Hard to Swallow

Kathleen Pender in today’s Chronicle does an excellent job in describing the health insurance choices for newly minted college graduates (those who don’t have jobs that have health coverage, of course).

Her valiant attempt in clear, not-even-college-level English shows that our health insurance system is terribly confusing. She introduces the concepts of COBRA, HIPAA, Cal-COBRA, Medi-Cal, and pre-existing conditions, but it’s easy to imagine that typical graduates in reasonable health may choose to punt on the whole issue and go uncovered. (They shouldn’t but many will.)

When a system is opaque, expensive, and “unfair” across several dimensions and documented by many horror stories that don’t need to be repeated here, the temptation is to turn the whole mess over to the government to fix. That an imposed government solution will produce a good result is not totally impossible, but to these jaundiced eyes that outcome is very unlikely because of the moneyed interests and paucity of wisdom and courage on the part of most political leaders.

Well, I suppose it is time to pass the baton to a new generation filled with enthusiasm and energy. I just hope that the guy leading the youthful parade isn’t the pied piper. © 2009 Stephen Yuen

Flitting Mind

"Behind every able man is an able woman" sounds quaint, even dissonant, to contemporary ears. The fortune cookie business is undergoing modernization:


I know what the writer intended, but I gotta get out of the Bay Area. I've lived here too long and I can't control my flitting mind.

Memorial Day, 2009

City Hall, Foster City, California

The state government faces cutbacks ($21 billion) that bode for tempestuous times in the not-so-Golden State. In contrast, our town of Foster City has managed its finances well. For the fiscal year ended 6/30/08 unrestricted cash and investments were $85 million, well exceeding total liabilities of $17 million. From an income statement/flow of funds perspective, revenues for FY08 exceeded expenses by $8 million (for more information see the Foster City financial report.)

The governor warns that he may force municipalities like ours to “lend” the State monies to help balance its budget. Such is the logical consequence of a philosophy that allows the public sector to provide services in more and more areas of our lives. Because there is one dominant provider in education, highway building, police, fire, parks and recreation, to name but a few areas, we are at its mercy. We either fund the beast and accept its inefficiencies or live without the service entirely. If the people won’t advance funds when asked nicely, the next request won’t be so nice.

What remains of the private sector has been cowed into submission by the threat of ruin, and the fabled fourth estate supinely accepts the argument that the problems of government can be solved by more government. It’s ironic that the only effective counterweight to government may be other government entities.

And so it goes on the day when we remember those who have died that we may live in freedom. Let's remember the greater challenges that they faced and be hopeful. © 2009 Stephen Yuen

On a warm Memorial Day the flags waived gaily next to city hall.

Grinding Ahead

Technical analysis tries to predict the future direction of stocks from charts of historical prices and volumes. To me the “science” of TA is too much like black magic; the wizards peer at charts like tea leaves and discern patterns oblivious to the uninitiated. At this juncture technical analysts are flashing warning signs that the spring rally has petered out. Schwab’s analyst warns:

This rally is long in the tooth and, now that the indexes are up in serious resistance levels, I believe a correction or pullback probably isn’t very far off. In situations like this, normally I aggressively take profits and use sell stops on remaining positions to help protect myself in the event of a downside reversal.

The reason I am becoming skeptical here is that many of the stocks that have been leading this rally are now moving up on lower volume, while the volume on down days is surprisingly strong. I am also not seeing leadership stocks with strong earnings breaking out of sound bases, as normally seems to be the case after a significant bottom is formed.

I'm paying attention to technical analysis because the above is in accord with my gut. In early March we were at a Graham-and-Dodd buying opportunity when you could find stocks selling for less than liquidation value and/or you could justify buying some based merely on dividend yield. Now that the market has rallied strongly, earnings growth becomes much more important.

It’s my judgment that the Administration’s long-term economic strategy of vast spending and deficits, coupled with its unchecked seizure of important sectors of the economy like health care, autos, and energy, not only will stultify risk-taking and innovation but add so much uncertainty to private spending decisions that we’ll be lucky to have positive real growth over the next four years. (And I'm not even considering the downsides of a flight from the dollar or a 9/11- or Katrina-type event.) For businesses the game will change from how well they can market and manufacture their products to how quickly they can get their permits approved from increasingly powerful agencies who have confusing and conflicting objectives.

Unlike some doomsayers I know, I’m not getting out of equities completely, but I have sold into this rally. Building a retirement nest egg in this market is going to be a long grind. © 2009 Stephen Yuen

14% per yr for 4 years will get us back to the peak.

San Francisco Quickie Tour

Like many who live in tourist cities, I rarely visit the area’s more popular attractions. They’re overly crowded and commercial, goes the conventional wisdom.

Grant Avenue, Chinatown

But it's a mistake for the amateur tour guide to assume that visitors want an "authentic" San Francisco experience on back roads and byways. (I first absorbed that haughty attitude, I think, in my home town of Honolulu, where in the Fifties and Sixties all of us cool kids stayed away from ticky-tacky Waikiki.)

