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Archives for June 2015

The Monday Melee: Panic in the Streets?

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Greece is Bankrupt: Athens Stock Exchange Waits for More Info:   What We're Reading: Traders and speculators drive 70% of ETF volume. (Barron’s) Markets Headed to ‘Bubbleland,’ Warns Jeremy Grantham (MoneyBeat) "The Hidden Costs of Bond ETFs"  (Barron’s) Chinese Stock Plunge Leaves State Media Speechless (Bloomberg) Millions, Billions, Trillions: Germany in the Era of Hyperinflation (Spiegel)   … [Read more...]

China Stocks Torch Investors

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How does the saying go… if you play with fire, you are liable to get burned? Investors who made the mistake of chasing returns in China’s A-share market this spring just got torched. Over the course of about 10 trading days, two of China’s major stock market indices plunged into bear market territory with the more widely followed Shanghai Composite index only a few ticks away from a bear market. The question speculators now have to answer is whether or not the 20% pounding they just took in the A-share market is the start of a deeper bear market, or simply a correction on the way to higher … [Read more...]

Freeport McMoRan’s Oil Patch Tour

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Warren Buffet once advised to buy into a business that any idiot can run, because sooner or later, one will. Harsh words from America’s favorite investing icon, but not far off base. I’m not sure if this proves Buffett’s point, but the management team at Freeport McMoRan Inc, just filed for an initial public offering of common stock in Freeport-McMoRan Oil & Gas. The same business Freeport’s management team acquired in 2012. Prior to the acquisition of the oil and gas business, Freeport was one of the largest pure-play producers of copper and gold. Many investors bought the stock for … [Read more...]

E.J.’s Notes from the Wild, Wild West

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You don’t have to spend a ton of money to have fun with your family, but it certainly helps. My family just returned from an incredible trip out west beginning at a ranch in Montana, then to Yellowstone National Park, and down to Jackson Hole, Wyoming. This was an important trip for Becky and me. One of Bec’s fondest memories as a kid was going out west to a dude ranch with her family. Mine was going across the country in a Winnebago in 1984 with mine. Our kids are 14 (Izzy) and 12 (Owen), so this was the summer to head out west before it’s too late. The two best things that … [Read more...]

The Monday Melee: Future Risk

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De-Globalization and The Great Monetary Experiment: These are two major risks facing the world economy going forward, as highlighted by Swiss Re's new report, New emerging risk insights. [gview file="https://www.youngresearch.com/wp-content/uploads/2015/06/SONAR_2015_WEB.pdf" width="100%" save="0"] A World of Risks: The Impact and Likelihood of Global Risks: Quotable: "Risk comes from not knowing what you're doing." - Warren Buffett "I have long understood that losing always comes with the territory when you wander into the gambling business, just as getting crippled for life is … [Read more...]

Economic Misfire

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For as long as the economy has been crawling its way out of the last recession, economists and policymakers have been puzzled by the lackluster rate of economic growth. In past economic cycles, deeper recessions were usually followed by stronger recoveries. Coming out of prior recessions, growth rates of 4%, 5%, and even 7% were not uncommon.  During this cycle, annual GDP growth hasn't broken 3.25% once. What explains the lackluster growth during this cycle? Aside from the many policy missteps that have held back growth, the chart below explains why the economy still hasn’t hit its … [Read more...]

Cyclical Economic Dysfunction a Brewing Storm?

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Two major cyclical indicators, construction (as pictured by housing starts and permits in the first chart below) and industrial production (chart 2 below) are giving very different signals about the direction of the U.S. economy. What is the reality? Numbers of housing starts and permits are climbing rapidly to levels not seen since before the housing bust. Meanwhile industrial production reports indicate flagging demand. The question is, which indicator is the better picture of reality. In any case, caution is the best approach for investors like you and me. … [Read more...]

3 Reasons Inflation Could Surprise

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Investors and policymakers have been obsessed with the risk of deflation for so long that they may be missing the risk of higher inflation. The headline inflation numbers in the U.S. do in fact signal a deflationary impulse. Prices have contracted by 0.20% over the last twelve months, but the headline number is being depressed by lower gas prices and a stronger dollar. Neither factor will persist indefinitely. Services inflation, which is a more stable indicator of inflation, shows that the underlying trend of inflation is up. Trends in the labor market are also pointing toward higher … [Read more...]

How to Buy a Boat: Part I

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You know the saying: The two best days for a boat owner are the day he buys it and the day he sells it. Well I bought a boat a few years ago and it was the best day. So I thought I'd share with you the process I went through to get there and hopefully help you in your own search for a boat. The first thing you need to do is decide that you want a boat. I grew up in Mattapoisett, MA which is a small town on the water near Cape Cod. To know where Mattapoisett is imagine looking down on Cape Cod from the air—Mattapoisett is the armpit. It's a real pretty town right on Buzzard’s … [Read more...]