education, in which English learners are helped in their native language, shows that students benefit in cognitive, language and social development, [CU Professor] Shannon said. Research also shows that it can take an English learner four to seven years to compete with English-speaking peers, she said.
Critics also say such a plan would deprive parents of choices, would leave English learners behind in other subjects and would be expensive.
First, there is always division on whether or not this or that "reform" is working. Good grief, there are even "education professionals" who think that 3+3 equals something else in Africa. Second, the Post provides no arguments in favor of the plan, but uncritically reproduces sounds bites against it. Finally, if anyone over 10 can get a waiver, it's by definition not coercive or "one-size-fits-all," despite Professor Shannon's objections. "One-size-fits-all" is exactly the system we have now - it's just a size that happens to fit Professor Shannon.
As it happens, both the Center for Equal Opportunity and the Lexington Institute have produced studies supporting English Immersion.
Finally, the Post has chosen as an advocate not someone who is sympathetic to English, but someone whose writings routinely deride the "hegemony of English" in the classroom and in the United States as a whole:
The current official English debate illustrates the problem well. Those in favor of official English, or English only, argue that such a policy is in the best interest of all Americans, especially those who do not already speak English. Furthermore, they argue, one language holds a society together and allows communication and trust across communities. Although such a policy would necessarily involve negative sanctions against those who either oppose it or who cannot abide by it because they do not speak English, the arguments in favor of it are promoted and perceived as benign if not benevolent. The negative sanctions necessary to enforce an English-only policy exemplify the symbolic violence that Bordiue talks about.
Immigrants, in our view, are the victims of a colonizing educational process.
If Prof. Shannon were to ask anyone who was outdoors west of the Mississippi on May 1 exactly who's feeling colonized, I suspect she'd get an answer that might move the askee to violence more than symbolic.
This is the expert the Post went to for an opposing viewpoint. Not someone who thinks bilingual education is a better way to assimilate and acculturate the waves of immigrants, but someone who sees it as a Trojan Horse to prevent their assimilation at all.
It took me about 10 minutes to track this down, by the way, even after being misdirected by the reference to University of Colorado rather than the correct CU Denver.
June 27, 2006
The Senate Dems' Campaign and National Security
This DSCC fundraising email nominally comes from Al Gore:
The evidence now makes it hard to avoid the conclusion that George Bush has repeatedly and insistently broken the law and the corrupt Republican Congress has shirked its constitutional duty to hold him to account.
In my view, a president who breaks the law poses a threat to the very foundation of our democracy. As Americans with a stake in the future of our country, we must act quickly and decisively. We have less than five months to win the six seats we need to control the Senate -- and pull our country back from the brink of a constitutional crisis.
"In my view, a president who breaks the law poses a threat to the very foundation of our democracy." He may actually believe this. After all, had any Senate Democrat decided to hold the previous President to this standard, Gore might have had the advantages of incumbency without the disadvantages of guilt by association. He probably wouldn't have even needed to campaign in Tennessee.
This email came out several days after the NYT handed over the details of another intelligence program to our enemies. The fact that "the evidence now makes it hard, blah blah blah" would seem to be an indirect reference to the SWIFT program. That absolutely no evidence - not even in the pages of the Times - has been presented to suggest any illegality or abuse in that program, ah, inconveniences him here as little as elsewhere.
Not one Senate Democrat has called for the discontinuation of any of the Big Three: international surveillance, phone call data mining, or financial transaction analysis. The Senate Dems, at least those in leadership, want the political gain of appearing to defend civil rights while realizing that they'll want those programs at their disposal should they gain power. Yet this doesn't stop the DSCC from sending out fundraising emails like this one all but threatening impeachment.
Of course, the notion of an impending Constitutional crisis is ridiculous. The courts are perfectly capable of resolving the legality of these programs, and there's never been even the hint of a suggestion that the Administration is interested in pulling an Andrew Jackson, or even an FDR (to name two Democratic Presidents) on the courts. Gore certainly has some experience in this area, as The closest we've come to a Constitutional crisis in the last 30+ years is the one perpetrated by him and his friend on the Florida Supreme Court.