When playing host to Asian businessmen, I was disabused of that notion. They wanted to cross the Golden Gate Bridge. They wanted to sip a cocktail at the Top of the Mark. They wanted to ride a cable car.

Recently I was asked to put together a one-day sightseeing tour of San Francisco. Below is this man’s plan. It's based on over 25 years of getting stuck in traffic, arriving at attractions after they've closed, and darting back and forth across the City, compounding the problem of anthropogenic global warming. I have coldheartedly crossed stuff off the list because they take too much time; for example, a wine country tour will take at least one day.

(A city map will make directions much easier to follow.)

First stop, Chinatown: park at the underground Portsmouth Square lot, walk up Washington, make a right on Grant, then Broadway up one block, back along Stockton. Visit the Cable Car Museum (free), which is up the fairly steep hill on Washington. Walk down back to the car.

Drive up Telegraph Hill to Coit Tower and park. Visit the display and ride the elevator to the top if you feel like paying the fee to see the view (not worth it in my opinion).

Head towards Lombard and park at the base of the "crookedest street in the world". Walk up and down along the sidewalk. Take pictures.

The seals at Pier 39.

Fisherman's Wharf: if it’s your first and only day in SF, I suppose you have to do it. Start at Pier 39 where you can see the seals. Walk toward the round marker at Taylor & Jefferson that's been there for half a century. Lunch at one of the many restaurants--one of my favorites is Scoma’s—or, if you’re in a hurry, grab a crab sandwich or shrimp cocktail from a sidewalk vendor.

Palace of Fine Arts. One of the most photographed SF venues, although first-timers don't know it by its name.

GG Bridge: Headlands View

Golden Gate Bridge: Another obligatory destination. I like the view from the Marin Headlands instead of the view parking lot at the end of the bridge on the Marin end. Stop at both places if there's time. If you have even more time, you can walk across the bridge and hopefully arrange for your friendly tour driver to meet you on the other side.

Ghirardelli Square: Walk around. Buy chocolates. If you're lucky, they're giving samples.

Cable Car: walk a couple of blocks to Aquatic Park and get on the cable car (all go to the same place) that will take you to Powell & Market. If there's a long wait, forget the cable car and drive to Union Square.

Union Square. If the shopping there's not enough for you, see the new San Francisco Centre (French spelling means it’s expensive) on Market (Bloomingdale's, Nordstrom, plus many more stores). There are dozens of restaurants choose from; half of the Chronicle’s top 100 Bay Area restaurants are in San Francisco so I’m sure you’ll figure something out.

Ferry Building

Destinations that did not make the list because they would have taken too much time:

Golden Gate Park and museums
Grace Cathedral & Nob Hill
Museum of Modern Art
Asian Art Museum
Moscone Center
Ferry Building
Ferry to Sausalito
Alcatraz
Muir Woods

AT&T Park: Press Box View

Cliff House
Japantown
AT&T Park
City Hall, Opera House, and Civic Center
Wine country tour (Napa & Sonoma)
North Beach (Italian section)
Haight-Ashbury © 2009 Stephen Yuen

Signs of a Market Top

A surge of emotion has carried the market a long way, but buyers have stopped throwing their money at just anything. One senses that they are becoming more discriminating about quality and bedeviling details. Frequent reversals and backtracking have fostered doubts about this market's staying power. Catastrophic collapse is still a remote worry, but so we all thought last year about the global banking system.

The $1 bargain bin at Barnes & Noble.

Merry Day in May

This weekend we celebrated the 90th birthday of a delightful lady whom I met 36 years ago. I made her acquaintance because of an unhappy circumstance; her husband had died suddenly and she wanted to rent a room to a male student. Not only would the student provide incidental income, his/my presence gave her a sense of security in an empty home. (Those who know me are amazed that she would feel this way.)

A few months into our arrangement she began to treat me more like a son than a boarder. She always had "extra" food warming on the stove, and my messy room mysteriously tidied itself while I attended classes.

In the intervening years she has added dozens of grandchildren and great-grandchildren to her list of admirers. For many of them her home has been a shelter against life's storms. Her story is an example that shows, if you can just hang on, things have a way of working out. Happy Birthday and many more, with gratitude.

Feeling Better Every Day

Conservatives believe that President Obama’s historic expansion of the public sector is terribly wrongheaded, but so far a sizeable majority of the American people supports him.

President Barack Obama appears to be slightly more popular with Americans at the start of his second 100 days in office than he was, on average, during his first 100. Gallup Poll Daily tracking from May 7-9 finds 66% of Americans approving of how he is handling his job, compared with an average 63% from January through April.

Political junkies on both sides of the spectrum should not assume that the American public shares their enthusiasm or disdain for various public policy proposals. Most people have lives. They do not follow in great detail the progress on tax-law changes, Middle East negotiations, Cabinet appointments, stem-cell research, and cap-and-trade penalties. It’s all they can do to keep up with developments in the economy, health care, and the Iraq and Afghan wars.

