Friday, April 22, 2022

Perspectives On the 1,000 Point Drop In the Dow

An old Chinese curse says, “May you live in interesting times.” Well, we certainly have that today with the Dow Jones Industrial Average dropping 981 points (2.8%) today. The S&P 500 also dropped 2.8% and the NASDAQ composite declined by only 2.6%. The drop in the equity averages was largely attributed to higher interest rates. Where do we go from here?

For the record, I am not an investment advisor of any sort anymore. I did spend 20 years of my life in the investments business and have maintained an interest in the financial markets. The drop today caught my attention. For a little perspective, the most dramatic day in stock market history had to be October 19, 1987, which saw the Dow drop 508 points, which was 22% of its value at the time. Think about that – investors saw 20% of their value wiped away in one day. I was a junior at Baylor that day, so I did not appreciate the enormity of that day like I do now. The Dow closed at 1,722 after that carnage. Today, after a 981-point drop, the Dow closed at 33,811, which is a 32,089-point increase since October 19, 1987. And consider all that has gone on since. Two Iraq wars. 9/11. A near depression in the 2008-2009 timeframe. A global pandemic. War between Russia and Ukraine. All manner of terrorist attacks, whether in Paris, Madrid, or Orlando among others. All that sandwiched in between two stock market crashes. And yet equities have managed a compounded annual growth rate of about 8.8%. Stocks are resilient and I expect they will recover from this as well.

Is this a buying opportunity? Just my opinion, so take it for what it is worth here, but my answer is not yet. When the market crashed in front of the pandemic in 2020, I believed that created a good buying opportunity. Turned out to be a better buying opportunity than I ever imagined. This time feels different. One of the pithy sayings that the old-timers like to say is “Don’t fight the fed.” Let the Federal Reserve be your guide. In 2020, the Fed unleashed the spigots and money gushed out. Today, they are tightening the spigot to the point where one wonders if they will ever put another dollar into circulation. Interest rates are rising, and now is not the time to get courageous and stand in front of that.

Why do interest rates matter? Anyone who has ever done a discounted cash flow analysis on a stock knows that Treasury rates (i.e. the risk-free rate) are tied to equity valuations. A discounted cash flow analysis yields an intrinsic value for a stock. As rates go up, that intrinsic value goes down. With the federal reserve sounding more hawkish than ever on rates, investors are betting that rates go much higher than originally expected. Higher interest rates get built into the DCF equation. Hence, the drop in stock prices.

Why do interest rates have to rise? Interest rates are the price of money. Back in 2020, interest rates fell to zero as money was injected into the economy to help fight the effects of the pandemic. Money was needed as millions of people were put out of work. When rates fall, more money is available from the banks, and credit becomes easier to obtain. With a low price of money, demand for money increases. When a wide swath of the population has more money, due to obtaining low-interest easy credit, it allows suppliers of good and services to raise their prices a bit. When there is a shortage of goods, it allows prices to be raised a lot. Supply shortages soon hit during the pandemic as production was either halted or slowed to a crawl. Lumber was the first shortage, but the most pronounced and longest lasting of the supply shortages has been in semiconductors. Semiconductors are used in a wide variety of products, with the big three being computers, phones and cars. When the supply shortages hit, prices rise dramatically and that shows up in the inflation numbers. In order to slow inflation, rates must rise, thereby reducing demand for credit, and bringing the supply/demand imbalances back into balance.

What is inflation? The best definition of inflation I ever heard is that it is too many dollars chasing too few goods. This hits at the causes of inflation. Too much money in the system on the one hand. Supply shortages on the other. We saw that in the 1970’s and we see it again today. The problem we have today is that the Federal Reserve tried to tell us last year that inflation was “transitory.” In the process, they continued to feed money into the system, making the inflation worse. By the time Jerome Powell realized what was going on, it was too late. Because the Federal Reserve was behind the curve all year, they made the inflation situation far worse. I believe that prices have gone far higher than necessary. The actions needed to correct the Fed created inflation will be far more drastic now than they would have been had the Fed started taking corrective action last year.

Would I recommend stocks at this point? First, like I mentioned at the beginning, I am not an investment advisor any longer. I do have thoughts and ideas. I still like to do my own research. Every person’s situation, preferences and risk tolerance are different. If you like to purchase individual securities, do your research first. If you have a financial/wealth advisor whose expertise you depend upon, consult him/her and develop your plan of action together. Or maybe you just invest in index funds and call it good. Nothing wrong with any of these approaches. My preference at this time to raise investable cash, and wait for the right buying time. In other words, don’t fight the fed. I’ll be getting my list together. For me, I like regional banks, semiconductors and a smattering of industrials.

Understand that this too shall pass. If today were as bad as 1987, the Dow would have dropped about 7,600 points today. It did not, it dropped 1,000. To believe that stocks will come back, as I do, is to believe in the resiliency of people. We will go on making widgets, working diligently at our jobs and being forever optimistic about the future.

Friday, April 15, 2022

A BUdding Rivalry?


On April 4th, the Kansas Jayhawks won the NCAA Men’s Basketball National Championship with a 72-69 win over North Carolina. One year earlier, KU’s conference foe Baylor won the National Championship with a win over Gonzaga. For the first time ever, one of KU’s conference opponents had won a national championship, and perhaps, the fulfillment of one of Bill Self’s wishes was starting to take some shape. We have to go back to 2012 to find the beginning of this story.

During the summer of 2012, conference realignment took shape in a big way and in the process, Kansas lost its biggest rival, Missouri to the Southeastern Conference. In order to replace Missouri, Bill Self knew he needed a nationally significant basketball power to replace Missouri in the Big 12. His dream was that Louisville would be invited to join the Big 12. Louisville was looking to leave the Big East Conference, so they were available. The Cardinals were coming off a Final Four appearance in 2012 (along with Self’s Jayhawks), and they would go on to win the National Championship in 2013, since vacated. They had a high-profile coach in Rick Pitino, who had already taken three different schools to the Final Four. The Big 12 went a different direction, thanks to the University of Texas, and took West Virginia. West Virginia brought a high-profile coach and competitive teams, but nothing more than what already populated the Big 12. Nothing nationally significant.