It's almost enough to make you think they knew Gen. Casey would be briefing the President on a troop draw-down when they proposed one of their own.
The Denver Post and the Death Tax
Warren Buffett, in addition to his admirable philanthropic endeavors, has also been trying to make sure that the Federal Government continues to be the recipient of your largess from beyond the grave:
The world's second-richest man, Warren Buffett, has asked Sen. Ken Salazar to vote against repealing the estate tax.
Buffett sent a letter to Salazar, D-Colo., the senator's spokesman, Drew Nannis, said. The multibillionaire Monday called on Congress not to repeal the tax.
...
Repealing the entire estate tax now would cost the government an estimated $550 billion to $700 billion through 2010. (emphasis added - ed.)
The Post gives no citation for this number, nor does it consider the additional wealth that will be created by businesses that can, well, stay in business after their owners die. If the estate tax comes back, it will be on estates over $1 million. Most estates over that number aren't just cash sitting around under mattresses. They're in businesses that employ people.
Larger businesses tend to be separate corporations, but the smaller businesses hit here are often partnerships or sole proprietorships that tend to struggle for cash. They would have to sell all or some of their assets just to pay the IRS. In all likelihood, they'll sell to larger companies. Even assuming that everyone stays employed - a bold assumption at best - these transfers concentrate wealth, they don't diffuse it.
The Post also fails to notice that Mr. Buffett hasn't been such a big fan of paying unnecessary taxes himself:
Mr. Buffett’s decision to give away to charity Berkshire Hathaway stock valued at about $37 billion, much of it to the Bill and Melinda Gates Foundation, is the sort of bold move that has made so many Americans admirers of Mr.Buffett. As an avowed supporter of the estate tax, Mr. Buffett could have let the government take its share of his estate after he dies. But just as Mr. Buffett has accumulated his vast wealth without paying much personal income tax, he has found a way to avoid the tax man in this maneuver as well, even writing in his letter to Bill and Melinda Gates that a condition of the gift is that the foundation “must continue to satisfy legal requirements qualifying my gifts as charitable and not subject to gift or other taxes.”
(Hat tip: Best of the Web)
On The Road Again
So for the first time in years, I got back on the bicycle. Not the downstairs bike with all the recorded lectures, but the real bike where the scenery changes.
The motivation? An Inconvenient Truth. No, not that one, silly. This one. I'm hoping to leave some of this gut along Cherry Creek.
Eventually, I'd like to bike into work, so last night, I wanted to see how far I could get in half an hour. Riding along the Cherry Creek bike path, I got to Logan Street, which is just about where I needed to be. Chop another five minutes off that, and the whole thing's doable.
The good news - which is also the bad news - is that I live on a hill in the highest part of town. The same applied to work, where I'm on a hill in the highest part of downtown. This means climbs to close out both rides. But the other good news is that Cherry Creek runs from east-to-west, which is the morning ride. It means the ride going into work, where time is more of a factor, will be easier. And while going home will be almost all uphill, at least it's a gentle grade.
The New Tattered Cover
Needing some exercise, and with the weather at a seasonable 80 degrees, I walked down from the office to the newly-relocated Tattered Cover during lunch.
I can't say I was disappointed, since I really didn't expect all that much. The floor space is half the size of the old store at Cherry Creek. I suppose that brings it into line with the LoDo store, but I always liked the Four Stories of Books! even if it wasn't quite Powell;s. The decor is pretty much the same, just arranged differently and crammed into less space. This leaves less room both for books and for people. There's an artificial barrier right in the middle of the sales floor, the back edge of the Orchestra Pit, which also makes for awkward traffic flow. Maybe it's supposed to make it feel busier, but to me, it just felt more crowded, like the bar that Fred Astaire keeps having to negotiate in Royal Wedding.
