Fall and Rise and ???

By |2013-10-31T10:42:37-04:00October 31st, 2013|Global Market Update|

Last night’s win by the Red Sox was sweet. Those of us who pulled our hair out year-after-year as Boston’s baseball franchise regularly faded in August and September feel vindicated as the team came back from its disastrous 2012 season with an epic turnaround. General Manager Ben Cherington deserves a lot of the credit. Last year’s mega-swap with the Dodgers freed up capital and allowed him to invest in steadier, lower-cost assets. The team also made good use of their home-grown talent—players in their [...]

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Irreducible Complexity

By |2017-07-17T12:34:37-04:00October 30th, 2013|Global Market Update|

Is investing today too complicated? Hedge funds, ETFs, high-speed trading, flash crashes—is the market today too multifaceted and treacherous for the average investor to even understand, much less profit from? It certainly can seem that way. Because computerized exchanges have largely replaced the physical hustle and bustle of the trading floor, the market now handles far more volume at far higher speeds than it ever could before. This has opened the way for a lot of new products, some of which represent real advances [...]

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Winners and Losers

By |2013-10-29T09:49:46-04:00October 29th, 2013|Global Market Update|

Can we improve our investments by thinking backwards? Investing has been called a loser’s game. A loser’s game is one where winners simply outlast their opponents by minimizing stupid mistakes. In tennis, it’s avoiding the unforced error. In golf, it’s keeping the ball on the fairway and staying out of the bunker. And with investing its staying away from the Lehmans and Madoffs of the market. Investing legend Charlie Munger understands this when he says that many hard problems are best solved when addressed [...]

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Fail-Safe or Safe-Fail?

By |2013-10-28T09:56:32-04:00October 28th, 2013|Global Market Update|

Are computer systems the problem? A little over a year ago Knight Capital--a small broker with a large trading presence—suffered a computer glitch which cost it almost $500 million dollars, wiping out its capital and destroying the company. Newly-installed computer code didn’t interface well with legacy systems: overdrawing some accounts by billions and setting massive short positions in others. In the course of 45 minutes, the firm was gone. By contrast, it took months for Bruno Iksil, the famed London Whale, to accumulate oversized [...]

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The Sky is the Limit?

By |2013-10-25T10:31:11-04:00October 25th, 2013|Global Market Update|

What happens at a market top? One advantage of living through the internet and housing bubbles is seeing market behavior at the extremes. There are two major players in the stock market: buyers and sellers—or issuers and investors. When equities topped out in 2000 and ’07, investors and issuers responded differently to the market’s financial incentives. What does this look like? Investors begin to be driven by momentum strategies. Momentum doesn’t care about value, it just evaluates the trend. Newsletters focus more on the [...]

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A Tale of Two Downturns

By |2013-10-24T10:10:54-04:00October 24th, 2013|Global Market Update|

It was the best of recessions, it was the worst of recessions. Many investors have now lived through two 50% downturns. When the dot-com and housing bubbles both burst, they devastated their respective sectors and bankrupted a lot of companies. It took five years from the market bottom in 2002 for equities to surpass their previous record; it took only four years from the depths of 2009 to get back to new highs. And yet the recovery from the dot-com bubble seemed so much [...]

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Turning Japanese?

By |2019-02-20T13:04:48-04:00October 23rd, 2013|Global Market Update|

Is Abenomics working? Almost one year ago, Abenomics surfaced in Japan. Last November Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda unveiled a strategy of monetary reflation, fiscal stimulus, and structural reforms aimed at ending deflation and reinvigorating a sclerotic economy. How’s it going? The strength of the recovery in the first half of the year has been striking. The stock market is up 41% in Yen terms year-to-date, and the Yen has fallen 26% from its level a year ago. [...]

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Double Debt Dealing

By |2019-02-20T09:40:09-04:00October 22nd, 2013|Global Market Update|

Is American $17 trillion in debt? That’s the headline number that’s referred to in all the debt-ceiling budget-busting filibustering debate. That’s the total of US Treasury debt that’s owned by the public, the Fed, and the Social Security Administration—along with various trust funds. But some people are challenging that figure. Stanley Drukenmiller—a legendary investor, who famously helped break the Bank of England in 1992—maintains that the national debt is actually $205 trillion. That’s the present value of all Federal promises from here to eternity--healthcare, [...]

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One Word …

By |2019-02-20T09:41:33-04:00October 21st, 2013|Global Market Update|

Is plastic the future? In the movie The Graduate, a minor character tells Dustin Hoffman that the future is in plastics. Strong, cheap, and light, the miracle material seemed to offer endless possibilities. That line may have been parodied endlessy since the 1967 film first came out, but many manufacturers have used plastic to make their products cheap and light. The problem is, a premium product that uses plastic may just seem cheap, and fail to justify its premium price. That’s what may be [...]

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Lather, Rinse, then What?

By |2017-07-17T12:34:37-04:00October 18th, 2013|Global Market Update|

Could we please not do this again? 240 years ago John Adams reportedly said that one useless man is a disgrace, two become a law firm, and three or more become a congress. After barricading tourists inside the Old Faithful Inn and practically stranding our astronauts in space, the Republicans and Democrats got—what exactly? The opportunity to plummet in the polls to the point where only blood relatives have a positive view of Congress? Seriously? Standard & Poor’s estimates that the 16-day shutdown cost [...]

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