December 31, 2009 To get you started on the right track in the New Year, we are offering a friends and family price of only $99 on a three-month subscription to Young Research’s Global Investment Strategy-our premium-level strategy report. Young Research’s Global Investment Strategy offers vital intelligence that savvy, sophisticated investors need in order to craft a globally diversified portfolio. Global Investment Strategy covers global economic and monetary trends, currencies, commodities, and global credit and equity markets, including distressed securities and special situations. This … [Read more...]
Natural Gas Rising
December 18, 2009 My goal for American security and safety is to cut oil use by 50%, driving the price of oil back to the $10 per barrel level of a decade ago. Americans can in fact achieve this goal by changing over our ground transportation and home heating mix from oil to gas and electric. Exxon has now made a huge domestic gas bet by seeking to acquire our #3 U.S. natural gas production player. These are America’s top 10 natural gas producers: 1.BP 2.Anadarko Petroleum 3.XTO Energy 4.Chesapeake Energy 5.Devon Energy 6.ConocoPhillips 7.EnCana 8.Chevron 9.Exxon … [Read more...]
Boost Employment – Guaranteed
December 11, 2009 Did you catch President Obama’s jobs speech this week? Is this guy kidding? He wants a do-over of the stimulus. Of course, you can understand his motivation. The Obama-fronted Radical Progressive Movement (RPM) promised Americans that a massive fiscal stimulus was the last, best way to ignite economic growth. The president’s own economic team projected that a mere $800-billion stimulus was all that was needed to prevent unemployment from rising above 8.5%. Today, the unemployment rate stands at 10%, not counting the millions of discouraged and underemployed workers. The … [Read more...]
A Nightmare Schedule
December 4, 2009 I have in front of me a most depressing chart. It shows the value of adjustable-rate mortgage (ARM) resets. The chart runs from 2006 to 2012 and has two peaks-almost like the back of a camel. The first peak was in early 2008. The second peak is in 2011. Guess where we are today in the ARM-reset schedule? That’s right, smack in the middle of the two peaks. The low point for ARM resets was 2009. Starting in the spring of next year, ARM resets will ramp up. The first batch of resets in 2008, which of course triggered the credit crisis, were dominated by subprime loans. The … [Read more...]
A Truly Ghastly Environment
November 25, 2009 This is a truly ghastly environment for yield-conscious investors. Three-month T-bills yield 0.03%, two-year T-notes 0.73%, five-year T-notes 2.09%, and ten-year T-notes a whopping 3.3%. Who is locking up money for ten years at a 3.3% yield? The Fed’s balance sheet is bloated with reserves, and the federal government is running massive budget deficits. Isn’t this inflationary? You betcha. But the combination of an extremely steep yield curve and the Federal Reserve’s promise to leave the fed funds rate near zero for an extended period of time has created a massive carry … [Read more...]
Investment Success
November 20, 2009 In 1981, the Dow Jones Industrial Average ended at 875, 10% lower than its year-end value in 1965. During this wretched 16-year period, blue-chip stocks went nowhere. This was the ice age for stock prices. High and rising inflation and interest rates and big government were to blame. This sounds eerily similar to America’s prospects today. Savvy investors have successfully navigated long dry spells in the stock market for decades. What is their secret? Buy the high yielders. My chart compares the hypothetical growth of a $10,000 investment in the Dow Jones Industrial … [Read more...]
The Irrational Mr. Mishkin
November 13, 2009 In the November 9 Financial Times, Frederic Mishkin, a former Federal Reserve governor, proved that the Fed has learned absolutely nothing from its Greenspan-era forays into dangerously low interest rates. Mr. Mishkin claims in the title of his editorial that “Not all bubbles present a risk to the economy.” I’m not sure which word Mr. Mishkin is misunderstanding: “bubbles,” “risk,” or “economy.” Mishkin goes on to make a lame distinction between what he calls “credit boom bubbles,” like the one that led to the current worldwide recession, and a more benign variety that he … [Read more...]
Top 10 Mistakes #1
November 6, 2009 The #1 item on my list of the top 10 mistakes investors make is taking a casual go-it-alone approach to investing. Wall Street is dominated by PhDs, MBAs, CFAs, CPAs, attorneys, and other highly trained professionals who spend the vast majority of their waking hours looking for an edge. You have to recognize that the person on the other side of every trade you place may be more informed or knowledgeable than you. My staff and I spend our entire days reading about and analyzing companies, economies, and the financial markets. Individual investors allocating capital on a … [Read more...]
Top 10 Mistakes #2
October 30, 2009 The #2 item on my list of the ten most common mistakes investors make is discounting the importance of compound interest. Albert Einstein described compound interest as the greatest mathematical discovery of all time. Charlie Munger, Warren Buffett’s longtime partner, said: “Understanding the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things.” My son, Matthew Young, puts it this way: “Compound interest is your silent warrior for long-term investing.” The key to compound interest is not interest, but interest on … [Read more...]
Top 10 Mistakes #3
October 23, 2009 Number three on my list of the top 10 mistakes that investors make is performance chasing. The quickest way to make a million investing in mutual funds is to invest two million in yesterday’s winners. No matter how often investors are warned not to select funds on the basis of past performance, they do just that-often with devastating consequences. The problem here is that success attracts inflows, which tends to limit both the agility and opportunity set of portfolio managers. When assets under management become bloated, portfolio managers often do one of two things: they … [Read more...]