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As soon as I have got my library (of a few hundred investment books) back in order, post building renovations, I will compile and share with you a list of books that have provided me with guidance [...]
Number of comments: 3
The MSCI World Index shed 11.0% between its high on July 19, 2007 and August 16, with the S&P 500 Index declining in similar fashion by 9.4%. At that stage high-yield debt markets had completely stalled, investment funds had blocked redemptions and the VIX had reached a high not seen [...]
Number of comments: 2
Talk in financial markets during the past week was dominated by increasing worries about the US economy, as illustrated by the reaction to the US Labor Department’s poor August jobs report. Before gleaning some wisdom from an assortment of quotes from market commentators, let’s briefly review the week’s ups and [...]
Number of comments: 3 The following hilarious spoof is courtesy of David Fuller’s Fullermoney newsletter:
Dear investor, we’d like to take this opportunity to update you on the recent performance of our hedge fund, Short-Term Capital Mismanagement LLP.
As you know, market selection for the entire fund is guided by a proprietary investing tool we [...]
Number of comments: 1
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I often receive enquiries from blog subscribers and readers about my travel schedule, with the aim of perhaps hooking up for a chat in some convenient corner of the world.
I do travel abroad quite often and would be very keen to connect with friends wishing to discuss investments and perhaps share [...]
Number of comments: 1
Global stock markets regained much of their credit squeeze losses during the second half of August 2007 to end the month only in slightly negative territory. The MSCI World Index was down -0.3% and the MSCI Emerging Markets Index lost -2.2%, but ten of the 54 indices in the [...]
Number of comments: 1
I have often written and talked about the US housing situation being the Achilles heel of the US economic outlook. As stated before, the unwinding of the US housing situation has some way to go before the system rids itself fully of all the excesses accumulated during the multi-year upswing.
The [...]
Number of comments: 4
When it comes to gold bullion and gold stocks, I need to confess that I started my investment career in 1984 as none other than a mining analyst. Ever since those days of calculating net present values on my trusted HP12C I have been intrigued by the shenanigans of the [...]
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Before highlighting some memorable quotes from market commentators during the past week, let’s briefly review the week’s market action on the basis of a few performance charts.
Global stock markets were generally higher, with the top performance coming from emerging markets – again spearheaded by China and Hong Kong – and [...]
Number of comments: 1
The chart below, courtesy of Chart of the Day, illustrates the Dow Jones Industrial Index’s average performance for each calendar month since 1950 (blue bars) and 1980 (gray bars) respectively. While the strongest upward movement in stocks has historically occurred during the November to January period, September has proven to be the most difficult [...]
Number of comments: 1
In my posting of August 17 I gave reasons why the Fed’s cut of the discount window rate on that day did not come as a surprise. Given the severity of the credit squeeze and the ramifications for the US economy at large, I also commented that a number of [...]
Number of comments: 4
Sarah Connor’s lyrics “Get up and move, Don’t make me act a fool, Just bounce” come to mind when reviewing the performance of financial markets since the Fed’s emergency discount rate cut on August 17.
The invariable question is to what extent the actions of the Fed and other central [...]
Number of comments: 2
I spend a very large amount of time reading investment-related material. In order to share some of the more interesting snippets with readers, I have decided to add a new section to the blog – Words from the Wise – where I will regularly publish a number of quotations [...]
Number of comments: 10
Since hitting a peak on July 16, the meltdown in global stock markets has taken place with lightning speed. Given the fact that more than 10% (using the Dow Jones World Index as a proxy for global stocks) has already been wiped off investors’ scoreboards, the question invariably is [...]
Number of comments: 3
The video clip of Jim Cramer ranting and raving about the credit squeeze stirred up huge interest in the financial world. And, true to the fast-moving pace of events, Hoofy the Bull and Boo the Bear did not waste any time hooking up to the action and giving meaning [...]
