Can You "Get Smart"?

One of our missions at "A Dash" is helping investors see opportunity through a better understanding of organizational behavior, especially that of government.

This is fertile ground.  As far as we can tell, no one else in the investment blogosphere is pursuing these themes.  Meanwhile, many top pundits and fund managers believe they have all of the answers.  What more could we ask?

A Fresh Approach

A few days away sometimes brings a fresh approach.  We ask readers to do something really difficult -- shed their preconceptions.  Pretend that you are a foreign agent, assigned to interpret what is happening in U.S. economic policy.

We admit that this approach was inspired by the recent movie Get Smart and the old TV show, now playing incessantly on the family room TIVO.  [A note to regular readers:  The presence of a cool teenager in our family just means that the Old Prof became a parent late in life.  I enjoyed watching Get Smart when I was Derek's age and I am older than Doug Kass!)

In our old classroom days, we often found that pulling the problem outside of the traditional framework enabled students to get insights they would miss in any other way.

The Questions

So suppose that you are a Russian agent.  You have no preconceived notion about U.S. policy, the state of the economy, how CEO's behave, or what the various government agencies might do next.

1. Would you report to your superiors about what the intentions were of "The Government", as if it were a unitary body?  Or would you report that various factions had differing opinions?  Remember, your career could depend upon your choice!
2. Would you suggest that the entire U.S. Government had engaged in a plan to prop up stock prices?  What would be your evidence?
3. Would you suggest that all of the major bank CEO's had embarked upon a plan of systematically lying about their assets and their prospects?  Knowing that they would soon be exposed?  What would be your evidence?
4. Would you report to your Chief that the U.S. Government was simply postponing the inevitable cleansing collapse that capitalist theory says is essential?  What would be your evidence?

Conclusion

Some months ago someone told us to look at traffic counts and how to do it.  We know that posts like this one, articles that really challenge readers to think for themselves, do not attract much attention.  We mention this as a pointer for astute investors.

A real understanding of government policy is one of the best ways to make money.  The reason?   No one is doing it!  That includes the Kudlow show.  We watch it daily since it is the best information on the subjects of interest. It still lacks a real government expert.

When you have an analytic technique that people do not understand or follow, you have a meaningful edge.

Comments

[oldprof]

Mike and Tim --

Thanks for the suggestions. I have an interest in the energy question from several different perspectives. I have a viewpoint, but I don't like to shoot from the hip, so let me put this on the writing agenda.

I enjoyed Tim's post on blog comments. I often wonder what they tell us. Perhaps that is another topic. This post got a comment on Seeking Alpha from someone who (intentionally) gave all of the wrong answers to the questions and another who cheered him on. I remember that type from the old days. Does such a reaction affect how the average reader interprets the information?

Thanks again,

Jeff

[Tim]

Jeff, too many valid points to go into but I will hit a few. I know the traffic thing. It is easy to write the posts that generate traffic, but I want to write on topics I feel are pertinent to the point of my blog.

The current tendency of what the government "should" be doing coupled with the belief that it is always taking the wrong approach points to a massive misunderstanding of how it really works. I think you have a great perspective on this and too bad more do not reference your stuff. Not enough sex appeal I guess. I hope your system makes you and your customers a ton of money. Success is the best reward!

A note on CNG and LNG powered vehicles. The current technology requires ungainly fueling and onboard solutions. A fuel tank half the length of a garbage truck can only propel it for about 80 miles. A diesel fuel tank the same size would provide enough fuel to cross half the continent.

Current air quality laws in California push many garbage trucks to the natural gas route. The truck is built in Texas, flat bedded by diesel truck to Florida or Canada for the garbage body, flat bedded back to Texas for the natural gas fuel system. Flat bedded to California where the natural gas (esp LNG) is brought from New Mexico by diesel powered truck to fuel the LNG garbage truck for its 80 miles of daily use. Not very efficient and a long way from wide spread commercial use.

[Mike C]

>>>>>>>>>

Jeff,

I have a lot of respect for your thoughts on this subject, so I am going to solicit your opinion on something that is of GREAT interest to me in terms of government policy.

I'm sure that by now you are familiar with the Pickens Plan for energy. Yesterday, the CEO of Chesapeake Energy (yes I have a position in it) testified before Congress on how substantial U.S. natural gas reserves are, and that we should be transitioning to natural gas for transportation.

Given your knowledge and expertise with government and how policy is shaped, how would you handicap the odds of this becoming reality over the next several years versus just talk?

This seems to be a good example of potentially understanding government policy leading to making money. Depending on what course of action government takes, there may be a big investment opportunity in domestic natural gas producers.