Walking into KLA-Tencor's (KLAC) annual shareholder meeting, I felt like I was entering a Mad Men set: everyone seemed crisp, professional, very white and very male. Out of the eleven upper management and/or board members seated in the first two rows, 100% were male, and only two were non-white. Having non-diverse upper management isn't as bad as having a city council member make misrepresentations to one of his own constituents (Hiya, Pete Constant!), but it's still undesirable. After all, a company that is global and non-diverse violates the Law of Diversity and hinders its own growth and reputation.

In a nutshell, KLAC provides highly specialized instruments that detect natural defects on man-made wafers and reticles. As semiconductor chips and wafers become smaller, they become more complex, and the manufacturing process requires increasingly specialized equipment to find defects. Put another way, KLAC engages in metrology--the science of measurement--for semiconductor companies like Intel (INTC) and fab owners.

See here for stunning facts about public sector unions:

For every $1-an-hour pay increase, noted Dennis Cauchon in USA Today, public employees have gotten $1.17 in new benefits. Private workers have gotten just .58 cents in benefits for every $1 raise. This gap worries left-liberal labor economist Barry Bluestone. The price of state and local public services increased by 41 percent nationally between 2000 and 2008. Private services only increased by 27 percent. The benefit growth has continued unabated into the Great Recession, and Bluestone says the gap will inevitably produce a backlash.

I've been studying California's budget. From 1998 to 2009, California added over 80,000 full-time government employees. That means future taxpayers must pay for an additional 80,000+ pensions, lifetime medical benefits, and annual salaries. However, adding 80,000 more government employees is not the major problem, as long as we reform their generous long-term benefits.

The biggest problem is that starting in 1999, California's legislators assumed revenue/tax numbers based on stock market gains/sales and spent accordingly. From 1998 to 2000, spending jumped dramatically, but from 1999 to 2008, expenditures declined only once--when the tech bubble popped, in 2003/2004. Basically, it seems our legislators banked on an ever-increasing stock market to finance spending. Oops.

A security credit freeze is one way to achieve peace of mind instead of worrying about identity theft. I just tried to extend a credit freeze and replace a lost PIN. I forgot my PIN, so I needed a new one in case I wanted new credit. I contacted all three credit bureaus--Equifax (EFX), Transunion, and Experian (EXPGY.PK)--to request new PINs.

I learned in California, a credit freeze is indefinite, so I didn't need to worry about "extending" my freeze. (In less consumer-friendly states, a freeze may be limited to seven years unless extended by the consumer.) If you are a victim of identity theft, you may receive a credit freeze without charge. If you are not a victim of identity theft, you may have to pay a fee to activate a credit freeze and to unfreeze your account later. When you apply, you are given a PIN that allows you to temporarily deactivate the freeze.

The Dow Jones Index Average (DJIA) closed above 10,000 yesterday. Unfortunately, hardly any American understands the reasons for the increase and bounce off the March lows.

Most DJIA companies receive at least half of their revenues from abroad. Coca Cola (KO), McDonald's (MCD), Procter and Gamble (PG) have been expanding overseas for decades. Even Wal-Mart (WMT)--unfairly stereotyped as a rural, "red state" store--has been expanding aggressively in Mexico, the U.K., and the EU.

I attended Franklin Templeton Limited Duration Income Trust’s (FTF) annual shareholder meeting on September 24, 2009. This meeting was held by the specific fund, not Franklin Templeton (BEN) itself.

I was the only shareholder attending. No refreshments were available. There was no prepared informal presentation.

I attended Symantec’s (SYMC) annual shareholder meeting on September 23, 2009. The company offered shareholders a goodies bag that included a complimentary copy of Norton Online Backup; a zip-up notebook; a nice pen; and a small padlock (symbolizing Symantec’s security focus). Approximately thirty attendees were treated to coffee, juice, and pastries.

I was looking forward to this meeting for two reasons: one, the Investor Suffrage Movement asked me to move Proposal No. 3 on behalf of another shareholder; and two, this would be new CEO Enrique Salem’s first year handling the annual meeting.

I attended Magma Design Automation Inc.’s (LAVA) shareholder meeting on September 17, 2009. The company offered attending shareholders coffee, water, untoasted bagels with cream cheese, and assorted pastries. There was no prepared informal presentation.

