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Economic Analysis

Inflation is Always and Everywhere a Monetary Phenomenon

Outside the Box

February 7, 2005

A few weeks ago, I posted a letter by Dr. Gary shilling on why he thinks there is deflation in our future. For another look at the inflation-deflation debate, this week's letter is by Myles Zyblock, who is Chief Institutional Strategist & Director of Capital Markets Research at the Royal Bank of Canada. Myles takes a look at why we have not seen a big increase in inflation even though the Fed has added vast amounts of monetary liquidity since the late 1990's. Milton Friedman's equation of...

Social Security’s Flawed Assumption

Thoughts from the Frontline

February 4, 2005

Social Security in the US (and the equivalent in Europe and Japan), as well as some pension plans, might be in far worse shape than you think. And the reason may be very good news for you, and almost certainly will be for your kids. Potentially very good indeed. Today we take a look at one potential pitfall in the future of Social Security that no politician is talking about.

I had told myself that with so many people writing about Social Security that I should just go on to another...

Emotion, neuroscience and investing: Investors as dopamine addicts

Outside the Box

January 31, 2005

Once again we look at one of my favorite analysts and behavioral finance thinker, James Montier of Dresdner Kleinwort Wasserstein in London. James wrote a fascinating book two years ago called "Behavioural Finance: A User's Guide" and puts out ongoing research like the one we will enjoy today. Long time readers will recognize the name because I have discussed many of his ideas in my weekly letter "Thoughts From the Frontline," my book "Bull's Eye Investing" and in "Outside the Box." While the...

Insiders Send a Signal

Thoughts from the Frontline

January 28, 2005

Is the US stock market rolling over? What are insider investors telling us? Are there sectors that might run counter to the overall trend? We look at a variety of topics this week, I point some of my hedge fund and institutional managers to an excellent source for information on insider investing and point the rests of my readers to a new book which shows you how to separate the "Vital Few from the Trivial Many." All in all, it should be an informative letter.

But before we delve into...

Shades of Irrational Exuberance

Outside the Box

January 24, 2005

Readers know that Paul McCulley of Pimco, and his cohort Bill Gross, are two of my must read economic analysts. Pimco is in Newport Beach California and oversee more than $400 Billion in assets, predominately in fixed income.

Last week my weekly letter called "The Problem with the Endgame" quoted some of Paul McCulley's January 2005 Fed Focus letter. This article was so interesting that I decided to make it this week's Outside the Box. The letter is a little longer than normal, but well worth...

China: One Coin, Two Faces

Thoughts from the Frontline

January 21, 2005

This week we begin what will be a series of occasional letters on China. The topic, like the country, is so vast that it cannot be adequately dealt with in one short letter. Today, we will take a long range view into the future, looking at how China will develop vis-a-vis the developed world.

There is a mountain of material on China, as I can personally attest to, having gone through hundreds of pages of reports, essays, and data in the past few weeks. Much of the writing falls into...

2004 Quarterly Review and Outlook

Outside the Box

January 17, 2005

This week's letter is once again from two of my favorite economists, Van Hoisington and Dr. Lacy Hunt of Hoisington Investment Management Company in Austin, Texas. They offer a view on bonds which, as Van noted in a conversation with me this week, disagrees with my 2005 forecast of last week. It is important to read well-reasoned opinions which disagree with your own, which is one of my foremost thoughts when selecting each week's article for Outside the Box.

And there are reasons to pay...

The Problem of the Endgame

Thoughts from the Frontline

January 14, 2005

Last week we looked at my 2005 Forecast. This week, we ponder the far more interesting question of where I could (or will be!) be wrong and why and what would be the consequences.

This week's topic came about as I was talking on Tuesday with Van Hoisington of Hoisington Investment Management Company. He and Dr. Lacy Hunt had just published their 2005 Forecast and I considered it quite thoughtful. I called to ask if we could use it for next Monday's Outside the Box.

The Sure-Thing Syndrome

Outside the Box

January 10, 2005

This week I put out my 2005 forecast that called for a See-Saw Economy. The theme being that the economy will not take off or crater but continue to move along at a relatively slow upward pace. There will be an end game to this cycle, but I don't see it this year.

One of my favorite economists, Stephen Roach, of Morgan Stanley gives us an insight into what one of the major components of that end game will look like. Let's take a look at his comments on the end of the carry trade and the...

Forecast 2005: The See-Saw Economy

Thoughts from the Frontline

January 7, 2005

Once again it's time for me to demonstrate the foolhardy part of my nature by putting to electronic pen my forecast for 2005. I spend more research time on this one letter than on any four or five combined, simply reading hundreds of pages of research, looking at mountains of data all in an effort to try and catch the gist of the markets. It is a daunting task, but one to which I actually look forward, as it challenges the mind like few other endeavors.

If I go into as much detail as...