TCS Daily


The Dobbs Rogue Fund

By James K. Glassman - February 17, 2004 12:00 AM

Researching an article on outsourcing a week ago, I came across a remarkable list on the website of CNN's Lou Dobbs. It was a sort of rogues' gallery, touted nightly on the show. "These are companies," says the Dobbs site, "either sending American jobs overseas, or choosing to employ cheap overseas labor, instead of American workers."

Another word for "outsourcing," of course, is trade, and the reason we trade is, in fact, to buy things -- including labor -- at lower prices. As Gregory Mankiw, the Harvard economist who heads the Council of Economic Advisors, had the temerity to say, "That's a good thing."

"If a U.S. firm shifts employment abroad," said the Washington Post in an editorial on Jan. 26, "the savings flow back to the United States in the form of lower prices for consumers and higher dividends for shareholders; the consumers and shareholders will direct their new spending power at things that create employment. Meanwhile, the fall in prices will allow the Federal Reserve to keep interest rates lower, boosting the job-creation engine."

Indeed, a study by the McKinsey Global Institute, found that two-thirds of the benefits of outsourcing flow to the United States.

Adam Smith understood this back in 1776. He wrote, famously,

"It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy...What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage." ("The Wealth of Nations," Book IV, Chapter II)

So, it seems to me that, far from being a bunch of evildoers, the members of the Dobbs most-wanted list are companies that are helping the American economy. Not only that; but, scanning them, I realized they were terrific businesses.

Why not, then, compose a stock portfolio made up of the Dobbs rogues? We can call it the Adam Smith Fund or, better, the Dobbs Rogue Fund.

Like many other things Dobbs does these days, the list is unscientific. Viewers write in and the Dobbs staff "confirms" that the companies really do "export America." Not all the companies, including, for example, BumbleBee Tuna Holdings, LLP, are publicly traded. Others are subsidiaries of larger companies, and there's often double-counting. For example, A.T. Kearney is owned by EDS, which is separately listed; Carrier is owned by United Technologies, ditto. Avanade is a joint venture between Microsoft and Accenture, also rogues. GE Capital, obviously, is part of General Electric, which gets a separate mention. And so on.

Still, this is a wonderful portfolio -- well balanced by sector (retailing, finance, tech, manufacturing, etc.) and by size. It includes many of the heroes of American technology, such as Amazon.com, Dell, Google, Cisco Systems and Intel.

The companies are below. We'll take a look after a year, but my guess is that the Dobbs Rogue Fund will beat the market as a whole.

But that's just a guess. No guarantees. This is not a real fund. It's a bunch of companies whose managers understand that their job is to maximize returns for shareholders. They do that by holding down costs, increasing profits and reinvesting them. Use the list as a recommendation for further study or buy the whole thing, giving each stock equal weight of about a half percentage point.

Editor's note: What follows below are the names of companies listed at the CNN/Lou Dobbs website as of 2/16/2004.

3Com
3M

A
Accenture
Adaptec
Adobe Systems
Advanced Energy Industries
Aetna
A.G. Edwards
Agere Systems
Agilent Tech.
AIG
Alamo Rent A Car
Albertson's
Alliance Semiconductor
Allstate
Alpha Thought Global
Amazon.com
AMD
American Express
American Management Systems
American Standard
Amphenol Corp.
Analog Devices
Andrew Corp.
AOL
Applied Materials
A.T. Cross Company
AT&T
AT&T Wireless
A.T. Kearney
Avanade
Avery Dennison

B
Bank of America
Bank of New York
Bank One
BearingPoint
Bear Stearns
Bechtel
BellSouth
Best Buy
Black & Decker
BMC Software
Boeing
Brocade
Bumble Bee

C
Cadence Design Systems
Capital One
Carrier
Cendant
Cerner Corporation
Charles Schwab
ChevronTexaco
CIBER
Ciena
Cigna
Circuit City, Inc.
Cisco Systems
Citigroup
Coca-Cola
Comcast Holdings
Computer Associates
Computer Sciences Corporation
Continental Airlines
Convergys
Cooper Tire & Rubber
Cooper Tools
Countrywide Financial
COVAD Comm.
CSX
Cummins