The problem with the new location is, well, the location. The new store is at the site of the old Lowenstein Theater, at Elizabeth and Colfax, and it's clearly a whole staircase down in neighborhood, too. The police may just have to open a station there, to respond to all the false alarms from people nervously fingering 9-1-1 on their speed dial. You can't just drop in, have a drink at the Fourth Story, and then wander aimlessly around window-shopping. The old building may have looked a little like a fortress, but the Colfax location is the real deal.
It is right across from East High School, though, so maybe some of the kids there will take the hint and learn how to read.
June 26, 2006
Free Market Reading List
For those of you intrigued by the Free Markets, Free People class being offered by last night's radio guest, Paul Prentice, but who either don't have the time to attend class, or don't have the time to commute from California to attend class, here's the reading list:
Economics in One Lesson, Henry Hazlitt
Between Power and Liberty: Economics and the Law
Free to Choose, Milton Friedman
Economic Fallacies, Frederic Bastiat
Human Action, Ludwig von Mises
Capitalism: The Unknown Ideal, Ayn Rand
The Road to Serfdom, Friedrich von Hayek
The Mystery of Capital, Hernando de Soto
A little light reading for the beach, maybe?
June 23, 2006
Media Alert
Remember, Matt Dunn and I will be hosting Backbone Radio this Sunday night at 5 PM Mountain Time, as John Andrews searches for missing ballot boxes in Washington State.
We'll be talking with Matthew Sheffield of Newsbusters; Rabbi Barry Freundel of Kesher Israel and author of this book; Lance Cottrell of Anonymizer.com, and Paul Prentice of Free People, Free Markets.
Mmmm. Politics and religion. Hear it here.
Worse Than Toxic Waste
Glenn Reynolds argues that telling the terrorists about intelligence programs is like profiting from dumping toxic waste in the river.
I disagree.
I think it's like selling the Soviets the plans for the hydrogen bomb.
These newspapers don't just go after companies who commit fraud or who poison our kids for a fast buck. They're the ones who've been chanting Halliburton-Halliburton-Halliburton as the reason why Dick Cheney took us to war. They're the ones who've screamed from the rooftops about $(fill in alarmist and armageddon-like number here) Air Force toilet seats and hammers. They're the ones who suggest that if we hadn't gone to war in Iraq, we wouldn't have brush fires out west from SunTeXXonMobil-induced climate change.
But faced with a chance to rescue his buggy-whip business model for another week, Pinch Sulzberger will gladly do more damage to his city's safety than all the Homeland Security Budget formulas laid end-to-end.
Maybe Eason Jordan really has convinced Bill Keller than George Bush is trying to kill him.
Whither the ISM?
The Denver Post and Rocky Mountain News continue to ignore the good economic news in the ISM's Regional Reports on Business. The Institute for Supply Management's monthly national survey is one of the most respected and widely-followed economy surveys, covering as it does the expected purchasing and hiring trends, as well as the trailing indicators of price and supplier performance. In addition to the national survey, the ISM also publishes monthly regional surveys, one of which is based in Denver.
For the last two months, the manufacturing survey has been extremely strong. This month, the more violatile non-manufacturing index moved from slightly negative (49.4) to solidly positive at 53.2.
The Rocky gave plenty of space to the unreliable Index of Leading Economic Indicators and the one-week increase in the volatile Jobless Claims, ignoring the decline in the more reliable 4-week moving average.
Personally, I believe we're cresting the economic cycle, but economic news is always mixed. Eliminating the positive while accentuating the negative doesn't help anyone make informed decisions.
The Governor, the Tsar, and the Duchess
So with the Democrats stamping their feet and threatening to hold their breath until they turn - er - blue, Governor Owens found time to meet with them yesterday about the proposed immigration special session. Since the Republicans are backing the governor on this one, the Dems really have no leverage. They'd need 15 Republicans to support their call rather than the governor's and that's not going to happen.
The Dems, in the meantime, sound less than sincere in their discomfort with the Court's decision:
Fitz-Gerald questioned whether the legislature has the authority to overturn a court decision. She said she didn't think it was the legislature's role to rubber-stamp flawed ballot questions.
