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Economic Analysis

State of the Markets: A Minsky Review

Outside the Box

April 25, 2005

This week's letter is from my good friend Ed Easterling of Crestmont Research in Dallas. Ed helped co-author a couple of Chapters in my book "Bull's Eye Investing" and that inspired him to write his own book. Ed's recently published, a must read book in my opinion, is called "Unexpected Returns: Understanding Secular Stock Market Cycles."

This article uses some of the insightful research in the book to examine current market conditions and why Ed thinks the "Four Categories" are pointing to a...

The More Things Change

Thoughts from the Frontline

April 22, 2005

This is the text of a speech given at the Accelerating Change 2004 conference at Stanford University. The conference organizers asked me to look out over the next 3-4 decades and offer my thoughts as to what the future may look like. A somewhat daunting task, and one guaranteed to failure, as the future always seems to surprise, I nevertheless tried to peer into that dark glass.

La plus ca change, la plus c'est la meme choses.
The more things change, the more things stay the same.

...

Economic Reforms Sacrificed For Political Gains

Outside the Box

April 18, 2005

This week we will turn once again to a group headquartered in Hong Kong with offices in Stockholm and New York called GaveKal Research Limited. Louis- Vincent Gave's GaveKal Ad Hoc Comments for Friday, April 8, 2005 looks at the political and economic climate in Europe and what that might mean for the Euro and European government bonds.

The European Union, now with a few years behind it, is looking to make some changes and as we have seen throughout history, what is good politically is not...

Forecast: The Next Ten Years

Thoughts from the Frontline

April 16, 2005

This week we look at how politics and geopolitical events can affect our investments. We look at a decade-long forecast from one of my favorite information services: Stratfor.com. I change my view on the euro, talk about a possible Chinese recession and look at uncomfortable analogies between 1900 and today. There's a lot of ground to cover so we will jump right in.

I have had the relative value of currencies on my mind every day for the past two weeks. I have been in London, where the...

Don’t Discount Discounted Dividends

Outside the Box

April 11, 2005

This week's letter is from John P. Hussman, Ph.D., President of Hussman Investment Trust. His firm is one of the few that has employed hedging techniques, similar to the hedge fund world, in a mutual fund structure. John is also one of the really, really, really smart guys in the running money business. John manages the Hussman Strategic Total Return Fund - HSTRX and the Hussman Strategic Growth Fund - HSGFX.

Hussman's Weekly Market Commentary on March 21, 2004 takes a look at the importance of...

Unexpected Returns

Thoughts from the Frontline

April 8, 2005

Writing on the train to Yorkshire from London, I am surrounded by a gorgeous English countryside on a beautiful spring day. Life has its moments. I like the trains in Europe. Quite a civilized way to travel. Yet every time I pull out my wallet, I am reminded of reality. The ebb and flow of the dollar has made this a most expensive country for someone from the states. Nearly everything is the same price, just in pounds instead of dollars. And a pound that is worth more than two of my...

An Asset Allocation Strategy For The Intelligent Investor

Outside the Box

April 4, 2005

This week's report is about some research finding from a group in Bellevue, Washington called Evergreen Capital Management, LLC. They have built a proprietary model that is used to predict when mutual fund styles (large-mid-small capitalization, value-growth) are being overbought or oversold. They believe that their model is quite good at predicting returns relative to the overall market over the subsequent two years.

This report does an excellent job of weaving together many of the themes from...

$100 Oil is the Solution

Thoughts from the Frontline

April 1, 2005

How can we go from oil priced in the low teens only a few years ago to oil now holding steady in the mid-50s? This week we have seen a projected price spike of $105 from Goldman Sachs. Can you say $4 a gallon gasoline, boys and girls? $100 to fill up the tank of your SUV? This week we look at the price of oil and why $100 oil is the solution and not the problem.

Since I'm writing this on April 1, I was tempted to start out the letter as an April Fools joke. My topic would have been why...

Bargain Hunter

Outside the Box

March 28, 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."

This report...

Of Bonds & Zombies

Outside the Box

March 21, 2005

This week's research comes once again from the GaveKal Ad Hoc Comment publication, however this piece was done by Anatole Kaletsky, a different analyst than the previous reports we have highlighted. This group is located in Hong Kong and I always find their comments on Asia very insightful.

The report takes a look at some of the structural players in the U.S. bond market and why their actions may be causing the longer term bond rates to stay low. The largest catalyst surprisingly is Japanese...