Self’s Jayhawks would go on to dominate the Big 12 over the rest of the decade. Kansas State would win a couple of league championships, but would never mount a consistent threat to Kansas. Texas Tech would win a league championship in 2019 (tied with Kansas State), and go to a Final Four, losing the 2019 championship game in overtime to Virginia. But they would take a step back, going 9-9 in the league in 2020. Coach Chris Beard would leave Lubbock for his alma mater, Texas after the 2021 season. The Big 12 fielded strong, competitive teams top to bottom, but nothing nationally significant.

Scott Drew came to Baylor in the summer of 2003, the same time that Bill Self came to Kansas. The coaches came to their respective schools under entirely different circumstances. Self inherited a Kansas team that was loaded and expected to contend for a conference championship and make big noise in March. Drew came to a school that did not know if it would even field a team that first year. Baylor was up to its eyeballs in the worst scandal in college basketball history. What came out of that was a picture of a Baylor basketball program that was out of control and entirely lost under Dave Bliss. As a Baylor alum, I never want to see or hear of Bliss ever again. He thoroughly disgusts me. Drew was left to clean up the mess with 7 scholarship players. He and his assistant coaches went begging for kids on campus to come try out for the team.

Somehow Drew survived and by 2008, he had Baylor in the NCAA Tournament (as an 11 seed). He would take the Bears to the NCAA again in 2010 and 2012, and advance the Bears to the Elite Eight both times. However, he was unable to match that success over the rest of the decade, making it as far as the Sweet Sixteen in 2014 and again in 2017. Drew built the Bears up to a consistently competitive program that won some significant games, but never really competed for conference championships and was never all that nationally significant. The Bears did briefly rise to a Number 1 ranking in the polls in 2017, but that was just for a couple of weeks. The Bears failed to make the NCAA Tournament in 2018. They were picked to finish 9th in the Big 12 in 2019.

There was no rivalry between Drew and Self, or Baylor and Kansas. Between 2004 and 2019, a period that covered 16 seasons, the two teams played 26 times with Kansas winning 22 and Baylor winning 4. That is not a rivalry, that is a beat down. During that time, Baylor did not win a single game in Allen Fieldhouse while Self’s Jayhawks won 9 times in the Ferrell Center at Baylor.

For Baylor, things began to change with the recruiting class of 2018. Drew recruited a couple of high
school kids, Jerod Butler from Louisiana and Matthew Mayer from Austin. He also brought in an international kid, Flo Thamba. Finally, he added a couple of transfers who would have to sit out a year, per NCAA transfer rules at the time, Davion Mitchell and Macio Teague. None of these kids raised any eyebrows, none made commentators and writers sit up and take notice. But this class formed the nucleus of what would be a national champion. Nobody predicted any sort of greatness, or paradigm shift in the Baylor program with this group. The other notable change for the 2018-19 season was that Scott Drew junked his zone defense, and embraced the type of man-to-man defense that Chris Beard was playing out at Texas Tech. As a Baylor alum, I have long believed that Scott Drew did his best coaching job in the 2018-19 season. The team that was picked to finish 9th in the Big 12, went 9-9 in the league, finished 5th and advanced to the second round of the NCAA Tournament before losing to Gonzaga. That was the season where Drew set in place all the things that were about to come.

In the 2019-20 season, Baylor finally beat Kansas in Allen Fieldhouse, and would win a Big 12 record 23 games in a row. After that Baylor loss, Kansas would not lose another game the rest of the season, closing out with a 16-game winning streak. They would need every single one of those 16 wins to edge out Baylor for the Big 12 championship. Kansas would close out the year 28-3, Baylor would finish 26-4. The NCAA Tournament was canceled that season due to COVID-19. Both teams had very high hopes for that tournament. It is reasonable to believe that both teams would have entered the tournament as a #1 seed.

For the 2020-21 season, Baylor would return 4 of its 5 starters from the previous, and they had their sights set squarely on the national championship. In addition to the returners, they added two significant transfers, Jonathan Tchamwa Tchatchoua and Adam Flagler. Again, no one that would make you sit up and take notice.  It was a strange season in college basketball because of the continuing COVID-19 pandemic that limited crowd sizes and had the games played in largely empty arenas. The Bears themselves were hit with a COVID-19 outbreak that forced them to miss about 3 weeks of the season. Even so, the Bears went on to win the Big 12 with a 13-1 record, losing 4 games due to the COVID outbreak that they were unable to make up. They entered the NCAA Tournament as the #2 overall seed (Gonzaga was the #1 overall seed) and a 23-2 record. Baylor had one the greatest NCAA Tournament performances of all-time, and one of the 2 or 3 most dominant Final Fours ever to win its first men’s basketball national championship.


Both teams entered the 2021-22 season with high hopes. Indeed, both teams shared the Big 12
championship with a 14-4 conference record, and the two teams split their two regular season games for the third year in a row. Baylor had a very disappointing 2nd round exit in the NCAA Tournament while Kansas won its fourth NCAA Championship. Looking ahead to next season, both teams have been ranked in the Top 10 of every “way too early” poll that I have seen so far. Both teams have plenty of returning talent, and an influx of incredible new talent. Next year, we as fans will get treated to two games featuring the last two national champions, and I am excited to see two basketball heavyweights slug it out. I am sure that when the schedules come out, both teams will be the circling the other. And both teams will have every expectation of beating the other.

Beyond next season the big question is whether or not Baylor has staying power. We know Kansas does. KU’s last four coaches have each taken Kansas to at least two Final Fours. They have accounted for 31 conference titles, 12 Final Fours and three national championships. Baylor’s magical 2021 season was their first conference championship in 70 years, their first Final Four in 70 years, and their only national championship. Kansas has won more basketball games than any school in history. Kansas plays in one of the most historic basketball venues on the planet. Baylor is getting ready to break ground on a brand new, state of the art facility that ironically enough is drawing from Allen Fieldhouse for its arena design. It is tradition vs up and comer. I do not know if Baylor has staying power. Scott Drew seems wedded to Baylor, and appears unlikely to ever leave. Will the Baylor program thrive beyond that? I would like to think so. Bill Self and Kansas have waited nearly 10 years for a nationally significant conference opponent. They may finally have what they have longed for. As they say, be careful what you pray for…I can hardly wait to see what this rivalry could become.

