San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Thursday, April 5, 2012

There Are Only Three Civil Rights

The front page of today's Denver Post has an article entitled "Bus Drivers Protest Cuts Affecting Poor, Disabled".  The first paragraph of the article says, "Transit workers protested cuts Wednesday in public transportation funding and services, saying getting people to and from jobs and home is a basic civil right."  Now I have heard everything.  Getting preferential treatment for being a racial minority is a civil right.  Getting preferential treatment for being disabled is a civil right.  Getting paid more than the market will bear (minimum wage law) is a civil right.  Getting health insurance coverage from my employer is a civil right.  Getting clean air and water is a civil right.  Getting a college education is a civil right.  And now, getting to and from work is a civil right.  Where will it end?
The blatant self-serving nature of the transit workers assertion that everybody has a civil right to be transported to and from work is truly audacious.  Based upon my limited experience with bus drivers, I have found that they do not really care very much about the people they transport.  Bus drivers are usually surly, nasty, mean-spirited, and clearly unconcerned about their customers transportation needs.  Now, all of a sudden, when their income might potentially be reduced, we discover that they have believed all along that everyone of us has a civil right to the services they just happen to provide.  How convenient.  A little contemplation about civil rights is in order.
There are only three civil rights in the universe:  the right to life, the right to freedom/liberty, and the right to my own property.  Our founding fathers were smart enough to realize this truth and they specifically limited the power of government to protect these three things.  The principles upon which this country is founded firmly declare that the state has the responsibility to protect the lives of its citizens.  The state also has the responsibility to ensure our freedom.  And, lastly, the state has the responsibility to make sure our property is secure from depredation and theft.  Notice how the assertion of these three civil rights amazingly does not require a concomitant duty for someone else to pay for me.  I have life without taxing you.  I have freedom without taxing you.  I have property without taxing you.  Sure, taxes need to be paid to provide for the personnel and infrastructure that will protect our lives, liberty and property, but that is a far cry from asserting that I have a right to force you to pay for my trip to work.
Any activity that is alleged to be a civil right that also requires the coercive power of the state to transfer the wealth/income of one person to another person is not a civil right.  It is an act of theft by an immoral state for an immoral special interest group.  The state can never do something that an individual could not morally do, and assert that it is moral.  I cannot force you to pay for my taxi fare to work, at gunpoint if necessary, and consider that to be moral.  Merely interjecting the coercive power of the state to accomplish the same end does not make it any more moral.  It is still theft.
Other than the three rights enumerated above, all other alleged civil rights that exist in the US are examples of theft.  All other civil rights are nothing more than examples of government hegemony in favor of a particular group over another.  When I am told that a woman has a civil right to a taxpayer funded abortion, I am being told, in reality, that I will be imprisoned for not voluntarily giving my money to a woman who wants me to pay for her abortion.  It is impossible for a woman to have a civil right to something that I get imprisoned for not providing.  In fact, it is impossible for any civil right to exist when taxpayers are imprisoned for not paying the bill.  A civil right only exists when it does not have a cost.  My life is free.  My freedom is free.  My property (other than the cost of acquisition) is free.   If the alleged civil right has a cost that must be born by the taxpayers, it is not a civil right; it is a civil privilege for one group at the expense of another.  Oh yes, and it is also theft.  Oh yes, and it is also immoral.  Oh yes, and it is also very wrong.  Oh yes, and it also goes on everyday, under the name of political action and civic-mindedness.  This is madness.
The belief that I have a civil right to something that you must be forced to pay for is a direct contradiction of the assertion that you have a right to your property.  You do have a right to be secure in your property.  That is an established moral principle.  How then, can I also have a right to your property?  How then, can I have a moral claim upon your wealth/income?  How then, can I use the power of the state to steal your money to pay for my alleged right?  Clearly, I can't. 
I am sick and tired of hearing people assert that they have civil rights I am expected to pay for.  I am sick and tired of their whining. I am sick and tired of the leviathan state intruding more and more into my life to extricate my wealth and give it to those people it prefers. I am sick and tired of politicians immorally pandering to the envy of the electorate in order to get elected, in exchange for the establishment of a new civil right on behalf of a portion of that electorate.  I am sick of the illogical and immoral rhetoric that justifies theft and robbery under the guise of a civil right.  And today, I am sick and tired of hearing a bunch of  hypocritical bus drivers try and cast their anxious desires for job security and higher income in the light of a civil right for a person to get to work. 
We need to stop worrying about our rights and start performing our responsibilities.  We need to stop minding the business of our neighbors and mind our own.  We need to work hard and leave others alone.  Perhaps, most of all, we need to stop using the power of the vote and the state to impoverish our neighbors for our own benefit.  

