The following chart illustrates the close correlation in recent years between real estate investment trusts (REITs) and stocks. For my money, this makes REITs far less attractive today than did the negative or low correlations and the much higher yields of days gone by. And I also don’t see much value in REITs given that 10-year Treasuries yield about the same—both are near 3% today. In a separate item, the Securities and Exchange Commission is looking into nontraded REITS as reported in the Wall Street Journal piece “Nontraded REITs Are Put on Notice by SEC.” The article … [Read more...]
Archives for June 2011
The World’s Most Profitable Currency
Can you guess which of the world’s currencies has appreciated the most this year? If you guessed the Paraguayan guarani, you’re right. A close second was the kina. Which country uses the kina? Why, Papua New Guinea, of course! If you would have trouble spotting either of these countries on a map, you aren’t alone. Like most sane investors, you probably limit your currency investing to developed countries and some of the larger emerging markets. Which major currency has performed the best this year? The Swiss franc. Just this year, the franc has gained 11.5% on the dollar. That crushes the … [Read more...]
Pimco’s El-Erian on Greece Outlook, IEA Oil Release
Absolute Return
The next time you see an advertisement for an absolute return fund, make sure you do your homework and understand exactly what you’re getting yourself into. I’ve been digging through the 100-plus prospectus pages of the Putnam Investments Absolute Return suite of funds and can tell you the reading isn’t as straightforward as I’d like it to be. Even in the reduced format of the Putnam Absolute Return 100 Fund’s summary prospectus 2/28/11 (only seven pages), there’s some mind-numbing small print. Here’s what I gather you’re up against for the Class A shares: a 1% sales load (charged at the … [Read more...]
What we’re Reading 6-17-11
Why 70% Tax Rates Won't Work The WSJ Buffett: How inflation swindles the equity investor (Fortune, 1977) CNN Money More U.S. homes lease solar panels with no upfront costs USA Today Jiffy Lube changes 3,000-mile rule for oil changes USA Today Uncertainty Is Not the Problem The WSJ The Return of the Population Bomb The WSJ Apple Retreats in Publisher Fight The WSJ A Constitution Scholar for the Fed The WSJ … [Read more...]
Wilbur Ross on Big Labor
Are You Exposed to the Most Leveraged Bank in the U.S.?
Sorry to break the news to you, but you are exposed to the most leveraged bank in the U.S. All Americans are. Why? The most leveraged bank in the U.S. is the Federal Reserve. Yup, the Federal Reserve—the same bank that issues those green pieces of paper in your wallet. How levered is the Fed? It holds only $1 in capital for every $53 in assets. Before Lehman Brothers went bust, the firm held $1 in capital for every $30 in assets. How does that sit with you? Don’t forget those green pieces of paper are liabilities of the Federal Reserve—similar to a bank deposit. Pull one out of your pocket. It … [Read more...]
Investing in Your Food Supply
You may want to start thinking and investing like a farmer. As a group, farmers’ average age continues to rise. And as their numbers decline in the coming years, the quality of our food is likely to follow suit, given the notion that more processing will pick up the slack. That’s why it’s so important to protect our heritage breeds—animals that were around when Thomas Jefferson walked the fields of Monticello. Protecting our heritage breeds may not be something you think about every day. But those who work at the SVF Foundation in Newport, Rhode Island, do. The SVF isn’t your ordinary farm. … [Read more...]
S&P 500 Technical Analysis Update
The S&P 500 is approaching a critical technical level. There is support for stocks around 1,255 on the S&P 500. The 1,255 level is also the 200-day moving average and the neckline of what appears to be the formation of a head-and-shoulders top. A decided break below 1,255 could signal further losses. If stocks catch a bid at 1,255 on the S&P, technical analysts will tell you that a rally back toward 1,340 is the most likely outcome. Stay tuned. … [Read more...]
A Stacked Deck: Is your broker providing compromised investment advice?
I want to briefly touch on the subject of broker dealers (especially publically traded firms) as they relate to our private, family registered investment-advisory firm. I started our money management business over two decades ago in response to years of requests from my strategy report readers for such assistance. Back then, I was still researching and writing every word of Young’s World Money Forecast. YWMF was a 50-page monthly monetary and economics report for institutions and corporate financial officers, I was kept busy. I could only work with a handful of clients. As time passed and it … [Read more...]