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Philip Mause
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My name is Phil Mause. I am a Senior Advisor with the Pacific Economics Group, focusing on energy, regulatory and valuation issues. I retired from 40 years of law practice earlier this year. I am a yield oriented investor and in the last two years, I have done reasonably well in junk bonds,... More
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  • Father's Day Message

    My daughter wrote me a lovely note on Father's Day. Here is my response(published with her permission);

    Thank you so much! This really makes my day. I want you to know that the experience of raising you was a wonder and a joy and it was one of the most fulfilling things in my life. Actually, the third most fulfilling. First place goes to figuring out how to get my car out of the Logan Airport short term parking lot after two weeks for only $1.25 and second place goes to that time in 1988 when I solved the Sunday NY Times diagramless crossword puzzle. You beat out the fourth place thing - winning the honorable mention award for "Most Improved Bathroom Hygiene" at a very weird summer camp my parents sent me to when I was 11 years old.

    But I digress. Child rearing was a constant challenge for your mother and me. To tell the truth, we had to consult books, neighbors, relatives, and experts; we also had to constantly switch gears in response to new information and new developments. It should be much easier for you. Apple has brought out software for $124 that you can download on your iPhone which pretty much does the trick. Be sure to download the updates as they become available. You have to use Apple products for the rest of your life in order to do so. That's why I have a large position in Apple stock (symbol: AAPL - close, Friday, $586.24).

    Anyhow, now you are fully raised and you are an independent young woman. And we are reaching the phase in our relationship at which I will become dependent upon you. I will call you about lost car keys, questions about whether I have already taken my meds, concerns about your mother trying to poison me, and, of course, efforts to maintain my driver's license even after I am dead. At some point, I will move in with you and probably destroy your marriage. You will hire lawyers to persuade me to execute a "living will." And I will develop affiliations with bizarre religious and political groups like the Republican Party.

    But those are all fun things we have to look forward to down the road. Today, I can just bask in the moment. A successful child rearing exercise...........at least for this split second in time. So, tomorrow, be sure to take enough money for the subway, take your keys and don't lock yourself out again, wear clean underwear in case you get hit by a car, don't make eye contact with anyone in public areas, never a borrower nor a lender be, floss, don't step on cracks or walk under ladders, yadayadayadayada.

    Oh, the hell with it. You'll be fine. Just remember what my father told me years ago which pulled everything together in a brilliant nutshell - "Don't make mistakes!"

    Jun 24 6:46 PM | Link | Comment!
  • The Hope Diamond Of Wrongful Convictions: The Kirstin Lobato Case

    As I have mentioned before, when I am not consuming tranquilizers or anti-depressants in reaction to the latest stock market news, I have developed an interest in the criminal process. As a semi-retired lawyer, I have tried to pitch in here and there whenever I think that the process has gone off the tracks and railroaded an innocent defendant.

    Reading lots of files and decisions, I have some good news. We are not North Korea! While the system makes mistakes, many of these are in fairly debatable situations or are rectified on appeal. Unfortunately, our criminal justice system has become gargantuan (and expensive- more on that in a future post)- 2.3 million inmates behind bars as I write this - and it is inevitable that, even if only relatively small percentage of such a big number are innocent, the number of innocents is still very large. But many of the cases are close, complex, arguable and, while there should not have been a conviction, it is also not completely clear that the individual who was convicted is actually innocent.

    Every so often(actually more often than I am comfortable with), however, the legal system serves up a fat pitch, a gopher ball, a hanging curve ball which is every pitcher's nightmare - an easy case, a no-brainer. There is an expression in law - "hard cases make bad law" - as courts wrestle with the law and twist it to deal with a difficult set of facts. Well, there are also easy cases. Kirstin "Blaise" Lobato's is one of those easy cases and the rationale for her continued incarceration is stranger than the parting of the Red Sea.

    Blaise was subject to a rape attempt in late May 2001 and defended herself by slashing the attacker's penis with a knife. She told lots of friends and acquaintances about the incident throughout June and then was picked up by the police in late July and accused of murdering Duran Bailey on July 8. The only "evidence" was her statement describing the May incident which the police characterized as "minimizing" the July 8 homicide. Never mind that her story involved an incident several miles away and several weeks before the July 8 incident. Never mind that there was no evidence of her at the July 8 crime scene. Never mind that she was 170 miles from the scene of the crime on July 8 so that she could not possibly have committed it. And never mind that she told everyone who would listen about the May incident over and over again in June before the July 8 incident even occurred. The police heard two words "knife" and "penis" and that was enough. So Blaise Lobato, who is less likely to have committed this crime than I am, was convicted.

