Going to visit NYC?

A friend of mine is spending the next 6 days in NYC and asked for restaurants that "won't completely murder" his wallet.

Here's the email that I sent:
*please note: I lived in Manhattan about two years ago; though new restaurants have opened, the following are my tried and true favorites. I also think most tourists spend too much of their time in Midtown. It is for these reasons that I have focused my efforts for those who venture below 14th St.

Best Italian: (mid range price, family style, freaking amazing): Piccolo Angolo 621 Hudson Street, New York www.piccoloangolo.com
Hip/Australian: Public http://www.public-nyc.com/ - try the Kangaroo...and the chili infused vodka drinks. Make reservations-in NoLita.
Spanish tapas: Las Ramblas (west village) http://www.lasramblasnyc.com/ ; OR Boqueria (more of a scene, no ressies, both in Flat Iron and SoHo) http://www.boquerianyc.com/
THE COOLEST GASTRO PUB IN THE WORLD: The Spotted Pig!!! For SURE get the Gnudi (chef's most famous) and the Burger w/ Fries. http://www.thespottedpig.com/ Ugggh.
Chinese Soup Dumplings: Joe's Shanghai http://www.joeshanghairestaurants.com/ - go to the one on Pell Street and you can walk around the corner to the Chinatown Ice Cream Factory http://www.chinatownicecreamfactory.com/ for some freakin' amazing and different flavors of Ice Cream
Fresh, local, cheap: Westville (they have both an East and West version: both equally delicious). Make sure to get there with some time to kill, it gets full for brunch/lunch. http://www.westvillenyc.com/
Brunch: our favorite place to go was Nero's in the meat packing district because of the all -you-can-drink mimosas/bellinis, but a quick google search didn't pull up any websites- it may have shut down...

Want a really cool place to have a drink- prohibition style?
Go to the Campbell Apartment outside but still kind of in Grand Central terminal...old school lounge with a very cool history: http://www.hospitalityholdings.com/

Have fun in NYC and let me know what you think!"

Greennovation

The last 25 to 30 years have set up an interesting paradigm on the business landscape. More is always better. More is always desired. If you were an advertiser, you needed to get people to spend more money on, well, basically everything. If you were the government, you incentivized a collective environment that encouraged ever greater levels of spending and consumption, and, eventually risk-taking. If you were the financial industry, you wanted to create more products to sell to more levels of society to create more returns...and also to borrow ever greater amounts of money. And, finally, the consumer. More features, more technology, more loans, more credit...more, more, more.

The question as to whether the years to come will be different comes with a variety of answers. Some might say that capital investment will be the future engine of growth...that maybe the consumer will be more focused on saving for some time. Some might say investment returns will be...different in the times to come. Whether bullish, bearish, or somewhere in between, there is an interesting trend emerging that transcends a lot of political or market prognostication. This is something that can be embraced regardless of viewpoint, position, or leaning. It refocuses the discussion away from the next government program or the bears that have been calling for a correction for the last 6-months without really seeing one of any significance, and it brings it back to the core of the Global economy. Ideas, specifically, brilliant ideas and innovations, are what brought us to this point and to the society in which we live. Consistently figuring out ways to get "more" of this or that in the easiest way possible is simply not sustainable. As a society we will be driven by the original, the innovative, and the new. If we are to progress out of the current economic downturn in a way that will engendersustainability, we cannot focus on rebuilding or holding onto things that brought us to where we are today, but rather, it must be about looking towards something new. In 1909, would we have really been able to conceptualize cars, blogs, nuclear anything or even half the things that we rely on during our daily lives? How can we say today what will happen or be happening in 2109?

Well...we can say this today. If our society is going to make it to 2109, it wouldn't hurt to change the focus. How can we get MORE (always an attractive prospect within human nature) by using LESS.

Efficiency. Productivity. All of those words will be key, and can be seen as already being key. Over the past 6-months, companies have beat their projected earnings in record fashion. Interesting...considering we are in one of the worst economic downturns since the great depression. Some might say that it wouldn't make sense that companies should be beating analyst expectations in this fashion, but, accounting trickery aside, they're doing it by generating the same or similar top lines with less inputs and costs. Less employees, less materials...LESS in fact leading to more. It will never be detrimental to consider resource uses with a consistent focus on how to make sure things are being done in the best and most efficient way possible.

In fact, going GREEN and considering these types of ideas in the normal course of business activity has actually been proven to be more beneficial than most might think...

GREEN OIL: Bio-fuels are one of those "next big things." Everyone has seen the funny ads with the socially and environmentally conscious individuals traversing the country with a peace-corps like zeal and dedication on nothing more than fuel made from vegetables. Completely sustainable "green crude." What if algae was able to be created and developed so that the harvesting process for this fuel could be completely streamlined and more of it could be more efficiently produced? Synthetic Genomics, led by J. Craig Venter, and Sapphire Energy, backed by Bill Gates, are engineering algae currently. Their goal is to come up with a sustainable substitute for gasoline, jet fuel, and even diesel.

Once the idea of EXTRA COST and FINANCIAL

TRADEOFFS are tackled, sustainability is realized to be essentially one of the biggest current catalysts of organizational and technological innovation. Immediately, some of the most logical cost savings comes from using less inputs, some of the increased revenues come from better products, and some of the best ideas come from new business entrepreneurship. The smart way to think of environmental preservation is not as an increased cost, but instead as innovation's new frontier. The time is now, as it's never too soon to take up the charge and secure invaluable first-mover advantages. There are always going to be a plethora of opinions about public policies and best practices...and it's a safe bet that there will come a time again when people think less about saving for tomorrow and focus on consuming for today. One thing will be certain, however, and that is the fact that practicing economically sound innovations with a focus on preservation of the environment will not be going out of style any time soon. In some ways, LESS will always lead to MORE.

ANIMAL

The words of Animal by Mike Snow were drumming through my head as I was on my way last night to meet my favorite foodie for a late night dinner at Animal restaurant in West Hollywood/Mid-City. We had read so much about these hot young chefs that won Food and Wine Best New Chefs of 2009 and a James Beard nomination for Best New Restaurant- we had to try it for ourselves!

Dropping my car off at the valet (the easiest, quickest way to park here), I was instantly impressed by the simplicity of the decor. As my partner in crime put it "They just get it. The ambience is subdued so all the customer can do is focus on one thing: the food." The simple wine racks behind the bar, the black tables and chairs, and the egg shell colored walls, all added to that elegent New York City style of restaurant that speaks to my epicurean senses.

Greeted by our hilarious, knowledgeable waiter John was also a treat...

His recommendation for two: two appetizers and two entrees.

Our choices:

- Pork belly, kimchi, peanuts, chili soy, scallion

-Melted petite basque, chorizo, grilled bread

-Leg of lamb, merguez, salsa verde, alubia criollo beans

-Quail fry, grits, chard, slab bacon, maple jus

As witnessed by our choices, this menu is definitely NOT for those of us aiming to lower our cholesterol. If you do not fall into that category, however, find your way to this place immediately.

Save for one piece (out of the 8 pieces on the dish), the pork belly tasted EXACTLY as it should, with that amazing flavor of chicharron. Perfect blend of fat and meat (and yes, we ate the fat). The kimchi tasted straight out of a Korean kitchen. Mixing those two flavors together would not be something I would ever think to do, but the crisp, cool, spicy nature of the kimchee was an ideal pairing for the pork belly.

I don't think I've ever had melted cheese of any kind that did not taste good (pretty tough to get the gloriousness that is melted cheese wrong), but the addition of the crisp chorizo underneath of the Petit Basque cheese, then placed atop thick pieces of a french baguette had me reminiscing back to my days in Spain...perfection.

