Seeking Alpha

Joseph L. Shaefer

View as an RSS Feed
View Joseph L. Shaefer's Comments BY TICKER:
Latest  |  Highest rated
  • Not a Drop to Drink: Three ETFs for Future Global Water Shortages [View article]
    Both Jack Gordon and Fran took John A. to task for his comment, “…Tibet has been part of China for thousands of years. Read your history.”

    They were right to do so. I am a professor of military operations and history. I make certain my students cite their research and exercise academic rigor before they extend their analysis, and hold myself (as does my and every other university worthy of the title) to that same standard. Clearly Jack Gordon and Fran do the same.

    I wouldn’t normally cite sources in a more practical forum like SA, but I would admonish anyone stating mere opinion in matters of factual history to “read your history.” Back atcha:

    The Tibetan Empire came into being, as most did in those days, after much bloodshed between various factions and clans. After consolidating his power at home, the first ruler of that final entity, Namri Songtsen, sent emissaries to neighboring lands to let them know there was a new sheriff in town high up in those mountains. Emissaries were sent to China in 608 and 609. (Beckwith, Christopher I., The Tibetan Empire in Central Asia: A History Of The Struggle For Great Power Among Tibetans, Turks, Arabs, and Chinese during the early Middle Ages, 1987, Princeton University Press, Princeton, NJ.)

    From this time forward, Tibet grew to be a major Central Asian empire, extending well into what is present-day India and Bangladesh, Mongolia, and Kazakhstan. It fought with China on an equal and peer status and then enjoyed treaties and inter-royal marriages with China on an equal and peer basis.

    A treaty between the two per nations was signed in stone, and still visible, in 821, which reads in part, “The whole region to the East of that [boundary] being the country of Great China and the whole region to the West being assuredly the country of Great Tibet, from either side there shall be no hostile invasion, and no seizure of territory... and in order that this agreement establishing a great era when Tibetans shall be happy in Tibet and Chinese shall be happy in China shall never be changed, the Three Jewels, the body of Saints, the sun and the moon, planets and stars have been invoked as witness.” (Michael C. Van Walt Van Praag, The Status of Tibet : History, Rights, And Prospects In International Law, 1987, Westview Press (Boulder, CO.)

    During the 13th and 14th centuries, of course, both China and Tibet came under the influence of the Mongol empire. Tibet came under Mongol influence before Kublai Khan's conquest of China and regained complete independence from the Mongols several decades before China regained its independence.

    While China was militarily conquered by the Mongols, the Tibetans and the Mongols established the historically unique "priest patron" relationship, also known as CHO-YON. The Mongol aristocracy had converted to Buddhism and sought spiritual guidance and moral legitimacy for the rule of their vast empire from the Tibetan theocracy. As Tibet's patrons they pledged to protect it against foreign invasion. In return Tibetans promised loyalty to the Mongol empire. (Van Praag)

    In 1639, the Dalai Lama established another CHO-YON relationship, this time with the Manchu Emperor, who in 1644 rose to power in China and established the Qing Dynasty. By the middle of the 19th century, the Munchu influence in Tibet had waned considerably as the Manchu empire began to disintegrate. In 1842 and 1856 the Manchus were incapable of responding to Tibetan calls for assistance against repeated Nepalese Gurkha invasion. The Tibetans drove back the Gurkhas with no assistance and concluded their own bilateral treaties. (Van Praag)

    Tibet formally declared its nationhood in 1912 and continued to conduct itself as a fully sovereign nation until its invasion by Communist China an 1949. Tibet has been part of China for thousands of years? I think not, sir. I and every other historian more well-versed than I date it from 1949, when it was invaded and annexed by the People’s Republic of China. "Read your history."
    Oct 25, 2009. 09:43 AM | 5 Likes Like |Link to Comment
  • Too Big to Fail: Now It Gets Interesting [View article]
    The last President with the guts to go trust-busting was Teddy Roosevelt. Couldn't we, just once a century, enjoy a similar courage from our leadership?

