Exchanging Places

By |2014-09-11T09:34:18+00:00October 14th, 2011|Global Market Update|

A lot of people are interested in currencies or gold. With Exchange Traded Funds linked to currencies, it’s easier than ever to take a position on the dollar. For those who might consider this, I have just one piece of advice: don’t. When you look at an investment, you need to understand what you’re buying. In a market economy, wealth is created by enterprise. Stocks represent ownership of those businesses. Bonds are loans to those businesses—or the governments that support them. Investments in stocks [...]

The Value of Doing Nothing

By |2014-09-11T09:33:53+00:00October 13th, 2011|Global Market Update|

In Pooh's Little Instruction Book Piglet comments, "Don't underestimate the value of Doing Nothing." Investors should heed his advice. Of the many temptations in investing, the temptation to act too soon is among the worst. If something unexpected happens, people want to know what what you are doing about it--as if your doing something will change the underlying problem. By contrast, if something expected happens, it is inviting to execute your plan right away, even though it is likely that the best values will [...]

The Myth of the Steady State

By |2014-09-11T09:32:06+00:00October 12th, 2011|Global Market Update|

Everyone’s waiting for things to get back to normal. The problem is, no one knows what normal looks like. In August of ‘07, the wheels started to come off the bus. That’s when a year’s worth of real-estate price declines began to tell on the sub-prime mortgage market. First Bear Stearns’ hedge fund blew up. Then sub-prime originators began to fail. Then prime-based originators, and you know the rest. Now that we’re in a recovery, people are debating what the “new normal” will look [...]

Making Work

By |2014-09-11T09:31:08+00:00October 10th, 2011|Global Market Update|

Milton Friedman once visited a developing country where they were building a canal. He remarked to his host how surprised he was that the workers only had shovels. For a large excavation project, heavy earth-moving equipment would be typical. “You don’t understand,” his host noted. “This is a jobs program.” “If it’s a jobs program,” Dr. Freidman replied, “why don’t they use spoons?” The illogic of being deliberately inefficient is clear when it’s as egregious as digging a canal with a shovel. The wasted [...]

In Memoriam: Steve Jobs

By |2017-07-17T12:35:00+00:00October 7th, 2011|Global Market Update|

Steve Jobs changed everything. He and Bill Gates changed the way we look at college dropouts. He changed the way that we buy, store, and listen to music. Through Pixar he changed the nature of animated movies. He altered the way we see the garage-entrepreneur. He made business cool in his trademark black turtleneck and jeans. And he forever affected the way we interact with our personal technology. Although he had a tremendous business and cultural impact, he was a serial failure before he [...]

Mr. Market and Risk

By |2014-09-12T09:25:13+00:00October 6th, 2011|Global Market Update|

Are the markets panicking? The stock market has declined almost 20% from its recent high. A lot of European markets—like Germany, France, and Italy—are down over 30%. The markets are pricing in a severe recession in Europe and financial contagion over here. The main issue is the uncertainty associated with these problems. This has caused investors to raise the return required from stocks, which has lowered stock prices. By the same token, should the EU and IMF favorably resolve their debt crisis, that would [...]

Ahead of the Curve

By |2019-02-20T12:56:36+00:00October 5th, 2011|Global Market Update|

Investing is about anticipating the next move. So what’s next? I’ve said again and again that we are in a slow growth recovery. The economy isn’t booming and it isn’t falling off a cliff. Forget the nonsense you hear about economic stall speeds, or a bicycle falling over if it doesn’t move. The economy isn’t an airplane and it isn’t a bicycle. It’s a complex […]


By |2017-07-17T12:35:00+00:00October 3rd, 2011|Global Market Update|

Okay, so Kodak didn’t declare bankruptcy. Now what? Kodak is a great example of the dilemma that faces value investors. The balance sheet of the company shows some value: current assets minus current liabilities, as of the last quarterly statement, come to about $2.50 per share. Add in the value of the patents they hold, the Kodak name, and their modest printing business, and there could be a lot of upside. With the emphasis on “could.” Apart from management, no one really knows what [...]