My eating mate had the leg of lamb. Upon first glance, we were surprised at how obviously over-cooked it looked. Beware of first impressions. We were proven wrong. Apparently the young chefs in the back roast it, quickly pass it over the grill, and then add some secret ingredients to create the flavor of this lamb which I have never heretofore tasted. Also not a huge fan of criollo beans (bad childhood memories) but this preparation, paired with the salsa verde, really hit the spot.

The quail fry. More moist on the inside, crisp on the outside than the best friend chicken. The chard, grits, and maple jus took me down to the South in a nuveau home cookin' kind of way. One bite with all the ingredients on my fork caused a tasty explosion in my mouth...and it was even better when finished off with with a gulp of the Mourvedre from Hug Cellars our waiter John so highly recommended.

And finally...

the Tres Leches. One of my favorite desserts of all time. As witnessed by the picture, we couldn't even wait to snap a photo before we dug into this one. I've had my fair share of Tres Leches. As simple as they are, I believe the flavors in this dessert ecompass everything I seek when deciding to eat a dessert (which I do only so often). This tres leches beats all that I have tasted.

Though we left this dinner a little over-satiated, we can't help but give this place our nod of approval. When in WeHo, check this place out.

The Question: Can the US economy recover without the US consumer?

This is an interesting question, and it cuts basically to the heart of the current issue. People generally believe that we are in a better place today than we were a couple of quarters ago. That much is understood. What isn't understood, and what is frequently asked, is whether or not this is sustainable. Have we been doing a lot of things that aren't repeatable in the coming quarters, or are we truly just getting warmed up? In the past, the consumer has made up about 70 percent of the overall economy, if we define "past" as the past 25 years of economic expansion. How has this occurred?

Note the following:

-Rising Asset Prices (house, stock market, etc)

-Low cost of borrowing and easy access to credit

-Decreased financial regulations that, in some ways, made access to money even easier than it otherwise would have been

These three main ideas, along with others, combined to make people very willing and very able to do one thing: SPEND MONEY. The key question to ask is, is what's going on today going to inspire people to spend money more freely? The government spending and Fed policy can help, but there is no economic force powerful enough to completely replace and regenerate the effect of the general population spending money. Note the following points relating to today:

-People are still WAY down in their investments relative to 2007 peak prices

-Home prices (depending on area) are depressed or still deteriorating

-Unemployment and under-employment are still on the rise

-Increases in regulations will tighten access to credit

-Securitizations are way down relative to recent past

-Bank Lending continues to be tight

-Savings rates have increased and are projected to increase further as consumers de-leverage their balance sheets

Maybe something will happen to turn things around, but these general facts, and probably some others, make a case that it is very tough to expect consumers to just jump right back in and start spending just as much as they were. Therefore, it makes sense to consider other ways in which the overall economy can grow. Consumer-led growth is a Keynesian principal, meaning, economic growth is catalyzed by the money consumers are spending. There is another view, the classical view, founded upon the idea of economic growth being centered around business invested and technological innovation. Ultimately, this innovation improves society and standards of living, and, while early in the cycle it does not lead to very much consumer spending, as the picture changes going forward, sparks ignite in a few distinct corners of the economy that lead to an overall larger and more sustainable recovery. A way to think of it is as though we had a pie, and the filling of this pie was depending upon factors that made people spend lots and lots of money. If people were spending, we had a nice, filling, tasty dessert. When they stopped, we were left with an empty crust.

When faced with an empty crust, there are two options:

1. Go back to doing the same things and trying to find the same sources of filling.

2. Create an entirely new dessert: Creating something new is definitely tougher to conceptualize, but that doesn't mean that it isn't possible.

Consider the following: Corporate balance sheets (ex autos and financials) are in fantastic shape. Companies are cutting costs and have more cash than during any prior economic down turns. The table is set for investment, especially with recent increases productivity and efficiency. As long as government policy is not too stifling, there is a significant chance of economic expansion, just not in the ways that it has been driven in the past 25 years.

This view was inspired from one of John Maudlin's pieces, Thoughts From the Frontline. What really grabbed me was that, instead of simply re-hashing all of the ways in which growth as occured in the recent past and trying to fit a square peg into a round hole, it takes what is currently going on and finds a theoretical framework that fits better than anything currently being proposed. There is no way to pull out a crystal ball and truly know. I just think it's nice to think that the recovery can come from sources and be driven by factors that no one truly knows at this time. If we can be so surprised by the crisis itself, who's to say we can't be equally, if not more surprised by the recovery?

Rising Cost or Rising Quality?

Every single day, the media is consumed with the question concerning how we as a nation plan to go forward in a world where the healthcare system is reformed, revamped, and reconstructed. You cannot turn on CNBC, read the New York Times, or even just show up at work without being faced with some sort of opinion. A couple things that most people seem to take as fact:

• The current system is too expensive

• Healthcare costs rise way too quickly

• The government has to do something

• Everyone deserves to be covered

The end goal is more noble than what it costs to get there...
I can't solve all of these problems. Actually, I don't think I can solve any of these problems. I did, however, read an interesting perspective the other day that took the discussion and thought process beyond a simple restatement of fact or a political analysis as to the timing and scorecard in the current Congress. I want to focus on the issue of cost, and specifically, how we measure rising cost.

Rising costs. Sometimes this is known as inflation. Inflation would be too few dollars chasing too few goods. It is easy to remember the last time you heard that healthcare costs rise faster than basically any other costs in this country. Health expenditures make up somewhere in the neighborhood of 16% of GDP. So, through time, the article that I read thought it important to ask one thing. Why? Why is healthcare so expensive? Why does the cost rise?

The assumption seems to be that costs are rising and this is unequivocally a horrible thing. Think of cars. Movie tickets. Almost anything. Have costs risen over time because these goods are exactly the same as they were? Have costs risen because of an overall rising of prices? Has it been a little bit of both? Examine the following argument.

I pose the following question: Has healthcare improved in the last 20 years? The last 10 Years? The last few years? Does this justify a higher cost? I mean, why do things improve in the first place? True, some people just believe in healthcare and in improving medicine for its own sake, and that's a nice ideal. But, that isn't going to keep drug companies making better drugs. It also isn't going to keep attracting the best doctors who want to push the envelope with new research and new procedures. At the end of the day, there has to be some type of economic motivation to keep a system improving itself. No one will keep improving a system to the maximum degree if they don't have an monetary gain at stake.

So, is healthcare and the cost of healthcare, rising too quickly? Maybe it is, maybe it isn't. But, the thing is, I think it's important to think of why costs rise. I think it's important to make the connection to how rising costs yield resources entering industries and attempting to find ways to make them better. The next time you or a relative gets sick...think about it. Do you want to take it on faith that your team of doctors is completely selfless and all about medicine for its own sake? Or, would you feel a little more comfortable if you knew that your team of doctors was just like any one else...trying to be the best that they can be all the time because they always have something to also gain for themselves and their own families? Socialism is a nice idea. But, can it work?

Jitlada Hollywood: The Real Taste of Thai

Earlier this week a friend of mine sent me an LA Times review of Jitlada, a small little restaurant off of Sunset- nestled into a strip mall (oh Hollywood, how I love you). Though I consider myself a semi-sophisticated epicurean, I confess that I have never tasted "Southern Thai" food before. Southern Thai cuisine is known for its use of turmeric (the fresh kind) and just overall pungent, spicy, dishes unlike anything I have ever tasted.

First order of business: read that review. It has every directive you will want to know before you enter that restaurant.

Three things we want to reiterate:

-DO NOT ORDER from ANY part of the menu besides the very back, the "specials" menu.

-If you like spice (and not just that 'hits you immediately' pepper spice but the kind of spice that creeps up on you after a few bites, the spicy that makes you feel like you may be on hallucinogenics), you will LOVE Jitlada's vast array of southern thai dishes- so try a few! .

