THE ATALANTA SOSNOFF STORY WILL BE COMING SOON.

LAZY OCCUPIERS VERSUS REAL PROBLEMS

The rain didn't come. The country was already suffering. The crops withered and then withered some more. The land, the asset of productivity, became baron, and still the rain didn't come. To a great extent we were an agrarian society. The several hundred thousand tenant farmers, through generations of sweat but at the same time life, were obliterated by the drought. And so with no education, no money, no medical care, no unemployment benefits and really no food, they were ejected from the land by owners and circumstance.

They packed their bags and went into cars and trucks that would hardly move. They headed west, for what was thought of as a "place of plenty".

There were no real jobs, it was all fictitious. Some found jobs for 30 cents only to find hundreds of thousands of others willing to work for 20 cents and then 10 cents. At this point you couldn't buy food let alone anything else. The horror of the American farmer at that point of history is hard to comprehend. This was part of the Great Depression and a people without a backup plan and is the background for the classic book The Grapes of Wrath.

Obviously there are many questions, but who were these people? Who were their parents? They were farmers, they came from a farmers background. They were hard working; but their history, their struggles, their nature went from one generation to the next. Only a few had the luck or the psychological stamina to move away from the soil.

The Jews of the world have tended to be a persecuted minority for centuries. People have found that the Jewish people have dealt with the psychological trauma of Anti Semitism in different ways. Many converted, often believing that conversion would allow them to escape from discrimination. Many changed their names to non Jewish sounding names. Many chose the path of rising up to separate themselves and say "Look at me I'm successful". A good example would be Larry King whose birthname was Lawrence Harvey Zeigler.

The New York Times is a premier example of assimilating. The extent of the New York Times failure to support Jewish causes during the Holocaust belies why any Jew would ever buy this newspaper. The Roosevelt administration's complicity of not helping to save Jews from Hitler and the subsequent overwhelming support of the Jews for the Democratic party is the delusional aspect of historical victims separating fantasy from reality.

So the farmers suffered, the Jews suffered and now we see 40% unemployment in black teenagers and a black unemployment rate almost double the rest of the population.

The delusion of the blacks, as a general group, towards Obama and Democrats is the same as the Jewish delusions was towards Roosevelt and his Democratic administration.

See the farmers were left to starve, the Jews were left to die and Blacks are left to be unemployed. It is essential to recognize not as an excuse or an appeasement of any sort, but just the reality that the American attitude towards the Black community has impacted the psychology of the group. Granted some Blacks have moved beyond but many have not been able to.

The Farmers, the Jews, and the Blacks each have had historical problems impacting their behavior. For the record, there are many other groups within our society who have suffered through their own feelings of discrimination and chosen similar methods to address their situation.

But who are the Occupy Wall Street people?

A RETAILER MAKING COMPUTERS?

BLOG FIRST PUBLISHED APRIL 2011

Many months ago when I bought my first IPAD I said to my business partner, "Holy Moly-this product is going to have some huge impact on PC sales". Months have passed and I have begun to think of how many people are employed in making PCS and their ancillary equipment.

The gadget that brought down an industry and we didn't see it coming. Holy Moly???

P.S. I must be crazy. "Laugh of the Day"

Many months ago I first published the blog above about the IPAD. Now a second catalyst has caught our attention and seems to be just as destructive as the IPAD. The fact that a retailer (Amazon) is now manufacturing its own tablet is incredible. Not only does it appear that Amazon's tablet is quite a capable machine but it's also to be sold at a significant discount to its competitors. Look at what's happened to both Hewlett Packard and RIMM with their venture into the tablet business. One can only wonder what the implications are for the rest of the computer hardware industry.

At one point in time the only device used to draft written correspondence was the typewriter. With the introduction of the personal computer the days of the typewriter were limited. Will the same fate lie ahead for the manufacturers of portable computers as the competition increases and the prices decline with the perfection of the industry?

