Two economists whom we respect recently pointed out a very important aspect to the current situation in Egypt and the Middle East, namely the role that inflation (particularly inflation in the cost of food) plays in the larger picture.Rising food prices can be the straw that breaks the camel's back (so to speak), increasing the pressure on the public...
Monday, January 31, 2011
Two prominent economists note the role of food inflation in global events
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Thursday, January 27, 2011
Mark Cuban declares Wall Street is for suckers; Maclean's of Canada agrees
Here's a recent article from Maclean's of Canada entitled "'Wall Street is for Suckers'." It lays out a litany of reasons why, in the words of the article's author, "something is very wrong with Wall Street" -- including the allegation that "the stock market has become very disconnected from its primary function of uniting growing businesses with...
Tuesday, January 25, 2011
Likelihood of Fed over-steering increases
In the past, we've compared the Fed's extreme interest-rate swings to a driver of a car going out of control, and we believe the image is a helpful one.Like an inexperienced driver going too fast on a road with little traction, the Fed's overzealous turns on the steering wheel can lead to a damaging wipeout, especially when one overcorrection is followed...
Wednesday, January 19, 2011
Don't confuse free enterprise with a questionable theory about securities markets
We've written about our insistence on using the term "free enterprise" rather than "free markets" in previous posts, such as this one and this one.While this may strike readers as a somewhat cranky or esoteric distinction, we believe that in fact it is an incredibly important distinction, but one that people overlook all the time.The problem arises...
Friday, January 14, 2011
The growth theory of investment works
At the beginning of the year, we cautioned against becoming too obsessed with annual performance numbers, because what really matters for most investors is performance over periods of time much longer than one year.That said, we would like to point out that the principles of classic growth investment theory which we discuss on this blog do work. ...
Wednesday, January 12, 2011
The ideology of modern finance
For investors looking for a good New Year's Resolution for 2011, may we suggest this one: swear off the ideology of modern finance.Andrew Redleaf and Richard Vigilante have published their insightful view of the financial crisis of 2008-2009, which they encapsulated in an article last year entitled "It's not the size that counts: the problem isn't...
Tuesday, January 11, 2011
Scott Grannis provides some excellent structural analysis of current wall of worry
Retired economist Scott Grannis published a noteworthy post yesterday on his Calafia Beach Pundit blog. We believe all investors should tune in to his blog for all his analysis, but yesterday's post, entitled "Rosenberg's Six Walls of Worry," is especially noteworthy for his clear and insightful discussion of six concerns voiced by economist David...
Friday, January 07, 2011
"There are some things that are just too important to be left to the free market"?
Yesterday, NPR aired a story about the increasing price of onions in India, up 40% due to heavy rains spoiling recent onion crops.The story featured quotations from those blaming "middle men" or "market mafias" who manipulate prices even further by holding back supplies until prices rise, and then brought in a professor of economics from Nehru University...
Wednesday, January 05, 2011
Facebook and Wall Street
Today, the Wall Street Journal has two noteworthy commentaries on the recent news of the private capital raise by Facebook.The first, by the opinion page editorial board, is called "Friending Private Capital"* and it asks the question "Why submit to Sarbox if Facebook can raise money without an IPO?" The authors make the case that fewer companies...
Monday, January 03, 2011
And now a word about annual performance numbers
It's a new year, and portfolio managers everywhere are reviewing their numbers from calendar year 2010 and looking ahead to 2011, which is off to a roaring start in its first day of trading.The financial media is busy covering equity managers who beat the market in 2011, and investors and their advisors are dumping managers who did poorly to move...
