Market Commentary for the Week of August 31, 2009

I write incessantly about the need to take emotion out of the investment process, about the superiority of science over hunch, fundamentals over guesswork. To a certain extent I am correct, although I acknowledge that no one discipline is absolute, no point of view absolutely foolproof. History, and experience, have shown me, though, that lack of discipline, any discipline in particular, is catastrophic when trying to build portfolio capital gains. In fact, lack of discipline is deleterious to almost any endeavor in life. My background in sports and entertainment has demonstrated that for me.

But I am concerned that the rhetoric and motivation on Wall Street, and Main Street, has shifted far from a logical, fundamental debate to one driven by ideology and greed. Hey, doesn’t greed go with Wall Street? Maybe, but it seems that where profit and money are concerned the conversation goes only one way. And that’s a shame.

One of the most seminal moments in my life occurred in 1968. I remember the inspiring photo of the first “earthrise” taken by the Apollo space mission. In it, we on earth got a glimpse (photographed by man not machine) of the fragility of our own planet as it hung tenuously in space. From that photo came my recognition of the unity of continents, people, countries. Despite our differences we (mankind) all occupied the same vehicle as it hurled through space and time. All that history has ever recorded about us, occurred on what was then dubbed the “big blue marble.”

Why then, in our search for the perfect portfolio, the perfect stock, the next “greatest idea” do we couch those discoveries with the burden of being jingoistic: mine, not yours; ours, not theirs? Is medicine a right or a privilege? Is ownership of technology a profit decision or a matter of making the globe better? While I recognize that these are not either/or issues, nor as simple as I pose them, they are questions to which common response seems to be gravitating toward “mine, not yours.”

“Take back our country” one hears. From what? From sharing the bounty and good fortune that enables many to live well, others not so well?

“Necessity is the mother of invention,” not greed. Rather than “taking,” perhaps profit and innovation derive from “giving,” from finding ways to uplift the globe, sharing its resources and opportunity for all members of the trip. Why not search for profit while aspiring to a higher ideal at the same time?

Renewable energy, abundant agriculture, life-saving medicines, innovative technology, safe homes, secure roads, clean and plentiful seas: these are not only goals but profit machines, no matter which side of the debate you fall on.

Writing letters to your congressmen, or President, decrying the inequity of having to pay for others less fortunate than you, alienates the writer from the other side, those who have less. Is the tax code inefficient? Maybe. Do we need legislative changes to appease the inequities? Perhaps. Does separating oneself from the “other half” solve the dilemma (other than one’s own)? In my opinion, no.

Portfolio management is indeed about science, methodology, point of view, and profit-making. It is also about good sociology and moral conscience. My work seeks to define a top-down topography which is opportunistic in its search for value-added, and long term capital gains. And, we have done an extraordinary job accomplishing those dual purposes.

Be grateful that were you ever to need the healthcare we are all debating now, you have access and opportunity. Be mindful of those less fortunate.

Be grateful for your coffee and cereal in the morning. Be mindful some have not.

Be grateful you have the financial means to afford this “esoteric discussion.” Be aware that some cannot.

Our time on this “blue-marble” is finite. So too are our resources. Do something to make the ride better.