-Make sure you enter knowing you will be spending the better part of your evening

there. Yes, service can be a little spotty...but it is well worth the wait. Here's why...

Our first dish was a perfect summery salad: deep fried catfish (though very light and airy to taste, despite the way it was cooked) over a bed of julienned mango and greens. This was actually my least favorite dish of the night- a testament to how amazing the meal carried on.

The simple glass table tops are those you will find in many Chinese restaurants all over the area; for Jitlada, they serve as free publicity. Among the four magazine excerpts underneath our table top was one from LA Weekly voting the steamed muscles as one of the Top 10 dishes in LA in 2007. That was our next dish- duh. Though simply cooked, the broth the muscles were served in was absolutely deep, rich, and divine. That broth took my breath away by combining the savoriness of the broth in a good bowl of Pho, with a spicy kick I've only tasted before in Indian cooking.

Finally, the pièce de résistance: Sator Bean with Lamb (No. 121). If you have a tolerance for a bit of pain, this dish is quite possibly on my list of Top 5 dishes I've ever had. In my life. The lamb: cooked to perfection. The sator beans and that spicy sauce is what made it, though. Upon first taste, both my friend and I thought it was one of the most flavorful mouthfuls we had ever come across. Three bites later, both our eyes were watering in gleeful pain, our bodies not knowing if we wanted more or if it this reaction was our bodies telling us to stop eating.

Oh, one more thing: beer, water (lots of it), and some brown rice make this meal much more pleasant. Go with friends, be ready to sweat (think of it as a culinary form of detox), and engage with Jazz (the owner) to make sure you are getting the best Jitlada has to offer.

An exquisite experience...

We have always seen the meal as a center of the human experience. -ChezPanisse Commitment to Sustainability

Thursday night we had the pleasure of dining at Alice Waters' famed Chez Panisse in Berkeley. We had made the reservations two months in advance, studied up on Alice Waters' philosophy on food, and had the tasting menu up on our screens the entire week leading up to this night: we were ready to rock. What was to follow was an evening of epic proportions (to be taken both figuratively and literally); an experience that changed the way I view, eat, and enjoy food.

Chez Panisse's core philosophy lies in the underlying belief that every segment of a meal- from the choosing of locally grown ingredients to our waiter capping the night off with hot mint tea- is inextricably linked to the human experience. I can say with absolute certainty that every individual we met who worked that evening personified these firmly held beliefs.

The wait staff: impeccable in execution. From the moment we stepped into the dining room, Gianni welcomed us with open arms. I am an incredibly curious person (especially when it comes to subjects of intense interest), and I peppered him with every question that came to mind. He answered them all, with no hesitation, in a way that conveyed the utmost passion for what he does. Even better yet, he dug our inquiries and gave us a personal tour of the kitchen in addition to giving us tastes of wines he felt went really well with our dishes. I would go back to Chez Panisse simply for the service I received from Gianni.

The food: fresh, seasonal, local DOES make a difference. Home made ravioli, squab liver, perfectly prepared duck, every dish appeared refreshingly simple while tasting absolutely divine. After meeting the chef and cooks in the back, you could tell the care used in the preparation contributed to how well these plates worked together.

In conclusion (and even though my fave Tony Bourdain despises the woman) we loved Alice Waters, Chez Panisse and the entire experience surrounding this little Berkeley eutopia. Go there...as fast as you can...and savor every minute!!

In response...

USA 2009 = Argentina 2001?
My response to that article is this: Pure sensationalism. Economics is such where you can pretty much draw almost any conclusion that you would like and then graphically and fundamentally support that conclusion. I see this article, and I think back to what I have read and studied relating to Argentina. It is my rudimentary understanding, as I am not an economist, that Argentina had a currency board. What does this mean? Well, in short, it means that they did not have monetary policy. Their central bank, if I remember correctly, was forced to maintain a dollar peg and currency speculators eventually pressured and succeeded in forcing a devaluation of the currency relative to the dollar. Combine this with the fact that many debts were in dollars and the Argentinian currency, with a devaluation, was worth substantially less of them per constant unit, and you can see the significant potential for problems. However, for the following reasons, I think that this conclusion and subsequent comparison is ill-founded for the long term, as many, MANY very bad things would have to occur prior to its ever coming to actual fruition.

First, the United States has a central bank and independent monetary policy. Is it perfect? Of course not. But, did Argentina have the TALF, the TLGP, or any of the other major programs put into place to help to stabilize confidence in its debt markets? This alone does not and will never ensure that major issues can't ever occur...not in the slightest. But, a comparison to Argentina, at this point, to me, completely discounts the effectiveness of many of the programs that were instituted quickly and efficiently during the early stages of crisis.

Second, the United states economy is clearly not comparable to the Argentinian economy in any major or measurable way. True, the case can be made that both economies had larger measures of their populations borrowing more than they should be borrowing. That's kind of a subjective rather than objective point, but the whole idea of credit contraction advanced in the article is certainly true. However, look at some relatively common economic indicators. I won't bore you with too many details, but, just think about per capita GDP. Per capita income. Things that compare the purchasing power of the average US citizen to that of the average Argentinian. I'm not saying that Argentina is a backward nation, not by any means. I am merely saying that they two are far from comparable. Types of jobs, training, education, standards of living...two vastly different countries...and this cannot and should not be discounted.

Thirdly, look at the causes of crisis. Argentina was a country that attracted a lot of foreign investment that, at the first sign of trouble, turned on its heel and ran out of there as quickly as possible. What does that tell you? Well, to me, again, based on my experience in looking superficially at the crisis, it says that there were a lot of short term projects looking for a quick return, and there was less real, long-term focus on value creation. The United States is a service-based economy depended, at least in recent past, on its consumers. Foreign investment is nice, and it does currently finance a massive fiscal deficit and a massive trade deficit. This cannot and should not be overlooked. If all of that money turned on its heel quickly and flew out of the country tomorrow, we would be in SERIOUS trouble as a nation. But, look at this logic. If money is running out of Argentina, where can it go? If money runs out of the United States, where can it go? It's true, China has been talking, Russia has been talking, and the IMF is in the early stages of what seems like bond issuance. In the near term, will this market be sizeable enough and liquid enough to replace the treasury market as the most liquid and most safe market in the world? It's just not possible to think of it at this point as a near-term alternative. The Euro, the Yen? Again, not possible. A country like China has a simple problem. Had it invested in Argentina, this country and investment opportunity was never large enough to be "significant." It was a diversifier...a diversion of some reasources, but one that could be easily written off and backed away from. The US market? The US market is not at the point of being a diversion. No major player invests in treasuries to "diversify." It is the most liquid and safest market in the world. Bonds of almost any maturity are offered, and, the key, the BIG key, is that you know when and what you are getting back at all times.

Fourthly, look at the lead up. Securitization...financial innovation...banking or mortgage malfeasance, etc. But, in Argentina, an important question to ask is simple. Did they have the FDIC? Where customer deposits safe? I'm not talking about loans...I'm talking about the savings of citizens. I'm talking about the need for people to make "runs" on banks. With US policy, this hasn't happened? I believe it did happen in Argentina, and I believe, but might be incorrect, that citizens in some cases lost everything even if they weren't taking risks and simply leaving their money at the bank. This is a big deal, and, in the United States, it has mitigated many potentially disastrous effects.

There are many other points and questions that can be brought up, but they all point back towards the same point. The article is interesting, the title grabs you, but it's the same as comparing the US to Zimbabwe, which was another article that came out 2-3 weeks ago when the yield on the 10-year increased "dramatically." It's pure sensationalism. Government and FED policy cannot and will not be perfect as we navigate forward. The Deficits could cause rather significant problems. But, saying that we are in danger of being similar to Argentina, Zimbabwe, or any other country in the developing world is an extreme leap and cannot yet be supported. Extreme negatives such as those might be just as likely to happen as extreme positives, but, no one writes about those. I guess they aren't as interesting to read.

