“The IBM case was the Antitrust Division’s Vietnam.” – Robert Bork

“Apple is worth nearly as much as Tesla, Meta, Berkshire Hathaway, United Health, and Visa –  the sixth through 10th most valuable American companies – combined.”                –Forbes; June 30, 2023

On January 17, 1969, the last day of the Johnson Administration, the U.S. Department of Justice filed an antitrust suit against IBM. The suit was filed under the Sherman Act and claimed that IBM was trying to monopolize the market for “general-purpose digital computers.” There followed six years of discovery and 700 trial days over seven years after that. The latter involved 87 live witnesses, 860 deposition witnesses, 104,400 trial transcript pages, and 17,000 exhibits. On the government side, the case spanned the terms of five Presidents, nine Attorneys-General, and seven Antitrust Division chiefs. On the defense side, the lead firm was Cravath, Swain & Moore, some of whose attorneys worked on nothing else for 13 years. And, after those 13 years, the U.S. Department of Justice abruptly declared the case to be “without merit” and dropped the charges. 

Continue reading “La Pomme” →

Yesterday…all my troubles seemed so far away. Now it looks as though they’re here to stay.

“Yesterday,” Beatles (1965)

Well, here we are in yet another crazy, mixed-up world with a list of troubles seemingly without
end and seemingly here to stay. At home, we have a work force reluctant to go back to work,
persistently high inflation, an ultra-high federal debt load, and a governing class looking like
two armed camps. Overseas, we’re dealing with two large-scale wars, either one of which could
become a much larger conflict. What’s the investor supposed to do in the fall of 2023? Always a
good question, and we once again were reminded of another time and place and another set of
highly unpredictable outcomes.

September 2020. A good friend and client asked one of us about the upcoming presidential election,
specifically how that election might impact her portfolio and what, if anything, she and we
should do about it. The lengthy email response? Not much that clients and other friends of the
Firm haven’t heard before from us, but a few things you might find interesting. Naturally, we’ve
done some editing of the original email, and, in the immortal words of Jack Webb, “the names
have been changed to protect the innocent.” Anyway, here goes. The subject is the 2020 election,
but to make a few points, as you’ll see, we go back to 2016.

Continue reading “November 2023 —
Anything to Do?” →

The Jury is Still Out

“mor·al haz·ard … a lack of incentive to guard against risk where one is protected from its consequences.”

– Oxford Languages

“A billion here, a billion there, and pretty soon you’re talking about real money.”

– Everett Dirksen

Haven’t we been here before? The SVB matter in particular has brought back a lot of bad 2008-2009 memories: swirling rumors of bad credits on the balance sheet and inadequate bank capital; bank stocks cratering on Fridays because of weekend uncertainty; shotgun marriages over the weekend; shareholder wipe-outs on Monday. Wasn’t Dodd-Frank supposed to take care of such drama, among other things,

Continue reading “Silicon Valley Bank —“ →

“‘Never’ is a long time, Marian.”

– Shane, in the movie of the same name, 1953

November is in the rearview mirror. With 11 months down and one to go, 2022 so far has been an unusual year, to put it mildly. First and foremost, the prices of both stocks and bonds have moved together to the downside. Most investors never have experienced such a phenomenon and in fact have clung to the belief that such a phenomenon never could happen. Never is a long time, however. The historical data in the investment world can be overwhelming, and what the data say is that stock and bond prices can and do move to the downside together about 5% of the time. Two thousand twenty-two has been one of those 5% times. Two thousand twenty-three? At the macro level, we suspect that the more traditional relationship between the two markets will reemerge, and are encouraged by a number of factors. At the micro level, the Value style of investing has been the place to be this year by a wide margin, and we expect Value’s outperformance to continue for quite some time. Onward and upward.

