Investing by Starlight

By | 2018-04-17T06:50:01+00:00 April 17th, 2018|Global Market Update|

Every decade or so, a new investment star is born. Van Gogh’s “Starry Night.” Source: MOMA In the ‘60s it was growth stocks. In the ‘70s it was gold. In the ‘80s we all turned Japanese. The ‘90s had the Nasdaq. The ‘00s saw China’s growth. And now we have the data giants. Each one of these markets rallied some 10-fold during its heyday. What’s next? One approach is to look for the asset that no one wants. In the early ‘80s Japan just [...]

Uneven Growth

By | 2018-03-27T08:31:11+00:00 March 27th, 2018|Global Market Update|

What do you do when your portfolio becomes lopsided? Photo: Alan Murray-Rust. Source: Geograph That’s the challenge that a lot of investors are facing. Facebook and Amazon and the other growth darlings have done so well for so long that they now represent an oversized position in many portfolios. It’s a simple matter of mathematics: If a holding in a 20-stock portfolio doubles in a single year while the rest of the portfolio remains stable, it’s weighting in the portfolio roughly doubles. If that [...]

An Economy with a View?

By | 2018-03-23T10:57:11+00:00 March 23rd, 2018|Global Market Update|

It’s not working. Italian Riviera at Moneglia. Photo: Fiore dod. Source: Wikimedia For the past 10 years incomes have diverged dramatically within the Euro-zone. Germany has done pretty well, most other countries have muddled along, and incomes in Italy have fallen. Per capita GDP in Italy is now 5% lower than it was in 2000. By contrast, the entire Euro-zone is 12% higher and Germany is 20% higher. This isn’t what Italians thought they were signing up for when they joined Europe’s common currency. [...]

Starting Seeds

By | 2018-03-22T06:01:56+00:00 March 22nd, 2018|Global Market Update|

It’s cold outside. So why are we thinking about gardening? Photo: Rasbak. Source: Wikimedia Outside we’re on the edge of another nor’easter, to be followed by more cold temperatures. Welcome to March in New Hampshire! Folks who have been here a while know that while this March has been pretty stormy, it will pass. And pretty soon, we’ll be looking at warmer temperatures and muddy roads. So right now, many long-term residents are thinking about their gardens: ordering seeds, getting out the grow-lights, and [...]

The Adaptive Imperative

By | 2018-02-08T06:00:27+00:00 February 8th, 2018|Global Market Update|

Why is it so hard to beat the market? Photo: Marcin Chady. Source: Wikimedia One reason is because markets are adaptive. They adjust to expectations. Sometimes we get concerned about a market melt-up. That’s where prices adjust so quickly to expected good news that there isn’t time to take advantage of the improved outlook. Then, the overpriced market sows the seeds of its own correction: new deals are put together that don’t make any economic sense. Eventually, these shares fall, pulling the rest of [...]

China Futures

By | 2017-12-14T07:27:09+00:00 December 14th, 2017|Global Market Update|

What’s happening in China? Pudong Skyline. Photo: Pjt56. Source: Wikipedia China is the second largest single economy in the world and over half the size of the US economy. It’s home to some of the largest – and fastest growing – tech companies: Tencent, Alibaba, Baidu, and others. And of course, over 1.4 billion people live there, the most populous nation on the planet. They import and export over $3.7 trillion of products every year. China’s growth over the past 30 years has been [...]

Getting to Growth

By | 2017-08-25T07:32:38+00:00 August 25th, 2017|Global Market Update|

Are there problems in the US economy? Source: St. Louis Fed Sure there are. Exhibit one is the rate of economic growth. Any way you measure it, real economic growth has slowed significantly over the past 30 years. The economy is a lot less volatile than it was in the ‘60s, and ‘70s, but the rate of economic expansion has gradually gotten slow and slower. The economy used to grow faster; now it’s growing more slowly. Whether we’re exporting jobs in order to buy [...]

Investors from Mars and Venus

By | 2017-07-17T12:21:18+00:00 June 7th, 2017|Global Market Update|

Can we ever understand one another? Photo: Amshudhagar. Source: Wikipedia In 1959 English novelist C.P. Snow gave a lecture on “The Two Cultures,” bemoaning the lack of understanding between literary intellectuals and scientists, between science and the humanities. At the time, folks were worried that scientists had never read Shakespeare or Dickens, and that the Atomic Age would usher in a technocratic tyranny, along the lines of Huxley’s “Brave New World.” But to these humanities scholars Snow asked, “Can you describe the Second Law [...]

Pennies from Dividends

By | 2017-07-17T12:21:39+00:00 October 25th, 2016|Global Market Update|

What good are dividends? Public Domain. Source: PD Photo It’s a good question. Dividends can limit a company’s options, forcing them to cough up cash that could be used to run the business. If they money flows out of the company, they might have to increase their borrowings. Ford paid a big special dividend in 2000—they called it their “Value Enhancement Plan.” Management probably wished they still had that cash a few years later during the financial crisis. You’d expect that paying dividends would [...]


By | 2017-07-17T12:21:40+00:00 October 18th, 2016|Global Market Update|

Why is the economy growing so slowly? Source: St. Louis Fed Since the Great Recession, the economy has never gotten back into high gear. We’ve always seemed to be teetering on the edge of another downturn. Quarterly economic growth has averaged 2%, while a normal recovery is usually above 3.5%. Why? First, the workforce is changing. We are now entering the period where baby-boomers are beginning to retire. Like most things the boomers have gotten involved with, they are transforming retirement. Their family finances [...]