As I signed into facebook on May 23rd, I contemplated the fact that this weekend was not like other weekends. It was memorial day! Nothing beats that extra day off. So, already in a great mood, I saw a reminder pop up. Oh! It was my friend's birthday that evening and I was set to go to a club. Admittedly, I am nowhere near the biggest "clubber" on the block, but when certain people your friends with invite you to things, I've learned you kind of don't have a choice. So, as I polished off the dancing shoes, I realized that there was an upside. I was part of the "pre-party", and the pre-party had the privilege--at least I thought so at the time--of dining together before hand at the restaurant of Justin Timberlake. The place is called Southern Hospitality, and it's located on the upper east side of NYC. I joked with a couple of people that maybe we'd be sitting in the back corner of some swanky, dark, stylish joint complete with hints of N'Sync playing in the background. I wouldn't have even minded actually. Couple drinks, good company, music that takes you back to, well, around junior high...good times. I couldn't have been more mistaken.

I arrived on time (which is impressive because I had the 4, 5, and 6 trains to pick from, and I think I went from the 4, which was the express, to the 6, which I thought was the express). Ok, I'm not great at subways either, but I'm better than I was the time on my birthday when I was waiting with my girlfriend at the wrong track entirely. She still makes fun of me for that one. I saw the place immediately from the across the street. Southern Hospitality in bold letters and a completely open front. I'm not a fan of the completely open front. I like a door, a wall, keep the light out, make it dark inside. Maybe really exclusive, velvet ropes and the feeling like you couldn't get a reservation if you called 30 times because the line would be busy every single one. Hey, if you've ever eat in NYC, you know it's crazy expensive. I want the whole expensive look and feel. I walked in and was greeted with TVs...as FAR as the eye could see. There was even one of the big, 10 feet across screen projection things on the wall. That, combined with the wall of noise and commotion (I guess in place of the physical wall), precluded me from finding anyone, so I did the awkward walk in, looked around, and, not finding ANYONE at all, walked back out and got on the phone, only to walk BACK in 2 minutes later all the way to the back to find my group. Seating was kind of TIGHT, even by NYC standards, and the crowd was of the more "I'm here to watch sports and get hammered" variety. I think there was a Mets game on...I know this because there was some yelling throughout the meal to that effect. So, overall, not the atmosphere that I was expecting.

Possibly, this was due to the fact that it was Ultimate Fight night. For 50 dollars, I could stay from 10-1 and have open bar AND I could watch the ultimate fighting championships. Maybe some people enjoy that...I'm not one of them. For 20 dollars I could just "be there" to watch the ultimate fighting championships. Hmmmmm, it made me wonder...were the food and drinks that I was ordering free, or would I have to buy a meal, and then ALSO pay another admission fee on top of that meal? What?

The food and drink itself was lackluster. If anyone reading this has been to a Chili's, an Applebees, a Cheesecake factory, or any version of a similar place...where you basically get reasonably priced food with REALLY GOOD and REALLY BIG specialty drinks, they would be better served heading in that direction. My margharita was not all that impressive. True, they had the mango, which was good. True, it was sizeable. True, they were LIBERAL on the tequila, which was nice. But, I don't know. I've had better. The cornbread was good, but, I can buy muffins at my grocery store. This is going to be a food and drink combined 35-50 dollar experience. Cornbread, to me, isn't part of that experience. I tried the fried tomatos, which had absolutely no seasoning at all, I actually had to pour some tabasco all over them just to give them some LIFE. And I had the fried chicken, all white meat for my meal. Chicken was very good, but, considering I was paying 20-25 dollars to have it, it wasn't any better than a wendy's spicy chicken would have been. Scratch that...Wendy's spicy chicken is AWESOME. This place...it's like the chef would fry the stuff and then just stop. Bro, where's the seasoning? And, anyone who has eaten with me knows, I am the LAST person to complain about the seasoning...so it HAD to be lacking.

Overall-if you like sports and want to get hammered, visit southern hospitality. If you want to have a nice meal on the upper east side of NYC, then, I might recommend a number of other options. I could have gone to Chilis, spent half as much and gotten two times as many drinks.

La Costena

Over the weekend, our favorite Silicon Valley burrito stop made it into the travel section of the New York Times!! La Costena, or as we so lovingly call it, "La Co", was recently featured as one of three restaurants that one must ABSOLUTELY check out if visiting the Silicon Valley. For more, read the article: http://travel.nytimes.com/2009/04/17/travel/escapes/17Amer.html

The Response...

We all know the tale...the man, given the gift of flight and able to fashion the perfect wings, only to take advantage just a little bit too far, melting off the coating of adhesive wax and falling back to the earth below. Time and time again throughout history, societies could have done well to heed the lessons inherent within this story. And yet, human nature drives us...no, it FORCES us to just try to take that one little bit more. That fateful..."if I could just...then I will be done...really..." The first mortgage brokers who sold subprime loans and got rich doing it...the first insurance companies who wrote massive amounts of Credit Default Swaps...the first rating agencies that "rated" packages of loans AAA...these entities were not the problem. The problem lies in the addiction...that need we all have to get just a little bit more and to eek out that last remaining possibility of performance. When bad practices with selfish aims begin to crowd out and erode more prudent foundations, it's only a matter of time before a house of cards comes crumbling down, or, better yet, wings of wax wither and melt as the fundamental forces of physics dictate a final trajectory.

2008. The year of the "structured product." There is nothing wrong with structured products. These securities, derivatives, are meant to hedge risk. Their returns are based on price movements or returns generated by some "underlying assets." The problem arises when the term "hedging risk" becomes synonomous with "eliminating risk," and clients eventually believe their accounts can never go down. The important thing to always remember, the first question to be asked with ANY security is HOW DO I POTENTIALLY LOSE MONEY? That's it, right there, plain and simple. If it's not FDIC insured...if it's not a CD...if it's paying more than some "risk free" rate, then, by definition, there is a risk, and there is a potential of loss. After 2008, it should be crystal clear to all investors that the idea that they "don't have to worry about a risk that is so miniscule, so infinitessimally small, that it could never happen", that idea, it has to be thrown out the window.

I recently read a paper regarding asset and liability matching and M-notes. Asset and Liability matching is a technical term, frequently used to duration match the cash flows of fixed income portfolios with pre-set or predetermined liabilities, or liability projections. It is used most often with large institutional pensions...they have assets that need to be there for retirees, and those assets need to be managed in such a way that there is the best possible chance that what is needed will always be there. It's tough, in my view, to take that approach and apply it to an individual person. If you think of a company as a large group of people, you feel like, as the group gets larger and larger, for the most part, the behavior of the group as a whole, which will have many common and similar interests, will be easier and easier to predict. Not with 100% certainty, and not for 100% of the members all the time. But, the averages used in the actuarial calculations for large groups of people are those for a reason...there are always deviations but, for the most part, projections can be made to reasonably conform to reality. Trying to do any such thing for an individual or single household...WOW. That would be tough. Not because the intellectual foundation is wrong or incorrect, rather, it's just so hard to know the exact liabilities that one will incur next week, next month, next year, or over the next 10 years. If one were to base their calculations on the averages for the population at large and then have an experience drastically different from the average of that population...well, I would shudder to think. Until one has a crystal ball, I'm not sure that this institutional approach is going to have widespread applicability to individuals, especially since those truly concerned can position portions of their portfolios in guaranteed products, like annuities.

