Young Research & Publishing Inc.

Investment Research Since 1978

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A Low-Risk Inflation Hedge

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The conventional wisdom is that bonds are a terrible investment when inflation accelerates. The theory is that rising inflation causes interest rates to rise and bond prices to plummet. The financial media has been pounding the table on this thesis for months. Check out “Stop Gobbling Up Bonds—They’re Risky!” in Fortune’s Investor’s Guide 2011. If inflation is your concern, the pundits will advise you to dump your bonds.  They advise you to load up instead on stocks, gold, and other hard assets. Gold and hard assets are certainly an inflation hedge. All investors should own at least some … [Read more...]

Global Inflation Heating Up

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Inflation is heating around the globe. China is tightening policy to combat inflation, Brazil is raising rates, the U.K. is talking tough on inflation and despite the euro-area’s government debt problems, so is the European Central Bank. It seems the U.S. is the only country ignoring the rising risks of inflation. … [Read more...]

A Caution Signal

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Young Research’s Moving the Goods Index is looking toppy relative to the S&P 500. Our Moving the Goods Index is a market-cap weighted index of non-airline transportation companies. The relative performance of transportation stocks can signal economic strength or weakness. The recent stalling in the relative performance of the Moving the Goods Index warrants close attention. A break below the trend-line in my chart may signal that economic momentum is slowing. An unexpected slowdown in growth won’t sit well with stock market bulls. … [Read more...]

Debunking the China Story

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Invest in China, you are told. China’s economy is booming. GDP growth is among the fastest in the world. Since China is growing faster than the rest of the world, it must follow that Chinese stocks are a good buy. That’s the pitch the pundits and promoters continue to make, but is it true?  Just this week China reported GDP numbers for 2010. Yes, somehow China, a country with a per capita income that is a fraction of U.S. per capita income manages to report GDP figures before us. Makes one wonder, but that’s a topic for another day. China’s real GDP growth came in at 10.3%—exceeding … [Read more...]

Your Dollar’s Silent Decline

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According to AAA, the average price per gallon of regular gasoline is $3.12, up 14% from a year ago. But another way of viewing the price change is as a decrease in the value of your dollar. And a weaker dollar eventually leads to a lower standard of living, since your quantity of dollars isn’t limitless. When government controls the money supply, its quantity of dollars is limitless. And the government’s ability to print more dollars may be the force most destructive to your personal wealth—and even to your well-being in your lifetime. In When Money Dies: The Nightmare of the Weimar … [Read more...]

Know Your Limits

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Charles Plosser, the President of the Philadelphia Federal Reserve Bank gave a speech in Chile over the weekend titled The Scope and Responsibilities of Monetary Policy. Mr. Plosser is one of the few Federal Reserve Board members that seems to understand or at least acknowledge that monetary policy has limits. Below are some highlights from the Speech. The emphasis is mine. You can read the entire speech here.  …I would like to begin with a quote that some of you may recognize.  “...we are in danger of assigning to monetary policy a larger role than it can perform, in danger of asking it to … [Read more...]

Up 5,000% in 10 Years

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Do you dream of buying shares of the next Microsoft before they take off? How about the next Apple? Apple shares are up 4,200% over the last decade. Even better than Apple, shares of priceline.com are up almost 5,000% over the last 10 years. These are life-changing returns. A modest $20,000 investment in priceline.com 10 years ago would be worth more than $1 million today. If only you had the foresight to identify the last decade’s winners ahead of time, you could be 10, 20, or 30 times richer than you are today. Sound like the beginnings of a pitch you’ve heard before? My … [Read more...]

Accelerating Inflation

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The December Producer Price Index (PPI) was released today. Producer inflation jumped 1.1% in December. Over the last two years, producer prices have increased at a 4.33% annual rate. Over the last six months, producer price inflation is running at a 6.9% annual rate. Producer inflation is accelerating, yet the Federal Reserve is consumed by the risk of deflation. It’s a head scratcher, is it not? … [Read more...]

Redefining Success

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The Federal Reserve released the minutes of the December 14 FOMC meeting this week. The FOMC’s meeting minutes provide an expanded discussion of the Fed’s views on the economy, financial markets, and future monetary policy. This is required reading for investment managers. The minutes from the December 14 meeting are particularly important because that was the first meeting since the Fed started its second round of money printing, aka Quantitative Easing 2.0 (QE 2). At the FOMC’s November 3 meeting, Bernanke & Co. decided to print an additional $600 billion to buy Treasury … [Read more...]

Retirement Isn’t What You Expect

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You don’t want to face a retirement in which you are forced into lowering your living standards. Yet that is exactly what the majority of baby-boomer households are up against. They may not have a choice in how they live their retirement years, because they’re not prepared. Retirement isn’t as easy as everyone thinks it is. It’s emotionally difficult not having a steady paycheck and the peace of mind a paycheck can provide. You have an idea of how much your living expenses will be, but you don’t necessarily expect the dream vacation or car your spouse suddenly needs to have. And even if you … [Read more...]