Friday, December 17, 2021

10 Things For 2022

 

Back in my investments days, one of my favorite reads was Byron Wien’s “10 Surprises” for the upcoming year. Back in the 1980’s and 1990’s, Mr. Wien was the Chief Investment Strategist for Morgan Stanley. He would define a surprise as an event that was outside the consensus thinking at the time of his writing, but that he believed had a better than 50/50 likelihood of happening. Given his profession and his audience, he would confine his surprises to the financial markets (which were always full of surprises), and he would dip his toes into the political arena only to the extent that such event would affect the financial markets. With an ode to Mr. Wien, here are my “10 Things” for 2022. Many of these are in line with consensus thinking, so no “Surprise” in the title. I do believe that my list will hold a couple of surprises. And I will offer up some viewpoints on the financial markets, but I will also venture into other areas as well. With that, here is my list:

1.       Inflation will be the #1 concern of economists, the financial markets and people in general in 2022. The latest Producer Price Index (PPI) reading came in at 9.2%. The PPI is often seen as a foreshadowing of consumer prices, which were most recently 6.8%. Look for consumer prices to approach double digits if they follow the PPI. Although I have not seen any consensus estimates for inflation next year, my guess is that no estimates approach double digits.

2.        The Federal Reserve has indicated that they will raise interest rates at least three times in 2022. Most economists believe that this will be in the form of 3 25 basis point (bp) increases. I say with inflation being a greater than anticipated problem, at least one increase will be at least 50 bp. Look for long-term rates to rise more than expected as well. The Fed has clearly been behind the curve on inflation, finally giving up the whole idea that inflation will be “transitory.” I never believed it would be. In 2020, the money supply increased by over 20% (an all-time record) in a year in which the economy contracted by 3.5%. Inflation is simply too many dollars chasing too few goods. With the 2020 money supply increase, the “too many dollars” part was taken care of, and with various supply chain disruptions, the “too few goods” part was taken care of as well.

3.        Returns in the financial markets will be muted in 2022. Look for negative returns from bonds (higher rates produce lower bond prices), and equity returns will struggle to eke out any sort of positive return (which I believe will be less than 5 percent). I would not be surprised to see negative equity returns, as higher interest rates will depress equity valuations.

4.        The economy itself will still be good. Definitely slower in 2022, as next year’s results will be going up against tough comparisons. Unemployment will remain low, and wages will see good growth, though not enough to keep up with inflation.

5.       The big political event next year will be the mid-term elections in November. I will stay with consensus that expects the Republicans to take both the House and the Senate.

6.        The NFL will have a COVID-related work stoppage. Too many positive tests have depleted too many rosters. When play resumes, look for the Chiefs to have to play its second consecutive Super Bowl on its opponent’s home field versus the Rams. With Super Bowl XVI being played in SoFi Stadium in Los Angeles, it’s sure to be a Rams crowd.

7.       In college football, Alabama will beat Michigan for the national championship, and in college basketball, I believe Baylor will become the first repeat champion since Florida did it in 2006 and 2007. Defense travels.

8.         I have no idea who will be nominated for the Oscars. I cannot tell you the last time I saw a movie in a theater. Do they still show movies in theaters?

9.        My social life, on a scale of 1-10, will be a -3. And quite honestly, I rather like it that way. If I have the time to string together this list, and enjoy doing it, the life is pretty good.

10.    I wish all of you a most blessed, prosperous and healthy 2022, with the richness of God’s blessings bestowed on each of you.

I do not believe in New Year’s Resolutions. Let’s face it, they are all obliterated by January 3. The art of being your best self is a daily grind, in which you give it your best each day. Many days we fall short. I know I certainly do. We get back up the next day and keep grinding to be our best. And don’t forget to stop and smell the roses. One of the things that makes us our best is a spirit of joy.

Since I commented on what I expect to see from the financial markets, and since I still have that old equity analyst still in me, here are a few stock recommendations. Look at some large company stocks that have been beaten down in 2021. Intel, AT&T, and IBM come to mind. Pharmaceuticals, Food & Drug retailers. Next year could belong to the value investor. I would avoid high flying tech stocks. Many of them have valuations that make no sense.

Happy New Year!

Saturday, July 3, 2021

My 50 Greatest Things About America

Found an article on Yahoo Finance entitled “100 Greatest Things About America in 2021” (The 100 Greatest Things about America 2021 (yahoo.com). Found plenty in it to agree with. Also found plenty to disagree with. Instead of nitpicking that list to death, I decided to create my list of 100 Greatest Things About America in 2021.” I would challenge the reader to make his or her own list. It will make you realize the blessing of living in America, and perhaps fill your heart with gratitude. In that spirit, here is my list, in no particular order:

