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January 31, 2008 in Market Economics | Permalink | Comments (10) | TrackBack (0)
January 31, 2008 in Long Wave | Permalink | Comments (4) | TrackBack (0)
Morningstar.com is a good place for basic looks at most US mutual funds, and ETFconnect.com does the same for ETF's, ETN's, and managed closed end funds. If you use a search engine you will turn up a great many other information sources.
January 27, 2008 in Portfolio Ideas | Permalink | Comments (1) | TrackBack (0)
A friend of mine calls the US Federal Reserve Chairman "Mr Bearhanky", because he often makes the bears cry, as he did again this week. But today's market action shows that Bearhanky doesn't understand and won't like what he won when he figures it out. Today gold was up over $30 in the US, the long Treasury bond futures were down nearly three big points (yield up from 4.175% yesterday to 4.353% today), and oil and gas and many grains and soy, and most "stuff" generally was up briskly. Forget about recession or disinflation! Get ready for part two of Harry Dent's and Mr Kondratieff's commodity and interest rate bubble. Those who have been reading me a long time know that I believe that the long wave of inflation and deflation bottomed by 2003 at the latest in commodities and interest rates. Stocks also bottomed in 2003. Stocks can and do run up with prices of crude commodity and consumer goods and rising interest rates for quite a while until prices and rates get "too high". "Too high" was 6% long rates in the mid to late 1960's when the stock market topped out and began its long flat line from 1966 to 1982. But commodity prices were just starting to make their second move in 1966, and they soared into the mid 1970's for some commodities and 1980 for the rest. Right now US interest rates rates are far lower, and so are commodities, on an inflation-adjusted basis, than in the late 1960's. So the stock market need not fall off a cliff on the basis of inflation or recession at this time. I suspect we have been seeing a true financial panic due to hidden events like France's SocGen bank fiasco which we only learned about today. This is more like the 1987 or 1998 panics which were unrelated to the economy and spawned no recessions. At this time my main worry about further fallout from the credit crisis would be that I have heard nothing at all about it from Japanese banks. Nada. Chinese, British, Spanish, US and now French banks have come forward to confess their sins, but total silence from Japan. It has been the Japanese banks who have loaned money everywhere at absurdly low interest rates to finance all the world's bubbles since 1991. This is the so-called "Yen Carry". It's enormously greater than anything the FED or US banks have done or loaned, and it reaches everywhere in the world. I'm hoping that no news is good news, because that would change things hugely if big Japanese banks have taken SocGen-like hits or go belly up. But barring that, US stocks needn't collapse further, and it's fairly clear that SocGen's liquidation of its toxic portfolio is probably what tanked many markets in the past ten days. If that's over, and if we don't get more such stories, stocks should go up with commodity prices and interest rates. But the main beneficiaries of Bearhanky's move will be commodities and a possible turnaround in real estate for a while. Since I am primarily an income investor I have gradually shortened maturities/durations of both taxable and non-taxable bonds and did so further today. Also I have increased inflation "hedges" some of which you can read about elsewhere on the blog. In my view, stuff (commodities and other physical assets) is going to fly: not every day or week or month, mind you. They now have additional tail wind from Bearhanky. Also bear in mind that I do not make investment recommendations. I only say what I am doing. And I could be wrong.
January 24, 2008 | Permalink | Comments (3) | TrackBack (0)
January 22, 2008 in Technical Analysis | Permalink | Comments (2) | TrackBack (0)
Cyber friend and internet veteran, Teresa Lo, has just written the best and most basic (redundant?) explanation that I've seen of the origin of the current securitized mortgage mess: what went wrong and why: http://invivoanalytics.com/
January 21, 2008 in Market Economics | Permalink | Comments (2) | TrackBack (0)
January 20, 2008 in Portfolio Ideas | Permalink | Comments (0) | TrackBack (0)
Julian Robertson lost a large bundle from 1998 to 2000, in the same way that Warren Buffet did in an unleveraged manner, and as John Hussman (See "True Confessions" below) has been doing on a much smaller and unleveraged scale for the last few years: Robertson was buying "quality" stocks and shorting "crap" stocks against them.