No word on what she thinks of flawed Supreme Court decisions. In a statement that was in the initial Rocky report last night, but later edited out, Romanoff said that they could spend all summer overturning State Supreme Court decisions they didn't like.
So which is it, guys? You don't have the authority, or you don't like the idea?
Since the call defines the parameters of the special session, Owens ostensibly called the meeting to find out what the Dems wanted included. When they asked to include employer enforcement, he pointed out that, along with a number of other Republican bills, the Democratic leadership had killed this one on a party-line vote in committee. (Committee votes are significant precisely because they're a way of killing a bill without a floor vote that might put vulnerable members on the record with an unpopular position.)
The Rocky's reporting on this was less-than-stellar. Initially, they stated as fact that the governor was considering including Republican bills that the Dems had committee-killed. A call to the governor's press office revealed that that was only Fitz-Gerald's interpretation of the conversation. The governor's point was that the Dems had the chance to deal with these issues, and decided not to, so to come back now with a raft of half-baked ideas smacks of playing catch-up.
The Rocky took out that paragraph in this morning's draft, but reporting Sen. Fitz-Gerald's comments as fact without attribution is just sloppy at best, and credulous as worst.
Former Spook Calls It
In From the Cold had this to say about the MSM's treatment of the chemical and biological shells found in Iraq:
The MSM--if it ever gets around to this story--will likely claim that Santorum and Hoekstra are playing politics with intelligence.
From this morning's Washington Post (buried on Page A10):
The intelligence officials also suggested that they were pressured by Hoekstra into declassifying the study in recent weeks. Hoekstra first sought its release June 15 and June 19 and made the request again giving John D. Negroponte, the director of national intelligence, 48 hours to declassify it, according to a senior intelligence official.
In From the Cold does what the Post declines to - describes the way intelligence now operates that makes such pressure necessary:
As a young intelligence officer, I was drilled that important information should make its way up the chain of command as soon as possible. Apparently, things have changed since I left the business. Information that contradicts prevailing judgements can be ignored, or simply buried on an intelligence website--let the customer find out on his own. If members of Congress want information, simply delay your response as long as possible, and provide data only when someone with enough horsepower (in this case, the HPSCI chairman) demands answers. Then, provide only a fraction of what they ask for.
June 22, 2006
It's Beauprez v. Ritter
Marc Holtzman's campaign came to an end today, like too many other political campaigns of late, in the courts rather than at the ballot box or at the convention.
Elections should be simple things. You campaign. People vote. You count the votes. You see who has more. There are too many damn lawyers in this process since 2000.
Happy 100th To Billy Wilder
Today's the 100th anniversary of the birth of Billy Wilder. And if you think for one second I'm going to try to compete with Mark Steyn on this subject, guess again.
June 21, 2006
And They'll Pass...
...and be forgotten with the rest.
Passed! With an 85, or 213 questions correct, which means I wasted 38 correct questions' worth of study time.
During the break, I went outside, opened up the sample exams, and started missing questions. This wasn't doing my confidence any good, I skipped answering them and just started looking at the answers. One or two of them showed up on the exam, so I don't suppose it hurt.
Now, it's on to the Series 86, for Research Analysts.
UPDATE: It occurs to me that an 85 is probably the 2nd-worst score you can get. If you're going to fail, fail big. The worst score you can get isn't a 0, it's a 69. It's like running down the escalator in time to hear the door-closing bell on the last train of the day. You paid the money, spent the time, and if you hadn't stopped off for the package of breath mints at the newsstand you'd be home by now.
If you're going to pass, on the other hand, either get a maximally-efficient 70, or a maximally-imposing 100. There's decreasing value to each correct answer, until somewhere in the middle the thing turns around and people start to be impressed, probably at 90. Eighty-five is like rushing to make the train, only having to wait 10 minutes on the platform, amongst the winos, breathing stale air. Yeah, you made the train, but you also had time for that snack so you're not hungry all the way home.