It took years for the electorate to turn against President Bush---he was re-elected—and it’s likely that President Obama’s popularity will erode as slowly, if at all. (A military debacle in Iraq, Afghanistan, Iran, or Pakistan could turn opinion quickly, which may be why Mr. Obama has moved very cautiously in reversing the Bush Administration’s severely criticized yet largely successful defense of the homeland.)

Another factor in Mr. Obama’s popularity may be the wealth effect. The stock market has nearly re-attained the levels last seen on Election Day (Nov. 4 - May 12, see below).

If one measures its performance since Inauguration (Jan. 20th), the market is sharply higher (following graph).

Ironically the growth in the investor class, a Republican objective, has made more Americans look kindly on the President. For many the recovery in their portfolios dwarfs any stimulus check that the Treasury could realistically send them. If the stock market continues its march upward, investors will overlook the odd Supreme Court nomination or workplace unionization rule and reward President Obama and his party at the ballot box. And yes, this is far from a profound claim--a rising stock market is an excellent predictor of a rising economy, which is one of the sure-fire paths to re-election. © 2009 Stephen Yuen

Happy Mother's Day

On Mother's Day I called Mom. She was pleased with the little electronic gizmo I sent her, but then again she's most appreciative when any of her children send her anything. She would have sounded just as happy with a card or note.

A flower, a call, or a card is small acknowledgment for decades of devotion. Better small than nothing at all. Happy Mother's Day, Mom!

Alumni in the News

Every now and then I check the alumni notes on my high school’s website. I had heard about the guy at the bottom of the page, but I didn’t know about the fellow at the top. Both have important jobs, but if there’s a difference of opinion, we know whose opinion will count the most.

Drive As I Say

During my car-buying life I’ve engaged in a form of affirmative action: if an American car roughly fulfills my specs and price I’ll favor it over a foreign make. Twice I’ve bought American.

In 1981 we acquired a new Buick LeSabre. It had a comfortable ride, which was about the only good thing that could be said about it. In the interest of fuel economy (plus ça change—been using that phrase a lot lately) we chose the six-cylinder version. Big mistake. The large sedan was underpowered and frequently broke down, especially when climbing hills.

Our family grew larger, so we turned in the Buick for a Grand Caravan. We were initially pleased with the Dodge. The engine had adequate acceleration, and the interior’s spaciousness made long car trips bearable. However, problems with the accessories crept in over the years. After the warranty expired the following items broke: glove compartment, fuel gauge, factory-installed alarm, CD tray, and windshield wiper controls.

The fuel gauge was particularly irritating. It always read “empty,” regardless of the level of gas in the tank. One mechanic took apart the fuel tank and replaced the float mechanism. Another put in a new electronic control under the dashboard. Over $1,000 later, I refuse to spend any more money on the problem, so every 200-250 miles we fill up the tank to play it safe.

Over the years we’ve also owned two Toyotas and two Volkswagens. No car has been trouble-free, but the GM and Chrysler products have been the most unreliable.

The President, otherwise known as the guy who controls the government that controls the auto industry, thinks that selling hybrids is the path to survival for American car manufacturers. High mileage is nice, but what this taxpaying driver wants above all is safe, hassle-free transportation, plus the reassurance that the company who makes my car will be around to fix any problems that come up.

I’ve been fooled twice already. When the people who work in the Administration start buying American cars for their own use (government fleet purchases don’t count), then I’ll take another look at Detroit.

R.L. Stevenson: A Child's Memory of Verses

Like any red-blooded American boy in the age before ubiquitous color television, I devoured action-adventure novels by Robert Louis Stevenson. His Treasure Island, Kidnapped, and Dr. Jekyll and Mr. Hyde were always checked out of the school library by me or my friends.

But my fondest memories are of a little book, the Child’s Garden of Verses, that sat on the second shelf in the back hallway of my grandmother's house. To a six-year-old boy seeking relief from the grimness of Grimm, Stevenson’s airy word-pictures captured perfectly a childhood in the Hawaiian sun:

The Swing

How do you like to go up in a swing,
Up in the air so blue?
Oh, I do think it the pleasantest thing
Ever a child can do!

Up in the air and over the wall,
Till I can see so wide,
River and trees and cattle and all
Over the countryside--

Till I look down on the garden green,
Down on the roof so brown--
Up in the air I go flying again,
Up in the air and down!

[Above right: photo of Stevenson monument in Portsmouth Square, San Francisco]

Beauty Without Lipstick

Two guinea pigs roam freely in our bedrooms. They are clean, doing most of their business in the litter boxes.

The GP’s have learned that we often have a baby carrot or juicy strawberry when we enter the room. They come running, emitting little squeals, and we have to tread carefully. They sit quietly while we rub their back and neck and watch the evening news; a half an hour of sitting still is their limit, longer than many toddlers.

Our guinea pigs are part of the family. The spread of the swine flu has made us become very cautious about washing our hands and avoiding unnecessary trips out. But our concern is not for our sake but for theirs.