1930 REVISITED?

While the Democrats focus on "class warfare" and the Republicans focus on spending cuts the "battle to right the ship in a storm" is being lost. (The Forgotten Man)

Both parties are focusing on the wrong battles. The Republican party is so split that it's hard to see how they can beat Obama, in spite of his huge failings.

In June 1930, as the Depression was unfolding, the Congress actually passed a tariff bill intending to protect American business from competition. Instead, there was worldwide retaliation.

A stronger dollar, at this time, under these conditions is exactly the same as the tariff bill passed in 1930.

All the above, tax increases, confidence lost, potential for stronger dollar and balanced budgets are so wrong as to make one think the country is being run by people who actually want us to go down the drain. Let's hope that President Obama has the courage to resign.

BLOG OF THE DAY

In a recent blog we discussed the extraordinary risk to the marketplace that computerized trading is likely to cause at some unexpected time.

The recent trading loss that occurred at UBS is another example of activities that clearly shouldn't be allowed in the banking system.

Permitting banks to be in the trading business, usually conducted by young inexperienced personnel, is so dangerous to the monetary and fiscal well being of the banks, the government and individuals that there are few words to describe the risks involved.

In America we have depository insurance which would leave untold billions of depositors uninsured in the case of huge losses by traders.

The banking system should not be in the trading business with derivatives and options, etc. It is wrong, dangerous and must be stopped.

Unfortunately, when traders make money they get big bonuses, buy big apartments and consequently the huge risks are not faced unless there is a significant crises. One of these days, with these kinds of absurd activities continuing to be permitted, government policies will not be able to fix the problem fast enough. This will make the housing crises seem trivial.

ECONOMIC MISERY CREATES HATEFUL ENVIRONMENT

To see the President of the United States cowering behind his Union supporters seems to indicate that he is certainly no George Washington where courage is concerned. For alot of different reasons I happen to think well of the Teamsters Union and its leader, but to hear him talk in terms of "war" sounds almost like a call for a fascist state. The "common man" will not cower in the face of demagogic bluster.

WHAT MADE OBAMA QUALIFIED TO BE PRESIDENT?

The poor struggle for subsistence. The middle class realizes that our manufacturing jobs have been sent far away. The rich, no matter what they say, are tired of being made scapegoats for the country's problems. The corporations, where most Americans still work, are made out to be the enemy. Banks are attacked as if they were supposed to have known what mortgages to write and what mortgages not to write. The Unions hang on to antiquated work rules. The Politicians have no creative capacity. The Tea Party, well meaning or not, advocates totally disastrous economic policies. The liberal left actually believe people are "entitled" without having to earn it. The public school system is frozen and outdated. Wasteful financial transactions are accepted as a crucial part of capitalism's strength.

You could write all the offsetting positives to the above you want, but as long as the standard of living is stagnant, you would just be plain wrong.

No jobs, no growth, no improvement...just the opposite.

MR. BUFFETT'S OWN WORDS

On June 26, 2006, Warren Buffett, the man who wants to be the protector of society, wrote in a letter to the Board of Directors of one of the Buffett Foundations, "THE ONLY CONDITION TO THIS COMMITMENT IS THAT THE FOUNDATION MUST CONTINUE TO SATISFY LEGAL REQUIREMENTS AND QUALIFYING MY GIFT AS CHARITABLE AND NOT SUBJECT TO GIFT OR OTHER TAXES".

So here you have it ladies and gentlemen. Avoidance of taxes through legal means which would be fine if he wasn't acting as a hypocrital man in my opinion.

OPPOSITES DON'T ALWAYS ATTRACT...

Whether some people like it or not, the Keynesian economic model is a pretty realistic view of how things work or should work.

Monetary policy, no matter how easy, and fiscal stimulus have a hard time igniting sustained recovery without confidence on the part of our people.

With Obama constantly raising the tomahawk of class warfare and evil corporations, (even telling people not to go to Las Vegas), and the Tea Party advocating a totally wrong economic model that won't lead to recovery, its no wonder confidence hasn't returned. Until both sides can see the factual difference of their dialogue, the two necessary ingredients for recovery; low interest rates and confidence, won't come together. So we muddle as the politicians vie for power above all else.

