Some will win, some will lose
Some are born to sing the blues
Oh, the movie never ends
It goes on and on and on and on
Some are born to sing the blues
Oh, the movie never ends
It goes on and on and on and on
A couple of things caught my eye this week, and they generally fall into the broad category of morality. The first, and maybe the most interesting was a brief clip on ABC's World News Tonight (http://abcnews.go.com/WNT/video/science-monkey-morality-human-link-similarities-evolution-12299947 ) that shows that even animals have morals. Morals are evolutionary, groups that work well together survive. Those that look out for themselves or a small segment of the population ultimately disappear. Morality runs deep into the human psyche.
Bailing out wrongdoers at the expense of the innocent has always been thought of as immoral, a crime against nature. It is this simple truth that is at the heart of the millions of innocent who are being forced (not asked) to bailout the hundreds who took on excessive risk and failed. This is where the anger comes from. When Federal Reserve Chairman Ben Bernanke takes it upon himself to bailout these troubled institutions, it doesn't matter if his gamble is successful or not, the larger issue is the moral hazard. We should not celebrate the successful IPO of General Motors, it was immoral to save them at the expense of the innocent. We should not celebrate the fact that Citigroup, Bank of America, JP Morgan, etc. are all larger and more profitable today, bailing them out was immoral. Unfortunately, immoral behavior is alive and well at the highest levels of our financial system. Until we who are being forced to bear the risk stand up to those who take the risk, and say, "No, you failed, you don't get to play again," then the morals will deteriorate and the anger will grow.
This affront to morality can also be seen playing out in Europe, where the frugal Germans are being asked to foot the bill for all those nations who were very busy living beyond their means. They are being told that if they let Irish/Portuguese/Spanish banks fail then the German banks that lent them the money might fail. Again, the innocent millions being forced to bailout out the risk takers. The risk-takers are not even being asked to take a haircut. Immoral.
On the subject of morality, we could also talk about WikiLeaks, the Presidents Deficit Reduction Committee, the unfair and inconsistent rulings from the NFL's Roger Goodell, and even the two perfectly healthy young lady's who walked off the show "Survivor", but I'll keep it short this week.
The beautiful thing about morals being deeply engrained in our psyche is that they are very hard to cast aside. Eventually, society stands up to the immoral and says enough already. "Don't stop belevin', hold on to that feeling."
Change in Asset Allocation:
We have been very nearly fully invested for several months now, but have recently moved our target weight in US Fixed Income to Neutral.
4th Amendment Wear (Printed in metallic ink):
My new favorite Christmas gift for all my frequent flyer friends out there; what better way to get your message across.
B
e careful out there, and keep the lights on,
Chris Wiles, CFA
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This article contains the current opinions of the author but not necessarily those of the Rockhaven Capital Management. The author’s opinions are subject to change without notice. This article is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
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