M-notes are interesting. My understanding is that they cap both upside and downside of "an index." A cursory read seems to make it appear that there is no way to lose money. At worst, principal is returned. I am disconcerted, not because it seems like a horrible idea, but because it seems like too good of an idea. How is the "packager" making money? How does the investor "lose"? Where is the catch? It is unclear. Why is this different from an annuity or other product with some type of "guarantee" attached? Not enough is known to draw a complete opinion at this point, but, when in doubt I will always return to the fundamental truths. Risk always persists. Always look for the ways in which you can lose, and be surprised and even skeptical when these seem to be outweighed by the probability of a win. The extra thought and care, it will have no effect on the intrinsic value of the opportunity and, over the long-haul, you'll be glad you made the extra investment in time and effort. No idea can fly forever...they always come back to earth. Let's never be surprised.

Quantum of Solace

James Bond, 007.
I have to say, this Daniel Craig does an absolutely incredible job, in my opinion. True, most of what he pulls off is utterly and completely unbelievable and obviously done with the help of computers and simulations, but, who cares? It's AMAZING entertainment. This new movie, the Quantum of Solace, had somewhat of an environmental twist. I noticed it especially because I have been noticing environmental things and green causes more and more these days, but this movie really made me think. To give a basic synopsis, the main villain was the CEO of a green corporation focused on the environment...or so we and the world would be led to believe. Bond obviously knows better, and he realizes and uncovers a plot that, under the guise of buying up land to create natural parks and perserves, the company is actually buying up access to fresh water in various countries. Engineering droughts and driving up the price of, of all things, water, our most valuable resource and one of the FEW things we cannot live without. The story centers around Bolivia, and, among other things, the villain's company would buy up forest land. That land would be sold to logging companies, which would then cut down all of the trees. This would lead to the earth being looser and less able to retain water, and so, without the vital root systems of the trees, water was more apt to run off into the oceans or evaporate. Additionally, river beds were strategically dynamited and damns were erected. At one point, one of the country's leaders is quoted as saying that citizens need to spend half of their paychecks just to be able to drink one bottle or bucket. Living in America, such a thing sounds unfathomable, and, I know that this was just a movie, but you can't help but to think of certain other, real world situations that have, did, and do actually occur. Situations that make you really think...just how impossible would this be?

People want cachet, they need power, and, quite frankly, it's tough to get this without having the cash to back it up. Reading a book recently, titled "Eco Barons", I read about Chile and what they do for what seems to be salmon aquaculture. I had heard of this before, but from the perspective of Wal Mart, a huge company that depends on Chile's aquaculture to sell fish cheaply in its grocery stores. The issue was debated from two sides. Fish is healthy, and Wal Mart makes it more accessible to Americans known to have serious issues with cardiovascular disease and cholesterol. By the same token, the cheap fish are coming with an expensive price. Salmon was introduced to an area of the ocean where it had not previously existed. The farmers make sure that it flourishes, and it actually flourishes to such an extent that everything else in that area dies. All the fertilizers and antibiotics and biohazard wastes cause various microbial blooms occuring at various levels of the ocean's thermocline. These blooms consume all available O2 in respiration, leaving behind an ecosystem devoid of life. So, that clean, efficiently sliced pink fish at the end of the isle. True, you can pick it up at an extreme discount. But, what if, embedded in that cost of getting that price so low it was proven that farmers providing that fish had killed a species that would have led to the cure for cancer? When we kill without truly knowing the consequences of our actions, can we really prove that this hasn't happened? Might we be the authors of our own demise? The world's ecosystems are incredibly resilient; there are ways to do things, albeit, in slight more expensive fashion, that will have less of an adverse effect. Are we in immediate danger of corporations scheming to control our world's water supply? Ha, of course not. But there are other resources and species that we should make more of an effort to preserve, especially the ones about which we know the least. They could be the ones to save us when we need it most.

Age

I heard two stories this week with respect to investing in the stock market at this, can you say, VOLATILE time. One involved the friend of a colleague. This friend was able to put some money into Citigroup stock when it was around, let's simplify and say, about a dollar. It went to 3 or 4 dollars a short time later, allowing him to triple or quadruple his money, depending on when he exercised the sale. Ironically, my father had called me a few weeks before asking if he should put 500 dollars into Citigroup. I don't know if he ultimately did or didn't, but I had told him that the political risk had been too high and that I would not have touched the stock, even if the price was so cheap relative to "where everyone seems to think it should be." Had he invested, he too could have doubled or tripled his money. Had I been able to invest, it would appear that I would have missed out on an opportunity.

The other story concerned the other side of the coin. A buddy of mine had a friend working in Boston at an investment firm. He was a trader, involved on the equity side, and he had been doing well. Apparently, from the sound of it anyway, he had "earned" his opportunity to take a chunk of money, presumably part of a larger fund, and put it somewhere of his choosing. He chose AIG at $4.00. One word...OUCH!! Needless to say, he will now need to work his way back up to getting that opportunity again.

If one is to invest, especially in these markets at this point in time, feelings of regret such as this, either at trades taken or opportunities forgone, can and will be part of the experience. I saw an article today with an incredible quote reading, "Life can only be understood backwards, but it must be lived forwards." So often, we feel the need to extrapolate future potential based solely on the past. Citi stock is cheap...why? Look at where it was a year ago... We have all heard that statement. Maybe even the "everything is cheap right now." Maybe that's true, but, what it certainly doesn't mean is, "If I pick stocks at random, since they're so low right now, they have to go up. I have to make money." If 2008 teaches us anything and we choose to extrapolate past to future, take one thing. Nothing is certain. Nothing can't happen. Anything can go down to zero...it just happens much faster from 50 cents than it does from 50 dollars. Have a process, have a reason, and go deeper than a simple "because it's cheap right now." Over the longer-term, you'll be glad you did.

In the land of the Basques...

Last night, after hearing interesting reviews from people who travel from all points across the Bay Area to South San Francisco, we headed to San Francisco Basque Cultural Center (http://www.basqueculturalcenter.com/). Besides having three restaurants (that house up to 200-300 ppl each), this enormous building is also home to three floors of pelota courts. I can say I have never have had a dining experience quite like last night....
First off, the WAIT was an experience in itself! We had made reservations the day before for 8pm (we had heard from devotees that they fill up quite quickly). We arrived at 7:45 to the hostess letting us know that it was "absolutely crazy" and that it would be a "25 minute wait" for those who had made reservations at 8pm. Twenty-five minutes turned into an hour and a half- it was 9:30 before we finally sat down. I felt as if I was back in Spain...where a set time to eat is more of a guideline. Instead of complaining or yelling at the hostess (which several of the patrons who had hoped to dine at 8pm did) I sidled up to the bar among a seemingly never-ending line of true vascos. Jolly, bearded old men sharing beers with their fellow pelota players. If you decide to spend an evening (and believe me, plan on spending an entire evening) at the Basque center, go for the ambience. As soon as you enter the doors of the center, it is as if you are stepping into the town center of any given small town in Northern Spain. Families, laughter, drunken debauchery...
Once you actually sit down, the best part of the meal is that you will probably be seated next to huge parties of 15 Spaniards who just know how to have fun. They sit and linger for hours, with no sense of urgency, and although this probably leads to an anxiety attack for the hostess who is trying to turn over tables to prevent being shot by exasperated patrons, it is a welcomed reminder of how a meal should really be enjoyed. As for the food, you can probably tell I was not super impressed by anything. For the most part, the dishes lacked seasoning. We tried the sea bass, sweet breads, veal, and seafood crepe, escargot, country pate...I can't say that I would go on record to say that I'd recommend any of them. Overall, this WAS a pleasurable dining experience- despite the mediocre food. Everything was authentic and wine flowed freely (and cheaply). Next time you find yourself in South San Francisco, make an effort to visit the center.
Viva el pais Vasco!

Economic Update: March 23, 2009

What we'd like to do is address this update in 2 main parts:

1^st- A capital markets overview, there has been so much going on! We will attempt to explain it as simply as possible.