1.       Patrick Mahomes

2.       Baseball

3.       80’s music

4.       Families

5.       Faith

6.       Communities

7.       Work

8.       Charming small towns

9.       Small business

10.   Big Tech

11.   The American Dream

12.   Risk

13.   Barbecue

14.   The Masters

15.   Juneteenth

16.   Simone Biles

17.   Scott Drew

18.   The College World Series (this year’s Series was outstanding!)

19.   Immigrants – legal and illegal

20.   Entrepreneurs

21.   College Football

22.   College Basketball

23.   The Final Four (for obvious reasons I really, really, really loved this year’s Final Four!)

24.   Pies

25.   Chocolate chip cookies – without nuts!

26.   The Grand Canyon

27.   Sandy beaches

28.   Reruns of “Frasier”

29.   The Founding Fathers. Flaws and all.

30.   The Declaration of Independence

31.   Cars – the mode of transportation and the rock group.

32.   Open roads

33.   Convertibles

34.   Lemonade & Limeade

35.   Ice Cream

36.   Southern accents

37.   The victorious underdog

38.   Hamburgers

39.   Salsa/Pico de gallo

40.   Grills

41.   Decks/patios

42.   Mancaves

43.   The Establishment Clause

44.   First responders

45.   Front-line workers

46.   Courage

47.   Jambalaya

48.   Margaritaville

49.   Boiled shrimp

50.   Strawberries

Sunday, May 3, 2020

The Trial of The Century


The trial of Sueanne Hobson was Johnson County’s version of the “Trial of the Century.” Mrs. Hobson was a striking woman, one universally described as attractive. She was stylishly dressed each day in court and her outfits drew as much commentary as any evidence or testimony presented at trial that day.  She had married Ed Hobson in late 1978, and less than eighteen months later, her stepson, Chris Hobson was murdered. Mrs. Hobson’s biological son, Jimmy Crumm had been one of the gunmen along with a friend of his from Shawnee Mission South High School, Paul Sorrentino. Behind it all, Jimmy had pointed out that it was his Mother who was the mastermind. Crowds would be lined up hours in advance, as people hoped to get a seat to the trial. Mrs. Hobson’s attorney was the former Johnson County prosecutor. There was a lot of doubt surrounding the courtroom ability of then District Attorney, Dennis Moore. Johnson County at the time was a bedroom community, a collection of suburban towns outside Kansas City. People in Johnson County were generally conservative and held a healthy dose of respect for law and order. The people generally did not tolerate legal gamesmanship to get criminals free on technicalities.

After Chris’s body was found on May 3, 1980, police set about confirming his identity, noting his wounds, and letting the coroner do his thing. It was gross, and those that were there noted that they would never, could never forget the smell. Thanks to the efforts of Leila Anderson, the police had their suspects in mind, and late in the evening of May 3, they set out to make their three arrests. The three would be interrogated into the early morning hours of May 4. Mrs. Hobson was a stone wall, admitting to nothing. Paul Sorrentino was defiant until the police played him the recording of the phone call he had the previous day with Ms. Anderson. Jimmy Crumm was chirping like a bird. He seemed relieved to be telling this story and getting it off his chest.

Mrs. Hobson’s trial started in late April, 1982. On May 7, 1982, Mrs. Hobson was convicted of first-degree murder and conspiracy to commit murder by a Johnson County jury. I was fifteen years old at the time, and my world was black and white. I knew at the time she was guilty. In the forty years since, my world has acquired many shades of grey to color over most of my black and white. Life’s complexities and experiences have taught me that things are not always as they seem. I have become much more educated on our legal system, and time, age and experience have taught me so much about discernment.  Mrs. Hobson maintained her innocence all the way through, from the point of her initial arrest to her parole and release from prison. I believe at this point I needed to go back and relive those events, with the benefit of hindsight, to satisfy my own curiosity in this case. Did she deserve the benefit of the doubt? Was she railroaded by the legal system? Was she indeed guilty?

In determining Mrs. Hobson’s innocence or guilt to my own satisfaction, I knew I could not rely on the same feelings I had at fifteen. Instead I needed solid, well-grounded, reasoned thought. I do not know if I have succeeded, but I have a thought process in place that I find satisfactory. I had to consider the evidence against Mrs. Hobson, and the source of that evidence, primarily her son, Jimmy Crumm. Let’s look at who Jimmy was in 1982 when he testified against his mother at trial. Most of the information comes from Thomas O’Donnell’s book, Crazymaker. Another book that was useful was Family Affairs by Andy Hoffman, who profiled the Hobson’s in 1981 for the Olathe Daily News and followed the trial closely. Another piece of note was written by Tom Leathers, publisher of a rag called The Town Squire.

I believe that we need to start by remembering Jimmy as he was in 1980. Mrs. Hobson’s own attorney paints us a picture of Jimmy during his closing statement at her trial. “When Jimmy Crumm came to move into that house, things went bad because Jimmy brought with him his drugs, Jimmy brought with him his predisposition for thievery. Jimmy didn’t go to school, Jimmy dropped out of school. He drops out of school and he drops acid. He does cocaine, it’s found in the house.” (O’Donnell, 407) O’Donnell described Jimmy earlier in the book: “The boy (Jimmy) was an extremely poor student. His grades in Raytown South Junior High and Raytown High were generally “failure” or “inferior” and, if anything, they got a little worse as he grew older.” (O’Donnell, 63). We see Jimmy the poor student, the kid who long before April 17, 1980 had dropped out of Shawnee Mission South and had no hope of graduating. Yet, what the defense attorney implied here was that Jimmy fabricated the story about his mother’s involvement in this murder. Why?

I make some assumptions at this point. I never knew Jimmy Crumm, so I can only go by what others said. We see a young man of below average intelligence. I believe it is reasonable to assume that his reading and comprehension skills were below grade level and that his language skills and vocabulary were below average. In reading accounts of the trial, we learn that Jimmy read at a ninth-grade level as a high school senior. And the defense attorney would have us believe that this is the kid who fabricated a story that was so spectacular, so horrifying, yet so bulletproof and airtight that the Overland Park Police Dept bought it hook, line and sinker? That the District Attorney so bought it that he would run with it at trial, even knowing that any run of the mill defense attorney could poke a thousand holes in it? This kid who spent his teenage years whacked out on every drug in the book made up that story? Could Jimmy have made it up? Yes. Is it reasonable to assume that he did? No. I find the possibility so slight that I am comfortable calling it impossible. The defense attorney wanted me to believe the impossible. That was unreasonable. At this point, my only fallback was that Jimmy was telling the truth.