Wednesday, April 4, 2012

Bad Advice From David Mitchell

I was listening to the radio yesterday when I heard an investment guru by the name of David Mitchell announce that stock mutual funds are terrible investment vehicles.  As I own a stock mutual fund or two, he had my attention.  Mitchell informed me that the mutual fund industry is dominated by Wall Street fat cats who are only interested in lining their own pockets.  In fact, he asserted that mutual fund managers, and the brokers who sell mutual funds, have only one interest in mind......their own.  Then he dropped the ultimate bombshell.  He told me about the "Three Big Lies" that mutual fund managers and brokers have foisted upon the investing public.  Here they are:  (remember, these are "lies", he believes the opposite)
1.  Buy and hold is the best strategy for stock fund investing.
2.  Market timing does not work.
3.  Diversification is important.
Let's consider each of these "lies" in the order it was given:
1.  Mitchell believes that "buy and hold is dead".  He is not the first investment professional to allege this.  Since the two bear markets of the past twelve years, many investment advisers have declared that the time-tested strategy of buying and holding quality stocks and stock funds no longer "works" in our "volatile" markets.  I just finished reading Forbes annual list of the richest people in the world.  Although I did not read the biographies of all the people on the list, I was struck by the fact that almost all of them attained their lofty status via one of two ways.  Many of them became wealthy by starting a business that became amazingly successful.  Bill Gates and the Walton family are two examples of this style of wealth accumulation.  The majority of those on the list, however, obtained their wealth by buying and holding the stock of companies for very long periods of time.  Warren Buffet is probably the most well known investor of this type to US investors.  He is infamous for holding companies for decades. If it is the case that "buy and hold is dead", nobody has told the richest people in the world about it.  Conversely, I did not see a single stock trader/day trader/technican on the list of the world's wealthiest people.  Is it possible they do not really realize the returns they promise?  Mitchell alleges that if I follow his "system" I can realize "triple digit" returns every year, regardless of market conditions.  He also alleges that he has been trading stocks for "over 30 years".  If he has been realizing triple digit returns in the stock market for over 30 years, why is he not on the list?
2.  Mitchell believes that it is possible to time the market.  On his website he talks about the "tools" he can provide you in order to build up your "skill set" that will allow you to time the market.  He alleges that after you have completed his seminar you will be able to predict which stocks will outperform the market, when to move in and out of those stocks, and when to get out of the stock market entirely.  Of course, those who sign up for his monthly advice ($50/mo) will have a decided advantage over those who simply attend the seminar ($100).  By using his system an individual investor will be able to see into the future, predict stock price changes, and become fabulously wealthy trading those stocks.  To predict the future is easy.  To accurately predict the future is impossible.  I predict that Obama will win the November presidential election.  That was easy enough.  I predict that Apple stock will trade at over $500/share on January 1, 2013.  That was easy enough.  I predict that K.J. Choi will win the Master's golf tournament this Sunday.  Simple.  Now I will have to wait and see if my predictions are correct.  If I can see into the future, my predictions will all be correct.  If I cannot see into the future some of them will be correct and others will not.  In other words, I will have the exact same level of success in predicting the future as a person who blindly guesses about future outcomes.  Maybe Mitchell does not realize it but technical market timers, fully armed with charts and sophisticated trading systems, have consistently shown an inability to predict the future direction of stock prices and, thereby, outperform stock market indices.  I have neither the time nor the space to post the data in proof of my point.  Other than anecdotal testimonials, Mitchell's website was conspicuously absent of any hard data proving his claim to be able to time the market.
3.  Mitchell believes that it is possible to predict the future.  It therefore necessarily follows that diversification is not necessary.  Diversification is something people do when they realize they are not omniscient. It is a way to protect a portfolio of stocks or stock funds from the occasional dud.  Since Mitchell is able to know, in advance, what a stock is going to do, there is no reason to purchase other stocks.  All he needs to do is focus on a stock or two, especially if the stock is highly volatile.  That volatility will give him the ability to go both long and short on the stock and thereby make money in both bull and bear markets.  All a follower needs to do is follow his system.  By following the system you too will be able to know, in advance, what a particular stock will do.  You too can purchase or short the stock and make millions!  Diversification is for sissies.  Since he never makes a mistake, there is no reason to use a protective technique like diversification.  The rest of us, who do not live in a dream world, are better off sticking with the tried and true principle of diversifying our holdings.
Mitchell professes to be the "Senior Pastor" of a large church somewhere in the US (I didn't pay attention to his church name or location).  Listening to his radio program made it impossible for me to see him as anything other than another stock market con-man.  He brags about how his stock market acumen has made him so rich he has "never drawn a salary" from his church.  I wonder if all of the members of his church are similarly rich?  I wonder if they have all followed his program and been enabled to retire and pursue other interests?  If not, why not?  Ultimately a promise of annual triple digit returns is simply too good to be true.  And you know the old axiom about that.

