Barry James: How Ideology Reveals Investing is Part Luck

[Post Summary]

The eye is not satisfied with seeing...
—Ecclesiastes

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From the desk of Barry James at James Investment Research:

Conclusions: As I've said before, the most dangerous words in the English language are “We're from the government and we're here to help.” We got a double dose of “help” last week with Treasury Secretary Geithner's TARP ideas and a $790 Billion stimulus bill. The Dow deflated 5.2 percent and unweighted averages lost about the same. All major sectors of the market fell with the one getting the most help, financials, losing over 9 percent. Wall Street should be much happier the next two weeks when Congress is out of session.

... The market falls and yet [our indicators] remain positive. Of course, they cannot foretell government intervention and just how discouraging it can be.

That was Barry James' message on February 16, 2009. Now, my position.

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

In other words, it is government's duty to help. And, yes, government has failed miserably over recent decades at satisfying constitutionally ordained objectives. On this count, then, disdain toward government's part in addressing the unfolding economic and financial disaster finds some substantive basis. Yet if past returns were indicative of future results, then there might as well be no Constitution and no government at all.

Is this an end the likes of Barry James help promote? Intentional or not, a contempt-filled attitude toward government could not possibly be more counter-productive, particularly at this extraordinarily vulnerable moment.

The idea of "posterity" meets the business world where the intention behind a company's being is it remain a going concern. Toward meeting this objective government has amply demonstrated over the course of U.S. history how to most effectively — most beneficially to all — secure the laudable goal of keeping business in business and creating conditions conducive to growth. Indeed, without government's organizational role and provision of means for achieving sound business ends, there would be no world as we have come to know it in modernity.

So, Barry R. James, CFA,CIC, how ever will you become a long-term bull with such low regard for government? Does not your firm wish its clients the luxury of investing in a sound economic environment? We see with our own eyes what government's blind eye hath wrought! How long before your forecasting is downgraded by indicators overbought with luck?

—Tom Chechatka