Jimmy was simple. Mrs. Hobson was complex. I do not mean to imply that Mrs. Hobson was smart, and intellectually complex. She was not either smart or intellectually complex. But she clearly had more worldly sophistication than Jimmy. Which brings up to the story of Chris’s murder. This story is complex. It has several different twists and turns. Why would Jimmy testify against his mother? What was Jimmy’s motivation to lie? Jimmy had already been convicted of first-degree murder and sentenced to life in prison. Testifying at Mrs. Hobson’s trial would not change any of that. Jimmy really did not want to testify at his Mother’s trial. What made Jimmy testify? I believe Jimmy’s attorney, Ed Byrne, convinced him to testify. I believe that Mr. Byrne was the only person that Jimmy felt like he could trust in this whole matter. He could not trust Dennis Moore. He could not trust his own mother or her attorney. Mr. Byrne despised Mrs. Hobson, hated her with every ounce of his being. He was afraid that if Jimmy did not testify, that Mrs. Hobson would be found not guilty. He would not let that happen if he had any way to stop it.

Jimmy’s appearance in court was of someone who was resigned, defeated. He spoke quietly, without any defiance. He was the only one who did not appear to parse every word. Jimmy testified first about his relationship with his Mother, which was bizarre (the relationship, not the testimony). After Mrs. Hobson divorced her first husband, Jimmy went to live with his Dad, and would not have any contact with his Mom for almost 10 years. She made no effort to contact him. Then, he recounted the events of April 17, 1980. April 17 was intentionally picked because Ed would be a union meeting at work. Mrs. Hobson knew this, but Jimmy, who lived in his own apartment by this time, would have had no prior knowledge of Ed’s meeting that evening. Jimmy recounted how he and Paul had decided not to do the deed that night. When they told Mrs. Hobson this, she was beside herself, and told him it was too late to back out. He did it to please his Mom and get her off his back.

Jimmy testified that this was not Mrs. Hobson’s first attempt to kill Chris. In February she had Jimmy take Chris out hunting one day. Jimmy was instructed to shoot Chris. She was visibly upset when both boys came back very much alive. In March, she dumped 8 Quaaludes tablets in his ice cream. Chris fell asleep for an extended period of time, but he woke up. Finally, the plan was to take him out on April 17. Mrs. Hobson testified at trial that all she wanted Jimmy to do was “talk to” Chris. Chris had been accused of telling on Jimmy regarding some stolen credit cards (Chris did no such thing), and of hitting Mrs. Hobson (again he did not do any such thing) and of spreading vicious rumors about Suzanne (Chris did spread some vicious rumors about her). This raises far too many questions in my mind. Was Ed told that Jimmy was coming over to “talk to” Chris? No. Why was a shotgun taken from the Hobson home, why was it needed? If all Jimmy was supposed to do was talk to Chris, why was Paul Sorrentino necessary? Whose idea was it to bring Paul in? The kid who was reluctant to do this in the first place (Jimmy), or the woman who was relentlessly hounding Jimmy to take care of Chris? It was Mrs. Hobson’s idea. What was in it for the boys? A new car for Jimmy, and motorcycle repairs for Paul.

I had to consider more than just Jimmy’s story. I looked hard at Suzanne Hobson’s testimony. Suzanne was Chris’s stepsister, and Jimmy’s sister. She was an eighth grader at Indian Creek during the 1979-80 school year. Suzanne was never considered a suspect in the case, but she was brought to the Overland Park Police Station early on the morning of May 4,1980 for questioning. During her interrogation, she volunteered some damaging information against her Mother, notably that she overheard both her Mom and Jimmy talking about the need to “get rid of” Chris. Suzanne was most definitely an accessory to this crime but was granted immunity from prosecution in exchange for her testimony. When she testified at her Mother’s trial, she attempted to stonewall Dennis Moore, then she attempted to change her story. At this point, Dennis Moore approached the bench and asked to have Suzanne deemed a “turncoat witness,” which would give him far greater latitude in questioning her. The motion was granted. Moore then proceeded to make mincemeat out of Suzanne on the witness stand. Dennis Moore would get her to confirm what she told police on May 4, 1980. This would turn out to be the key testimony in the trial.

So which story from Suzanne was the truth? Was it the story she told the Overland Park police on May 4, 1980 or was it the story she tried to tell at her Mother’s trial? To me, one was raw, where she was asked questions and she answered them. At trial, we saw a Suzanne that had been exceedingly coached, and was attempting to give pat answers. She had clearly been taught to expect the questions that Dennis Moore asked her. My assessment is that the Suzanne we saw on May 4, 1980 was a far more honest one that the Suzanne we saw on the witness stand. My impression of Suzanne at the trial was of a 15-year-old sassy, smartass girl who knew more than the DA. And she was going to show him up and embarrass him. All in the name of protecting her Mom. Big mistake. Dennis Moore got her to admit to everything she told the police on May 4, 1980. In the end, her testimony was damaging to her Mother.

There were several others who testified. Of particular note was Margie Hunt, a close friend of Mrs. Hobson’s who turned against her. She testified for the prosecution. Margie is the one who went drinking with Mrs. Hobson on April 18, the day after the murder, in what was clearly a celebratory occasion. Her testimony was particularly damaging, but the defense attorney’s attempt to condescend to her completely backfired and basically showed himself to be a first-rate ass. The defense attorney’s disrespect also garnered Margie the sympathy of the jury. Ernestine Bean was another of Mrs. Hobson’s friends who testified for the defense. Dennis Moore then got her to contradict several aspects of Mrs. Hobson’s testimony, further damaging her case and making it easier to find her guilty. Finally, Mrs. Hobson’s mother, Ruth Sallee, testified for the defense, and she was a disaster. She had a fractured relationship with Mrs. Hobson and came across as goofy.

Mrs. Hobson’s defense attorney, Hugh Kreamer, was a former prosecutor in Johnson County, so he knew the courts like the back of his hand. In addition, he was dying of cancer. He would pass away just five months after Mrs. Hobson’s trial ended. Hugh’s son, Scott Kreamer, assisted him in this case. Scott was not familiar with criminal law. He handled lots of divorce cases, as he found that’s where the easy money was. As an aside, Scott represented my Mom in her divorce case in 1991. But Hugh had a flair for the dramatic in the courtroom. He did a great job of cross examining both Jimmy and Paul in this case and came surprisingly close to exonerating Mrs. Hobson with his questioning. But he made plenty of mistakes, the biggest being putting Mrs. Hobson on the witness stand and giving Dennis Moore his shot at her. Mrs. Hobson was a tough nut to crack, but Moore focused on the wallet found at Metcalf South. He pounded home that there were three different stories surrounding the wallet, and in the end, he made her out to be a liar. Kreamer also mishandled Margie Hunt, and could not counter the damage that Suzanne Hobson did to her Mother. Scott appeared to be in it primarily for the money and made sure the Hobson’s deeded over their condo on 103rd Terrace and Nall before the trial began.

