Molested in Medford...

I was standing in line at the gate at Medford's Rogue Valley International Airport on Monday morning, when two fat, smelly (yes, really) TSA employees pulled me out of line and aggressively frisked me from head to toe, getting way too intimate with me in the process.

They noticed I was wearing a heat wrap around my waist. Longtime readers know I've had two back surgeries. Flying is never comfortable, so I use the heat wrap to try to mitigate the pain. They told me they'd need to go into the bathroom and get a better look at it. Just like every other whipped dog in this fading republic, I complied. The two perverts got their fill of the heat wrap and stood there gawking at me as I put it back on.

At first, they told me it was a routine check. Then, in the men's room, they admitted that was a lie. Someone in the airport spotted the heat wrap, most likely while I was putting my belt back on after going through security. That someone then alerted the TSA to my oh-so-dangerous presence. I figure the average IQ level here in the valley is double digits, so none of this was much of a surprise.

This is on top of the fact that I can't check in online or at airport kiosks because I'm on some kind of government watch list. It's all a ridiculous violation of my privacy, by the most ineffectual group of human beings on the planet – the United States government. As my wife will tell you, I'm not even dangerous to the insects in my house. She wants me to kill them, but I can't do it, so I just put them outside.

The fact that the U.S. government is stupid enough to perceive a threat from the most unthreatening individual in the country is all the proof I need that the TSA, like most of the rest of our government, has no legitimate function.

It is the biggest limitation to the rights of individuals and the rights of states ever executed. Your privacy, your health information, your financial information... it'll all become government property. The new system will eventually push private companies out of business, forcing everyone into a government-run system.

I thought that, for my trip to Grant's to benefit you the most, I should try to figure out the smartest thing said all day. I couldn't narrow it to a single utterance, but there were a few excellent candidates.

Thomas Gallagher, the head of ISI's Policy Research team in Washington, spends his days trying to figure out the investment implications of political developments. He said, "It's a huge mistake to expect markets to validate your political views."

Sounds pretty smart to me. Stay focused on what really matters: returns, price of assets in relation to value, sources of cash flow, and other important variables. Avoid becoming overly political with your investments.

Gallagher also said, "'Former' is the word we use to describe politicians who expect voters to sacrifice anything."

But the winner was definitely Sy Jacobs, founder of Jacobs Asset Management. Jacobs sold short many bank stocks from 2005 through 2008. Now, his firm is buying bank stocks that have excellent managements and plenty of capital. Jacobs says these banks are prime candidates to purchase FDIC-backed assets from failed banks. He mentioned a couple stocks.

But forget about Jacobs' picks for now, because our own Tom Dyson beat Jacobs to the punch, with a fantastic new bank stock pick that matches Jacobs' criteria. Dyson's bank recommendation has over $3 billion of cash sitting on its balance sheet. And its management team refused to participate in the subprime lending bubble in particular, and in the real estate bubble overall.

I rarely read about investment opportunities I wish I'd found, but Tom's bank stock idea is one of them. When an overcapitalized bank buys FDIC assets, the FDIC backstops the losses, limiting the losses the bank will take. If management buys a bank with a good deposit base, it's easy to grow assets and earnings rapidly. Betting on banks that can take advantage of other banks' failures is one of the best ideas out there today.

It's perfect for anyone who's afraid to buy stocks because of the government's heavy hand in our economy. The government wants these stocks to go up more than any others, and it's doing everything in its power to make that happen.

Like Grant, I love gold and hate Treasuries. But I can't help thinking investors with resurging risk appetites could wind up losing their lunches sometime in the near future. The last time Mr. Market started vomiting, in late 2008, he sold absolutely everything, including gold and gold stocks and dove headfirst into Treasuries, even when they went to negative nominal yields.

Japan has taught us that, right when you think yields should continue to rise, they turn around and fall even farther than before. Rosenberg thinks we're in the early innings of a prolonged deleveraging, de-risking episode. He likes Treasuries mostly because he hates everything else.

I'm not selling my gold or my gold stocks. And I'm not buying Treasuries. In fact, if we get a replay of late 2008/early 2009, I'll buy more equities, more gold, and more gold-related stocks. I don't agree with Rosenberg's long Treasury argument. As I write this, long bond yields are up 15%. But I'm still glad I heard his argument. I like hearing contrary ideas more than ever, because they make me rethink my reasons for being long or short.

"It is a shame that so many lies have been told and so much anger engendered for no good reason (unless you count getting one's ratings up and working the political base into a feeding frenzy to be good reasons.) Universal health care would be a significant step towards restoring our competitiveness in the world economy but it isn't simply right because it makes economic sense – it is the morally right thing to do.

"Twenty years from now we'll look back in amazement at the days when we allowed tens of thousands to die and hundreds of thousands go into bankruptcy because they got sick." – Paid-up subscriber Frans

Ferris comment: Since when is slavery morally right? Our health care system hasn't been reformed. It's been taken over by the government. And 20 years from now, we'll be looking back, asking ourselves why we didn't know we destroyed the highest-quality health care in the world in a single, mad, self-destructive, politically satisfying stroke.

Regards,

Dan Ferris
Medford, Oregon
March 25, 2010