A very very good speech by Bob Rodriguez. He spoke at the Morningstar conference last week. He has been selected Morningstar Manager of the Year three times and after this speech received a standing ovation. He was one of the early bears and still thinks we are in a bear market rally. He believes the U.S. government is walking down the wrong road. I couldn't agree more. The speech is worth the time to read. Thanks goes to Pete.
On the government's bailout policies.
At FPA, we fundamentally disagree with these “rescue” programs since we believe our impaired financial system is being distorted by protecting inefficient and questionable business enterprises. These programs reflect a philosophy of DWIT—Do Whatever It Takes—to stabilize the economy now. Maybe I should call it DimWit? In my opinion, a perfect example of unwise policy has been the economic support of the automotive industry, especially GMAC.
On the stimulus package
I expect little bang for the buck from the latest economic stimulus plan since most, if not all, of the anticipated positive economic effects will be offset by an increase in personal savings and a reduction in U.S. exports.
On Congress
My confidence is being undermined by this new financial system and era. The House of Representatives responded to the voices of the mob, when it voted 328 to 93, to punitively tax AIG employees in an ex post facto fashion. Many of these employees committed to aid in AIG’s corporate restructuring and expected their employment contracts to be honored.
Outlook on the Markets
My financial market outlook is rather cautious. I believe the recent stock market rally is nothing more than a bear market rally. It is being driven by some highly optimistic expectations.
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