    If you read the preserved newspapers from that long ago time, you'll find that John D. Rockefeller and the other robber barons said the EXACT same thing at the time that Goldman, Citi, Morgan, B of A and AIG are saying today. "If you break us up, millions of jobs will be lost." "America will now lose its competitive position in the world." "We must keep our mega-giants so as to compete with other giants from across the sea." And "You are destroying the very strength of America, replacing capitalism with socialism."

    To which I say, hooey, balderdash, horsefeathers and moose poo. These "too big to allow to fail" oligarchies were split up and it ushered in a new era of competitiveness in American industry that allowed us to label the 20th century "The American Century."

    The choice we face now is remarkably similar. We have allowed a few institutions to enjoy a revolving door relationship with Washington DC, providing favors, campaign contributions and employment to politicians in exchange for "Most-Favored Corporation" status. Whenever they do something stupid that would destroy another company, these once and future employees rush to transfer OUR savings (via taxation) to the Most-Favored Corporations.

    David can beat Goliath and often does. It's part of the creative destruction that allows hope, change, and growth. But when David has his arms and spirit broken by a government that then stands firmly behind Goliath, propping him up whenever he is felled, usually by his own mis-deeds, it makes the job a lot tougher.

    Too big to fail? Tell it to Teddy Roosevelt. Or to today's Exxon, Chevron, and a host of newer names allowed to grow and prosper because we refused to believe the hooey, balderdash, horsefeathers and moose poo put out by a bunch of cowards Too Big to Be Willing to Compete.
    Oct 23, 2009. 10:53 AM | 42 Likes Like |Link to Comment
  • Nouriel Roubini, One on One: More Doom and Gloom [View article]
    The Economists' Rule to avoid ever 'fessing up to being wrong is: "Tell 'em what or tell 'em when, but never tell 'em both."

    Dr. Roubini has built a fine business following this rule, as have Robert Prechter, Mark Skousen, Howard Ruff, and scores of others in the past. "What's going to happen?" "There will be a terrible decline." "When?" "Sometime in the future." "How do you protect yourself? Gold, commodities, equities, debt?" "No. None of those will work?" "What then?" "Stay liquid."

    It happens that Dr. Roubini and I agree that this thing has come too far, too fast. Where we differ is that I refuse to cower in a hole somewhere eating trail mix and muttering, "I told you so," so I will allocate to the assets and purchase the sectors I've been writing about, all the time enjoying the party, but taking some profits along the way so I don't have a lot of baggage as I quietly edge toward the exits.

    In the real world, I need to make a reasonable return for my clients and myself no matter what I THINK the markets or the economy are going to do. Being rich, or at least protecting assets and making a reasonable return in all types of markets, is more important to those of us in the real world than being right!
    Oct 23, 2009. 10:38 AM | 38 Likes Like |Link to Comment
  • Not a Drop to Drink: Three ETFs for Future Global Water Shortages [View article]
    Freya, Hyflux has a contract for the biggest water desalinization plant in the Middle East and a backlog of others that show their expertise around the world. Now if we could just trade the Arab states even-Steven oil-for-water, that's a trade I'd be willing to endorse!
    Oct 23, 2009. 08:39 AM | 5 Likes Like |Link to Comment
  • The Mortgage-Servicing Writedowns [View article]
    Felix, you ask quite rationally: "And what kind of hedges result in a $3.6 billion profit when rates decline by 26bp?"

    REALLY leveraged ones. And the last time I looked, leverage cuts both ways. If I owned a single one of these game-playing, edge-of-the-risk-window banks, I'd be selling. Today, it worked for them. tomorrow shareholders may be left holding the bag. Forewarned is forearmed...
    Oct 22, 2009. 11:39 AM | 4 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    "Shedding light on the dark pools... the SEC will reportedly today propose slashing the percent of daily volume in a company's shares that can be executed on the systems before quotes must be publicized to 0.25% from 5%...Trading executives warn sweeping rule changes could ultimately hurt the investors regulators are trying to empower."

