Wednesday, March 07, 2007

In '05 Investing, Obama Took Same Path as Donors

Unless Obama's lying, which I highly doubt, this front page story in today's NYT is a really lousy piece of journalism.  It begins:

Less than two months after ascending to the United States Senate, Barack Obama bought more than $50,000 worth of stock in two speculative companies whose major investors included some of his biggest political donors.

One of the companies was a biotech concern that was starting to develop a drug to treat avian flu. In March 2005, two weeks after buying about $5,000 of its shares, Mr. Obama took the lead in a legislative push for more federal spending to battle the disease.

The first sentence -- again, unless Obama's lying -- is false: Obama did NOT buy these two stocks -- HIS BROKER DID, WITHOUT HIS KNOWLEDGE!  And the second paragraph is just yellow journalism, insinuating that Obama was pushing legislation to benefit his stock position, which would be a scurrilous charge even if Obama knew about the microscopic ($5,000?!) stock position.
There are, however, two questions that Obama needs to answer: how did his broker come to own two such speculative stocks in an otherwise conservative portfolio?  And why would Abbruzzese give money to Obama at the same time Obama's broker bought stock in a company affiliated with Abbruzzese?  It's unlikely that these are coincidences.
Regarding the latter, it doesn't surprise me that a Republican like Abbruzzese would donate to Obama -- one of the reasons I think he's more electable than Hillary or any other Democrat is that he attracts quite a bit of support from the right.
As for the unusual stocks, I think the likely answer is that the broker was at an Obama campaign event and was talking with the executives of these two companies, who had already given to Obama's campaign (or were about to).  Like most executives of small, speculative companies, they were probably hyping their companies' prospects and the broker got excited about the stories and bought the stocks (without the knowledge of Obama OR the executives).  This was dumb on a number of dimensions, but Obama had nothing to do with it and, as soon as he learned of it, sold the stocks and closed the account.
The key here is quick damage control: Obama's campaign needs to identify the person who bought the stocks and have him explain why he did so (and confirm that Obama had no knowledge of these purchases).  Otherwise, the damning insinuations in this story will linger...
Also, whoever is managing Obama's money currently, even if it's in a blind trust, needs to invest ONLY in totally benign stuff like Treasury bills and index funds.
March 7, 2007

In ’05 Investing, Obama Took Same Path as Donors



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