My mind and my gut are in disagreement. There is something gnawing in my gut that says this market rally is overdone and needs a correction. While a 5% correction is almost always a good thing for the market in the long run, my gut is telling me we are overdue for a 5-10% correction or drop in the market. However, history does not support…
For this Thanksgiving, I give thanks for the things in my life: a nice home, a nice car, a dry bed, good food & wine, nice clothes and things that don’t really matter.I give thanks for the people in my life:my friends and clients who allow me to see the world through their eyes, my long-term friends & family, who age before my eyes, just like…
Readers know I’ve long supported a “Grand Bargain” approach to solving our economic malaise. This means making everybody suffer . . . but only for a short time. While Estonia has been my favorite example, Eastern Europe in general has done a far better job of ripping off the scab from the global financial crisis five years ago. They have cut entitlements. Yes, even some…
Northern Trust is a huge Chicago-based money manager that successfully styles itself as home for America’s blue-bloods, i.e., the extremely wealthy and discerning. Like all big money managers, they brag about their proprietary investment research department, as if that was something unusual. Their forecasts are obviously written by economists and strategists for other economists and strategists, not the average investor. But, their latest forecast is…
“No smoking, no drinking, and no cussing.” That was the first advice I can remember as a boy. Then, I learned the Ten Commandments. Still, the best advice I ever received was to “NEVER discuss religion, politics or the proper way to raise children.” (Only your spouse should know such intimate things about you.) While attending Infantry Officer Candidate School, I recall a three-hour class…
Investors may be tall or short, male or female, black or white. The possibilities seem endless. However, we tend to categorize them as growth investors, income investors, or capital preservation investors. As a practical matter, 99% of investors are either growth or income. (Most capital preservation investors leave their money in FDIC accounts.) Generally speaking, the appropriate investments for each type of investor are very…
Like all human relationships, my love affair with numbers has its “ups & downs.” Numbers are a useful shortcut thorough the blizzard of words that bombard us almost every waking minute. But, when numbers become as vague and contradictory as words, the love affair suffers. I’ve been trying to identify why the market has been so strong this year. One strong possibility is that “The…
You don’t have to trust Goldman Sachs in order to respect their research department. Here are their latest forecasts: 1. GDP growth in 2014 will be almost 3%, which is a big improvement. They expect both consumer spending and capital spending to pick up sharply. 2. Congress will avoid the next round of sequestration, partially explaining the improved growth rate. 3. Unemployment will average 6.6%,…
I have not been able to contribute to my blog in five days. Once again, Google was denying me access, presumably because it didn’t like my downloading their newest Chrome . . . I guess. This is not the first time they have shut me down. Once they denied me access because I was using Explorer, which is owned by Microsoft, instead of Chrome, which…
Janet Yellen has been nominated by the President to be Chairman of the Federal Reserve System in January. With all due respect to Ms. Yellen, I agree with Warren Buffet in wishing the President had re-nominated Ben Bernanke for another term. Yellen will be grilled today by the Senate Banking Committee, as part of the nomination process. More is already known about her economic views…
Readers know I have been mildly bullish about the economy for some time, despite its being constrained by our politics. While recoveries from financial crisis are almost always longer than recoveries from recessions, this particular recovery has been painfully slow. But, the economy clearly has the potential to grow much faster. There is an old Wall Street adage that anybody can be a bear, but…
Ken Burns is arguably the greatest film documentary producer in our history. Your perspective is always richer after viewing one of his films. After viewing Dust Bowl, I was fascinated by the failure of science in causing this disaster. Now, I just watched Prohibition and was fascinated by the failure of economics. One of the tenets of classical economics, which was dominant at the time, was…
On Thursday, we learned that GDP was stronger during the third quarter than we expected, with an annualized growth rate of 2.8%. Interestingly, it was not because of improved consumer spending, which was 1.5% of the 2.8%. Improved exports contributed 0.31%. But, the most surprising increase was inventory levels, which contributed 0.83%. That could be because businesses are not able to sell existing inventory, but…
Technical indicators are always interesting but not necessarily trustworthy. It is a very bullish technical indicator when the 50-day moving average crosses above the 200-day moving average. That just happened for gold. Take a look at this: Despite what all the commercials on Fox News promise, gold is not about to spike upwards, UNLESS you believe we are about to experience hyper-inflation or governmental collapse.…
While nobody would ever confuse me with a Tea Party supporter, media analysis of the Tea Party’s dismal performance during Tuesday’s elections remind me of the quote attributed to Mark Twain about reports of his death being greatly exaggerated. I hope so, because we still need the Tea Party . . . a little, maybe! Born during Bush’s $5 trillion increase in national debt and…
Investment legend Sir John Templeton is best known for his emphasis on international investing. However, he also said “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” And, of course, he is right! So, where are we today? While I see a lot of political pessimism, I see even more economic optimism, especially on Wall Street. But, I…
With our daily deluge of negative news, it is easy to think America is falling apart. Maybe, it is, but there are some places that are far worse. If you think we have problems, consider the case of Greece: 1. They are still in recession after six long years. We’ve been a “weak” recovery for four years already. 2. Their GDP has fallen an unbelievable…
Amid the love fest taking place on Wall Street, it was easy to miss the good ISM (Institute of Supply Management) reports of underlying economic data last week. We learned that manufacturing improved nicely in October, with the ISM Manufacturing Index coming in at 56.4. (Anything above 50 indicates an increase.) While production increased 2% in the third quarter, most economists expect a 5% annualized…
It doesn’t matter if you believe you are fortunate because you are a “doer” or “job creator” from the mind of Ayd Rand, or if you believe God has just blessed you (but not others), or that you had the good foresight to pick a rich father, or that you believe it was simply blind luck or even all of the above. However, reflecting my…