Number of comments: 2
What’s up with gold? The dollar gold price would appear to be in pause mode of late, but somewhat deeper analysis shows a few interesting aspects.
On August 9 the bullion price was slaughtered by $12 together with an avalanche of selling across just about all financial markets, with the [...]
Number of comments: 2
The US housing situation is turning out to be a nightmare of much worse proportions than was generally expected not so long ago. And, to reemphasize my viewpoint, it is still rather difficult to detect even the faintest ray of light at the end of the proverbial tunnel.
But with [...]
Number of comments: 10
“I have often been too bearish about the US equity markets in the last 12 years (although bullish on emerging equity markets), but I think it is fair to say that my language has almost never been this dire. The feeling I have today is that of watching a [...]
Number of comments: 1
Ever wondered about the rating process involved in transforming sub-prime mortgages into AAA collateralized debt obligations (CDOs)? Nothing can be easier, at least not the way it is explained below. (If the diagram appears a bit faint, that is a characteristic of the process!)
Source: [...]
Number of comments: 3
As nervousness among investors mount in the wake of the gyrations of financial markets, the key question remains whether something more serious than a normal (and overdue) mid-cycle correction is starting to manifest itself.
On the fundamental front, the credit bubble would appear to have been irreparably punctured and, failing [...]
Number of comments: 5
Mad Money host Jim Cramer made a passionate, and quite amazing, plea to Federal Reserve Chairman Ben Bernanke on CNBC yesterday. He urged Bernanke to cut interest rates and, in turn, help the market and the people who were losing their jobs on Wall Street.
This is video footage at [...]
Number of comments: 1
Bear markets, and their inevitable casualties, could undoubtedly produce all the soppy ingredients for ready-made movie scripts, and possibly spawn a few Hollywood bestsellers. But is there a direct link between the quantum of horror movies being produced and the incidence of bear markets? Or, on the other side of the [...]
What you see may not be what you get, especially when analyzing historical stock market performance. One would be excused for thinking that global stock markets were on an uninterrupted upward path when considering their good gains in US dollar for the three months ended July 31, 2007. But that [...]
Number of comments: 2
This is not a financial story, but there is at least anecdotal evidence of a strong link between nervous stock markets and the excessive consumption of alcohol. I thought I would share this with you to provide some light relief in the otherwise serious world of finance.
“Sometimes when I [...]
Number of comments: 3
“Down, down, deeper and down”. So goes the chorus of a Status Quo song, but it is eerily starting to sound like the stock market’s anthem.
When writing an article on Thursday’s 312 point drop in the Dow Jones Industrial Index I did not quite contemplate market circumstances requiring a [...]
Number of comments: 7
On the face of it yesterday’s drop of 312 points (-2.3%) in the Dow Jones Industrial Index is scary stuff. The chart below tells the sorry tale.
But just how serious is this decline from a historical perspective?
Since the start of the Dow in 1896 [...]
Number of comments: 1
Just when everybody thought gold bullion was down and out and embarking on a downward spiral, the shine returned. Even erstwhile gold bug Richard Russell started favoring the Dow stocks over the yellow metal, but more about that later.
Since my last, somewhat upbeat, article on gold bullion and gold [...]
Number of comments: 2 This article is quite different from my normal stories as it deals with a country rather than with a specific financial market or asset class. But please allow me the freedom to share this information with you as Slovenia is such a delightful country and also presents some unique investment opportunities for the international [...]
Number of comments: 3 It is often stated that investors have become increasingly less risk averse over the past few years. This is true for many asset classes as evidenced by narrowing credit spreads and a number of sentiment indicators.
However, this is not necessarily the case with US equities, especially not when considering [...]
Number of comments: 4 The video clip below is a cocktail of mind-boggling statistics. As John Mauldin remarked: “I think that we underestimate the accelerating pace of change we are going to see in the next 15 to 20 years. We will see more change in the coming decade than we saw all of last century. [...]