    I first warned of the abuses inherent in dark pools three years ago. In one of my earliest articles on SA, I tried to expose these practices to the unwelcome (to Goldman, Citadel et al) glare of fresh sunlight. They are basically yet another way to make investors pay more for their trades by hiding the actual size of orders from the trading desks of banks that are playing Big Casino rather than making loans to businesses with the money we gave them.

    The fact that "Trading executives warn sweeping rule changes could ultimately hurt the investors regulators are trying to empower," should be proof enough that reining these gambling addicts in is a good thing. If the "trading executives" are against it it means it's bad for them, good for us.

    The enemy of my enemy is my friend...
    Oct 21, 2009. 10:08 AM | 8 Likes Like |Link to Comment
  • Retail Sector Rebounds (Part II): All That Glitters [View article]
    Ron Baron of Baron Funds is a big booster of Blue Nile, as well.

    I may be a hopeless throwback, but the image of a nervous young man trying to determine the most beautiful way to ask his girl to marry him or the young couple slowly deciding together which diamonds to ask the jeweler to bring out from the case and trying them on herself is a timeless one.

    All things do not yield to online purchases. "Look, honey, I saved 20% on this symbol of my love!" may or may not be the rock-solid foundation of a clever business plan it seems at first...
    Oct 21, 2009. 09:53 AM | 1 Like Like |Link to Comment
  • Potash Is Busting out All over [View article]
    I envy those traders who can (or claim to be able to!) watch every sector and be able to leap aboard a train just as it is leaving the station for a wild Mr. Toad ride.

    It just isn't me. So I plod along, doing basic research, tearing into annual reports, reviewing demographic trends, and gauging investor sentiment. I've been in agriculture for months now. So while my train still sits in the station, at least I have the luxury of buying at leisure rather than in a panic. As a result, my money has been "sitting" (and collecting some nice dividends) and, since our clients are comfortable with the concept of ag as a long-term play, we'll get in "too early" without stress and enjoy the ride from what we hope are the best seats.

    So let me to the momentum of POT and MOS simply add: fundamentally (which counts to me) I believe they are well-managed, well-capitalized, and undervalued companies, as well!
    Oct 20, 2009. 09:41 AM | 8 Likes Like |Link to Comment
  • Canadian Royalty Trusts – Will Dividends Rise or Fall? [View article]
    RohanRider, small town investor and Old Trader --

    All valid and important points. RohanRider, CanRoys' distributions will often fluctuate year to year, sometimes wildly, based upon the actual cash flow they receive as royalties, whether they choose to distribute 90% or 100%, new acquisitions, debt offerings, etc. When I buy them, I am looking at a moving average of distributions and mentally use a moving average mindset for future distributions. I believe that I will sometimes receive 7 cents a month, sometimes 10, and sometimes 12 -- but over time if they are good business people and if oil and gas continues to rise with or slightly ahead of inflation (the former at least partially in my control to analyze, the latter the assumption I proceed under) then the distributions will rise.

    small town investor, it is an important point that the final tax effects on US citizens are not yet fully known. The bad news is out -- if CanRoys are to be taxed as corporations, they'll have less money available for distributions. But as you point out, there may be a benefit to US taxpayers that will partly mitigate that effect -- or they may be taxed at some hybrid rate lower than the top corporate rate. Politics is the art of compromise!

    And, Old Trader, you are so right. Not only have some been squirreling away cash, they've been revising their business models and amassing tax credits (called "tax pools") that allow them to continue for as much as three years in a completely or partially tax-sheltered environment where they won't be paying (or paying in full) their corporate taxes.

