DEMERIT BASED PAY

Among the many investment newsletters I get every day (most of them offering garbage "investment" advise), the one that seems to provide consistently thoughtful and useful analysis is Agora Financial's "Rude Awakening." To be sure, many of their newsletters hyped the market before it crashed along with everyone else, but they were also very generous in providing an outlet for stuff like this:

Yesterday morning, a wonderful thing happened – an individual in a position of power made an attempt to separate incompetent corporate executives from lavish pay packages. President Obama announced plans to limit pay to $500,000 a year for the executives of any company that receives extraordinary government assistance ...

... The fact that ANYONE would defend generous pay packages for overtly incompetent corporate executives suggests to this stock market observer that America’s financial crisis is far from over. Even after all the wealth that Wall Street has destroyed during the last 18 months, some folks still believe that the raw, unalloyed incompetence that produced the current financial crisis deserves multi-million-dollar paydays, rather than ankle bracelets.

We don’t agree…and returning to one of our favorite themes, we would urge all investors to actively avoid investing alongside scumbags [my emphasis]. If a scumbag happens to produce a positive result for the minority shareholder, it will always be an accident. Seek out the CEOs and executives who align their interests directly with the minority shareholders and who behave like owners, rather than trust fund babies.

These guys get it. Obama gets it. If you're wondering when the incompetents on Wall Street will get it, my only advise is to hang on.

- Mark