In reading the book, Crazymaker, author Thomas O’Donnell does a good job of building psychological profiles of each of this saga’s main characters. For the months and days before April 17, 1980, he paints a picture of a Mrs. Hobson who is nervous, impatient, jumpy, and always on edge. From April 18 on, we see a Mrs. Hobson who is at peace, relaxed and happy. She even goes out with a friend, Margie Hunt, on April 18, the day after the murder, and has some celebratory drinks. Contrast this with Ed Hobson, who has no idea what has happened to his son.  He is frantic, spends his days searching for Chris, and is on the phone with the Overland Park police several times a day. Mrs. Hobson obviously does not share his concerns (how he does not see this is beyond me). Mrs. Hobson does not even tell Ed that she knows what happened to him. Meanwhile, Mrs. Hobson is giving away Chris’s clothes and his bedroom furniture. His body had not been found yet! She knew he was dead, and she had Ed completely fooled. She was talking about redecorating Chris’s room and making it into a den. Would it not make sense to be concerned at this point? Would you not be hoping to hear news that he was safe and that he would be returning home soon? Who thinks of giving his stuff away at this point? Who talks about redecorating his room at this point? Someone who already knows that Chris is dead.

In summary, I believe the testimony of Jimmy Crumm, even if he is not a “credible” witness in the traditional sense of the word. He told the truth, as making up a story like this was too complex for him at that time. Hell, it was probably too complex for me to make up! Suzanne Hobson’s answers to the police on May 4, 1980, were raw, simple and most likely honest. Her answers in court were rehearsed, coached and hard to believe. Mrs. Hobson’s own story changed way too often. She was caught in her own lies. I am privy to information the jury might not have had, although I have tried my best to myself in the shoes of a juror. My reasoning satisfies me, and it leads me to two very unmistakable conclusions: 1) Sueanne Hobson was guilty as hell and 2) she should never have been paroled.

A Most Horrifying Murder


Forty years ago today, May 3, 1980, two young boys in Miami County, Kansas, decided that they would spend the day fishing, and headed out to dig for worms that they would use as bait. They found their spot, started digging, and made a gruesome discovery. They had come across the deceased body of 13-year-old Chris Hobson, an Overland Park, Kansas youth who had been missing for about 2 ½ weeks. Law enforcement and the community in general had been frantically looking for Hobson, a 7th grader at Indian Creek Junior High School. His wallet had been found at Metcalf South Shopping Center. Unconfirmed reports had him at Worlds of Fun amusement park the weekend prior to his disappearance. The fact that Hobson was dead was indeed a tragedy. He had been shot at close range three times. On May 4, three people were arrested for the murder: Sueanne Hobson, Chris’s stepmother; James Crumm, Chris’s stepbrother; and Paul Sorrentino, an acquaintance of Jimmy’s and a student at Shawnee Mission South. Suzanne Hobson was brought in for questioning but was never a suspect. As the story of how it happened unfolded, we would all learn of the most shocking and horrifying murder in Johnson County, Kansas history.

I remember watching the local news on Sunday May 4. The lead story was about Chris, and I was horrified by the story. For the first time in my young 13-year life, pure evil had pierced my little bubble of a world. All of us at Indian Creek lost a fellow student, some of us lost a friend. In this note, I recall the events leading up to and including April 17, 1980, the day Chris was murdered. Then I give some of my own impressions of the people involved. The only one I knew personally on any level was Chris. In a separate companion piece, I discuss my own thoughts on Mrs. Hobson, that you can read about here.

Sueanne Hobson had targeted the night of April 17, 1980. Her husband, Ed Hobson, would be gone to a union meeting (he was a millwright at Ralston Purina). Mrs. Hobson and Ed had married in December 1978 after a brief courtship. Ed’s previous wife (and Chris’s mother) died of cancer in 1976. There were adjustment problems within the marriage, as is common in marriages in which families are blended. Ed had the one son, Chris, and Mrs. Hobson had two children from a previous marriage, James (Jimmy) Crumm and Suzanne Hobson. Suzanne was adopted by Ed after the marriage. Mrs. Hobson had trouble with Chris from the beginning. She convinced her son Jimmy to take him out the night of April 17. Jimmy was accompanied by a friend, Paul Sorrentino. Jimmy was a troubled youth who did not live with Ed and Mrs. Hobson, having moved out in February 1980. The daughter Suzanne was instructed to be upstairs in the shower when Jimmy and his friend came by to pick up Chris. The boys picked up Chris and took a shovel and a shotgun with them (both were stolen from Ed). They lured Chris out of the house on the promise of a “drug ripoff” and drove him to a heavily wooded area in Miami County, about 25 miles south of their Overland Park residence. The spot they chose ran alongside Big Bull Creek (now Hillsdale Lake). They had Chris dig a hole about six feet long, four feet wide and three feet deep to get a truck stuck. Then had him sit in it to try it out and make sure it was the right size (in other words, they had Chris dig his own grave). Then the older boys pulled out the shotgun and shot Chris three times. They each took turns shooting him before he finally died. The boys buried him and headed back home. Chris was reported missing later that night by Mrs. Hobson who told police that he had run away from home and had a shotgun with him.

On May 1, 1981, Jimmy Crumm was convicted of first-degree murder and sentenced to life in prison. At his trial, Crumm claimed that he killed Chris at the direction of his Mother. Paul Sorrentino took a plea deal offered by the state and was convicted of aiding and abetting a murder, but the first-degree murder charge was dropped. He was to testify against Mrs. Hobson as part of his plea deal. Apparently, the Johnson County prosecutors heard enough that by June 23, 1981, they had arrested Mrs. Hobson and charged her with murder and conspiracy to commit murder.