    This issue is far more complex than any single article could cover (it is, after all, a political AND economic decision!) but I hope this introduction adds to investors' thinking the other two important variables here -- the price of the underlying resource and the skill of management. Thank you all for your additions to the discussion!
    Oct 20, 2009. 09:33 AM | 9 Likes Like |Link to Comment
  • Platinum: A Stronger Safe Haven than Gold? [View article]
    There are solid rational reasons to consider the PMGs (platinum metals group) over gold. And if the parket were a rational place, I might make that decision. But until a country song comes out with the lyrics, "All the platinum / in California / is in a bank in the middle of Beverly Hills / in somebody else's name" I'm going to stick with gold as my hedge position. It;s tried, it's true, it's emotionally, if not rationally, the more "logical" choice. And emotion rules the markets...
    Oct 19, 2009. 10:01 AM | 5 Likes Like |Link to Comment
  • Bond Market Expects Inflation to Be Only 1.75% [View article]
    When given a choice of trusting government pronouncements, brokerage research or the actual actions of professionals and amateurs putting their money to work, the intelligent investor looks to see what the last group are actually doing. All the fudging by government economists and screeching from brokers and the financial press are just that. The bond market will, in the aggregate, predict short-term inflation and deflation, if only we will listen to what it is saying...
    Oct 16, 2009. 10:22 AM | 5 Likes Like |Link to Comment
  • Ken Lewis's Symbolic Pay Cut [View article]
    The gentleman in question bought Countrywide and all its troubles even after seeing the books because he wanted B of A to get "bigger." He overpaid by a factor of at least 300% for that liability and slight asset. I fear the same "buy it at any cost" mentality prevailed when buying Mother Merrill -- although he later protested "the government held a gun to my head and made me buy it."

    Clearly he was not the only executive at BAC during the time these decisions were made. But in my life experience, "a leader is always responsible for his men." Even the pirate Jean Lafitte took responsibility when his men, against his orders, attacked US vessels in the War of 1812. An honorable man would take maybe $10 million for his time and effort and donate the other $115 million to childhood leukemia research, alleviating poverty in Appalachia or -- a crazy thought -- giving it to the long-suffering B of A shareholders.

    As it is, it looks like the $125 million is a finder's fee for taking all those billions from taxpayers. And the beat goes on...
    Oct 16, 2009. 10:17 AM | 4 Likes Like |Link to Comment
  • Naked-Shorting Datapoint of the Day, Carl Icahn Edition [View article]
    In this country, we may give too much "grudging respect" even to the charlatans, as long as they are SUCCESSFUL charlatans. Here's Goldman, on the one hand, always skating the line of legality, sometimes just inside, sometimes just outside. Yet other articles on SA today laud their "out-performance" and "trading acumen."

    Is it possible the "acumen" is more deviousness and a willingness to crush anything in their way than it is brilliance in trading or operational control? Only their regulator (should) know for sure (but doesn't...)
    Oct 15, 2009. 10:46 AM | 1 Like Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    "Sources say Bank of America (BAC) has reversed course, deciding to waive attorney-client privilege and hand over "troves of documents" regarding legal advice it received during its acquisition of Merrill Lynch."

    From "What? Us? We didn't do nuttin' wrong," to ""Well, if we did, the lawyers made us do it!" And we are supposed to find B of A leadership credible? In my company, the buck stops here, at my desk, as CEO. The lawyers work for me, not the other way around. At B of A, who is in charge...?
    Oct 13, 2009. 10:00 AM | 2 Likes Like |Link to Comment
  • Think Twice: How People Are Fooled by Irrelevant Data [View article]
    The secret of course isn't merely to correctly analyze all the data. Many a brilliant empiricist has gone quietly mad as their analysis is spot-on -- but the investing public does something completely counter-intuitive.

    The secret is to figure out what 100 million investors will DO with the data that is presented to them. And that's why the "efficient market theory" is a bunch of hooey. Even if its proponents are correct and all the information is available and -- allegedly -- already reflected in the price, that was so 10 seconds ago. It's how investor psychology en masse reacts to some new data point, not the data point itself!
    Oct 13, 2009. 09:53 AM | 9 Likes Like |Link to Comment