"PUT YOUR MONEY WHERE YOUR MOUTH IS"

I agree with you Mr. Buffett. We should stop coddling the Super Rich. I propose there be a 99% asset tax on those with assets over $1 billion dollars. Let's start with you. Contribute your money to the government NOW!

FAILURE OF BRAINS

The fake genius of Paul Krugman...Read most of what he says and you'll see alot of complex words, but he really is just a troublemaker in the ilk of Saul Alinsky, disguised as an intellectual. He may like hiding behind his beard, but he is just an angry man who gives teaching talent to the elite, instead of working more in the middle range schools where the students are generally much poorer.

The second paragraph of his piece in the New York Times is telling everyone who reads it we should all feel "anger" because the "influential people", which I guess he is not, are the culprits responsible for our economic crisis. Who are these influential people...I say just typical Krugman propaganda.

Stand up people, feel your "anger", sounds like the first step before advocating riots in the streets. With all the violence in the world today, why would you want to incite such "anger" in people?

You be angry, Mr. Krugman, but you probably would be better off proving the real value of your economic thoughts first. Cut the crap!

In the last paragraph Krugman's writings of August 15th in the New York Times titled the "The Texas Unmiracle", he states "when Mr. Perry presents himself as the candidate who knows how to create jobs, don't believe him".

You may not like to pray, Mr. Krugman, that's your business but why in the world should people believe you. Get it straight. You are just a Professor, of which there are many, not the "Messiah", who tells people who to believe in or not.

SOMEDAY - THE REAL DEAL

In the 1930's President Franklin Roosevelt's administration created the Social Security program. There was strong political opposition based on the argument that this program would create a socialist state,reduce people's incentive to work and to save, and thereby reduce economic activity. In order to get the Social Security Administration bill passed, Roosevelt agreed the bill would be self funded. We all know we pay from our earned income a tax towards our future social security receipts.

The Medicare and Human Services expenditures by the Government are mainly funded by charges deducted from our weekly wages.

Only a hand full of the other government budgetary expenses account for the remaining government outlays.

A significant portion of this category is defense outlays. Historically the right wing of the Republican has been pro-defense expenditures.

The fact of the matter is there have only been three years, in recent history, that have accounted for the acceleration and the rate of growth of the debt level.

We have covered this analysis before. We have tried to explain that there is absolutely no way out of this without a significant increase in personal income. That requires a very positive capital formation environment. I don't mean to be trite, but the argument about corporate jets is about as trivial as it comes since every one of them is made by Union workers and using the political bogeyman is again an attack on our own people. For politicians like President Obama, being elected seems to come first.

Let's see the government publish how many planes it uses in its non-defense fleet. You mean government can use small jets but business owners can't. As long as political manipulation outweighs honest analysis, jobs will come slowly, the country will continue to retrogress and the world wide competitive environment will slowly but surely overtake us.

In a world full of so many social needs, I find it beyond explanation that the media has rallied behind our "First Lady" and her entourages trip to Africa.

Imagine, we have a First Lady...what in the world would make Michelle Obama a First Lady except marrying Barak. She's no First Lady, she's just Michelle Obama. I mean its almost hysterical, the "First Lady Arrives In Africa".

I was talking to a brilliant, poor, educated Ugandan. She was explaining to me that what her people needed was erasers. I said erasers, yes she said, erasers. She explained that if we get an eraser, then we have to get a pencil. She said that right now in her town in a school she recently visited, there is one eraser in the whole classroom.

You see erasers lead to pencils, pencils lead to paper, paper leads to books, books lead to teachers, and teachers lead to schools.

We are spending how much money announcing the arrival of our First Lady to meet Nelson Mandela, when what the people need is real caring rather than political hubris.

You are not going to get rid of AIDS until you face up to the promiscuous sex and the religious base which supports population growth that can't be afforded. Our First Lady arrived in Africa, not with truth, just ceremony.

