"In this month's Absolute Return Letter we will take a closer look at agriculture. Should you be exposed to agriculture in the first place? Is it too late to buy farmland? Are there other and better ways to be exposed to agriculture? These and other questions I will address in the following." (Read more.)
"Today's dominant investor classes - individual investors, hedge funds and pension funds - have de-risked and are relatively uncommitted to equities. A re-allocation into stocks (and out of bonds) represents an underappreciated and potentially massive (and latent) demand that could easily be the catalyst for a move to all-time highs in the S&P 500 in 2012." (Read more.)
After a decade marked by two severe bear markets, 401(k) plan participants have adopted a more balanced approach to their portfolios, according to a report released by the Investment Company Institute (ICI) and the Employee Benefit Research Institute (EBRI). In the current study's sample of more than 23 million participants, 401(k) participants had moderated their account allocations to equities: 11.8 percent of account holders had no allocation to stocks, while the share of participants with more than 80 percent of their balances invested in stocks dropped to 40 percent. Tohear Randy's comments on the survey findings listen to the 1/18/12 Wise Investor Show Midweek Update for more details. (Read more.)
"The Spanish and Italian bond auctions were trumpeted as a big success. Spain sold 10b euros of 3-year bonds, which was double the target of 5B euros. Yields fell and the bid to cover number was also good. Italy auctioned off 12B euros worth of 1-year maturing bonds, which was the expected target, but the yields fell sharply from the last auction. The central banks in Europe, the U.S. and China have shifted from a restrictive policy to an accommodative one. They are hard at work to stem a collapse in the markets from a deleveraging event surrounding the European sovereign bonds. So far, those policies are working..." (Read more.)
While Warren Buffett has generated attention with his complaints that he and his fellow billionaires pay federal income taxes at a lower rate than his secretary -- about 17 percent -- the real figure is often smaller...The problem is not that people like Warren Buffett pay tax at a 17 percent rate, it's that they can use complex transactions not available to most Americans to get cash from their appreciated stock without pyaing any taxes at all...Borrowing against appreciated stock and real estate is a popular tax deferral strategy particularly as interst rates plummet, said Randy Beeman, a private wealth manager at The Wise Investor Group... (Read more.)
To suggest financial markets have been volatile as of late is simply a wild understatement. Although we've certainly seen this type of volatility in terms of percentage moves over short spaces of time in the past, we can't remember when we've last seen this degree of volatility within the context of whipsaw back and forth movement. Although it may sound hard to believe, if one looked only at closing S&P prices and added up the interim high to low and low to high movements of the SPX since literally May 1 of this year, the S&P 500 has traveled 1,233.83 points !!!! more than the entire value of the SPX as of the close the day after Thanksgiving. Now how's that for volatility... (Read more.)
Relying on a series of proprietary indexes, the institute correctly predicted the beginning and the end of the last recession. Over the last 15 years, it has gotten all of its recession calls right, while issuing no false alarms...TAKEN as a whole, he says, these and other indicators are quite clear. "We've entered a vicious cycle, and it's too late: a recession can't be averted," he says... (Read more.)
While it's possible that the equity markets will mount a relief rally in the event of new funding to Greece, it will be important to recognize that handing out a bit more relief would be preparatory to a default, and that would probably be reflected in a failure of Greek yields to retreat significantly on that news...Greece will default. Europe is buying time to reduce the fallout...The only question is whether a needed restructuring is orderly or disorderly. Washington Mutual was so orderly that it was forgettable, despite being one of the largest U.S. banks...Lehman was disorderly... (Read more.)
Backlogs are crucially important for the outlook on economic strength. The recent upticks in production in the month of September which got the mainstream media all "bully eyed" are missing the fact that manufacturers, not just in the NY region but all over, have been keeping shipments and employment up by working down backlogs. However, that is becoming an increasingly thin strategy to hang hopes on. Eventually when backlogs are worked through the wheels come off that cart if there is not a rush of new orders to take over... (Read more.)
This is not a replay of mid-2010. The global economy is slowing down much faster than was the case then and the problems surrounding sovereign government debt are far more acute. While the Fed may be forced at some point into more easing action, there is more reason to be skeptical of any success now than before. And fiscal austerity is now the policy watchword in Washington whereas the largesse last fall after the midterm elections played a key role in stimulating the economy, at least for a short while, and risk appetite as well...Corporate insiders are also selling at a rate that is 10x larger than insider buying levels... (Read more.)
The initial market reaction to the announcement of the Fed's latest policy move, known as the Maturity Extension Program (MEP) or Operation Twist, was for commodities and stocks to fall, the dollar to strengthen, and bond yields to decline. Thus, the reaction was to reinforce trends already in place. These market reactions were the exact opposite of what occurred during QE2...Unfortunately, it is unclear whether Operation Twist will ultimately accrue any benefit to the economy because efforts to achieve very low interest rates could produce counterproductive or unintended consequences... (Read more.)