Robertson's problem was that everyone else was doing the exact opposite from 1998 to 2000: they were selling the good stuff and buying internet and tech crap. After massive losses in 1999, Robertson liquidated Tiger and his other hedge funds right into the 2000 top. To do that, Robertson had to buy back his shorted and now bloated crap stocks and sell his good stocks on their lows and exactly when everyone else was suddenly doing the opposite. O my!
Had Robertson not been leveraged and been able to hold on another six months in 2000, he would have triumphed and prospered as "value" trumped junk in the new century. Not being leveraged, at least in the usual sense, Buffet survived to win again. Hussman's timing was perfect for value versus junk from 2000 through 2003.
January 19, 2008 in Technical Analysis | Permalink | Comments (0) | TrackBack (0)
January 18, 2008 in Technical Analysis | Permalink | Comments (0) | TrackBack (0)
January 17, 2008 in Long Wave | Permalink | Comments (0) | TrackBack (0)
January 14, 2008 | Permalink | Comments (2) | TrackBack (0)
At first I just couldn't get my mind around this concept except possibly that if oil is going down the "hot money" would move to gold and pump it up. But I didn't see how the dollar would benefit from that ratio per se. So I looked around a bit more through "biiwii's" posts on gold and found this interchange with a reader on December 31:
"Gary,
That's exactly what I suspected, that you may have in mind a "relative" decoupling" [rather than] an "absolute" one. But this is certainly already occurring. When Gold goes up or down by a percentage the other linked assets ( i.e oil, euro) don't move equally in percentage terms. Similarly in the case of other financial assets, i.e the DOW/Gold ratio has been falling for years meaning Gold has outperformed the Dow.
This explains what you see in terms of metals stocks: more or less a fundamental look at gold miner's costs, which certainly have been negatively impacted by oil prices and would benefit from falling oil prices. I guess where the USD would come in is in looking at the US economy as a beneficiary in the same way that gold mining is."
That is doubtless true as the import prices showed today. This is from Brian Wesbury today:
"Exports increased $0.6 billion in November and are up 13.0% versus last year. The increase in exports in November was led by services. Imports increased $6.0 billion in November and are up 11.4% versus a year ago. Petroleum accounts for most of the increase in imports in the past year. Excluding petroleum, imports are up 5.4%.
The trade deficit is up $4.7 billion versus last year. By region, the largest expansions in the trade deficit have been with OPEC ($5.0 billion), Mexico ($2.0 billion), and China ($1.0 billion)
So gold miners and the USD could both go up together with oil falling.
Interestingly, John Hussman http://www.hussman.net/index.html also says that gold and the dollar can go up together in a recession during inflationary times simply because inflation doesn't stop until midway or further into a recession, but the dollar is already anticipating recession. Hussman loaded up on gold miners (for him that means over 20%) in his HSTRX fund about a month ago, if I remember the timing correctly, and it has paid off. He thinks a recession is coming soon if not already here.
January 11, 2008 in Market Economics | Permalink | Comments (0) | TrackBack (0)
VWINX is Vanguard's Wellesley Income Fund, one of the earliest of the stock and bond balanced funds, about 30-35% in stocks and the rest in bonds, mostly corporate bonds of an intermediate maturity as a rule. VWINX currently pays 4.31% as a cash dividend plus capital gains and charges only 0.25% per year. VWIAX with a $100,000 purchase minimum pays 4.41% cash dividends plus capital gains and charges only 0.15% per year and is managed by legendary Wellington Capital. Look how it sailed through from 1999 to 2003. Being a value investor VWINX did worse in 1999 than in 2002! Steady, safe, simple, long term record.
RPSIX is T R Price's Spectrum Income Fund which is a mix of several Price Funds chosen by its managers to meet its goal of a steady, safe income producer. It's relative lack of volatility beats even VWINX as it has half or less the percentage of stocks, usually 18% or less and a wider (and therefore shorter) exposure to bond maturities. You pay for low volatility with a lower payoff, but RPSIX is currently paying 4.65% annualized cash dividend on a monthly basis plus capital gains.
