Those familiar with this publication and its author are aware that a defining imprimatur is embodied in an epistle otherwise known as the 10 Commandments of Risk Management (TCoRM). The uninitiated, and those in need of a refresher, can, for their own erudition, click on the following link:
I (with acknowledged hubris) believe that this document aspires to biblical proportions. Case and point: my favorite: Commandment 10 – Obey the 10 Commandments. You know, the ones in the bible? Which Moses delivered, destroyed, and re-delivered to the fallible, as-sinning-as-sinnedagainst Chosen People, in the Desert, some 35 odd centuries ago?
Don’t lie. Don’t steal. Don’t kill. Honor thy father and mother. Please believe that adhering to these and the other six will do no harm, and may materially benefit, your investment returns.
Whereas the content sourced from “Exodus” has, by any standard, held up well across the ages, we face a deficiency of time passage to evaluate the staying power of the rules I have established. Perhaps we’ll know more in 3,500 years — at or around the year 5623.
So, I (with irony, as us of the Chosen are instructed to always cover our heads) take my hat off to the biblical tablets. Ten instructions, embodied in a mere 313 words. Encompassing, nonetheless, most, if not all, of the essential rules for righteous living.
Our risk management task is more complicated, requiring not only more verbiage, but also significant annotation. I will spare you the full set of notes that accompany the TCoRM but have taken to mind that a sampling of these is in order. Such as one that occurred to me over the last several days:
Footnote 12: No matter how bad things are, they can always get worse.
How bad things are now, however, is a bit of a sticky wicket. It was a horrible week, for instance, for Geritol rockers, or, like me, passionate admirers of same. Over the past few days, Three of the big Dogs passed into Night. First David LaFlamme – founder, singer, songwriter, and violinist for the briefly magnificent, eternally underappreciated San Francisco ensemble It’s a Beautiful Day.
Bookending on the other side is Rodriguez, a fabulous Detroit songsmith, laboring, in anonymity until about 15 years ago, and then immortalized as Sugarman. Trust me folks: he’s worth checking out.
However, the meat of this dirt nap sandwich is demise of Robbie Robertson, who we’ll just call The Leader of The Band. Solemn duty impels me to offer some expanded thoughts here.
I will cop to some ambivalence about Robbie and The Band. At their best, they absolutely earned their place in the pantheon. 4 Canadian guys and a drummer/singer/mandolin player from Arkansas (and what can be more American than that?). Backing ensemble for Bob Dylan’s at-the-time traitorous conversion to electric music. The quintessence of what the righteous side of rock and roll should be. Musicians working together, playing together, living together – all in the idyllic setting of Woodstock, New York.
The vibe, for a while at any rate, was divine. Dylan hung out with them there, and, together, they recorded some of his greatest output. His pal George Harrison was so inspired by their comradery, particularly as juxtaposed against the John/Paul psychodrama that prevailed at the time, that he quit the Beatles in the immediate aftermath of hanging out with them at their Upstate New York digs — a small house now immortalized in the Rock Cannon under the name of Big Pink.
But like everything else under heaven, it was finite. Robbie decided to break up the group in the mid- 70s, among other reasons because 3 of his 4 bandmates had morphed into stone cold junkies.
OK; fair enough. Unless you’re the Rolling Stones, your band is eventually gonna break up. But then the universally lauded fellowship devolved into abject hatred. Why? Money, of course. Robbie, who had he not been a musician, would’ve made a fine CFO, hoovered it all up. Economically, he was entitled to do so. Their income derived largely from the stratospheric success of three or four songs that he composed. And, as the 10 Commandments of Rock and Roll (TCoRR) advises us — to the composer goes the spoils. But the other guys, particularly Levon, believing they had contributed, felt they got stiffed.
Tough shit, says Robbie, who minted it for several decades while the other guys floundered. And then died.
The enigmatic but unambiguously brilliant Richard Manuel offed himself in ’94. Rick Danko died of cancer in ’99. Levon kept the vibe going in Woodstock, with a lotta help from his friends, until he gathered to the dust of his forebears, about ten years ago.
A great deal has been written and said about The Band, particularly over the last several days. I will keep my editorial contributions brief. Unfortunately, what sticks out to me is the human comedy aspect, under which the most tightly knitted musical band of brothers ever to grace a stage or studio ended up hating so deeply on each other. If Robbie wasn’t entirely to blame here, if the hurt that Levon felt was perhaps more acute than otherwise justified, well, anyway, it seems like Robbie could’ve been a little more generous over the years.
All of which recalls another footnote to the TCoRM/TCoRR, a lesson I have learned, the hard way, more times than I care to count.
Footnote 76: Most affiliations are transactional. If you cling too tightly to the notion that they are build upon relationships, you are setting yourself up for bitter disappointment.
But reverting to Footnote 12, it is important to bear in mind that the possibility of deteriorating conditions does not abide merely under times of duress. It is equally true that during happy intervals, matters can always get worse.
Market conditions, for example, recently strong, have deteriorated over the last few sessions. There is a weight to the tape that wasn’t felt during the heady month of July. There are reasons for this, of course, but none that rise to the dignity of catalyzing an all-out rout.
There’s that whole Fitch downgrade thing, which merits some minor elaboration. Last week, I opined that Fitch may have been motivated to tag U.S. Treasuries as a proxy for playing a whack-a-mole with the whole credit complex, comprised, as it is, of their paying customers.
Well, in support of this hypothesis, the more deliberate Moody’s downgraded ten banks, and put a bunch of others, including the staid, conservative, old school custody outfits BONY and Northern Trust, on ominous review.
Bleakly, there may be more of this sort of thing on the horizon, but a downgrade crescendo appears far from imminent.
Inflation came in a titch higher than had been expected, or, at any rate, hoped for. But not by much.
The justifiably feared $100B Treasury Auction was a bit soft, but far from catastrophic.
Key Risk Factors, including Crude Oil and USDJPY, are at warning level threshold highs, but have not, yet, broken through.
In general, investment conditions have indeed worsened, but: a) from a rather lofty perch; and b) by manageable amounts. All of which has nonetheless darkened the mood of the investment community, as exemplified by their rather ungracious response to upside surprises emanating from the earnings podium:
It would appear, from the above presentation, that the markets are adhering to Footnote 12, recognizing that even when things are, on balance, pretty solid, they can indeed get worse.
We’re in the Dog Days of Summer. Other than the NVDA earnings release, a fortnight hence, which, somehow, has become as important a barometer as there is of market conditions, the news cycle slows dramatically – from here until after Labor Day, whereafter, I promise, the action will be heavy.
Could things get worse? Of course, they could. George rejoined the Beatles, but the group disbanded shortly thereafter. And he’s now gone. As is Rodriguez. As is LaFlamme. As is Robbie. Whose progeny can console themselves with the ~$50 Large he leaves behind. Levon, at the time of his death, was said to be worth ~$12M, causing us to wonder what he was whining about.
Things could have been worse for him and may very well be worse for us in the days to come. So it says in the footnotes of the TCoRM. Be forewarned.
TIMSHEL