Of Potholes and Portfolios

By | 2014-09-11T12:26:02+00:00 April 12th, 2011|Global Market Update|

It’s pothole season. Is your portfolio ready? As mud season comes to a close in New Hampshire we have to deal with pot-holed roads. How we deal with them says a lot about who we are. Some folks cruise blithely through, figuring that their cars’ shocks can handle the bumps. That’s fine as long as long as they have strong stomachs. Some of the indentations I’ve seen could swallow a John Deere tractor! Others slow significantly, and pick their way through, steering clear of [...]

A Modest Proposal

By | 2014-09-11T12:23:48+00:00 April 11th, 2011|Global Market Update|

Academics and politicians have it backwards. Again. A couple weeks ago there was a conference in Beijing to discuss the world monetary system. To the shock of no one, they recommended a modest change in how the International Monetary Fund is made up. In essence, they suggested that the IMF’s financial structure be tweaked to be less dominated by the US Dollar and Euro and more open to minor currencies. This is just one step along the path of reduced US dominance. It’s understandable. [...]

Billions and Billions?

By | 2014-09-12T10:48:46+00:00 April 10th, 2011|Global Market Update|

A couple decades ago Carl Sagan achieved lasting fame with his phrase that illustrates the countless stars, planets and galaxies in the universe. It became his catch phrase on the PBS series Cosmos. But it’s likely to become the “Swan Song” for banking analyst cum municipal guru Meredith Whitney. In her famous 60 Minutes interview, she predicted 50-100 major municipal bankruptcies in 2011 totaling hundreds of billions of dollars. In response, millions of small investors sold billions of dollars of holdings in muni bond [...]

Nothing Succeeds Like Failure

By | 2014-09-12T10:48:37+00:00 April 9th, 2011|Global Market Update|

We love rags-to-riches stories. Like the Horatio Alger tales of yore, we’re captivated by the turnaround story. The Apple Computer that Steve Jobs arranges financing for, so he can bring out the iMac, iPod , iPhone, and iPad. Now Apple is so successful that the index geniuses at Nasdaq have decided to bet against it. (Good luck.) Or the plucky emerging market company, like Petrobras, that markets its product to a growing China and grows to be one of the largest oil companies in [...]

Budget Battles Forever

By | 2014-09-11T12:23:15+00:00 April 8th, 2011|Global Market Update|

Things seem to have changed. State capitals are rife with conflict over public employees. Washington is braced for a government shutdown. Courts are opining on the legality of payment freezes. The political rhetoric repeatedly invokes Charlie Brown and that football. What’s going on? For one thing, the budgets sure seem important. Historically, government shutdowns are rare. In a shutdown, the government furloughs non-essential workers like regulators and analysts, while the military, police, and other essential workers remain on the job. A shutdown points to [...]

What Not To Wear

By | 2014-09-12T10:48:58+00:00 April 7th, 2011|Global Market Update|

Does what goes down always come back up? It’s a reasonable question. At Charter we invest on the basis of “mean-reversion.” That’s a fancy way of saying that what goes up comes down, and what goes down comes back up. So we reduced our weighting in Tech stocks in the late ‘90s because of all the silliness, and we bought financial stocks in ‘09 because of the irrational gloom. But sometimes that downward trend isn’t coming back up. Some industries, like the buggy-whip, are [...]

WWF?

By | 2017-07-17T12:35:16+00:00 April 6th, 2011|Global Market Update|

Does the political theater associated with the government shutdown resemble professional wrestling? Like professional wrestling, we know the outcome before the match ever starts. Like wresting, the combatants take turns at the mike ahead of time blasting the other side. And like professional wrestlers, each combatant has a personal brand that has to be maintained: Barack “Brainiac” Obama; Harry “Cool Hand” Reed; “Fiesty” Michelle Bachman; John “Hold-‘Em Together” Boehner. And the fans love it. It doesn’t matter that every contest is stage-managed. It looks [...]

Of Risk and Return

By | 2017-07-17T12:35:16+00:00 April 5th, 2011|Global Market Update|

How much risk can you handle? It’s probably the most important question in investing. If you can deal with a lot of volatility, then you can have more of your portfolio devoted to equities. Over time, because equity investments are a portion of ownership in a company, they benefit the most if the company grows. But if the company sees any trouble, or even if it just stagnates, the value of that equity investment will fall. Not so with bonds. These “steady Eddies” return [...]

Questions for Warren Buffett

By | 2014-09-11T12:20:53+00:00 April 4th, 2011|Global Market Update|

David Sokol of Berkshire Hathaway has resigned amidst a cloud of controversy. Folks might want to ask some questions at the upcoming annual meeting. Here are some suggestions: Years ago, a former SEC Chairman famously noted, “It is not an adequate ethical standard to aspire to get through the day without being indicted.” Why then do you begin and end your discussion with technical legal issues. People who sold Mr. Sokol their shares at $100 didn’t know that Warren Buffett’s senior manager was interested [...]