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Investment Research Since 1978

Archives for February 2013

A Winning Stock Policy for You

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Thinking about all the cash Apple is holding on to makes me wonder about its dividend policy. Some of that cash would probably be better off in the hands of stockholders. I’ve been spending some time reviewing my copy of Security Analysis by Benjamin Graham and David Dodd. I’ve had the book since the early ’90s, when I was at Babson College. What Graham and Dodd wrote in the early ’30s on dividends applies just the same today. Here’s what they had to say: Dividend Policies Arbitrary and Sometimes Selfishly Determined. –One of the obstacles in the way of an intelligent understanding by … [Read more...]

VIDEO: James Grant on Economy, Price of Accommodation

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Feb. 25 (Bloomberg) -- James Grant, publisher of Grant's Interest Rate Observer, talks about global central bank policy and the outlook for automatic U.S. federal spending cuts set to begin March 1. Grant, speaking with Tom Keene, Sara Eisen, Michael McKee and Scarlet Fu on Bloomberg Television's "Surveillance." also talks about the U.S. economy and the Federal Reserve's policy on quantitative easing. (Source: Bloomberg) … [Read more...]

Alert: Bernanke’s Sanguine Forecast a Bad Omen

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Stocks sold off a bit on Wednesday and Thursday following the release of the minutes from the Federal Reserve’s last policy meeting. Investors were apparently concerned that Bernanke & Co. may pull the Free Money Truck back into the garage ahead of schedule. The minutes from the last Federal Open Market Committee (FOMC) indicate that more than a couple FOMC members are worried that the Fed is inflating asset bubbles and encouraging speculative excess in financial markets. That asset bubbles and speculative excess are the result of pinning interest rates at zero for years and printing over … [Read more...]

Sequester Cuts? What Sequester Cuts?

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Both parties in Washington D.C. are desperately attempting to avoid the sequester “spending cuts” that they passed with a bipartisan majority only a short time ago. The warnings of coming apocalyptic results should the “cuts” not be repealed are laughable. Each party is defending its sacred cows. But what’s really getting cut? The short answer is nothing. If the sequester ultimately prevails, total spending will increase on average 4.8% for the next eight years, as opposed to 4.9%. Total spending doesn’t decrease in any single year under the sequester framework. Read that last sentence … [Read more...]

Coal Consumption Plummeting in America

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Coal consumption in America is plummeting. During the recent recession the volume of coal consumption fell from a peak of 94.7 million tons in July 2008, to 83.1 million in December 2009. Then, after rebounding briefly, new regulations and low natural gas prices served to crush demand for coal. The trailing twelve month average monthly consumption of coal fell to 74 million tons in October. That’s the lowest volume of consumption since October of 1989. The striking drop is driven by environmental regulations and more importantly by inexpensive supplies of natural gas. With new regs for such … [Read more...]

This Stock Rally Is a Dud

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Investors are not paying attention to the real returns of this stock market. Rich Karlgaard, publisher of Forbes, wrote a spot-on piece recently in The Wall Street Journal. He pointed out that the S&P 500 is up 124% over the past four years, but gold is up 88%, oil 106%, and silver 167%. The broad correlation between stocks and commodities implies that dollar weakness is driving prices higher, not the fundamentals of supply and demand. In light of that, the stocks’ returns aren’t that great in real-dollar terms. Karlgaard also compares this rally to that of the 1974–80 market when the … [Read more...]

Presidents’ Wisdom

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George Washington However [political parties] may now and then answer popular ends, they are likely in the course of time and things, to become potent engines, by which cunning, ambitious, and unprincipled men will be enabled to subvert the power of the people and to usurp for themselves the reins of government, destroying afterwards the very engines which have lifted them to unjust dominion. Over grown military establishments are under any form of government inauspicious to liberty, and are to be regarded as particularly hostile to republican liberty. Thomas Jefferson When we get … [Read more...]

What We’re Reading 2-15-13

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The Rookie, Review & Outlook, Wall Street Journal Are Government Spending Multipliers Greater During Periods of Slack?, Owyang, Ramey, Zubairy, FRB of St. Louis The President's Plans, Review & Outlook, Wall Street Journal Fed Joining in Alarm Over Distortion It Enabled: Credit Markets, Abramowicz and Giovacco, Bloomberg … [Read more...]