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June 12, 2009
Reporter: Rich Shearer Editor: Ron Brown Photographer: Tom Black
Pat Flaharty, President, 2008 - 2009
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THOUGHT FOR THE DAY
 It was insightful and pithy, and it was from Mark Robert from Mark Twain, but the Magic Pen wasn't on and he didn't give me the copy, so make up your own darn Thought for the Day, already.
VISITING ROTARIANS
Frank May - Moraga
Heather Vilhauer - San Ramon Valley Rotaract
GUESTS OF OTHER PERSUASIONS
Jean Simpson
 Stefan Raeth - of course, he's Thomas's son and Little League closer about to play in the championship game
Dominic Porrino - still a guest, officially
Laurie Ware - Steve's vastly better half
Barbara Miller - Laurie's Mom, all the way from Louisville KY
Woody Tauschend
Queen Glenda Fillinger
BIRTHDAYS, ANNIVERSARIES, AND OTHER MISCELLANEOUS GOODIES
Rick Ashburn admitted to 18 years of wedded bliss with one Dana Fillinger - and yes, she's one of thoooooose Fillingers. 18 years, three kids, two proud parents-in-law and a new gig for Dana as head of the Burton Valley PTA apparently adds up to $20, which the Club promptly invested in municipal bonds.
I'm not sure it goes in this section, but it certainly doesn't go anywhere else, so I guess this is the place to note that Membership Co-Chair Walt Nelson was relieved of $20 for not knowing the last name of Probably-Soon-To-Be-Member Dominic Porrino.
And continuing the trend, President Pat ended forking up over a Jackson for not knowing our Rotaract guest's last name. Yeah, it was that kind of a meeting. You'd think Pat's year is almost over or something.
SUPPORT ROTARACT AND HAVE A GOOD TIME DOING IT
Heather Vilhauer is clearly going places. One of the places to which she currently goes between 7:00 p.m. and 8:00 p.m. on the 2nd and 4th Mondays of each month is Pyramid Brewery in  Walnut Creek wherein meets the brand-spanking new San Ramon Valley Rotaract Club. Rotaract is the Rotary program aimed specifically at young adults 18-30 or 35 or so. Like us, they have fund-raisers and do service projects.
Which brings us to why Heather was here today. The SRV Rotaract Club is holding its first fund raiser on Saturday, June 28, with a special package to see the Oakland A's play the Colorado Rockies. $15 gets a ticket to the game and tailgate food before hand (but bring your own beverages, please). The tailgating begins at 11:00 a.m. in Parking Lot A at the Oakland Coliseum (the name this reporter insists on continuing to use), and game time is 1:05.
If you want to go, send check payable to Danville Rotary to Stuart Bessieres, 2014 Delaware Street, Berkeley CA 94709, and include your name, address, phone number and e-mail address. Confirmation and ticket pick-up instructions will be e-mailed before June 26.
Oh, by the way, Lamorinda Sunrise is an official sponsor of this Club, so stop in for a visit sometime and/or come on along for this fun day of baseball and comraderie. You'll be more than welcome.
THE FASTEST ANNOUNCEMENTS YOU WILL EVER HEAR FROM GEORGE CHAFFEY
 George promised to say his piece in a minute, and nobody thought he could do it. And he didn't - he only took 50 seconds, according to Clock-watcher Extraordinaire Tay Wheeler. So what did George have to say?
Three things. 1) The summer student from Brazil will not be coming after all. 2) George and Carol are recently returned from Denmark, where they helped Herbert and Kirsten Fischer celebrate their 60th birthdays. 3) There will be another Friendship Exchange in 2010 of Lamorinda Sunrise Rotarians heading off to Denmark to be hosted by the Fischers and the rest of the Logstor Rotary Club (a.k.a. "Lamorinda Sunrise East" - or are we "Logstor West"?). Stay tuned for more details.
