Stuck in the Muddle

By |2014-09-05T17:38:39-04:00October 13th, 2010|Global Market Update|

The economy’s in a muddle. What’s an investor to do? The employment report came out and showed that the US economy shed some 90 thousand jobs last month. That’s on top of losing 60 thousand in August and 70 thousand in June. This of course was augmented by the elimination of temporary census jobs, but the overall picture is sorry: the economy isn’t putting enough people to work. By contrast, the stock market looks healthy. No, we haven’t erased the losses, but we’ve come [...]

Home Sweet (Forclosed) Home

By |2014-09-11T15:55:30-04:00October 11th, 2010|Global Market Update|

Lots of people are worrying about there being too many foreclosures. But the real problem may be too few. In recent weeks we've been treated to multiple stories about robo-signers processing 8,000 or 10,000 foreclosures per month. Assuming a 60 hour work-week, that's a package every two minutes. Since one of these packages is umpteen pages long, it's not hard to see why these folks didn't have time to read them all. This foreclosure crisis is a logical outgrowth of the securitization culture of [...]

A Phony War?

By |2014-09-05T17:37:43-04:00October 8th, 2010|Global Market Update|

Are currencies in a phony war? At the onset of World War 2, the Germans and French faced off from October of 1939 through April of 1940 with only a few minor skirmishes being fought. It seems that a phony war is now being waged among international currencies. Brazil’s finance minister used that phrase to describe how governments around the world are trying to push their currencies lower in order to boost the competitiveness of their exports. After all, China has been suppressing its [...]

Munis in Mind (Part 4)

By |2014-09-05T17:36:45-04:00October 7th, 2010|Global Market Update|

There are lots of reasons why munis are safe. Moody's Investor Services just published a report on municipal credit. In it they noted that all the states are rated Aaa to A1, while only 4 percent of non-financial corporations are rated that highly. Why does Moody's consider the states better credits? First, states enjoy numerous financial advantages. They are essentially monopolies, able to raise the prices of their services at will. They can also cut spending without worrying about lower service levels hitting revenues [...]

More Investing, Less Trading

By |2014-09-05T17:35:36-04:00October 6th, 2010|Global Market Update|

When I lived in Vermont in the ‘90s, real-estate whiz Les Otten wanted to change the way Sugarbush resort serviced its Castle Rock area. Specifically, he wanted to route a high-speed quad into the quiet, natural-snow-only section. In response, several locals carried signs that read, “More Rock. Less Otten.” I sometimes feel that I should be carrying a placard around these markets, and it should read, “More Investing. Less Trading.” Excessive trading increases transaction costs and exposes you to a performance headwind. An annual [...]

Cash is King?

By |2014-09-05T17:34:21-04:00October 5th, 2010|Global Market Update|

Are stocks a good source of income? That’s the question for a lot of investors these days. With money market yields at zero and long-term bond yields not much higher, many are turning to stocks to replace their income needs. After all, dividends from some blue-chip companies seem quite attractive. But not so fast. We’ve discussed before how stocks are a residual claim on corporate cash flow. That means that they are the last in line to get paid. Companies have many competing claims [...]

Individuals and Innovation

By |2014-09-05T17:33:29-04:00October 3rd, 2010|Global Market Update|

Is the Marlboro Man just a myth? Maybe so, but according to a recent study, it could be a myth with meaning. Endemic to the American character is the notion of the frontier. By global standards, we are a relatively new country. Many Americans can trace their ancestry back to immigrant forbears, be they Scotch-Irish or Scandinavian. And the massive North American continent was settled by these farmer-entrepreneurs. As a result, the West looms large in our national psyche. Americans celebrate innovation and entrepreneurship, [...]