BERIX is Berwyn Income Fund whch is similar to VWINX long term in overall yield. In contrast to VWINX, BERIX is tilted more toward small and mid caps in stocks and to preferred stocks and higher yield corporate bonds, when justified, as opposed to VWINX's solid mega-caps and high grade corporate bonds. Berwyn had cut back on high yield corporate bonds this year which served them well. BERIX is yielding 4.70% and charges 0.73%.
Last of the "oldies" is the king of the managed bond funds, LSBDX, also available in smaller minimums as LSBRX. You can see that VWINX, BERIX, and LSBDX tracked one another pretty closely until mid 2002. LSBDX took off as they are a "go anywhere" bond fund and so were into foreign sovereign bonds "early and often". The management has won the Morningstar Bond manager award of the year many times, beaten out this year only by Bill Gross. But LSBDX's returns are far greater every year. So for the excess yield, this is where I have been. If Dan Fuss and Kathleen Gaffney, there since the start in 1991, retire or leave I'll have second thoughts. They each also have a major part of their own wealth in the fund. This fund is currently yielding 6.16% and charges 0.67%. As you will see on the five year fund chart, LSBDX is beginning to slow down as they have trimmed their sails this year wisely and ahead of the credit crunch this past summer. They did very well in Canadian Treasuries this year, and I expect that if the recession truly develops this year, they will have been cutting back more to US Treasuries and outperform less than usual. Given their history and method I trust them to "get it right" unless at some point they do not.
PAAIX and HSTRX are income funds I have not mentioned before. If you invested through Vanguard and some other fund companies (perhaps Schwab?) which clear trades through Pershing, you can buy many of the PIMCO institution grade of funds for a minimum of $25,000 instead of $5,000,000. The "retail" versions are the same but with higher annual costs, supposedly to compensate for the extra cost of many smaller investor's traffic instead of fewer but much larger accounts. Rob Arnott does at PAAIX what the T R Price team does with RPSIX. He picks and actively changes which of many PIMCO managed funds are represented in PAAIX. Current trailing 12 month yield on PAAIX is 7.66% with a 0.86% cost, and with PASDX (retail) 7.09% and 1.46% cost. PAAIX/PASDX are more volatile than the others but may be worth the diversification for some. I am looking at it for possible purchase since I can get in for $25,000 through Vanguard and Pershing.
Last, but not necessarily least is, John Hussman's HSTRX. It is an eclectic income fund based upon the idea of beating inflation, at least judging by its holdings. Mostly they are fairly short but variable maturity TIPS (Treasury inflation-protected notes), a few high dividend stocks, and 10 to 20% in gold stocks. Both the TIPS and gold stocks are traded, with trading for the golds based on gold stock relative strength compared to gold bullion and other undisclosed factors I am sure.
HSTRX had a modest record from inception until the past 24 months since when it has taken off in relative terms. I told you earlier that short term records of three or five years really do not test the mettle or long term abilities of managers, and Hussman may certainly have merely been lucky to ride both TIPS and gold bull market spurts of the past two years. He has shown great skill in his long/short mid cap stock fund (HSGFX) using very conservative principles, and he is still relatively young for a successful independent manager. So I feel I may be seeing in Hussman someone like Dan Fuss and Kathleen Gaffney were in their approach before they really hit pay dirt in 2002. I would like to see how he does when gold pulls back and/or TIPS do if a deeper recession occurs than most people expect. Since I own gold I do not need Hussman to give me the exposure, but as I get older I may need to simplify further and allow others to do more of my work for me.
Start simple, get a few basic facts and some history, use your head, narrow it down, simplify further.
January 06, 2008 in Portfolio Ideas | Permalink | Comments (0) | TrackBack (0)
January 02, 2008 in Long Wave | Permalink | Comments (1) | TrackBack (0)
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