June 20, 2006
Media Alert
With John off surveying Washington State wetlands for development, I'll be sitting in the Big Chair this Sunday night, with fellow LPR graduate Matt Dunn, reprising his old role.
We'll be interviewing Paul Prentice, who, much to the dismay of Ward Churchill, will continue teaching a free-market class for credit at CU even as Ward frees up office space.
I'll have a chance to meet my editor at Newsbusters, Matthew Sheffield, as well as chat with the head of my New Favorite Company, Anonymizer.com, who's helping to play Mongol to the Great Firewall of China.
Finally, we'll have a chance to talk with my old rabbi from Georgetown, Rabbi Barry Freundel, on the Modern Orthodox approach to some issues at the intersection of science and technology. He can explain much better than I where and why we differ with our evangelical friends on these things.
You can listen on 710 AM, if you happen to be in Denver or environs, or online at www.710knus.com.
Series 7 Day
Radio silence for a while Wednesday. I'll be taking the Series 7 in the morning, and then taking a conference call in the afternoon.
The Immigration Debate Expands?
The Republican Study Committee of Colorado is encouraging Governor Owens to expand the terms of his special session to include Official English and proof of citizenship for voting & driving.
The politics are obvious - force the Democrats to take unpopular and unwise positions. It'll be much harder for Romanoff and Fitz-Gerald to bury these issues in committee, and virtually impossible for Democrats in close races to vote against them on the floor. Not if they want to be back in January.
Ken Gordon's already on record opposing proof of citizenship for voting and driver's licenses (which act as id for voting). Now he'll have to vote that way on camera. In the campaign ads, they'll put him in front of a Mexican flag.
The only possible downside is that you give away the issue of the Supreme Court by focusing on substance rather than process.
The Morningstar Empire Strikes Back...
...but not very well.
Apprently, the work I helped out on last year has, ah, struck a nerve over at Morningstar, where John Rekenthaler, VP of research, has sallied out to meet the attackers ("In Defense of Style Boxes") in this month's Investment Advisor. He takes the litigator's approach: "my dog doesn't bite, and anyway, that's not my dog." In this case. it translates roughtly as, "style boxes work, because people don't use them the way you say they do; and even if they did use them that way, they'd still work."
While conceding the main research points, Rekenthaler has to distort our assertions in order to deflect them.
Nothing so drastic as investing 100% in a single style grid is required for maintaining "style purity." Even if a portfolio manager were morbidly concerned about adhering to Morningstar’s style definitions, the manager would have much more flexibility than is implied by this study. That is because the Morningstar style designations are averages of a portfolio’s positions, with no minimum requirement that stocks be in any particular grid. Strictly speaking, it is possible, although quite unlikely, that a fund could occupy a style grid without having a single stock of that style type.
...
Finally, every manager with whom we have ever spoken has considered overall portfolio issues when implementing a strategy. So, regarding a strategy’s top-ranked selections as the true portfolio that would exist if the managers disregarded the style policy is not realistic.
And yet, every manager we spoke to, the ones who actually have to manage inside this grid, and to face investors and advisors on a quarterly basis, expressed frustration with the limits that the boxes put on them. Every one spoke of investments foregone becuase it would place them too far outside the box.
Morningstar's use of the average to characterize the fund is also misleading. They speak derisively of Lipper's "Multi-cap" designation, calling it the "junk drawer." where Lipper can store everything that doesn't fit. And yet, the multi-cap funds have outperformed the single-cap funds for a while now.
Lipper also provides a service telling a fund manager when his fund is getting close to changing Lipper boxes, helping them game the system. Whence the demand for such a service?
Finally, these boxes are beginning to take on the air of a regulatory authority. Funds need the approval of their investors to change their stated investment objective. Should a fund drift outside its box, and stay outside its box, there's the risk either of regulatory disapproval or shareholder litigation.