Number of comments: 1 Can money trees in fact grow to heaven? It is certainly beginning to look that way when considering global stock market returns.
World stock markets again delivered good returns in US dollar for the quarter ended 30 June 2007. The best performance came from the Peru Composite Index with an [...]
Number of comments: 1 The most nagging question for investors in equities is what return they can expect from their investment. For most people it’s as simple as that, unless of course you want to bring risk and some other Greek (quant) variables into the equation.
It is stating the obvious that [...]
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While some sorry hedge fund tales abound, the following provides an entertaining “top ten” list of hedge fund manager quotes (some perhaps apocryphal), courtesy of Hermes, a London-based fund manager.
10. “If we don’t charge 2 and 20, no one will take us seriously.”
9. “We are 75% cash because we [...]
Number of comments: 10
In the true ancient fashion of King Arthur’s Knights of the Round Table, we have also gathered men of the highest order, not of chivalry but of investment expertise, at our virtual Round Table. In a world first, and a coup of note, four of the investment industry’s leading lights [...]
In the true ancient fashion of King Arthur’s Knights of the Round Table, I have also gathered men of the highest order, not of chivalry but of investment expertise, at my virtual Round Table. In a world first, and a coup of note, four of the investment industry’s leading lights [...]
Number of comments: 2 Gold bullion is like children – unpredictable. You never know with what inconsistent action the yellow metal is going to catch you next, making it notoriously difficult to predict the short-term price movements. Many traders have to their detriment seen their pockets being emptied as a result of unwelcome margin [...]
Number of comments: 10 The gold price has experienced a rather precipitous decline of 6,7% since its recent peak of $691,7 on 20 April 2007. This correction is considerably larger that the drop in the prices of commodities in general as well as the increase in the value of the dollar from about the [...]
As stated before, the unwinding of the US housing situation has some way to go still before the system rids itself fully of all the excesses accumulated during the multi-year upswing. The following graphs from good friend Martin Barnes, managing editor of BCA Research, vividly illustrate the point.
 [...]
Number of comments: 10
“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.” – the gospel according to Warren Buffett. Although this sounds quite simple, there are two schools of thought on how to go about accomplishing it.
Firstly, the market timers believe the answer is to “buy [...]
I am at risk of sounding like the proverbial stuck record player when reporting that global stock markets continued to deliver good performances for the three months ended May 31, 2007. As far as US dollar figures were concerned, the Shanghai Composite Index was still comfortably in the lead with [...]
Number of comments: 2 I have often written and talked about the US housing situation being the Achilles heel of the US economic outlook. This video clip is a particularly cool (or uncool if you are cringing under debt) take on the unfolding saga.
You have read the script, now watch the movie.
 [...]
Number of comments: 3 Although this video clip from the South African jungle has on the face of it very little to do with investment, it will be worth your while to spend a few minutes watching it, and perhaps take some lessons from it to be applied to financial markets (and life).
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Number of comments: 1 “Where is the stock market heading?” is one of the questions most often asked by investors, especially as markets seem hell-bent on rewriting the record books. It is therefore no wonder that even so-called “pop analysis”, including some legendary axioms, is resorted to in a quest for direction. And besides [...]
Albert Einstein described compound growth as the eighth wonder of the world. Although he may have passed away in 1955 – coincidentally the year when yours truly saw his first ray of light – the concept of compounding remains the single most important principle governing investment.
Compounding simply means that you [...]
“What will my likely return on capital be?” is probably one of the questions most often asked by investors. But in a global investment environment faced with increasing uncertainty and the potential of low or negative equity returns, investors should perhaps rather ask about the return of capital (i.e. the [...]
Bullion is on the rise again and seems to be heading higher. Although we are all quite familiar with the movements of the dollar gold price, the trend of gold expressed in other currencies receives far less publicity.
The graph clearly illustrates that bullion has been making [...]
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