James C. Cusser, a veteran municipal bond analyst with Kidder, Peabody & Co., a few weeks ago left Wall Street to join Waddell & Reed in Shawnee Mission, Kan., as a portfolio manager.
Jim Cusser, who wrote some of the most intelligent copy on municipal bonds in the business, won't be doing that anymore. He is a friend of mine, and he will be missed.
The elegiac tone may not be appropriate here, but it is time to examine Cusser's literary output. After all, here was the man who wrote Past ... Present ... Future, Kidder's bond publication, as well as Capital Notes, and who said farewell on two occasions with pieces entitled "La Dolce Muni" and "His Last Writes." That such a stylist could find a place on the Street in the midst of the Roaring Eighties is a tribute to the vitality of the institution. Although what they made of some of his stuff, God knows.
I believe I first met Cusser in November 1982, when I was doing research on a story about New Hampshire and read his "The Importance of Being Capacious."
As he wrote, "Capacious referred to a state's debt capacity. We guessed that a state's per capita debt as a percentage of a state's per capita personal income was an important element of a state's creditworthiness." This was accompanied by the Cusser "10-Year State General Obligation Bonds Relative Yield and Credit Risk" graph, which to a rookie looked as if an ant had scrambled across the page after getting into the ink. I went to meet Cusser for an explanation.
Jim Cusser, sitting in the trading room, held forth on his chart, though he interspersed a reference or two to Bill Buckley and quizzed me on a few Latin expressions he wanted to use in an upcoming piece. Cusser was writing for a Kidder Peabody audience, after all.
He presumed not just a college education, but some familiarity with the classics. In one piece on "the prudent investor," he quoted at length from Aristotle's "Ethic." In another, he quoted James Madison writing as "Publius" in "The Federalist Papers."
Cusser seems to have agreed with Ambrose Bierce's declaration in addressing one critic of his column: "If you freaks can't understand what you read, why don't you read what you can understand?"
One thing led to another -- in this case, a rathskeller near Trinity Church in lower Manhattan called the Chop House, where we dined on superannuated steaks accompanied by musty ale. Another restaurant is there now, but the memory of the Chop House will remain dear.
At any rate, that is how I met the man and was privy to his philosophical meanderings in the municipal bond market. They were many, and I was privileged.
The Soul of the Analyst
Cusser has not surfaced on anyone's "All-American" team yet, and his position now makes future inclusion unlikely. But in assessing his collected works, his oeuvre, as they say, what comes across (besides his careful explanations of complicated ideas and a lust for bad puns) is his zest for the profession of municipal bond analysis, especially as it concerned political science.
I am not certain that this is much of an issue now, with so many analysts sitting on trading desks, but in 1985, Cusser explained why muni analysts are different. "We've different told that we're too easy on credits," he wrote, and answered, "Municipal bonds get higher ratings because the chance of default is less."
He continued, "The difficulty with municipal credit is not the separation between bonds that will eventually pay from those that won't. The problem comes with the gradation within investment grade category. The corporate bond analyst has a tremendous amount of financial data from which to work and can make those fine distinctions ... But with municipal credits, most of the analysis is non-financial.
"First, there is not the quantity and quality of financial reports available on a timely basis. Second, it's unclear what a ~good' financial position is for a nonprofit, stewardship corporation. And third, even if we did have good financials with good standards, it's arguable that financial data is only a small fraction of the analyst's job. The most difficult part of the analysis is understanding the political -- i.e., the issuing government's willingness to translate its citizenry's wealth into debt service payments. Many of our current problem credits have their problems based in politics, not ~profits.'..."
F. Scott Fitzgerald once wrote that the measure of a man's intelligence was how well he could hold two differing ideas in his head at the same time. The Cusser who wrote about the ground of municipal analysis in political science was also the Cusser who said, "They don't want analysis. They want marketing. Happy talk," and then began to sing, Happy, talkin' talkin' happy talk....
Cusser is, in fact, a musical fellow. I may have the only extant copy of his Christmas 1982 production, the poem "Compounders," detailing the wonders of a then-new product called compound interest bonds.
Such hijinks were pretty rare, although week after week he tried to fill his publication with stories that were not only informative but also entertaining to read. He wrote about "The rational mind of the trader," for example, showing how traders figured odds beyond gut intuition. He wrote about "The Three Princess of Serendip," in discussing pre-tax return on investment.
He influenced more than a few "Spectator" columns with his observations on politics. His last major contribution permeated an April 20 column dealing with progressive reformers and social engineers, and the question of consolidating bond-issuing authorities.
After wrestling with the subject with Cusser, I concluded that government operates best, and is most responsive to the wishes of the electorate, when there is competition between layers or sectors of government to provide services. This is hardly an original idea, but it seemed like good, common sense not much in circulation today.
Cusser could always be relied on for such stuff, and, despite managing taxables now, still occasionally ponders municipals. "Hey -- Massachusetts," he remarked last week in a call. "It would be interesting to track how that bond's done. Why not...."
Thus, Jim Cusser. Next week, a review of a biography of Gen. Joshua Chamberlain. Anyone who has heard Maine Treasurer Sam Shapiro speak knows Chamberlain saved the day for the North at Gettysburg, and kept the United States united.