All in all, the world of characteristic-defined funds behaves much more like we say than like he says. The fact that Morningstar shouts, Bart Simpson-like, from the rooftops that, "I didn't do it," hasn't kept them from profiting mightily from that misuse.
The authors’ second claim is that style boxes are not asset classes. According to them, asset classes should be obviously and readily definable entities with widely agreed-upon definitions. However, they point out, style-box grids are defined differently by different organizations. The authors also argue that asset classes should have low correlations with each other. Finally, the authors state that asset classes should have a stable membership; that is, securities should not periodically change their asset classes.
The first and third points, those of the ease of definition and stable membership, reflect the authors’ preferences, no more.
Points One and Three are, at least partially, a way of getting to point Two. I would argue that any of the major indexers - S&P, Morgan-Stanlet, Wilshire, Russel, would agree that they each have useful definitions of "Large" and "Small." But if a word is to be widely used, the various participants should at least be able to agree on what it means. We didn't uncover small differences of opinion, we encountered wholesale overlaps:
Only half of the Morningstar mid-cap stocks were categorized that way by S&P, and a little less than 75% of Morningstar’s small-cap stocks were called small cap by S&P. Over all, there was slightly more than 30% disagreement between the two information services on how individual stocks should be categorized in these supposed "asset classes."
... S&P does not have a "core" category. Among the stocks not in the Morningstar core category, S&P and Morningstar disagree on 20% of the remaining value or growth stocks. That is a remarkably large area of disagreement for supposed "asset classes."
... Fully 50% of the Morningstar "mid-cap" stocks are smaller than the largest "small-cap" stocks in the S&P classification, and a little over 23% of the "large-cap" stocks are smaller than the largest "mid-cap" stocks in S&P.
On point Three, we have no problem with funds and indexers periodically deciding that Amazon or Google no longer qualify as small-cap. But when almost 10% of the stocks indexed drift back and forth over the value-growth line on a regular basis, one doubts whether the classifications are capturing behavior.
The problem is, as Rekenthaler suggests, one of behavior. If the definitions are so fluid that one stock can be put all over the map, depending on which service is doing the rating, and if these various classifications accurately capture the stock's behavior, then perhaps (cough) we really are dealing with a single asset class called, "US stocks."
Rekenthaler argues:
The problem is, asset-class behaviors change over time, enough to confound simple correlation rules. For example, in the first half of the 1990s, the Lehman Brothers Aggregate Bond Index had a 0.60 correlation with the S&P 500. In contrast, in the first half of the current decade, the Morningstar Large Value index had but a 0.39 correlation with the Small Growth index. So, what’s that about bonds and stocks are asset classes, but style grids are not?
Yes, and if you compare the mileage of my grandfather's Studebaker to that of the 18-wheeler Rekenthaler is looking at in his rear-view mirror, you'll conclude that cars today just aren't any more fuel efficient than they were 50 years ago. Comparing bonds vs. stocks during a period of stable growth to stocks vs. stocks during a period of international chaos is like asking to be published in the Journal of Irreproducible Results. We know that small and large, value and growth have some differences in performance. That those differences would be magnified during a decade with several multi-sigma events is hardly surprising. For the record, when we compared the Morgan-Stanley Large Value to its Small Growth from 1992-2003, we got a correlation of 0.672.
Rekenthaler's comparison of Morningstar's Four Corners from the years 1999-2001 is similarly loaded:
Uh-oh. In the most dramatic marketplace in your clients’ memories, the single most critical element in their investment returns was how much money they had in Large Growth style stocks, as opposed to Small Value. And you didn’t clue them in.
No kidding. A sector comparison between techs and industrials, or say, tulip and onion bulbs, would probably show the same thing.
Rekenthaler doesn't tell you whether or not he loaded the deck. Morningstar reworked their classification methodology in 2002, and used 1999-2001 as part of the input to the optimization. Any sane methodology would show similar. But these things matter - the correlations among boxes using the current methodology are much higher going forward from 2002. (Again for the record, Rekenthaler returned my email from his vacation in Japan, but a firm response on this point will have to wait until he's back stateside. Frankly, it was nice of him to reply at all from vacation.)
