Hoenig Critiques Fed in Parting Shot, Carey Gillam, Portfolio.com 1 in 5 Modified Loans Default Again: Comptroller, John Gittelsohn, Bloomberg Is Warren Buffett the New Andrew Mellon? Not Quite, Amity Shlaes, Bloomberg How to Keep Your Balance in Unsteady Markets, Vanguard.com Eurozone Inflation Hits Three-Year High, Ralph Atkins, Financial Times … [Read more...]
Archives for September 2011
Have Stocks Bottomed?
After busting through its previous support level of 1,200, the S&P 500 dropped to an intraday low of 1,100 in early August. As we pointed out in our last technical analysis update, longer-term charts show that stocks have significant support in the 1,100-1,150 range. That support level has been confirmed by the price action over the last six weeks. The S&P 500 has tested, let’s call it, 1,125 on four occasions over recent weeks. Each time, the market hit 1,125 it bounced higher. But the rallies have failed each time the index approached 1,225. Stocks have carved out a 100 point range … [Read more...]
Bank vulture investor says environment more dangerous than 2008
Sept. 27 (Bloomberg) -- Christopher Flowers, founder of private-equity firm JC Flowers & Co., talks about the European financial crisis and its impact on his strategy. Flowers speaks with Erik Schatzker at the Bloomberg Link Dealmakers Summit in New York. (Source: Bloomberg) … [Read more...]
Pay Risk for Pensions and Annuities
High interest rates are not the problem with the real-estate market. Anyone who bought a house in the ’70s or ’80s can attest to that. The actual problems? Weak appraisals, 20–30% cash at closing, high labor costs, and high input costs for basic materials top my list. So the Federal Reserve’s long-bond-buying binge is a real head scratcher. As you can see in the following charts, traders jumped on the news, buying up long bonds last week to front-run the Fed buying that will begin in October and last through June 2012. Traders have done quite well. Annuities and pension funds … [Read more...]
How to Profit when Stocks Plummet
Over the last two months, stock-market fluctuations have been extreme. In August, 400-point swings became a common daily occurrence for the Dow Jones Industrial Average. September has also seen its share of volatile days. Since the end of July, one common measure of volatility, standard deviation, has increased by over 130%. For many investors, extreme bouts of volatility can fray the nerves. Stock-market gyrations cause anxiety and stress and lead to emotionally charged investment decisions. But falling markets aren’t uniformly negative—they do create opportunities. Here are two ways to … [Read more...]
What We’re Reading 9-23-11
Global Stocks Drop 20% Into Bear Market, Lynn Thomasson and Michael Patterson, Bloomberg The Spend Now, Tax Later Jobs Bill, Alan Reynolds, The Wall Street Journal Obama's Tax Morass, Daniel Henninger, The Wall Street Journal The Real Effects of Debt, Stephen G Cecchetti, M S Mohanty and Fabrizio Zampolli, BIS In Pockets of Booming Brazil, a Mint Idea Gains Currency, Paulo Prada, The Wall Street Journal A Little Inflation Can Be a Dangerous Thing, Paul A. Volcker, The New York Times Buffett's Dad Was the Ron Paul of His Day, Philip Klein, The Washington Examiner … [Read more...]
Down 58% in 2008
Legg Mason Value Trust fund outperformed the stock market every year from 1991 to 2005. The word “legendary” would often precede the name of its manager, Bill Miller. He was legendary for building positions in companies by dollar-cost averaging down while other investors were selling. His style is described in The Wall Street Journal article “The Stock Picker’s Defeat”: Mr. Miller’s swing-for-the-fences approach makes even other value investors flinch. Christopher Davis, a friend of Mr. Miller’s and a money manager at Davis Funds, recalls discussing his investment strategy with Mr. Miller in … [Read more...]
Twisted Monetary Policy
At the Fed’s policy meeting yesterday, Mr. Bernanke announced that what America desperately needs is a rearranging of the deck chairs. Facing opposition from, well, just about everybody who isn’t a trained Keynesian economist (read: those with common sense), the Fed decided to lengthen the maturity of its Treasury portfolio. Bernanke & Co. will sell $400 billion in short-maturity Treasury securities and purchase Treasuries with maturities of 6–30 years. Investors have dubbed the move “Operation Twist” because the Fed is twisting the slope of the yield curve. This latest attempt to … [Read more...]
Chanos on China
Mr. Chanos provides a sobering reminder of the dangers lurking in the world’s second largest economy. … [Read more...]
Copper Signals Trouble
Copper is said to have a PhD in economics for its ability to forecast the economy. Copper is used in everything from construction to autos to electronics. What do copper prices signal about the economy today? Global economic momentum is slowing. Copper prices are rolling over. The red metal has broken through a two and half year uptrend with further losses signaled. Stay tuned. … [Read more...]