After the difference in the spot market prices of Brent crude and WTI crude peaked in 2011, another slightly lower peak formed in late 2012, and now it appears the differential is widening again at the end of 2013. You can see on the chart below that in matter of only 68 days, the price differential has expanded by 1873%, from a mere $0.86/barrel to $16.97/barrel. As you can see on the next chart. Prices for WTI started diverging from the internationally used Brent benchmark in 2011, whereas beforehand the prices had tracked each other quite closely. A glut of new oil production in the … [Read more...]
Archives for November 2013
Counterbalancing for the Crushing Market Declines
A counterbalanced portfolio is your key to investment success. For an example of how counterbalancing works I’ll point you to the Vanguard Wellesley fund. For my taste, a “one size fits all” fund simply does not exist today. But this one comes pretty close. Take a look at the years where stocks were destroyed. When you’re in retirement or close to it, you can’t afford to take the big hits. Counterbalancing—the 60% bonds and 40% stocks in Wellesley—helps to ease the pain. E.J. Smith works with new investors that have $2 million or more to invest. He can be reached … [Read more...]
VIDEO: Chinese buying up California housing
Chinese investors fleeing housing market bubbles and restrictions on investment may find they're participating in another bubble right here in California. CNBC: CNBC's Diana Olick reports that Chinese home buyers are looking to United States real estate as an investment in their childrens' and their families' futures. … [Read more...]
VIDEO: Fed’s Lockhart: Taper delay ‘vindicated’
The same folks who believe monetary policy should be based on inaccurate forecasts of short-term data trends, believe that short-term data releases vindicate programs with long-term implicaitons. CNBC: Atlanta Federal Reserve president Dennis Lockhart thinks Janet Yellen is "extremely well qualified" for Fed Chair, the current state of the economy and how long QE is expected. … [Read more...]
VIDEO: Faber: We’re In a Worse Position Than 2008
Whatever Happened to Core CPI?
Today’s CPI recorded 0.06% reduction in prices since last month, the first drop in prices in six months. The headlines from the major financial news houses were focused squarely on the price drop. Bloomberg: Consumer Prices in U.S. Decline for First Time in Six Months The Wall Street Journal: Consumer Prices Ease Amid Lower Fuel Costs Financial Times: US consumer price index falls for first time in six months You get the picture. But whatever happened to the focus on core CPI? It seems whenever prices are rising, the Fed, government and media focus on Core CPI, while when … [Read more...]
Gold Update: The Yellow Metal is on the Move Worldwide
China’s coming dominance of world gold markets is apparently, according to a report in Bloomberg, being fueled by “aunties.” Middle aged women who prefer to invest in something they can wear and transport, rather than property or stocks. This type of dual purpose investment in gold jewelry has been driving India’s world leadership of gold for years. But as we mentioned in August, China will soon overtake India as the world’s largest gold consumer. But part of the reason India has slowed its consumption is the result of draconian import rules the government has implemented to prop up the … [Read more...]
Who’s Stealing Your Kid’s Lunch Money?
"We have seen meaningful progress in the labor market," Federal Reserve Vice Chairwoman Janet Yellen said last week during her testimony. "What the [Fed] is looking for is signs that we will have growth that's strong enough to promote continued progress." That could be a while. Take a look at the special unemployment rate U-6—those who have stopped looking and those who have settled on part-time work. In the meantime this is a classic tale of dollar debasement. At the end of the day there is no free lunch. E.J. Smith works with new investors … [Read more...]
VIDEO: Fed Policy to Cost U.S. Another Decade, Rogers Says
Nov. 18 (Bloomberg) -- Jim Rogers, chairman of Rogers Holdings, talks about China’s planned economic reforms and Federal Reserve policy. Speaking with Betty Liu on Bloomberg Television's "In the Loop," Rogers also talks about investing in graphene. (Source: Bloomberg) … [Read more...]
The Truth about Warren Buffett’s Investment in Exxon Mobil
Most stories on Buffett’s purchase of Exxon Mobil shares are missing the most important point. If you don’t already know, Buffett’s Berkshire Hathaway recently made public its $3.7 billion stake in Exxon Mobil Corp. The revelation pushed Exxon’s price up, but perhaps markets shouldn’t care so much about what Warren Buffett is buying these days. You see, Buffett’s investment in Exxon, like his recent investment in IBM, is more a sign of his lack of options than a vote of confidence in these big blue chips. That’s the paradox of investment success, once you’ve been successful for as long … [Read more...]