Mrs. Hobson’s trial began in late April 1982. Mrs. Hobson testified on her own behalf. Why her defense attorney, Hugh Kreamer, put her on the witness stand remains a complete mystery. We saw a woman who was a loving and deeply caring stepmother to Chris. She described a near perfect family situation at home. She denied any involvement in Chris’s murder. Yet, there was a dead child in this perfect house, and the older stepbrother admitted to the crime and pointed to him Mother as the mastermind of the whole thing. James Crumm testified against his own Mom and on behalf of the prosecution. He testified grudgingly and only agreed to it at the last minute. He reiterated his story that his mother wanted Chris gone and that she had grown quite agitated that he had not completed the job yet. He testified that she wanted Chris gone by Christmas so that she would not have to buy him any presents. He testified that things got so bad between his Mom and Chris that she refused to be in the same room with him. He testified that she had tried before to kill Chris by lacing a bowl of ice cream with Quaaludes. He testified that his Mom promised to buy him a car and to pay for Mr. Sorrentino’s needed motorcycle repairs in return for killing Chris. Then, Mrs. Hobson’s daughter also testified for the prosecution. She had said in her statement to police on May 4, 1980, that she had overheard her mother and Jimmy talking about the need to “get rid of” Chris. While she did not say that they discussed killing him, it was obvious that Jimmy took the meaning of “get rid of” to mean killing him. Suzanne reaffirmed that she said those things to police. There were several of Mrs. Hobson’s friends who testified for the prosecution that she utterly hated Chris. Mrs. Lee Shank, one of Chris’s teachers at Indian Creek also testified for the prosecution, recalling how Mrs. Hobson noted that Chris was creating problems at home. The jury convicted Sueanne Hobson of murder and conspiracy to commit murder and she was sentenced to life in prison.

Kansas law at the time made each convict eligible for parole after 7 ½ years. James Crumm was paroled in 1999 and is believed to be living in Texas today. Paul Sorrentino was paroled in 2000 and is believed to be living in Florida. Sueanne Hobson was paroled in 2011 and is living in Prairie Village, Kansas with her husband Ed in the house she inherited from her parents.

Chris Hobson was a classmate of mine at Indian Creek Junior High. We were both seventh graders during the 1979-80 school year. He was in my third hour reading class with Mrs. Pipes. That would be the only class that I had with him. I have no particular memories of Chris. He did not strike me as either exceptional or unexceptional. He was not a troublemaker nor a saint. He was remarkably average. Just an average kid, who like me was looking to make his way through life as a sevie. Chris Hobson had no chance. With a weak father, and an evil, determined stepmother, he was doomed to die an early death. Rest in Peace, Chris.

Suzanne Hobson was an eighth grader at Indian Creek that same year. I never knew Suzanne. I could have passed her hundreds of times in the halls of Indian Creek that year and never known it. After April 16, she would never go back to Indian Creek. Suzanne Hobson was the most intriguing character in this story. She knew of her Mother’s desire to have Chris killed by about February 1980. Suzanne was all in on it. She hated both Ed and Chris because they had taken her Mother from her with her marriage to Ed. This would get rid of one of the problems. On the day of the murder, Suzanne knew something was going down that night and she was the intermediary between her Mom and Jimmy. Ultimately, she was brought into the Overland Park police station early in the morning of May 4, 1980. She delivered some very damaging testimony against her Mom. She would try to walk it back at the trial (after some extensive coaching from her Mother), but the damage was done. This testimony she gave the police turned out to be the key testimony in the trial. On the witness stand, Suzanne came across as a sassy, smartass 15-year-old girl. She carried herself as though she was smarter than District Attorney Dennis Moore and she figured she could beat him at his own game and on his own turf. Big mistake. Moore made mincemeat out of her on the witness stand. Some years later, Suzanne admitted that her Mom was guilty. In September 1982, after the trial was over, Ed Hobson sexually assaulted Suzanne. Her Mom took Ed’s side in this dispute and Suzanne decided that she had enough of her Mom. It also led to a series of events that landed Suzanne in a state mental hospital in Topeka. While there, a counselor befriended Suzanne, gained her trust, and Suzanne spilled everything. The lie that she had been living could be lifted and she could truly be freed of her Mom and Ed Hobson.

One character in this whole story that should have garnered a world of sympathy was Ed Hobson. He had experienced immense tragedy before Chris’s death. Chris’s murder was another in a string of tragic deaths in his life. Yet, I find it hard to feel sympathy towards him. Ed initially divorced Mrs. Hobson right after her arrest. But, by December 1980, he had remarried her! He was convinced of her innocence. He comes across to me as a weak, pathetic, and gullible idiot. He was blinded by his lust for his wife, and completely duped by her story. After an unsuccessful attempt to have his wife paroled in the 1990’s, then Johnson County District Attorney Paul Morrison observed that Ed was “a sap of galactic proportions.” I completely agree with Mr. Morrison’s assessment. Sad thing is that he came across as someone who did not even care that his only biological child was murdered and all the evidence pointed to his wife. He would get his wife back at all costs, and that is all that mattered to him.

Strangely, a character here who comes off sympathetically is Jimmy Crumm. Jimmy had two conflicting feelings towards his Mother: 1) He wanted to please her; 2) He wanted her out of his life. He convinced himself that killing Chris would ultimately do both. He really did not want to do this. He never really thought he would. By February 1980, Mrs. Hobson got it into her head that she wanted Chris dead, and that Jimmy could do it for her. She relentlessly hounded him. Jimmy tried to put his Mom off as much as she could. Jimmy could not win. Jimmy had even taken Chris to the woods to go hunting at his Mom’s insistence. He was to shoot Chris then. Nobody was more disappointed than Mrs. Hobson when Chris came back home from that outing. The relentless hounding soon became a daily thing. It was Mrs. Hobson’s idea to bring in another person who could get it done.