By the way, I really like Michelle Obama, they don't come much better than her.

ADDENDUM: There are over 2 million people suffering from AIDS in Africa. That is almost 20% of the population. There are over 2 million children who have lost their parents to AIDS in Africa. These facts may clarify this blog.

HOW GREED OVERCAME CHARACTER...

For many years after the continuous attack on my credibility from some of my former senior executives at Alliance Bernstein (formerly S.C. Bernstein & Co.), I made very serious efforts to maintain a personal relationship with some of them. It was kind of like a "forgive and forget" and move on with life.

Finally the obnoxious comments of Roger Hertog at a dinner with our wives was the last straw in forgiving and forgetting. If it wasn't for Roger's inflammatory comments about my personality, the blogs that I have written probably would have never been done.

Ethics is a strange thing. It can be used to cover up subtle unethical behaviors, and when truth be told, it's characteristic to cry "How could you do that to me?"

I wasn't just an employee at S.C. Bernstein, it was my company and a significant loophole in the corporate papers, was turned against me by two greedy associates.

As fate would have it, I received a call from Sanford Bernstein's brother, Paul Bernstein. He informed me of how he was writing a book about his life with his brother and will be coming down to Florida to interview me. He assured me of his integrity and positive intentions. (He has never shown up or called again.)

When he called he reminded me of a totally true story, that many of you will think is inappropriate to publish. It is a small truth about a wicked man, who in his later years seemed to hide behind religious activities to cover up his abuses of other human beings, many of which I was personal witness to. Whereas Roger Hertog and Lew Sanders, appeared to stand in the background, seemingly afraid to raise their voices.

When Paul phoned he recalled his humiliation when his brother, who was then CEO of the company, took out his private parts, and p----d upon his desk in front of other employees.

Paul's story reminded me of a time when this same Bernstein, at a corporate party, took out his private parts in front of woman for reasons that you can analyze on your own. Several partners of the firm thought this was funny and that it was just Bernstein. Please note in the Bernstein eulogies by Hertog and Sanders,(earlier blog) the comments about his continual use of vulgarity and sexual innuendo. This was the real Bernstein, this is a small part of what I dealt with as President of the company, all else is tragic.

I certify this to be true.

PART ONE OF SEVEN - THE EARLY INTRODUCTION OF PRODUCT DEVELOPMENT AT SANFORD BERNSTEIN AS DELIVERED BY SHEPARD OSHEROW, PRESIDENT

When I was elected President of Sanford Bernstein and Company, after the disastrous management of the accounts under Bernstein's leadership, I had to start from scratch. There was no understanding of the firm or its product by the salesforce. There were no systematic rules of investing. You might say that speculation was the rule of the day and diversification standards hardly existed. The following is part one of a speech that I made to our employees in an attempt to step forth into a professional investment methodology. There are five parts to this speech.

PART ONE
The first step in the development of most industrial companies is the definition of that which it is going to do – a simple step, perhaps, but one which the securities industry has rarely taken. Think about this: We cannot control the price of what we sell; we cannot determine its distribution, nor for the most part can we even be free from a competitor offering, not only a similar product, but the exact thing that we are selling. Yet, for years the brokerage industry has prospered without a discernible product, which has insatiable advantages to the people who purchase it. Our key is our ability to position assets to meet a detailed, refined set of agreed-to objectives to a list of customers.

Wall Street has primarily been merchandising business. In the 1920’s (prior to the crash), a book was written titled, “Where are the Customer Yachts”. That title had implications then and meaning up to 1974. Very few investment concerns can point proudly to the product which delivered the customers a yacht; at the extreme, but very few can even point proudly as to how they achieved the goals of the investors who have come to Wall Street with need. As a matter of fact, very few investment mediums can point to any long-term success as it relates to the individual investor as a group. Most mediums for investments do not even attempt nor have they bothered to publish their record. One of the subjects that has come up is what is the product of Sanford C. Bernstein & Co.? Over the last 18 months or so, I have asked many of you individually what you thought the product of Bernstein was. Some of the time it was because I was trying to find out if you knew what it was, but most of the time I was trying to get as much information as I could in order to see the development of the product too place along the lines that would be professional and beneficial to every one of us.

