Here is a chart of the Reuters/Jefferies CRB Index which plots monthly returns from 1956 through the present (February 29, 2008 is latest data point). You can see that since February 28, 2002, the commodities index has been on an absolute tear, going almost straight up. In the past couple years, when stocks have not been doing so well, the continued...
Tuesday, March 25, 2008
What NOT to do right now about the economy
In the wake of the subprime lending frenzy and subsequent market turmoil (some of the causes of which we discussed here), many in Congress are now gearing up for increased regulation of the financial markets.The fact that government regulation often has unintended consequences, and has been partly responsible for the recent problems in the financial...
Thursday, March 20, 2008
Say tax rate cuts, not tax cuts (Part II)
As we wrote a couple of months ago, tax rates are a critical factor in the performance of the economy.And yet, with all the talk in government about needing to "do something" for the economy right now, discussion of the impending tax rate increases has been notably absent.Yesterday, the Center for Freedom and Prosperity released a new video detailing...
Tuesday, March 18, 2008
How to find a financial advisor who will build your foundation on businesses
When families are looking for a "financial advisor", "wealth manager" or "financial planner," the modern landscape is quite crowded.However, as we have explained previously, the current environment is dominated by an arrangement like that pictured in diagram I above (the upper diagram). The investor (red circle marked A) deals with an intermediary...
Friday, March 14, 2008
It's not worth zero, but if the market says it is . . .
If you put your nice leather jacket on eBay, which you believe to be worth some sum in the hundreds of dollars, and nobody will bid anything for it, how much is it worth?When it comes to valuing an asset, the simple fact is that the asset is worth whatever somebody will pay for it. If the highest bid for your jacket is only eleven dollars in any market...
Tuesday, March 11, 2008
Be centered, be still
Yesterday the Dow Jones Industrial Average closed at 11,740.15. This close is down almost 18.5% from the close on October 5th, 2007. The S&P 500 is also down over 18% in the same period. The Nasdaq is down almost 22%.During storms of this magnitude, the tendency is to want to run and hide. Investors bail out of sectors that are being hardest hit...
Friday, March 07, 2008
Champagne and Freedom Don't Go Together
This morning on National Public Radio's Morning Edition you may have heard this broadcast about the European Union's decision to uphold a monopoly on the use of the term "champagne."We all know that real vin de champagne comes from the exclusive Champagne Production Area in France, just as bourbon whiskey comes originally from an area that was once...
Tuesday, March 04, 2008
A troubling quotation
In testimony last week, Fed Chairman Ben Bernanke told Congress that "inflation could be lower than we anticipate if slower-than-expected global growth moderates the pressure on the prices of energy and other commodities or if rates of domestic resource utilization fall more than we currently expect."The troubling aspect of this quotation lies in...