The other person brought into this was Paul Sorrentino, a friend of Jimmy’s from Shawnee Mission South. Paul was described as a very likable kid, but also one who had frequent run-ins with the law. He came from a troubled home. For some reason, he had harbored a fantasy of being a mafia hit man, so when Jimmy approached him with the idea of killing Chris, Paul was all in. Paul does not come across sympathetically to me at all. He is described as very likable by all who knew him. He was a hired hand who murdered with way too much enthusiasm. Paul returned to South the next day after murdering Chris, and he could not wait to tell his friends at South what he had done. He bragged for the better part of two weeks what he had done, feeling himself rather invincible. He was convinced no one would ever find the body. He came oh so close to being right.

Paul Sorrentino bragged a little too much, and to the wrong person, about his deed. On May 1, 1980, Leila Anderson went to the Overland Park Police and told them what she had heard from Paul. This changed the entire scope of the investigation from a runaway situation to a murder case. With this new information, there was a much greater sense of urgency to find Chris. The police needed a body and needed it quick. Leila promised the police she would come back the next day with more information. She came back but did not have any more information. Detective Douglass asked her to do something very risky, and call Paul. She agreed. The Police taped the conversation. The phone call yielded a goldmine as the police now knew who all was involved. Based on what Anderson was able to get out of Sorrentino, the Overland Park police searched the area around 151st & Antioch. Today that area is well developed, but in 1980 it was still gravel roads and countryside. The police were unsuccessful in their search of the area on May 2. Anderson is the real hero in this story. Without her courage to step forward, Mrs. Hobson, Jimmy and Paul would have got away with murder.

Detective Stephen Moore of the OP Police comes off as a bumbling idiot. He was responsible for this case after Ed Hobson had called in to report his son missing. It was treated as a runaway case. Ed would call Detective Moore 2 or 3 times a day asking for any updates. Truth is, Detective Moore did not lift a finger to find Chris for nearly a week. When Chris never showed up, Moore ordered an all-out search on April 24, which included a police helicopter. The police searched all along Indian Creek from about Lamar, as it ran behind Shawnee Mission South over past Roe, as it ran behind Indian Creek Junior High. There was no body to be found. Detective Moore put this to the backburner again. Chris’s wallet was found at Metcalf South. This did raise suspicions at the police department that foul play was involved. But not enough to convince Moore that this was a murder. Once Leila Anderson came forward, this case became a murder investigation and was handled with much greater urgency. Detective John Douglass took over. He was much tougher and more professional than Moore, which would come in handy as he interrogated everyone. Douglass handled this case like a pro from the moment he became involved.

District Attorney Dennis Moore deserves credit for getting the conviction. He never could get Mrs. Hobson to admit to any crime on the witness stand. In his cross examination of Mrs. Hobson, he got her to admit that she lied about several points in her story and he did get her to admit to three or four different versions of how the wallet ended up at Metcalf South. He also got Ernestine Bean, a friend of Mrs. Hobson’s who testified for the defense, to contradict several substantial points in Mrs. Hobson’s story. Moore himself worried about the strength of his case. He caught a big break when Jimmy Crumm decided to testify for the prosecution. There was a lot of apprehension before the trial that Moore was more of an administrator than a trial lawyer. But, with a high-profile case, he would try it himself. Everyone knew he had aspirations to be the Attorney General of Kansas. He would eventually be defeated in his attempt to become Attorney General of Kansas, but he would go on to serve as the Kansas 3rd District Congressmen from 1999-2011.

Sunday, April 19, 2020

There Are No Non-Essential Jobs

During this time of pandemic, we have seen heroes rise up from the ordinary and become extraordinary. Hospital doctors, nurses, even janitors has risen up to become heroes. We also praise our grocery store and general merchandise/discount store (ie Wal Mart) clerks who have worked tirelessly to keep store shelves stocked. Sadly, I have also heard tales of these clerks taking unbelievable abuse from customers. They have all done this while literally putting their own lives at risk. These people are front-line soldiers in a war and deserve to be remembered as such. We have called them "essential" workers, and this gets to what bothers me. The ones we do not label as "essential" are labeled as "non-essential." In other words, they are not important. At least that is the message being communicated.

All jobs are essential. We need them all. Over the past four weeks, approximately 22 million people  have filed for first time unemployment benefits in this country. That is an average of 5.5 million people per week. The previous record was 695,000 in 1982. Economists generally believe that any number over 400,000 signals a recession. Prior to the country shutting down over this pandemic, there were 282,000 first time claims.

Who are these 22 million people? I believe Brennan Manning's book, The Ragamuffin Gospel, offers the best definition. They are the "bedraggled, beat-up and burnt-out." In short, they are ragamuffins, one who is commonly dressed in dirty clothes, typically a child. These days, they are beat up and burnt out. They are the food server working for tips. The aspiring entrepreneur. The single mother who now wonders how she will pay for the rent, the heat, the lights and still feed her children.

I get why we are shut down. We want to slow (not stop) the spread of the virus so as not to overwhelm the health care system. This is a highly contagious virus that for the person who has a compromised immune system is a death sentence. For most of us, we will fight it off and go on. The vast majority of us will never contract the virus. Others of  us will contract it, but be asymptomatic. My heart goes out to those who contract it. Many are scared. Scared of an uncertain future, perhaps an uncertain death. Personally, I do not fear death, but dying scares me to no end. I cannot imagine what those who receive this diagnosis are going through.

My heart also goes out to those who face an uncertain economic future. Even if/when they go back to work, will their employer still be in business? Will their business return to break even or profitable levels? What will they do? The government cannot keep writing trillion dollar plus checks to cover this. That is not a solution. No political party is going to rescue any of us. My personal opinion is that we are headed for a "double-dip" recession and when the recovery comes it will be very slow, and very weak at best.

As for me, I am going to re-read The Ragamuffin Gospel, as I believe it has a message that resonates for this time. Ultimately, it says that we are all ragamuffins. We are all certainly going to start feeling like it, if we don't already. Many of us are already feeling beat-up, burnt-out, stressed and at the end of our rope. We need hope and we need each other. All of us, and our jobs, are essential.