2^nd- Give you an intelligent, informed, actionable idea centering on what you can do right now to position yourself to move forward in 2009 toward your future goals

Let’s begin the overview of the capital markets by identifying the problem: nobody has any confidence in the financial strength of the nation’s biggest banks. Banks don’t even trust one another because no one is sure of the value of the loans and securities currently held on their books. The truth is, some banks will make it through this recession…and some won’t. This uncertainty has caused borrowers to have trouble getting loans and banks have been unable to sell loans or securities they don’t want.

So what is the solution?

The big news today was Secretary of the Treasury Tim Geithner’s plan to fix the banks. The plan is more easily digested when thought about it as a three-pronged plan:

1. Get enough capital into the 19 biggest banks so that everyone believes that each can withstand a bad recession.
2. Get toxic assets off their books so banks will pick up the pace of new lending.
3. If the first two points are well executed, investors will regain confidence in our financial system.

Before this recession comes to an end, the credit markets must become fully functional and liquid once again.

If you watch CNBC, you might not be aware that the Fed is actually having some success in thawing out these markets. The Asset Backed Securities market is critical for keeping credit flowing to consumers (it made up roughly 40% of real estate lending before the crash). The Term Asset-Backed Securities Loan Facility launched last Thursday is what the government has put in place to get this market moving again. It allows hedge funds and other investors to borrow from the central bank at low rates so that these investors can now go out and buy newly issued securities backed by consumer financing such as auto loans and credit card debt. On Thursday and Friday alone, $4.7billion was accessed and three deals (Citi, Ford, and Nissan) went through. This is viewed as a very good sign that money is coming back into the asset backed securities market.

Many believe that a healthy credit market begets a healthy equity market...

Today the S&P has witnessed its largest comeback since 1939. And, although today’s prices may not be rock bottom, they do provide a margin of safety for the long term investor. Jeremy Grantham, one of Wall Street’s most infamous bears, came out this weekend in Barron’s advising individual investors to be ready to get back into the market “you absolutely must have a battle plan for reinvestment and stick to it.” We certainly agree with Grantham’s point. “In an environment where assets are still being re-priced and balance sheets are being restructured, it is still wise to be cautious”- however, we would encourage every investor to develop and be truly comfortable with a reinvestment plan back into the markets.

With more than a trillion dollars flooding the market, we believe investors should be wary of the risk of inflation. Last week we saw the dollar decreasing in value because of these fears. What is a way to protect yourself? Diversifying your portfolio by keeping a healthy weighting in both the developed and developing worlds is a great way to mitigate this risk. International markets look attractive for a few other reasons:

Central banks in the developed world have, for the most part, done their best to mimic the comprehensive policy actions of the Fed. After China unleashed its own $585 billion stimulus plan in November, its local stock market has gone up 33%.

For the long term, growth in emerging markets will continue to outpace that of the developed world. The advantage of emerging market exposure corresponds directly to the relatively non-existent debt burden compared to the developed world, namely the United States. Citizens in these countries can simply consume from the higher savings rates they have built up over time. Imagine yourself for a moment. Every month the credit card has to be paid prior to the enjoyment of new purchases. The citizen in the emerging market country can go straight for that new purchase. Growth, without the need for financing, will propel these economies forward as the burst of global demand catalyzes from fiscal and monetary stimulus on a global scale.

So now we have covered why there currently are tremendous opportunities in both the US and International, equity and fixed income markets. What is the key takeaway that you can leave here with today? If there was anything we would want you to remember, it is this: The definition of investment success is changing in today’s world. Everyone in this room has investment goals, and, what we learned in 2008 was that we were focused on the wrong measure in our portfolios. Return at all cost...in some cases, at any cost. What we should be thinking about, especially since return can function well beyond our control, is risk. We can quantify the amount of risk we need to take to meet our goals within a given time frame, and we can feel it when we move an uncomfortable level beyond our own, individual tolerance. When you decide to do this as an individual investor, what you are doing is taking on the mindset of the most successful institutional investors in the world. In the words of David Swensen, CIO of the Yale Endowment, "Focus on asset allocation relegates market timing and security selection decisions to the background, reducing the degree to which investment results depend on…unreliable factors.”

The Question: Compensation

It is IMPOSSIBLE to go through a day and not hear something about what is becoming a dreaded word: COMPENSATION. The funny thing is that, throughout that same day, you will also hear that this is one of the bleakest periods in economic history--a veritable economic ice age--so it is ironic that anyone is making any money at all. One of the most interesting scenes that I can recall from the past few months: I was watching a video on CNBC.com (Please, personal feelings about CNBC aside, "fair" and "unbiased" was replaced with "selling" and "sensationalism" long ago) and I saw them run one of the congressional hearing clips with all of the big bank CEO's. Right on down the line, one of the congressional leaders, or, excuse me, "leaders," had these gentlemen recite their compensation for the previous year. Then their bonus. Then their compensation for the next year. Then their bonus. It was both funny and scary. Funny that time was being spent going up and down the line of say, 8-10 CEO's 4 times when each had the exact same answer, or, at least, nearly the exact same answer, to every question. Scary because, call me crazy, but CEO pay has always been set by corporate boards. If Congress, and true, they're using TARP as their "way in" in this case, starts setting CEO pay, I can't help but to think of it as a slippery slope. It's interesting how it all sounds so good, so "in the interest of the taxpayer," and yet, the taxpayer could quite possibly never be made precisely whole again in some of these cases. If you really think, it seems that Congress is capitalizing on an opportunity to seek greater and greater relevance, more and more TV spots, and an overall feeling that this nation will never be the same again unless they can save it. The funny thing, and correct me if I'm wrong, but I wasn't aware they were solely responsible for the greatest successes of this nation...

Anyhow, the point here is not to polarize our readership by going on a political tirade. I prefer to deal more in absolutes. Like, a 1.75 trillion dollar deficit (or projected deficit) is not good for the dollar. The Fed printing money will cause inflation and will require some NIMBLE maneuvering to quell before we wind up with an opposite set of problems. And, the compensation question. It is an important question, but not with regard to Edward Liddy and the pre-debacle standing contracts at AIG. That is just a CIRCUS. Nothing more. The compensation question I think about regards asset management, most specifically that of hedge funds employing the 2 and 20 strategy. 2 percent of assets under management. 20 percent of profits. Superficially, this appears to be "performance based compensation." Looking deeper and applying a little bit of thought, if that 2% figure can become large enough, say, off of a billion dollars (20 million), what is the incentive to do anything. Additionally, depending upon how the 20% is measured and what the term "performance" means, in a strong overall market environment (where indices themselves are up double digits for years in a row) that can add up to a lot. Call me crazy, but I thought the point was to pursue these "absolute" returns, good in any type of market, exhibiting low correlation overall...but the comp structure would seem to tell me that the goal is to have the portfolio manager make an awful lot of money.

I have nothing against portfolio mangers making an awful lot of money. Absolutely nothing at all. However, these are smart people who have a deep understand of statistics and how to use them to their advantage. I would challenge any of them to measure their performance purely by the alpha that they generate, or, return that they generate for other reasons than taking more or excessive risk. A rising market raises all boats equally...it doesn't make sense to be paid for the portion of the performance that could be generated sitting in an S&P 500 ETF for basis points. Managers who are so great and so smart...they should have the guts to put their money where their mouths are, and they should not be paid any more than index funds for anything less than positive alpha. It's not fair that clients lock up their money for potentially years at a time, becoming part of that asset based fee. Managers should have the same skin in the game as their clients. There shouldn't be any caps...all I am saying is that excessive fees should be taken only for excessively strong, risk-adjusted performance.

