Since 2005, investment in commodities futures funds has increased over 200% to an estimated $250 billion. Some of the biggest inflows to commodities futures funds have been from institutional investors—pensions, endowments, and foundations. Not by mistake, the institutional crowd moved into commodities futures just as a powerful bull market was getting under way. Institutional investors are just as susceptible to performance chasing as the average investor, but they would never admit it. The institutional crowd will instead tell you that they are investing in commodities futures funds for … [Read more...]
Truly Astonishing Debt Accumulation
Federal spending is at the highest level since WII. In five years, the national debt has soared to $11.9 trillion from $7.3 trillion, an increase that equals all the debt accumulated between President George Washington and President Clinton. … [Read more...]
The Recovery’s Winners
The Young Research Affluence Index has outperformed the Young Research Discount Goods Index by 100% since the economic recovery began. Our chart indicates that the economic recovery has still not reached low and middle income consumers. Quite shocking considering the populist majorities in both branches of government. … [Read more...]
A Must Own Asset Class
If the last decade has taught investors anything, it is that taking greater risk does not always result in greater return. An investor who put his entire portfolio in a basket of developed-world equity markets at year-end 1999 would have earned all of 2.34% over 10 years. And to earn that 2%, this investor would have endured two of the worst bear markets in history, with peak-to-trough declines of 45% and 53%. What's more, an investment in conservative full-faith-and-credit-pledge short-term U.S. Treasuries was up 55% over the last 10 years. The 2000s were without a doubt a dismal decade … [Read more...]
Bad News for Small Business
In 2009, the number of problem banks increased nearly 200%. Problem banks now hold $400 billion in bank assets. Most of these problem institutions are regional and community lenders. The same banks that dominate in small business and commercial real estate lending. A continued rise in problem banks is likely to hinder a recovery in these sectors of the economy. … [Read more...]
Canadian Banks and a Chinese Bubble
This is the first installment of Clippings, a new feature from Youngresearch.com. In Clippings we'll periodically post articles on markets, economics, finance, investments, and anything else we find of interest. What U.S. Banks Can Learn from Canada By Derek DeCloet – BusinessWeek “Canadian banks did not fail because they mostly avoided the big mistakes with mortgages. They didn't lend to people who couldn't prove a sufficient income. They did give no-money-down mortgages, but not many—and the practice was effectively banned. They made scant use of teaser rates. They do these things … [Read more...]
The U-Shaped Recovery?
Historically, housing recoveries follow a V-shaped trajectory. Even with significant government support, the current housing recovery, appears to be taking more of a U-shaped path. A healthy skepticism on the pace of a housing recovery remains warranted. … [Read more...]
Commodities Demand
Did you know that China accounts for close to 40% of the consumption of aluminum, copper, lead, tin, zinc, and nickel? China is by far the most important consumer of industrial metals. China is also a large consumer of energy and agricultural commodities. If you want to know what the outlook for commodities demand looks like over the coming decade, look to China. If the Chinese economy is growing, it is safe to assume that demand for commodities is on the rise. In the fourth quarter, China’s GDP growth was over 10%. So commodities demand is likely on the rise, but what about supply? You can't … [Read more...]
Productivity Growth
Here is why the U.S. will lead the Euro Area in an economic recovery. Higher productivity growth in the U.S. will allow American firms to ramp up employment sooner than their European counterparts. … [Read more...]