ANOTHER LETTER FROM THE ABCs
Thomas Black, in addition to being a fine photographer and an all-around nice guy, is also this week's purveyor of wisdom from Cliff Dochterman's "ABC's of Rotary." And so we received some important dates, in the form of questions from Tom and embarrassingly incorrect answers from us. But we did learn that the precursor of the Rotary Foundation was formed in 1917. And that Paul Harris Fellowships were established in 1957. And, to top it all off, that Rotarian Frank Borman carried a banner from a Houston area Club in orbit around the moon on Apollo 8 in 1968. Cool stuff, Tom. Thanks.
AND ANOTHER THREE-QUARTER CENTURY CLUB LUNCHEON IN THE BOOKS
John Fazel announced that last Wednesday's Three-Quarter Century Lunch was a great success. Over 120 Orinda seniors  enjoyed a fine meal and a visit from the ghost of Mark Twain. John thanked Tom Black, Walt Nelson, Rich Shearer, Pat Flaharty, Brad Davis, Mark Roberts, Ray Welles, Jackie Welles and Valerie Heusinkveld for helping out in the kitchen, serving, setting up and cleaning up.
Tom Black chimed in to let everyone know what a true, instant gratification, feel good project this is. So of course, that means John will be swamped with volunteers next year, right? Right?
Tom also let us know that there are photos of this event on SmugMug, his photo website of choice. There is a hyperlink on our website. Right there on the home page. If you can find our website (here's a hint - it's www.lamorindasunrise.org) then you can find the link, since it is right there, front and center on the main page.
Did I mention that the link is on the home page of our website?
PAT PROMISES THERE WILL BE NO GOAT
All good things must come to an end, and so must Pat Flaharty's year as our Scheming Despot. Previously Ousted Poobah Paul Fillinger has taken up the cudgels once again and, in the finest traditions of Lamorinda Sunrise (and how's that for an oxymoron?), he is planning the official Demotion of President Pat. It will be disguised as this month's TGITLFOTM and will be held - wait for it - on the last Friday of the month (I think that's June 26) at the Waal residence, 6:00 to 8:30. Yes, that's p.m., not a.m. Dave Isenberg is doing the "chef" thing, and Gary Fulcher is doing the "passing-around-the-sign-up-sheet" thing. And isn't it nice to see some of the newer members getting involved in kicking one of the older members out into proverbial Siberia. Of course, I remember a couple of years ago when newer members were allowed to get involved in a Demotion and the SPCA had to be called . . . .
MYSTERY ROTARIAN
This week's Mystery Rotarian has led an active life, to say the least. This person: 1) is a fifth-generation San Franciscan, but never spent a summer there; 2) has ridden a bicycle from Lafayette to Lake Tahoe ten times, not to mention riding over some of the European climbs made famous in the Tour de France and the Giro d'Italia; and 3) was the featured speaker for an hour on C-Span on a subject about which he/she knew nothing, and yet has never been a member of Congress.
 If you guessed Dave Waal, you are correct. Although he grew up in SF, his grandparents always had a place in Kentfield, and thus young Dave always spent his summers there. Well, that is when he wasn't summering at Lake Tahoe or Hawaii. (Jeez, rough life there, Dave.) During the school year, he lived with his folks just below the upper-most reaches of Pacific Heights in a huge house that was purchased on the cheap because it was close to the Presidio, and everyone was convinced that (a) World War III was going to happen and (b) there was a nuke somewhere in Ruski-land with the Presidio's name on it. (Reporter's note: We who grew up in Livermore thought the same thing about our hometown.) Fortunately, such did not come to pass.
As for the bike riding stuff, somehow or other Dave and some friends of his got it into their heads that riding 208 miles from here to the Homewood area in one? two? days would be fun, and doing it nine more times would be even more fun. Go figure. They go via the Delta to Sacto, and then more or less parallel I-80, including a few miles on the freeway itself (and yes, it's legal to ride on some freeways in California - if there is no sign on the on-ramp prohibiting bikes, they are allowed on). In addition, Dave did a tour that took riders over a number of the most famous - and most difficult - climbs that have been featured in the Tour de France and the Italian equivalent, the Giro d'Italia. Some of those climbs are nasty-vicious-hard, sayeth Dave.