Boondock in a Box

While watching the Travel Channel on a relaxing Sunday afternoon before St. Patrick's day, some friends and I came to the most appalling of all realizations. Before we get into it, let's quickly reminisce what we once used to love (and associate) with the local Irish Pub.

1. Guinness. Any true Irish Pub keeps their lines clean so the foam on top of the Guinness is a thick, frothy, white (instead of the beige derivations you get at most American bars).

2. The Local Bartender. Admit how awesome you feel when the bartender at your local bar recognizes you by name when you walk in; and then think about how much better it is that your name is said in a hot Irish accent.

3. European sports. Football (or futbol for those Espanoles), rugby, and more football; ESPN zone can't even come close to the camaraderie felt when watching your favorite football team womp their competitors while yelling at the opposing team's fans from across the bar in as coherent a sentence as you can put together after you've imbibed 7 pints of Guinness.

4. St. Patty's Day pub crawl...finishing off the day at your favorite local Irish pub where you are welcomed home like family. Need I say more?

These are just the first few memories that come to mind as I looked back on many good memories shared in America's version of the Irish Pub. Now it is true that I want to feel this nostalgia and that this nostalgia is very much a result of Hollywood imagery mixed with a bit of Irish immigrant folklore...but is it really too much to ask to have an authentic Irish Pub in your American neighborhood?

On Sunday, I found out that the (unfortunate) answer to this question was, quite frankly, "Yes".

Although I applaud the entrepreneurial spirit of the individuals at the Irish Pub Company (http://www.irishpubcompany.com/who.htm), I must say that I was left in a state of shock and awe. This company offers future Irish Pub Owners its services in the "design, manufacture, and installation of authentic Irish Pubs worldwide." In fact, the Irish Pub Company has built approximately 500 "authentic" Irish Pubs worldwide. They even let you choose from 5 different authentic pub layouts (Country Cottage, Brewery, Gaelic, Traditional, and Victorian Dublin Style)!!! After watching the Travel Channel, I recognized some of our old haunts in NYC were mirror images of those pictured on the show: I was outraged!

What makes a bar/restaurant "authentic"?
As Irish Pub Goers, should we begin asking at the door whether or not the pub was manufactured by the Irish Pub Company?
Is anyone else as disillusioned as I am?

Want more? Check this out: http://www.npr.org/templates/story/story.php?storyId=101959736

From Buenos Aires, With Love

And today, our first guest blogger Erica Bleau writing about her recent trip to Buenos Aires....

Buenos Aires querido, like a tango…
this is where you start and where you finish a trip to Argentina.

Of course if you go for ten days you might want to stay 20 , why not if you are on a holiday? But the country has it’s charm with the chaotic Latin traffic (perhaps inherited from Italy?) , French buildings and further away from the capital the calm and mysterious culture of the original indigenous inhabitants. The place is a big hybrid , modern and yet not developed , rich and poor, a big mix of Europeans and their legacy that could never replace the Indian mate with the tea or coffee. They just coexist.

Well, as you can see I could write about Argentina for days but today I've been asked to write about a restaurant... Argentineans are nostalgic ( that’s why we have the tangos) and I have to say that those different cultures contribute to the gastronomic world in a wonderful way; you can find great variety. But we have a majesty: Su majestad, la carne!!

Asi es como para comer la ultima delicia antes de subir al avión mi hermano ha tenido la sana idea de pasar por Puerto Madero…

The restaurant is called “El mirasol del puerto” and it is in Puerto Madero , a recycled area that used to be the harbor and the railway station.
Every piece of meat is perfect with the taste of the animal walking and eating grass, that's the real taste of the meat ( you could never be vegetarian here because the meat is the most natural and common food you have from childhood). And the different cuts in Argentina are pretty special, I have never finished learning all of them because sometimes their names vary from one province or one city to the other. Rib-eye, tenderloin, sirloin. I go normally for bife de chorizo (a thick red strip loin). This time: ojo de bife rojo rojo

http://www.el-mirasol.com.ar/indexesp.htm

As red or as well-done as you prefer the carne can be served with very natural and well done “ensaladas “ (that I think, we have to attribute to the Mediterranean taste for vegetables).

Endibias y rucula con parmesano; rabanitos, tomates .
A mix of fantastic colours; and if you still want to add red, you certainly shouldn’t go without tasting the Argentinean wine. Malbec is one of the favorites ; they say because the grape found it’s natural place growing by the Andes that gives this variety a very special flavor…"Alto las hormigas” a fun name for a great wine; we chose this wine to toast with for this and future trips in front of the river.

After a little walk in the area , among boats, new buildings and the old style English recycled railways stores, my brother took me back to the airport with my mother . I was leaving happy to have seen them all and perhaps I forgot to mention how amazing my farewell was because this is a just a normal ritual for us. My body thanked me and I slept like a log throughout the flight.

Gracias a mi hermano conocedor de los buenos lugares porteños y el selective comite de despedida.

Erica Lopez Bleau
Claro que queda siempre mucho mas para contar…

What NOT To Do

Man oh man, another week of CREDIT CRISIS. The word crisis used to send a chill down my spine but hell, it's been so long I'm basically chilled-out by now. I turn on the news every day. I read the paper...or at least some of the articles that aren't so inane that they make you LESS informed from their perusal, and all of these people who don't know anything at all and didn't know anything at all are telling everyone else (the regular, retail investor) what to do. There are those who opt for the classical approach. This is an easy approach. HOLD. You buy and you hold. The other extreme just continually repeats..BUY AND HOLD IS DEAD, BUY AND HOLD IS DEAD! However, I never catch what it means for it to be "alive"...maybe I always happen to need to jump into the shower right when they say that part. Then, there are the book writers. You have to love the book writers. There was one who wrote a book called Pounce. We were supposed to be impressed that he was only down 28%. -28% return...I guess he didn't quite lose 33 cents on every dollar invested, or 1/3 of your money, but he came close, and he beat the market (S&P 500) by about 900 bps. But, does anyone else see that the title is "Pounce." Why didn't he just pounce his way into treasuries...money markets...CD's? I know money managers who aren't writing books and were down 28%...what is so special about this guy's approach? I don't know, I'm personally not impressed and I HAAAAAATE being told what to do. I wanted to come up with a list of things NOT to do. Here are 5 things that we have learned (or should have learned) from 2008 NOT to do:


INVEST IN PONZI SCHEMES-Madoff anyone? I was forced to watch him being driven to the courthouse today in his Kia Sorento. He steals what, 50 billion dollars, or commits a 50 billion dollar investment scheme, and he drives in a Kia Sorento. The funniest part is that we have CEO's of multi-billion dollar corporations who are on the verge of bankruptcy flying around in private jets asking for government handouts. Our criminals are the ones exhibiting the utmost in frugality...

BUY GOVERNMENT BONDS-anyone who understands upside and downside risks would agree, this is the time to be selling. Risk free assets are not supposed to exhibit those kinds of returns. Why do we get any returns at all in markets? Because we accept a measure of risk. That's the only reason. More risk, over the long term, should mean more reward. Don't forget this, as the force driving it to be true in the long run is much stronger than any of our silly little emotions.

FORGET WHAT WE MAKE-I can't imagine people are dumb enough to actually borrow the amounts of money that they borrowed not paying attention to what they actually made for a living. They must have just spaced out. It might seem like a good idea from time to time to just spend ridiculous amounts of money that you don't have, but, please, think twice. Bills have a way of coming due at the most inopportune times.

PUT YOUR FAITH IN STATISTICS ALONE- OMG, the best one is the 1 in 1000 year event. Or the betas, alphas, standard deviations, P/E's, anything...BASED SOLELY ON THE PAST. Some things try to look in the future a little bit, but then these are only projections. The answers will never be solely in numbers. There is an art to this science.