D
Dell Computer
Delta Air Lines
Direct TV
Discover
Document Sciences Corp.
Dow Chemical
DuPont

E
Earthlink
Eastman Kodak
Eaton Corporation
EDS
Electroglas
Electronics for Imaging
Eli Lilly
EMC
Emerson Electric
En Pointe Technologies
Equifax
Ernst & Young
Evolving Systems
Expedia
ExxonMobil

F
Fair Isaac
Fedders Corporation
Fidelity Investments
Financial Techologies International
First American Title Ins.
First Data
Fluor
Ford Motor
Franklin Mint

G
Gateway
GE Capital
General Electric
GlobespanVirata
Goldman Sachs
Goodrich
Google
Greenpoint Mortgage
Guardian Life Insurance

H
The Hartford Financial Services Group
HealthAxis
Hewitt Associates
Hewlett-Packard
The Holmes Group
HSN
Humana

I
IBM
IndyMac Bancorp
Infogain
Innodata Isogen
Intel
Intl. Paper
Intuit
ITT Educational Services

J
Jabil Circuit
Jacobs Engineering
Jacuzzi
JDS Uniphase
Johnson Controls
Johnson & Johnson
JPMorgan Chase
Juniper Networks

K
KANA Software
Kaiser Permanente
Keane
KeyCorp
KLA-Tencor
Kwikset

L
Lawson Software
Lehman Brothers
Levi Strauss
Lexmark International
Lifescan
Lillian Vernon
Linksys
Lionbridge Technologies
LiveBridge
Lockheed Martin
Lowe's
Lucent

M
Maritz
Marshall Fields
Mattel
Maytag
McDATA Corporation
Medtronic
Mellon Bank
Merrill Corporation
Merrill Lynch
Metasolv
MetLife
Microsoft
Monsanto
Morgan Stanley
Motorola

N
Nabco
National City Corporation
National Life
National Semiconductor
NCR Corporation
neoIT
NETGEAR
Network Associates
Newell Rubbermaid
New York Life Insurance Co.
Northwest Airlines

O
Office Depot
Ohio Art
ON Semiconductor
Oracle
OshKosh B'Gosh
Otis Elevator Co.
Owens Corning

P
palmOne
Parker-Hannifin
Parsons E&C
Pearson Digital Learning
Pericom Semiconductor
Perot Systems
Pfizer
Pitney Bowes
Planar Systems
Portal Software
Pratt & Whitney
Primus Telecom
Procter & Gamble
ProQuest
Providian Financial
Prudential Insurance

Q
Qwest Comm.

R
Rainbow Technologies
Radio Shack
Raytheon Aircraft
RCG Information Technology
Regence Group
Rogers
Rohm & Haas
RR Donnelley & Sons
Russell Corporation

S
SAIC
Sanmina-SCI
SBC Comm.
SEI Investments
Siebel Systems
Sikorsky
SMC Networks
Solectron
Sovereign Bancorp
Sprint
Sprint PCS
Starkist Seafood
State Farm Insurance
State Street
StorageTek
SunTrust Banks
Supra Telecom
SurePrep
The Sutherland Group
Sykes Enterprises
Synygy

T
Target
Tecumseh
Telcordia
TeleTech
Tellabs
Texas Inst.
Thrivent Financial for Lutherans
Time Warner
Toys "R" Us
Triquint Semiconductor
Tropical Sportswear
TRW Automotive
Tyco Electronics
Tyco Intl.

U
Union Pacific Railroad
Unisys
United Online
United Tech.

V
VA Software
Veritas
Verizon
VF Corporation

W
Wachovia Bank
Washington Group Intl.
Washington Mutual
WellChoice
Werner Co.
West Corporation
Weyerhaeuser
Whirlpool
Wolverine World Wide
Wyeth

Y
Yahoo!

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