    It takes a lot of breathtakingly incompetent lawyering, judging, expert testimony and police work to produce a conviction in a case like this but the "justice" system in Nevada was up to the task. The big question the case left me with is "why did they convict her of killing Duran Bailey?" If they were going to convict her of a crime completely unrelated to her story why not convict her of killing Jon Benet Ramsey? Or Jimmy Hoffa? Or John F. Kennedy? Or Abraham Lincoln? Or - better yet - all of them? Her story could be interpreted as a "minimization" of a historic crime spree and Nevada could be credited with "solving" some really big cases.

    The case is pending on appeal of her Habeas petition before the Nevada Supreme Court which is showing some signs of giving it serious consideration. I have my fingers crossed but I do not have my hopes up. On the other hand, there is something inside me that tells me that, sooner or later - hopefully sooner, an injustice that is this obvious will not go uncorrected.

    Why do I put this on Seeking Alpha? Because the same lawyers, judges, courts, and journalists which dealt with this case deal with contracts, patents, property rights, takings, and all sorts of legal issues which impact investments. Because as investors all we really have is little pieces of paper which give us a "bundle of legal rights" and these rights must rely on our buddies who produced the Lobato verdict for interpretation and enforcement. And because a legal system which can convict Blaise Lobato of murdering Duran Bailey can do ANYTHING. Which makes those little pieces of paper worthless. Which is what they are in a country without a "predictable" and functioning legal system - or in a country which investors suspect does not have such a system(anybody look at the price action on Chinese stocks over the past year or so?). So investors are stuck with one more headache - has the legal system gone totally bonkers? We will soon get guidance from the Nevada Supreme Court.

    May 31 8:59 PM | Link | 6 Comments
  • Racing, Cruising, Speculating And Investing

    In the past couple of weeks, there have been two fatal sailing accidents on the West Coast. The first involved a race from San Francisco around the Farallones Islands and back; the second was in the popular Newport to Ensenada race.

    I am not going to go into details, but in each case the boat appears to have hit a fairly substantial island - in the first case, one of the Farallones Islands and in the second case, one of the Coronado Islands (near the border between the United States and Mexico). I am not sure exactly what happened but what struck me when I read about the accidents is that each boat had a large and experienced crew and the wind conditions were normal.

    I contrast this to the experience my wife and I had in the Aegean in 2007. We are day sailors accustomed to the forgiving conditions of the Chesapeake Bay. We had a Bavaria 42 under charter and were relaxing in Mykonos where we dropped off my son and a friend, after which we planned to take the boat back to Paroika on Paros. I picked up the Paris Herald Tribune and saw the winds listed at 7-8 and figured we would head out, spend a quiet night anchored South of Mykonos and head over to Paroika at our leisure.

    It is probably an indication of my acumen that the "7-8" I read in the paper was not calibrated in knots but in the Beaufort scale. As soon as we pulled out of the harbor we realized that we were in for something that sailing near Annapolis did not really prepare us for. Over the next 24 hours, we found times we couldn't make headway and at night we could not get the anchor to hold. We struggled mightily and probably unnecessarily but made it back to Paroika only to discover that all the other boats in the "fleet" we tied up tight - even those with "professional" captains.

    So, what is the punch line. Well, we were two sailing duffers in our 60s dealing with 45-55 knot winds in unfamiliar waters with an unfamiliar boat (but, once again, I have to praise German engineering - the Bavaria was built like the Tirpitz) but we survived. Why couldn't younger and more experienced sailors survive in easier conditions over the past two weeks?

    The answer is simple we were CRUISING, not RACING. Every decision was made conservatively. When in doubt, we dropped sail. We never relied on automatic pilot. We closed hatches and hunkered down. We gave all rocks and shores a very wide berth and we got assistance mooring in Paroika from a pro. We were not trying to cut close to every rock or island in a desperate effort to make time. It made all the difference in the world.

    There is the same distinction, I think, between investing and speculating. An investor seeks a margin of error in his investments and does not plunge ahead unless that margin is available. A speculator may be forced to take risks because of the need to show short term returns. An investor is not looking to squeeze the last nickel out in monthly returns by trying to "time" the market although by buying only when there are deeply undervalued targets of opportunity he often winds up timing the market very well in spite of himself. Investing isn't really as hard as speculating just as cruising isn't as hard as racing. But I honestly believe that certain personalities - especially those with a hyperkinetic bent - will always be uncomfortable unless they have all the little things to do that racing and speculating provide.

    I am going to try to get into the Newport Ensenada race next year but only in a very laid back, tortoise beats the hare, cruising mode. I am still trying to figure out where the Coronado Islands are and I will be very, very careful not to hit them. The harder question is just what equivalent to the Coronado Islands is there awaiting us on the investment front - somehow, I think it will come from the other side of the "other" ocean.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    May 02 9:07 PM | Link | Comment!
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