FORGET YOUR RISK TOLERANCE- Stick to the fundamentals. Recognize your willingness to lose at all times, even when it might cost you a little upside in doing so. It doesn't ultimately matter the return that you get or when and how you sell your positions. The successful investor is always in absolute harmony with his portfolio in that it can't surprise him. He knows what he holds, he knows what can happen, and he has anticipated his worst-cases, however unlikely. Risk will garner reward. As Buffett says, American business WORKS. Take a page from Neo in the Matrix: "Know Thyself." Sound investments will follow.

A Toast to San Diego's Best Bartender

Oh Corey, how you spoil us so.
You only come second to our best friend Don Julio.
As promised, your picture is now posted on the blog- where this picture of you (with Mike holding a picture of you) will live in infamy.

A Tale of Two Restaurants

Last Thursday I had the pleasure of dining at an oldie (but goodie), mostly-locals, Malibu restaurant: Guido's. Right off of Cross Creek, in the same lot as the Malibu cinema, tucked right next to the lagoon, you will find the closest you can get to old-school, home-style Italian food...as they only know how in the 'bu.

If you visit at the right time (and with the right local) you may be lucky enough to sit through your meal, sip vodka through the night (with a splash of soda water and two limes, please), while falling witness to Guido's transition pre-Malibu Midnight through to post-Malibu Midnight.

So often, restaurants are judged by the food and service they provide during its most bustling hours. Last Thursday at 10pm (Malibu Midnight), after the stuffy Malibu crowd and owner took off for the night, I witnessed the opening of a second restaurant whose ambience, demeanor, and guests completely knocked the socks off the first restaurant.

Picture the bar- once populated by a motley assortment of Hollywood industry washouts and old retirees returning from golf. This long oak bar, after closing, became home to the cooks from the kitchen. Though my friend and I did our best to continue conversing as nothing had changed- I couldn't help but notice how surprisingly upbeat all these men were after putting in some very long hours behind the stove. Here they were, laughing and soaking up these few moments of liberation from life's daily grind. Bourdain always gives the most street cred to the Mexicans and Salvadorians who really keep America's best kitchens running. I couldn't agree more.

The quote of the night was from the bartender (obvi became my best friend by the end of the night) who said: "When the boss is away the Tequila comes out to play"....Salud!

Man vs. Model

I was sitting in my finance class today when it dawned on me. I had been thinking for awhile that people are inherently intelligent. I mean, one has but to walk through a field past a lake enveloped by gigantic man-made structures to note the nature of our impact on this world. The pond...the field...

these things have always been there, but the structures...hangars, wind tunnels, anthropomorphic wonders leading to ever bigger, larger, and greater anthropomorphic wonders, some even leading us to explore the far reaches of space flight. In many regions of the world, one has but to cross over a grassy knoll to realize conceptions that allow us to almost literally touch the heavens.

And yet, there I was in my finance class with the teacher trying to explain Beta. In finance, Beta is not complicated. There is some market, or benchmark, and there is some security or portfolio. Historically, when the benchmark has moved, the security/portfolio has also moved...in some cases, more than the market (a beta greater than 1) and in others, less than the market (a beta less than 1). It isn't rocket science and typically is used to create a "rough" estimate of some figure, such as a required rate of return given a particular unit of risk, or the CAPM model. I'm not sure what it was, but the class was peppering the professor with question after question after question after question. I didn't understand for a few reasons. First of all, the CAPM, or any other of these "models" is just that, a model. You use it and have a deep understanding of it, but, by the same token, you take it with a grain of salt. No one throws down the CAPM and gets the answers to the great secrets of the universe and the stock markets. At least, it hasn't worked for me. Maybe I am using the wrong model... Additionally, beta is frequently based on month data drawn back from history 3 to 5 years. I say again...HISTORY. Also important, but not imbued with all of the answers.
There are many other similar points to be made, but, the big picture is that this is not an exact science. It is a form of educated estimation. In the popular press modern portfolio theory is said to be DEAD. In the common parlance, it just no longer "works." Yes, Nobel Prize winning ideas no longer work. Riiiiight. I would just venture to state that sometimes it isn't these ideas, but rather, our haphazard applications of them.
With every investment, every portfolio manager must cross a point beyond what is known and into what is unknown...sort of where the ART meets the SCIENCE. If anyone wants to be truly impressive, they should stop criticizing what has already been done and start attempting to explain how, with the same PUBLIC information, Buffett became Buffett and the rest of us became, well, ...you know.

The Market

Many have believed for the last few decades that the market is there to "give." I put my money in, it "gives" me a good return or a solid retirement. Just by putting it in, I secure myself against any risks of not reaching my goals. Why is this? Well, I know that past performance is not indicative of future results, but if the last 10 years gave people 18 percent, why won't the next 10 do the same?

This thinking was all too common and absolutely ludicrous. The market is fickle and it will always be the master of us all. If I see a strategy that claims to "know" anything, I immediately head for the hills. The best statement is that "this strategy will fail once in 1000 years." Think about that. We don't even have 1000 years of data at which to look. Where does that even come from? What does it mean? They say that statistics can be made to say anything, but some of the earliest I have seen are from the late 1800's. What are these 1000 year scenarios based on?

I know, I know...one can do "scenario analysis" and figure out probabilities according to certain assumptions and ascribe those to chances in a given year and then translate that to a figure in 1000 years. Yes, yes, yes. Great idea. One must only read the annual letters of Warren Buffett to see how it should be done. Honesty. Fallibility. Uncertainty. Humility. It's all there, and we all know it doesn't have to be. If you like statistics think of this: over the long term 85% of active managers fall short of the market. That's Charles Ellis for you. Sense hubris in an investment manager? Get the hell out!

Perception

"Perception keeps our lives in chaos. Our perceptions are legion. We have numerous perceptions about any given subject, and for the most part they are all terribly inaccurate!"

I saw this quote today in a book I am reading, entitled "The Lotus Still Blooms." First, I saw the word legion, and I thought of course of the legions of readers who are always waiting with bated breath to see my work here. LOL. After I got over that shock, I did get down to some serious contemplation, and I was struck by the truth. The truth in the quote and how it relates to the world. Now, before you haul off and go, here is another northeastern douchebag from a liberal arts college struck by some vague notion of "truth" in a book about Buddhism, recognize that I actually did partake in a Pilgrimage in Japan, and that I harbor no axe to grind against Catholicism, the religion that I was born into. The truth that I see is absolute only in how it applies to life that we currently face. Warren Buffett once wrote that, in the short run, the stock market is a weighing machine. In the long run, it is a voting machine. This year, in his annual letter, he referred to the derivatives markets as venereal disease. Print it out and look at page 17 of the printed PDF if you don't believe me. It's true...in that you don't only have to worry about who you partner is but also with whom they have been "in bed."

I could say here that, in the financial world, our perception is diverging farther and farther afield from reality. If someone else wrote that though, I would scream CLICHE. I mean, we're wrong. We're all wrong. No one knows anything. The system is set up as follows. There might be private investors in the world who would be able to see a "solution" to the current crisis. So, it would logically follow that there would be so much money that they could make that they would be motivated by their own self-interest to do what they could to execute on that idea. Capitalism at its finest. But, on the other side, there is the government with its complete ineptitude. True, in some cases, it had to act. But, how did it "save" AIG if the company is still losing 61.7 billion dollars in a quarter. No, there is some element there of "they don't know what they're doing." And, there is another element of "we don't know what they will do next." Combine those two, and then ask, why would any private investor do anything at all? I can't see any reason. If they did, there would be no certainty that the rules wouldn't change tomorrow.

And so, our perceptions function to keep our lives in chaos. Government seems to perceive a need for more and more and more. The private sector perceives a need to wait for certainty. Both are interlocked in somewhat of a death spiral that isn't going to solve anything.