Look, Rekenthaler's no idiot, and he wouldn't last 10 minutes in this business if he were dishonest. But he's got a vested interest in perpetuating Morningstar's methodology, at least until they can wean themselves from it.
June 19, 2006
Back To The Robed Masters
So with the Fat Lady warming up by singing September Song for the Holtzman Campaign, it's back to the Supreme Court.
A Denver District Court ordered today that Holtzman's name be removed from the primary ballot in 48 hours unless the Colorado Supreme Court decides to hear his appeal.
"There is no evidence or basis in law to set aside or overturn the Secretary of State," ruled Judge Robert S. Hyatt, referring to the secretary's decision more than two weeks ago that Holtzman did not have enough valid signatures to make the Aug. 8 primary ballot.
Because the judge found Holtzman had "absolutely no reasonable probability of success on the merits" of his case, he would suffer no "irreparable harm" by not being on the ballot. Therefore, Hyatt ordered his name be removed from the ballot pending a 48-hour stay.
Of course, I'm not sure I'd put it past these jokers could rule that the 1500-voter-per-district violtates one-man-one-vote, or something like that.
A "New Direction" For Wages?
Let's continue to pretend that the border doesn't exist, while raising the minimum wage!
This is like making the hole at the bottom of the tub larger, while pouring in more water and adding suction at the same time. You're increasing the hiring incentive for US employers, simultaneously reducing their incentive to hire US workers.
Electorally, you get to add numbers both to an oppressed underclass and the idle government dependants. Economically, you get to increase government spending at both ends.
If the Democrats weren't so clearly incompetent, this might actually constitute a plan.
Colorado Pork Pork
Which has the same cadence as, "Chitty Chitty Bang Bang."
It turns out that, over the last 7 years, over $1.2 million of federal money has been spent on something called the Livestock Marketing Information Center, located in a western subrurb of Denver.
The LMIC is a unique cooperative effort between state university extension specialists, USDA economists, industry cooperators and Center staff. Through cooperative efforts and programs, duplication of effort is greatly reduced while enhancing the overall quality and quantity of livestock market information for producers and other decision makers.
The fact that this information is repeated on at least three separate government websites may be taken as either confirmation or refutation of its claims, I suppose. My guess is that if the information's that valuable for producers, they could probably be induced to pay for it. In the meantime, my tax dollars notwithstanding, not all the information collected is public.
That's almost as much as was budgeted this year alone for "Wood Debris Bioenergy Project (Legacy Management)." I thought I had one of those in my house....
Carnival of the Capitalists
June 18, 2006
Radio Links
I was remiss in getting up the schedule for this week's interviews, so here are the links to our guests' websites of interest.
Former Governor Richard Lamm - who, contrary to comments made here, did not appoint most of the partisan justices on the Colorado Supreme Court - is a co-leader of Defend Colorado Now. So much for the Denver Post turning this into a "Republicans hate Hispanics" issue.
Ted Harvey, who helped expose the Democrats', er, discomfort with the results of late-term abortion-on-demand.
John Fund joined us to discuss the Yale Taliban.
Steve Chavis, Communications Director for Promise Keepers.
And Geoff Segal of the Reason Foundation joined us to talk about privatizing bits of government, in particular toll roads.
June 16, 2006
Don't Blame Marbury
At least not according to the Claremont Institute.
A House Divided
The pressures of trying to produce a company report have me tied down, but Amy Oliver of the Independence Institute has pointed out that today is the 148th anniversary of Lincoln's "House Divided" Speech to the Illinois Republican Convention.