Update:  August 30th, 2012

I was listening to the radio again yesterday when David Mitchell came on once again.  I listened more carefully to his promised investment returns.  According to Mitchell, if you follow his stock market investing plan you can turn $500 in to $20,000 in a "couple of months".  Then, once you have that $20,000, you can generate "$4000 to $5000 a month in income" from that seed capital.  That is a monthly return of 20 to 25 percent.  That means he is claiming that his stock market investment plan can realize 250%/year returns, in perpetuity.  Simply put, that is impossible.  It sounds too good to be true because it isn't true.  Nobody in the universe can generate those types of returns on a regular basis.  If you started with $100,000 and were able to realize 250%/year as your rate of return it would not be too long before you would become the richest person in the world.    In fact, if you start with the $20,000 Mitchell wants you to start with, and you are able to reinvest the $4000/month he asserts you will be able to realize in investment income from that $20,000, you would have a net worth of $190 million after ten years, $18.5 billion after 15 years, and $1.81 trillion after twenty years.  If Mitchell has been obtaining 250%/year returns for 30 years on his own portfolio, he is worth more than the Gross Domestic Product of the US.  I don't think that is very likely.  Do you?

Update:  January 31, 2013

There is an additional update to this post found in the January 31, 2013 posting to this blog.  It is entitled "David Mitchell Eschews Diversification" and it goes into greater detail about Mitchell's fallacious position that the practice of diversification is an impediment to your portfolio's total return.

Update:  May 31, 2013

For those who are interested in more information about the NuVenture on Wall Street program, there is an additional update at May 31, 2013.  It is entitled "David Mitchell's Big Boys Theory". 

Update:  July 31, 2015

A graduate of the NVOWS program by the name of Hamilton Collins has posted a long defense of the program and David Mitchel on the January 31, 2013 post to this blog.  I decided to comment on his comment in a separate blog which can be found here.  The new post is dated July 31, 2015.  Looking back over the dates for these blog posts I see a lot of "31s."  I don't know if that is a sign or not.


Tuesday, April 3, 2012

Let Us Admit We Have Abandoned The Constitution

I heard several news reports yesterday, on both the radio and the television, which informed me that President Obama had given a speech in which he affirmed his belief that the Supreme Court will uphold Obamacare. In all of the reports it was specifically stated that "President Obama's healthcare legislation" would likely survive the examination of the Supreme Court for constitutionality.  The mere fact that a news report would be delivered using those words indicates how far we have fallen in our understanding of the Constitution.  Did you see it?  What is wrong with the above paragraph?
Article II of the US Constitution describes the powers that are assigned to the Executive branch of the Federal government.  Section 1 describes how the President is to be chosen.  It says nothing about any type of power.  Section 2 describes the actual powers of the presidency.  The President shall be the Commander in Chief of the military forces.  The President has the right to require a written report from his military commanders.  The President has the right to issue pardons.  He has the power to make treaties with foreign countries, with two thirds Congressional consent.  He has the power to appoint Ambassadors and Supreme Court Justices, with Congressional consent.  The President has the power to "fill vacancies" in positions that would normally be appointed by Congress when Congress is not in session.  Lastly, the President has the power to convene Congress and address the State of the Union.  That is it.  Nothing more.  According to the Constitution of the United States, if the President attempts to do anything more than what has just been described above, he is in violation of his vow to support, defend and uphold the Constitution and should be impeached.
Now do you see what is wrong with the radio and television reports?  The media assume that Obamacare is a piece of legislation that belongs to the office of the President.  Obamacare is almost always described as President Obama's legislation.  Obama himself takes credit for the congressional action.  The Constitution is very clear on this matter.  Article I, Section 1 of the Constitution states, "All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives."  It could not be any more clear.  All legislation comes from the Congress.  No legislation comes from the President.  Why, therefore, do we persist in this unconstitutional belief (and practice) that the President can enact law?
The only political candidate that should be legally allowed to campaign on the particular type of legislation he plans to introduce in Congress, is a candidate for Congress.  Any person who is campaigning for the office of the President, who also campaigns on promises of future legislation that he has no authority to enact, should be immediately banned from the election.  The President has no Constitutional right or authority to propose or create any legislation whatsoever!  As a member of the Executive branch of the Federal government the only authority the office of the President has in regards to legislation is the veto.  In the case of the veto it is the job of the President, as the supreme executive, to veto any legislation that he deems to be unconstitutional.  Our founding fathers, in an attempt to create a system of "checks and balances" between the various branches of government also empowered the Supreme Court to declare legislation to be unconstitutional.  In all cases the supreme rule of the Constitution was to be enforced.  In all cases, the final authority of the Constitution was to be recognized.
Look at where we are today.  Candidates for the office of the President spend almost their entire campaigns promising different special interest groups various new laws that will transfer wealth to those who vote for them.  It is inconceivable that a candidate for the office of the President would say "I promise to enact no legislation during my term of office, and thus fulfill the specific, precise terms of the Constitution I swore an oath to uphold."  Besides the fact that political candidates will refuse to exercise constitutional restraint and limit their promises to the people, the people will hear nothing of it as well.  The people want candidates that promise them the moon.  The people believe in the power of the President (actually more like a King, or even worse, a god) to enact legislation that will solve all of their problems.  The people ignore the fact that the Constitution does not empower the President to perform the functions they want him to perform.  Everybody ignores the Constitution.  Everybody ignores what is theoretically the "law of the land".
So I propose we fess up.  I propose we do the unthinkable and say what we really think.  I know nobody ever does that.  I know we prefer to pretend that we are law abiding citizens.  I know we prefer to pretend that we admire and follow the Constitution.   But, let's give up the fiction, shall we?  Let us make the following confession:  I have abandoned the Constitution of the United States.  I have no intention of doing anything it says.  I have no intention of holding any politician to the terms of the Constitution.  My eternal security is found in men who promise me things they can never deliver.  The President is my shepherd and, as long as my guy is elected to the office,  I shall not want.  My political goal is to elect as many rulers as I can who will use their political power to give me what I want.  I do not care about my neighbor's property or the fact that it will be stolen and given to me.  I only care about myself.  So Be It. Amen.