CEO and Chairman Rajeev Madhavan handled most of the meeting. CFO Peter Teshima also answered several questions. Both CEO Madhavan and CFO Teshima responded to my questions with energy and confidence. I asked several tough questions, and I received good answers. Some quick points:

I can't believe I just learned about Loren Steffy's economics blog.

Here's one post on the Baker-Hughes (BHI)/BJS merger and the price of natural gas. An analyst states that the deal makes sense if natural gas prices will return to at least $6.50 per thousand cubic feet by 2011.

click to enlarge

Predictably, housing is the main expense, following by transportation, food, and insurance/pensions. How much does the average American spend on reading? Just $118 a year.

Two interesting views on the economy and whether the recession is over:

1. Schwab's Liz Ann Sonders says it might be over.

The WQ's Steven Lagerfeld opened my eyes to the risky, two-way bet of tax cuts:

In another way, today's red vistas of debt recall the era of tax cutting under Ronald Reagan. The Reagan Revolution was in part a gamble: Cut taxes, and an alarmed public will demand budget cuts in order to avoid red ink. Now we may be witnessing a kind of reverse Reaganism: Increase the size of government and gamble that an alarmed public will eventually authorize the taxes to pay for it. [From Wilson Quarterly, Summer 2009, Vol. 33, No. 3, page 4]

Housing investors and fans of Robert Shiller's MacroShares Major Metro Housing Up ETF (UMM) should pay attention to the dating scene. The WSJ recently had an article on Japanese dating trends. The following sentence from the article made me think about modern marriage and housing prices:

Experts say that in tough times, single women feel an urgency to get married for financial stability, while men tend to put off marriage until they feel they can afford it.

Yesterday, I sold almost all my equity-based positions. I also called my sister and suggested she sell all of her stocks and mutual funds. Of course, you should do your own due diligence, but as of August 3, 2009, the S&P 500 closed at 1002.63, an annual high. The potential for further upside does not seem to justify the risk of holding equities. My remaining major positions--held in a retirement account--include only an inflation-protected bond fund; a GNMA fund; and a corporate bond fund.

My earlier prediction that the S&P would rise to a range between 920 to 950 proved accurate. I made my prediction on April 1, 2009, when the S&P was only 811.08.

Professor Greg Mankiw points out that the the top 1% of taxpayers paid 40.4% of the total income taxes collected by the federal government. See here.

I don't think we should have a "free lunch" system where millions of Americans have no financial stake in their government. At the same time, with sales taxes increasing, it's hard to argue the middle class and poor are getting a "free lunch."

I attended Sigma Designs Inc.’s (SIGM) shareholder meeting on Thursday, July 30, 2009. About eleven people attended, mostly company employees. The company offered shareholders juice, soda, mineral water, cookies, and cherries. CFO Thomas Gay handled the formal portion of the meeting and then turned the meeting over to Kenneth Lowe, VP of Business Development and Strategic Marketing. Founder, CEO and Chairman Thinh Q. Tran played a more reserved role in the meeting, helping Mr. Gay and Mr. Lowe answer some of the more technical questions.

Sigma Designs provides system-on-chip solutions (SoCs) for third parties, primarily in the home entertainment area. It dominates in the area of IPTV set-top boxes, where, according to Mr. Gay, it controls approximately 80% of the market. Its main competitors are STMicroelectronics NV (STM) and Broadcom (BRCM).

The next time a California government worker starts talking about furlough days and pay cuts, remind them about their pensions and lifetime medical benefits. Or, just give them a link to this Judy Lin article from Friday:

California has at least $63 billion in unfunded pension liabilities, an amount equal to roughly two-thirds of all annual general fund spending...

1. American Express (AXP) CEO Kenneth Chenault had these sobering words to say (from American Express's 2008 Annual Report):

The experience of the past year reinforces the principle that people should not spend more than they have the capacity to earn and pay back. And financial services companies should not encourage people to get over their heads in debt. Healthier consumer behavior is better for everyone in the long run. (Shareholder letter, page 9)

From John Maudlin (July 17, 2009):

Globalization is a two-edged sword. On balance, it has brought prosperity to those who have embraced it, with rising lifestyles, better health, longer lives, and more. The more we need each other, the less likely it is that we'll shoot each other. Shooting your customers is not a good business strategy. And while the growth has not been even or smooth, only a Luddite would want to return to the early 1800s or 1900s, or even 1975.