As for the featured speaker thing, Dave was at some high-tech gathering or other a few years back and was set up by his underlings to be a "featured speaker" with about five minutes' notice. So the C-Span comes and they talk. Actually, it sounds like the C-Span guy spoke and Dave listened. Dave's assigned topic: the Digital Divide in Africa. Dave knew nothing about it. No worries; the C-Span guy gave him the Reader's Digest version (poor folks in third world countries have significantly less access to computers than do better-off folks) and a pile of stats to which he could refer. By such stratagems was Dave turned into an Expert On The Digital Divide, holding C-Span's usual audience of two or three insomniacs rapt for an hour.
By this time, President Pat had decreed that this was not just a Mystery Rotarian installment but a New Member Talk. (Uh, Pat, isn't it a little late to worry about our District score sheet for the year?) So now we know that Dave Waal is certifiably insane, which makes him perfect for our merry band.
And he will soon have an experience that will make all of the above seem like kid stuff. (Okay, some of it was kid stuff, but you get the idea.) To what do I refer? Re-read the previous item and realize that Dave Waal has agreed to host a Demotion. Just in case Dave isn't clear on what he is getting himself into, here are two facts: (a) we used to hold these shindigs in a barn, and (b) at one of them, the outgoing Imperial Potentate was presented with a live, bleating, fit-to-be-tied goat. And no, Dave, I am not making either of those things up. You have been warned, and yes, it is too late to back out.
PROGRAM
Today's program was our very own Paul Fillinger, whose topic  was "The Importance of Family, or If You're Going to be Stuck With a Son-in-Law, You Might as Well Try to Get Along With Him." Paul gave a loving homage to his son-in-law, our very own Rick Ashburn. It turns out Rick is the Chief Investment Officer for Creekside Partners, a firm that specializes in, well, investing. Other people's money, one assumes, but Paul did not make that clear.
Paul went on to mention that Rick graduated from the University of Maryland with honors, and then went on to get his graduate degree at that most outstanding of institutions of higher education, UCLA, which stands for University of California comma Los Angeles (there ain't no "at" in the name). Rick has three delightful children, and proud Grandpa Paul loves waxing poetic about their respective skills in joke telling, playing the cello, and playing Little League baseball.
Then came the real reason for all of Paul's enthusiasm: Rick happens to be married to a certain Dana Fillinger, who is not only Paul's daughter but, coincidentally, also happens to be the mother of the aforementioned rug rats.
At this point, Paul got all choked up and couldn't continue, and so Rick graciously and gracefully took over, allowing Paul time to  collect himself. As an investment guru, Rick says he gets asked two questions all the time: what about municipal bonds when state and municipal finances are so screwed up; and what is going to happen with the economy.
It turns out that Rick is an expert in, and a fan of, municipal bonds. The real ones, that is. He carefully distinguished between "real" municipal bonds - they pay for regular governmental functions, like roads and schools and sewer systems and the like - and "fake" muni bonds, which can be floated by utility companies, for private airports or private hospitals, things like that. In short, and at the risk of greatly over-simplifying what Rick said, "real" muni bonds are good, and "fake" ones are bad.
Obviously, there is more to selecting proper investments than that. But the simple truth is that "real" municipal bonds are virtually certain to be repaid, and probably on time, while it is possible for your investment in "fake" muni bonds, to simply disappear.
But how can that be? Aren't some municipalities talking about going bankrupt and won't that leave their bond holders high and dry? As Rick explained more cogently and in more detail than I will even attempt, bankruptcy law is federal law, as mandated by the U.S. Constitution. A state (or it's subdivisions, counties and cities and the like) cannot, as a matter of a Constitutional law, enact legislation that simply wipes out its debt. (And can't you hear Ahhh-nold saying: "Ach du lieber, that pesky Constitution!")