Monday, April 2, 2012

An Amazing First Quarter Goes Uncelebrated

The S & P 500 finished the first quarter of  2012 with the biggest gain since 1998.  The index was up almost 12% for the quarter.  So, where is the celebration?  When the stock market rose by 12% in one quarter of 1998 we were greeted by headlines about how we were in a new era where stocks would realize 20%/year   returns for the rest of our lives.  Instead, here are the headlines I read today:
  1. Popular investor Marc Faber declares that "massive wealth destruction" is in our near future.
  2. Dallas Fed President Richard Fisher declares that there will be "no more jet-stream for investors" as he seeks to guide the Fed to lower inflation.
  3. An article on cnbc.com declares that stock market analysts have concluded that the stock market will "pause for breath in the second quarter".  
  4. Two articles by msn.com's Jim Jubak are entitled "Three Picks For A Shaky Market" and "Three Big Risks That Could Derail The Rally".
  5. Also found at msn.com,  Bill Fleckstein has recently penned two articles entitled "All Roads Lead To Inflation" and "A Rally Built On Fairy Tales"
Meanwhile, anybody who is bullish on the stock market is disparagingly described as a "perma-bull", while those who have been permanently fixated upon the belief of an imminent stock market crash are given a free pass when the market continues to climb.  As I write this the stock market (as measured by the S & P 500) is up 110% in a little over three years.  Furthermore, the stock market is now only 10% below its all-time high set back in October of 2007.  So, where is the party?
I have learned a few things over the years.  One of the things that I have learned is that human beings have a propensity to believe that tomorrow is going to be just like yesterday.  Another thing that I have learned is that human beings have very short memories.  These two things combine to make most humans highly ill-equipped to predict the future. 
In the last twelve years, investors in US stock markets have experienced the second and third worst bear markets in modern history.  Not surprisingly, this reality has led many investors to the belief that, since tomorrow will be just like yesterday, the markets are poised for another huge drop.  Since most investors have forgotten the 20%/year total returns they realized in stocks in the 1990s, they are incapable of looking to the future and seeing any stock market returns in excess of a measly couple of percent per year.  The belief that the next twelve years are going to be exactly like the last twelve years, and nothing like the twelve years prior to 2000, is a pretty ridiculous belief.  It is a firm conviction in the minds of many that we are doomed to lackadaisical long term returns in stocks.  That conviction is firmly based upon nothing but emotion, negative bias hindsight, and conjecture.
What does the future hold?  I have no idea.  When stock market gurus talk about the "foreseeable future", I laugh.  How far into the future can they see?  If they really can see into the future it would not take long to become extremely rich.  I would only need to be able to see a couple of hours into the future.  Then I could go to Las Vegas and become a permanent fixture in Caesar's Palace sports book.  I would make millions betting on sporting events.  Good or bad, I have no ability to see, for even a millisecond, into the future.
What I do know is that the stock market always goes up and down.  I know that when measured in terms of days, weeks, months, or years, the stock market has historically realized a positive return 67% of the time.  Measured in three year periods the stock market is up 85% of the time.  Measured in five year periods the stock market is up 95% of the time.  Measured in ten year periods the stock market is up in all periods but the one ending 2010.  Without being able to see into the future I can reasonably conclude that the stock market is a pretty good place to invest for the long term.  I am celebrating a good first quarter.