Economic Analysis

Just A Little Patience

Outside the Box

October 23, 2006

In my Friday letter, Thoughts from the Frontline (you can view it here), we looked at how valuation and prices change over market cycles. As I mentioned and have written about extensively in my book Bull's Eye Investing, market cycles should be viewed in terms of valuation and not prices. But how does one capitalize on such a way of thinking? Today's "Outside the Box" will show how several valuation styles and categories have performed over different time intervals, how each styles compares to...

That Permanently High Plateau

Thoughts from the Frontline

October 20, 2006

"Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as they have predicted. I expect to see the stock market a good deal higher within a few months." - Dr. Irving Fisher, Professor of Economics at Yale University, one of the most important US economists of his day, speaking on October 17, 1929, a few weeks before the Great Crash.

"What," more than a few readers ask, "do you...

Temporary versus Permanent Returns

Outside the Box

October 16, 2006

Is this the week the Dow will break 12,000? Will we once again see $50 barrel oil? Are we in a Goldilocks economy? These are all questions that investors are confronted with by the financial press. In today's "Outside the Box," we will focus our attention on a well-thought piece by John Hussman, Ph.D. John is the President of Hussman Investment Trust where he manages the Hussman Strategic Total Return Fund - HSTRX and the Hussman Strategic Growth Fund - HSGFX.

In his Weekly Market Comment, John...

Some Additional Firming?

Thoughts from the Frontline

October 13, 2006

Are we in for a soft or a hard landing? Did retail sales slow, as the data suggest, or is the underlying data quite bullish? We will look at the arguments, and then look at the most reliable of all economic indicators to see if we can get an idea as to which view is right.

But first, I want to announce a new addition to my free information services. In addition to this letter, I send out a free newsletter every Monday evening called Outside the Box, where I feature the work of another...

U.S. Vulnerability and Windows of Opportunity - Special Edition

Outside the Box

October 12, 2006

Today marks the first of a new series of special editions of "Outside the Box" that will feature the work of my good friends at Stratfor and be released every other Thursday. With the war in Iraq, geopolitical controversy over oil dependency, and an ever increasing merging towards a global economy, I feel it timelier than ever to stay up-to-date on the geopolitical landscape as it can have broad implications for both investment and political decision making. Contrary to many of the conflicting...

Quarterly Review and Outlook - Third Quarter 2006

Outside the Box

October 9, 2006

This week's "Outside the Box" is by my friends and the always out of the box thinkers at Hoisington Investment Management. In their 3rd quarter market commentary, Van Hoisington and Dr. Lacy Hunt weigh in on a myriad of topics ranging from the data affecting interest rates to housing to the outlook for the dollar. They go on to discuss a correlation between the yield curve and the Leading Economic Index (LEI) that has produced a very accurate track record of predicting recessionary...

The Inflation of Expectations

Thoughts from the Frontline

October 6, 2006

This week we had two more Federal Reserve members repeat what has become the theme for their chorus, but not one the market seems to be paying much attention to. It should be. The market believes the Fed will soon start to cut rates, perhaps as early as first quarter of next year. It is not altogether clear that this will be the case.

I must admit to being somewhat baffled as to the apparent disregard by the stock market for what I view as a tough environment in the medium term with...

Empty Nesting/Successful Investing

Outside the Box

October 2, 2006

Hello, hope everyone had a pleasant and enjoyable weekend. We have officially entered the 4th quarter of 2006 and all eyes seem fixated on the major market averages with the stakes being a new all-time high for the DJI. For this week's "Outside the Box," we turn our attention towards a recent article by PIMCO's Managing Director and widely heralded "Bond King," Bill Gross.

Bill currently manages the largest bond fund in the world, the PIMCO Total Return Fund. PIMCO is one of the largest...

Trim Inflation Now

Thoughts from the Frontline

September 29, 2006

It's been a random walk through the data fields this week. The headlines say that inflation rose a mere 0.1% in August. The markets liked that. But digging deeper, the data is not as sanguine. We had the depressing Philly Fed manufacturing index last week, but today we find that Chicago is doing more than fine. The Dow flirted with a new all-time high, but then took the train home early for the weekend, leaving those who care about such things feeling like a teenage boy at a Baptist...

Oil: Will the Malthusian View Carry the Day?

Outside the Box

September 25, 2006

Today's "Outside the Box" will be one of the more controversial pieces that I have sent out over the past year. My long-term readers are well aware of my views on oil and energy, yet despite my beliefs, I find it valuable to read thoughts from those who have different views. These challenging view points come from my good friend, the very intelligent and always thought-provoking Charles Gave.

Charles is one of the co-founders of GaveKal, a global investment research and management firm that...