Best-known is the opening:
If we could first know where we are, and whither we are tending, we could better judge what to do, and how to do it. We are now far into the fifth year, since a policy was initiated with the avowed object, and confident promise, of putting an end to slavery agitation. Under the operation of that policy, that agitation has not only not ceased, but has constantly augmented. In my opinion, it will not cease, until a crisis shall have been reached and passed. "A house divided against itself cannot stand." I believe this government cannot endure permanently half slave and half free. I do not expect the Union to be dissolved—I do not expect the house to fall—but I do expect it will cease to be divided. It will become all one thing, or all the other. Either the opponents of slavery will arrest the further spread of it, and place it where the public mind shall rest in the belief that it is in the course of ultimate extinction; or its advocates will push it forward, till it shall become alike lawful in all the States, old as well as new—North as well as South.
However, equally important is the closing. Here, Lincoln argues that while a political movement must be willing to accept help from all responsible comers, the leadership of a great cause must be entrusted to those who actually believe in it. Otherwise, it will eventually be betrayed by those who see a way to defend their true interests and values without actually delivering a victory:
Senator Douglas holds, we know, that a man may rightfully be wiser to—day than he was yesterday—that he may rightfully change when he finds himself wrong. But can we, for that reason, run ahead, and infer that he will make any particular change, of which he, himself, has given no intimation? Can we safely base our action upon any such vague inference? Now, as ever, I wish not to misrepresent Judge Douglas’s position, question his motives, or do aught that can be personally offensive to him. Whenever, if ever, he and we can come together on principle so that our cause may have assistance from his great ability, I hope to have interposed no adventitious obstacle. But clearly, he is not now with us—he does not pretend to be—he does not promise ever to be.
Our cause, then, must be intrusted to, and conducted by, its own undoubted friends—those whose hands are free, whose hearts are in the work—who do care for the result. Two years ago the Republicans of the nation mustered over thirteen hundred thousand strong. We did this under the single impulse of resistance to a common danger, with every external circumstance against us. Of strange, discordant, and even hostile elements, we gathered from the four winds, and formed and fought the battle through, under the constant hot fire of a disciplined, proud and pampered enemy. Did we brave all then, to falter now?—now, when that same enemy is wavering, dissevered and belligerent? The result is not doubtful. We shall not fail—if we stand firm, we shall not fail. Wise counsels may accelerate, or mistakes delay it, but, sooner or later, the victory is sure to come.
While others of Lincoln's speeches are better-remembered, coming as they did during the crisis of the Civil War, Harry Jaffa considers this to be the most consequential of Lincoln's speeches.
As Don Fehrenbacher has written, everyone knew that a South that would not accept Stephen A. Douglas as leader of the Democratic Party, would never accept Abraham Lincoln as President of the United States. Yet the South was foolish in what it did. It actually looked at Douglas through the lenses Lincoln had kindly provided them in the debates, in the follow-up of the House Divided speech. Had they abated their demand for a slave code for Territories, they might have elected a President who might have found more certain means of guaranteeing the survival and success of slavery. Indeed, for all we know, slavery might be flourishing amongst us even now. That it does not, we have the House Divided speech to thank.
June 14, 2006
Chopper Chicken
This was one of those mornings I wish I had had my camera with me.
I walked into my office after the morning meeting, looked out the window, and saw the military chasing Jack Bauer as he was whisking that Mexican drug dealer back to El Pais. Only they were already over downtown. And neither one was a military copter. And they were headed more or less straight south for the Financial Center building, which is what I see out of my north-facing window.
Did I mention that they were both well below roof level?
When they emerged from around the other side, the trailing chopper had pulled even, and then, as I watched, pulled around and in front of chopper #1, like the airspace was just I-25 extended upwards. They sat there for a few seconds, with the blades no more than a dozen feet apart, and then headed off to the south.
And I went for a cup of coffee.
When I got back, they were just breaking up from round #2. Chopper #2 retreated back to the northwest, and Chooper #1 once again flew by the Financial center a good six storeys below roof level.
I don't know if there was something wrong with the first chopper that the second guy just had to tell him about, but I suspect that the emergency channel would have been they way to go there. Definitely not pinning him against a major office tower with rush hour traffic down below.
Fortunately, the FAA has a simple 800 number to call to report just such things. Three long voicemail instructions, several selections, and a rec |
