What If You Were Wrong?
Every time you make an investment in 2008, ask yourself the following question: What if I am wrong? As we look forward to the next five years, we need to ensure we are always and everywhere operating with balanced ideas and temperament. Have a Core Strategy and a Counter Strategy – just in case...
Coal in the Stocking For Retailers
Retailers who were betting on strong holiday sales are not happy with the way 2007 is ending. Target (TGT) warned this week that same-store sales for December may actually decline from a year ago. Other reports show growth that is sluggish at best. There is some hope that shoppers who received gift cards...
Recession in Sight?
The Index of Leading Economic Indicators came out yesterday at its lowest level in more than two years, suggesting that the economy remains weak and recession is not out of the question. The housing slump continues to hurt employment and consumer spending. Credit is still very tight. Recession may not...
A Shockingly Bullish Statement…
…from a guy across the pond. His name pops up from time to time in John Mauldins’ musings. He hails from South Africa, and his name is Prieur du Plessis. The WSJ blog picked up on this incredibly rookie-like statement. Click here for the WSJ piece. Here’s the actual excerpt: Prieur...
Beijing Bails Out Wall Street?
The financial wires were hopping this morning with more bad news. Wall Street was in trouble again. Morgan Stanley, one of the largest investment banks in the world, admitted to $9.4 billion in losses. The problems relate back to the unending subprime saga. The markets can’t seem to shake it, we’ll...
Stagflation Lives
Those old enough to remember the 1970s may remember “stagflation.” It describes an economy that features the worst of both worlds: low or negative growth and rising prices. Such times are decidedly unpleasant. In a depression, your income falls but the things you need to buy get cheaper at...
Lipstick on a Pig
That is how one analysts describes the coordinated effort by the Federal Reserve and several other central banks to drive down interest rates by injecting new liquidity into the bond market. William O’Donnell at UBS Securities said “What the program will not do is cure the cancer that got...
An Inefficient Market
Why the angst on Wall Street today? If the futures market was pricing in a 53% chance of a 25 bp fed funds rate cut, that means 47% were calling for something else. We can keep this whole analysis simple – that’s close enough for 50/50 for me. Therefore, the market should have neither gone...
Pushing On A String
We come once again to Federal Reserve time. The futures markets suggest a high probability that the Fed will cut short-term rates by 25 basis points to 4.00% on Tuesday. The bigger question is what sort of statement will accompany the announcement. The Wall Street honchos want reassurance that the Fed...
Subprime Slime Oozes in Europe
Investors knew U.S. mortgage issues would arise in other places. With the securitization of debt instruments and the packaging and selling of those instruments world-wide, it was a matter of time before the problem showed up abroad. Because of the anticipation, the market was not entirely surprised about...