I have been in Wall Street since 1955, since 1960 full time. The world will not allow us to look back; there will be other people developing improved money managing products; the format that we basically have here, as hard as it is to believe, the discretionary format, is still unique. The original idea which we will discuss in a short while is exceptional in its concept because of a number of reasons. But just to give you one, which might concern each of your livelihoods, even with the failures that we have had, the basic format is not only potentially unique in its framework of profitability so that if we can combine the necessary talent and have the necessary discipline, we have a framework that can make us proud. The basic framework is unique in its ability to be able to manage thousands of clients for their individual needs. Very few firms have been able to put together that capability, and generally the number of accounts and the types of accounts that can be managed are very few. Now we have another business: we have institutional business. The institutional business as you all have read – and I would like to suggest that each of you re-read for understanding and so that your total participation and feeling towards the firm maintains a very high level, the Policy and Procedure Manual, which in itself took a great deal of work – seems like very little. But just the putting together of it was an extremely hard task. You should all read it and understand it and feel that you are a part of this and that it is basically the business that we are in. We are additionally in the institutional business; for all its merits, for all its time and potential, it is a separate business from the management of individual accounts, and I repeat this meeting is to discuss the product as it relates to the management of individual accounts.

COMING SOON - ATALANTA SOSNOFF STORY (In order to clearly read the articles simply double click to expand)

Before we begin to write the story about my time with Atalanta Sosnoff we decided to publish a few old articles from the Wall Street Journal. (In order to clearly read the articles simply double click to expand.)

PART TWO OF SEVEN - THE EARLY INTRODUCTION OF PRODUCT DEVELOPMENT AT SANFORD BERNSTEIN AS DELIVERED BY SHEPARD OSHEROW, PRESIDENT

There is a substantial art business in New York. Art prices have appreciated, but very few people point to their record of what they have sold in total in the art business as to its appreciation. They point to their successes, but they do not quite say they have sold 200 Picassos over the last 50 years because they were smart to discern that it was merchandise for them to be selling. In this room, except for one old man on my left and two medium aged men on my right, I do not think we have anybody who has reached the ripe age of 40. So that in fact we have a very young average age. We are in the investment business to provide account management appropriate to the needs, the different needs, the various needs, and the changing needs of primarily individual investors and pensions. We admit that we have had some failure, but I view these as I view the potential of this group, more or less, as an opportunity to create in this firm the discipline, the courageous, organized, coherent, repetitious, explainable, inheritable approach to the management of the funds that people have entrusted to our firm. We may not, probably will not and should not, aim to point to our ability to deliver the customer’s yacht. Nevertheless, we can deliver to the customers what they are entitled to, what is explained to them and what is developed for their best benefit.

