The further to the left or the right you move, the more your lens on life distorts.

Friday, June 01, 2012


The first rule of investing is to diversify—invest your hard earned dollars across industry sectors (e.g., retail, healthcare, technology) and across a number of investment instruments—stocks, bonds, mutual funds, etc. In actuality, diversifying is just another way of saying that by placing investment bets on a number of different sectors, you reduce your risk substantially.

As I watch the Obama campaign's flailing attempts to demonize Mitt Romney for his leadership of Bain Capital, I can't help but think of the word diversify. First, criticism of the President's attacks on Romney have been diversified across local, state, and federal levels. More surprisingly, much of this diversified criticism has come from leading Democrats. Cory Booker, the Democratic Mayor of Newark, NJ gained national attention when he suggested that Obama's attacks on Bain were wrong-headed. Deval Patrick, Democratic Governor of Massachusetts, praised Bain's work. And just yesterday, William Jefferson Clinton, Democratic past-President of the United States said: ""I don't think we ought to get into a position where we say this [Bain's investments] is bad work,This is good work." He also called Romney's leadership "sterling."

That's an interesting diversification of criticism—all coming from prominent Democrats.

But there's also diversification at a more technical level. David H. Horiwitz comments:
Bain diversified itself by risking capital in a variety of industries and not going all in for any one sector. That way, its eggs are not all in one industry basket and it looks more like the overall economy.

In contrast, the administration’s attempts to invest in “green” technology, no matter what one’s views are about the efficacy of “green” technology, are a fool’s bet. Even were it able to discern winners from losers, the inevitability of bad investing in one sector should be apparent to all.

The problems for The One’s are threefold. First, he has made near-universally bad bets. Second, public entity investing possesses fundamental flaws. And third, the opportunity to make investments with politically connected business ventures has led to charges of corruption and cronyism.

Look around. Can anyone name a successful entity in which this administration has risked billions of dollars of taxpayer money? From Solyndra to LightSquared. All taxpayer money, none of it confined to only one failure and in technology whose merits none of us have any interest, expertise, and time to debate, other than for me to make the observation that Steven Chu’s fervent hope and desire that oil prices climbing much, much higher would be the first necessity for this business model to work in the real world without needing to be propped up by the government.
Barack Obama is blinded by his firm belief that big government can solve all problems. But worse, within this belief, his complete lack of experience in the private sector, coupled with his selection of advisors who share his inexperience and his ideology, have lead to numbingly bad decision-making. That's a conversation that we should all encourage as the campaign progresses.