With the stock market getting pummeled investors have run for cover. Panicking after losing significant chunks of their savings, investors are looking for any reason to jump back into the stock market. Unfortunately instead of rewarding investors, companies are trying to fool them. As if we haven’t seen enough corporate irresponsibility, the new trend of corporate stock buybacks artificially increases EPS, thus fooling investors into thinking the company is actually growing.

It’s funny that this trend towards buybacks has taken hold as Barack Obama has surged in the polls. Much like Obama’s economic policy, share buybacks are cosmetic solutions but often nothing concrete to reward investors. Sort of like running a campaign on hope and change!

Enough trickery, investors have suffered enough. It’s time to start rewarding investors. How? Remember that old time word they used to use,  ‘Dividend.’

I know that share buybacks are ‘tax efficient’ as well as they fatten EPS numbers, but how about doing something radical for investors?  Something like paying a dividend, or investing in growing the company. Doesn’t a stock buyback just mean that the company has nothing better to do with their money? Give some of your profits back to shareholders. Hey, there is an idea!

For a great analysis of the pros and cons of buybacks, check out economist Stefan Karlsson’s blog.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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So we now have the much anticipated Barack Obama economic plan with the centerpiece being wealth redistribution. Taking from the rich and giving to the poor, or maybe we could say it’s not allowing one to become rich and making people stay poor. Haven’t we tried this before and seen disastrous results. Throw in a little capital gains tax and we have a recipe for a continued economic slowdown.

My last post about how investors are spooked about the prospect of an Obama victory sure seems even more plausible after hearing about his proposal. Taxing capital gains, increasing taxes for the so-called rich, and giving tax credits to those who don’t even pay taxes to begin with sounds like a rehash of European economic policy for the last few decades and look at their situation.

While the tax raise is troublesome enough, the most scandalous part of his plan is to raise death taxes across the board to 45%. What a scam. We are about to enter into the biggest generational wealth transfer in the history of the world and Obama wants to take 45% of it? Where is the outcry? Why should the government see a penny of inheritance money? Hasn’t it already been taxed multiple times? Everyone speaks about how Obama is all about justice; well where is the justice in taxing already taxed money?

If he gets elected this plan will come back and bite the very same people he is trying to help. Inheritance as well as letting workers keep more money of what the earn is the way to increase individual prosperity. If you were to confiscate all the joint net worth of both Bill Gates and Warren Buffett, and you would distribute it evenly among all Americans how much would they end up getting? A couple of bucks at best. What kind of difference will that make to anyone.

This plan is outrageous, and will do nothing to help grow the economy. But heck, Barack, if you are in the giving mood, how about sharing some of the millions you made on your book?

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Many reasons have been thrown around to the continued rout in global stocks. After all with 24/7 media, they need to have something to talk about. Bank failures, plugged up credit markets, as well as a general panic among investors are just some of the reasons given for the market slide. But what about the fact that Wall-Street may be on edge regarding a potential Obama presidency. Could it be that investors are worried that a Democratic president and Democratic controlled congress is a recipe for disaster?

Much has been made over the years about gridlock in Washington. Many of us believe that gridlock is good because nothing ends up getting done in Washington, which means that nothing can get screwed up. With a potential Democratic sweep, investors may be fretting about increased spending, increased taxes and increased intrusion into the lives of each and every one of us. After all the Obama policy of hope and change is innocent enough, but if it’s backed up by Nancy Pelosi et al. running with a majority in both houses, things could interesting.

Here is a chicken/egg one for you. Common wisdom has Obama surging ( I guess this is one surge he supports!) due to the current economic crisis. But could the market crash be a result of Obama’s poll surge, and the fact that investors are scared of a Democratic sweep?

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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With the hedge fund industry facing more scrutiny than ever before it’s quite amazing that Hunter Biden’s sour hedge fund deal, where he is accused of defrauding a former business partner and an investor of millions of dollars, has barely been mentioned in the press. After all he is the son of Democratic VP candidate Joe Biden.( Could that be the reason?)

According to a story in the Washington Post: “A lawsuit filed by their former partner Anthony Lotito Jr. asserts in court papers that the deal was crafted to get Hunter Biden out of lobbying because his father was concerned about the impact it would have on his bid for the White House. Biden was running for the Democratic nomination at the time the suit was filed.” The article continues, “Hunter Biden was made president with an annual salary of $1.2 million, despite his inexperience in the hedge fund industry.”

Wow! So we have the son of a Senator, who at that time was considering a presidential run, allegedly compelled to give up his lucrative lobbying job, to be made president of a hedge fund with a salary over one million bucks a year. Giddy up. And then he gets accused of defrauding investors. The media has been filled with reports on investment deals gone bad, hedge fund managers flying the coop, and others facing scrutiny for losing investors most if not all of their money. Yet the Hunter Biden story doesn’t get picked up? Sort of fishy isn’t it?

Sounds juicy. At least as interesting as the pregnancy of a 17 year old girl from Alaska.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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