Michael Moore: Jesus Wouldn't Play the Stock Market

For those Feedburners who can't see the embedded movie - here is the URL

Pinko alert. Worse: Religious pinko alert. This is one very clever demagogue.

Moore's recently released movie Capitalism: A Love Story is nothing but socialist propaganda for the lowest common denominator. It over-simplifies the issues and is of dubious documentation. And people pay to see this crap. . .

I would spend time illustrating how Moore selectively frames his 'facts' out of context for effect and in insufficient detail. But a decent deconstruction has already been done by Vitaliy Katsenelson over at ContrarianEdge. Here's a sample:

Moore spends the bulk of the film going through our country’s [USA] trash and presenting it as the main course. . . Really, if you want to make a successful propaganda movie, you must evoke emotion and rightly or wrongly direct it at your subject of hate – in Moore’s case, capitalism. . .

. . . Ayn Rand said it well in Atlas Shrugged: “But you say that money is made by the strong at the expense of the weak? What strength do you mean? It is not the strength of guns or muscles. Wealth is the product of man’s capacity to think. Then is money made by the man who invents a motor at the expense of those who did not invent it? Is money made by the intelligent at the expense of the fools? By the able at the expense of the incompetent? By the ambitious at the expense of the lazy?”. . .

. . . He offers no alternative to our “broken” capitalism system other than let’s have “democracy.” This is laughable, as democracy is not a market system, it is a political system. What he wants is a command-based economy – the Soviet Russia that failed so miserably. He wants Mr. Mouch from Ayn Rand’s Atlas Shrugged, a mediocre bureaucrat who failed at everything in his life, to be put in charge of Mr. Moore’s version of a “democratic” economy (still not sure what that means). Mr. Mouch decided how much everyone produced, at what prices goods were sold, and what “fair” wages everyone got paid. In the end, despite sacrifice after sacrifice, Mr. Mouch’s economy collapses. Mr. Mouch’s visible “fair” hand fails to accomplish what the invisible “impartial” hand of the free market accomplishes so effortlessly.

Katsenelson knows about socialism first hand. He grew up in the USSR.

Investing In Range-Bound Markets: An Interview With Vitaliy Katsenelson

Barron's have just published the delayed release free-access copy of their interview with Katsenelson over at Smart Money.

Katsenelson is becoming rather well known for what he calls his Active Value strategies. He has written a book on his methods (Amazon link) and also writes a blog with plenty of archive material over at ContrarianEdge.

Whilst I'm not a huge believer in being able to beat the market through stock picking (without superior skills and access to information) and certainly not by giving your money to an active manager, his Active Value ideas make good sense.

Katsenelson is convinced we have entered a range-bound market and will remain here for some time. Hence his enthusiasm for Active Value - which he explains in the interview.

He also suggests that some investors are falling into a relative value trap:

In today's environment, investors should favor absolute-valuation tools, like discounted-cash-flow analysis or breakup analysis, as opposed to relative-valuation analysis -- i.e., Wal-Mart is cheap at a P/E of 14, because it used to trade at 45. Relative valuation is a backward-looking tool, and anchors on valuations that we'll not see again for a long time. That will lead investors into a relative-valuation trap, and lead to overpaying for stocks.

Wise words if markets end up remaining stagnant for some time and his range-bound prediction becomes reality.

He also talks about how Margin of Safety has never been more important in stock choices. Something no one should leave home without.