The New York Stock Exchange not too long ago said that there were 30 million individual investors. That same figure in 1948 was 4.7 million. Those individual investors (it is fascinating what I am going to say now) invested their money primarily not totally up until 1956 and 1957 as individuals, and that is when the mutual bond business really started to grow. These individual investors, how did they invest their money? There were a few unique individuals who studied the markets and invested in it, but most of these people did it as an ancillary activity primarily employed in some other capacity rather than investing. The stock market was merchandised and promoted. It was promoted by the New York Stock Exchange; it was promoted by Merrill Lynch; it was promoted by what was then the great firm of Francis T. DuPont and Co. It was promoted by the Reynolds, the Shearson and Hammills and the Shields and the Paine Webbers and the Hayden Stones. There are literally 5 or 100 relatively major brokerage firms that employed thousands, and we will leave it at that: individual stock brokers who were told to go out and recommend securities to various types of individuals. That started after the war. To this day, except for one study that was done by the Brookings Institute, there is no way that anyone can really trace how these individuals investors performed – how they invested, why they invested, the techniques they used, the success or failures that they had. It is not available anywhere. It is an interesting question; why is it not available anywhere because no organization among the ones mentioned would be proud of the record of success that they had in regard to their record of investments as it related to their individual recommendations. As a matter of fact, there were some studies done by the accumulation of research reports, and I am sure that if we had been in business in those days, at the same time our record would not have been different, but that is where the opportunity of this young group lies, including myself. There were not records because there was limited success and because the individual investor was not given the opportunity, for whatever reason, and it is complicated. It relates also to the fact that the levels of competence among the brokers was low, that the levels of compensation that Wall Street was able to earn on its commissions were extraordinary, and it became a business of potential greed and avarice, with no records, and it was management by levels of profitability as it relates to the firms and differentiated from levels of profitability as it relates to the client. So in the 50’s someone decided (IDS was there early) that the individual investor could not by and large achieve successful investment results on their own. Therefore, a completely managed, highly diversified portfolio in which he could be told that was owning a piece of America and could get the “Professional Management” and that they could not have on their own. It was out of that that the mutual fund industry developed.

MY ENCOUNTER WITH GERALD LOEB -

This blog is dedicated to my daughter.

It's been said that the Harvard Business School teaches you a lot of things, but not how to read people. The following vignette concerns a particular part of my history, which I hope by sharing, will help young people as they negotiate their way through life.

It all started back in 1960. I was laying in a muddy trench on the machine gun range, luckily in Fort Dix, New Jersey. The mud was six inches deep. I did not expect a jeep to ride up and down the firing line yelling out my name.

When they finally found me I was told to report to the Captain's office, relieved of my firing, and was given a jeep ride to the barracks. Reporting to the Captain I was handed a telegram. I opened it and it said I should call a number at EF Hutton and Company and ask for Gerald M. Loeb, the senior partner of Hutton. I called and he said he wanted to see me about a potential job offer as I had exceled at my finance studies at CCNY.

A month or so later I was interviewed in the marble clad offices of Hutton's executive towers, in total awe of the presence of a Wall Street Legend, Gerald Loeb the writer of the Wall Street epic, "The Battle for Investment Survival".

A few months later, after being released from the service, I went to work as Assistant to Gerald Loeb. What I did is not worth commenting on since it wasn't much, but in essence, in the days before computers, I posted all the customer trades to a ledger book. Loeb would carry this book with him at all times. I posted thousands and thousands and thousands of trades.

After a while I began to notice, that in many cases, the customers would make 1/2 a point or a point, we would get over a point commission, and invariably the stocks would go up substantially higher after we sold them. Being naive, I thought it was my duty to point out to Mr. Loeb, that if we kept these stocks the customers would make alot more money.

I was told that I didn't understand the brokerage business, that it was our job to make commission income and as long as the customers made profits, all was well and good. I should go back to work and keep posting. When I tried to explain to my boss that we would have a lot more money to generate commissions if the customers made more money, I was given more or less a warning to mind my business.

A month later, we had a parting of the ways. You might say I was fired, I would say I quit. I had no negotiating leverage, either when I took the job or when I left it. I never should have taken the job, I didnt even think that I had any right or power to look into the character and personality of the person who was going to employ me.

Even at the beginning of your career you must start to develop strong negotiating skills no matter whom you are negotiating with. Never give up on your thoughts and ideas, no matter who you are up against. My concept of holding investments in order to make the clients a bigger profit, vs. their desire to make commissions for the firm the priority, eventually succeeded in my upcoming business ventures.

SLOW CHANGE

There has been a lot of focus on taxing Internet sales that in certain cases are not taxed today but are taxed if the same products are purchased in a brick and mortar store.

One thing for sure, the Internet is potentially the "ultimate weapon" against the oil cartel. The potential for reducing miles driven without reducing economic activity lies therein.

"MADNESS"

When a company named S & P is responsible for rating government debt, the crazies are loose. What an inept company - throw out their junk.