Continue reading “5%” →

So sayeth the great Oliver Hardy to his equally talented sidekick, Stanley Laurel, in countless classic films. With only a few minor changes, the same could be said to those responsible for our macro-economic well-being. Sure, as we stated often, no playbook for the post-COVID economic recovery existed, so missteps were inevitable. But some were not. Washington’s massive and ongoing fiscal largesse in recent times and the Fed’s monetary spigot, now turned off but wide open for far too long, amounted to pouring unneeded fuel on the inflationary fires. The Fed now is responsible for putting out those fires, but when will the Fed get a handle on the problem and at what cost to the economy?

Continue reading ““Well, here’s another nice mess you’ve gotten me into.”” →

“History doesn’t repeat itself, but it often rhymes.”
– Mark Twain

What exactly is the best, or at least the most well-known, barometer of U.S. Large Company equity performance? The answer: Despite its many faults (more about those in a moment), most people who routinely traffic in such things would point to the S&P 500 Index. So, with the S&P currently hovering at or near bear market levels (a decline of 20% or more from the Index peak), the breathless anchors at CNBC and elsewhere would have us believe that the sky is falling in Chicken Little fashion. OK, the 2022 sledding has been a bit rough, and the reasons, e.g., inflation, rising interest rates, are not to be taken lightly. But, the math behind the S&P 500 suggests that the Index isn’t always the best indicator of what’s going on out there. In fact, there is another Large Company stock market in 2022, and so far the sky over that stock market has not been falling. Some background…

Continue reading “We’ve Seen this Movie Before” →

A challenging April finally is in the books, and, on top of that, here comes the Fed in May. The monetary spigot has been wide open for too long, and the last couple of COVID relief checks probably were gratuitous in most cases, all of that to go along with numerous supply chain disruptions. So, too many dollars chasing too few goods. In other words, classic inflation at an uncomfortably high rate and the sense, as we moved through April, that solving the problem will require more than a quick Fed fix with only a modest rise in interest rates.

Continue reading “April 2022 – That Was the Month That Was” →

February 25, 2022

So, they’ve gone and done it after all. The Russians have taken the next step in the re-establishment of the old Soviet empire, and invaded the rest of Ukraine. Worldwide equities, which already were facing interest rate headwinds, now have very real geopolitical problems with which to contend. In an investment sense, how should we react?

March 9, 2020. We clearly are not dealing with some sort of flu bug – in an effort to contain the spread of a lethal virus, economies everywhere are shutting down. The public health and financial implications are unknown, and U.S. equities are under considerable pressure. Then, as now, we confronted the “how should we react?” question by penning “S-O-Y-H,” and we once again submit the following portion of that earlier March 9, 2020, Perspective to your attention.

Continue reading ““S – O – Y – H” (II)” →

Once upon a time, if you recall, a then-unnamed virus supposedly emanating from Chinese live-animal markets was going to be a problem for three or four months before burning itself out. That was March 2020, and here we are, still dealing with COVID’s human tragedy and economic dislocations in December 2021. That’s 21 months, not three or four, and the specific virus form at this point is the so-called Omicron variant. More or less transmissible than the others? Vaccine-resistant, or vaccine-vulnerable? Back to masks and lockdowns, or never again? Who knows, but there’s no shortage of shrill commentary, even with a distinct scarcity of data. What do we know? We know for sure why “COVID fatigue,” which must be the expression of 2021, has become such a popular expression.

Continue reading “A Whimper or a Bang?” →

“dé•jà vu…1b: a feeling that one has seen or heard something before”
– Merriam-Webster

Even in the modern era, medical science is not what we could call an exact science, but, 15 months after the Wuhan outbreak, COVID-19 finally appears to be on the run. Economies everywhere are opening up, and levels of both production and employment are returning to the good old days of 2019. As a result, the more economy-sensitive stock market sectors, distinct laggards in 2020, have been marching right ahead, while the stay-at-home Growth/Tech superstars of 2020 have been struggling a bit. Not being trashed wholesale, mind you, but struggling just a bit. What now?

Continue reading “Déjà Vu All Over Again?” →