Governmental entities can go through bankruptcy. But they go  through their own special set of procedures and rules known as Chapter 9 bankruptcy. As a practical matter, it means that bond holders will be paid off. It is possible that some of the payments will be late, but history shows that even that is unlikely. Here are some illuminating examples. Bridgeport, Connecticut, tried to go BK, and its filing was dismissed by the Court. In Orange County's bankruptcy a few years back, all debts were paid in full and on time. The then-Richmond School District tried to default on some bonds, and the Court would not allow it. By comparison, private bankrupts, including issuers of "fake" bonds, can and do get debt wiped out in bankruptcy proceedings. Heck, that's one of the prime reasons for going through bankruptcy in the first place.
According to Rick, history shows that, even in the Great Depression, municipal bonds have been abnormally stable and safe, with an infinitesimal default rate. He thinks they are a safer investment than Treasury bonds.
So here are a couple of rules for prospective bond buyers. Buy only "Essential Function" bonds. Do not buy anything that says it is for a "lease" or is a "certificate of participation." And don't buy a longer term than 10 years. Rick thinks a private investor "has no business" buying a longer term bond than that. Pension funds have a reason to buy them, but you don't.
So what about the economy? Rick's return question is: Why do you want to know? If it is out of morbid curiosity, that's fine. If it is in an attempt to predict how to invest, the answer is irrelevant.
Irrelevant? How can that be? Because, it turns out, even if you can accurately predict the economic trends (and their exact timing, and can figure out which investments are going to follow the upward trends and can avoid the individual investments that are going to suck for any of a host of reason specific to that particular investment), having that information really doesn't net a significantly different result than if you either used the "buy and hold" strategy or if you used a value-based strategy (i.e., where you make your "sell" decisions based on price-to-earnings ratios). Rick illustrated this point by charting the performance of these three possible investment strategies over the course of many years, and while there was some difference between them, it was very little on a percentage basis and all three followed the same basic trends over time. And for purposes of this comparison, one had to assume that whoever was predicting the economy was right more or less 100% of the time.
So even if you had a crystal ball that could predict economic performance accurately, your results would be about the same as if you used the value-based method and not all that far off of the "buy and hold" method. And so, says Rick, the point is that, for the individual investor, there is not much point in trying to predict the economy or the stock market.
Rick does have a preference, though. He prefers value-based investment decisions over "buy and hold." His preference is not because of any long-term difference in overall investment success - his examples showed there is not much of a difference - but because value-based investment decision will smooth out the peaks and valleys when compared to "buy and hold."
So what makes economies grow? Population growth and increased productivity. Even in a severe recession, money may be destroyed, but not real capital. For example, a skilled employee may lose his or her job and that is a real hardship. But that does not destroy that person's skills or training; when conditions are such that that person is reemployed, they will go back to being productive.
On the other hand, zero population growth leads to sustained bad economic times. Japan is an example. Doing away with widely available education will do in an economy, because that effectively renders useless the human capital essential to make a complex modern economy work.
In answers to questions, Rick opined that stocks in general are now valued about right.
Thanks for stepping in for Paul, Rick. You did him proud.
CALENDAR
Weekly Meeting Program: Expose Yourself Redux. Rich Shearer is really going to do it to himself this time.
Friday 6/12 7:00 to 8:15 am
Weekly Meeting Program: Expose Yourself Paul Bettelheim and Rick Ashburn.
Friday 06/19 7:00 - 8:15 am
Weekly Meeting Program:Pat's last day as Prez. See what he has to say as he leaves office and turns the reins over to Mr. Fazel!
Friday 06/26 7:00 - 8:15 am
TGITLFOTM and Pat's Demotion Ceremony at the home of David Waal.
Friday 6/26 5:30 pm until whenever! | |
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ADDITIONAL PHOTOS OF THIS AND OTHER LSR EVENTS MAY BE FOUND AT TOMBLACK.SMUGMUG.COM. SHOULD BE YOU SMITTEN BY A PARTICULAR IMAGE, PRINTS MAY BE ORDERED FROM THIS WEBSITE. (THE QUALITY IS EXCELLENT.).
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Contact Us
Rotary Club of Lamorinda Sunrise
PO Box 1491
Lafayette, California 94549
www.lamorindasunrise.org
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