This weekend I wrote about the problems of being an entrepreneur in our Muddle Through Economy. I would like to follow that up with two brief (but somewhat controversial) essays on two aspects of starting up small businesses. The first, by Vivek Wadhwa, points out that start-ups account for all of the net new jobs, and is a summary of a paper from the Kaufman Foundation. (You can read the 12 page paper at http://www.kauffman.org/uploadedFiles/firm_formation_importance_of_startups.pdf)
The second is by my friend William C. Dunkelberg, the Chief Economist of the National Federation of Independent Business. He asks a very simple question: Why is thrift getting such a bad name? And if we take the potential savings from “the rich,” where will the savings come from to invest in start-ups?
Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at the School of Information at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University.
The both make for thought-provoking reading, and offer some challenges to the conventional wisdom, which is what Outside the Box is supposed to do.
Your doing his part by creating start-ups analyst,
This week we look at some mostly bullish analysis from my friends at GaveKal for the Outside the Box. Much of the letter is devoted to looking at why Europe may fare better than many think (which will make uber-European bull David Kotok happy to read!). But be very sure to read the last page as Steve Vannelli analyzes the latest speculation about the Fed and quantitative easing. All those calling for QE2 may not actually do what they think it will. His conclusion?
"Once again, if there is no growth in broad money, no increase in velocity and no increase in Fed credit (hybrid money), then the only source to finance growth in the real economy will remain the sale of risky assets. When confidence seems to be stuck in a low plateau and talk of reigning in fiscal deficits is growing louder, a policy of undermining the value of risky assets couldn't be more counterproductive to growth."
I find myself in New York this morning (I once again did Yahoo Tech Ticker) leaving for DC later. Then sadly will have to forego Turks and Caicos, but that does allow for me to go to Baton Rouge for a one day course on the affects of the gulf oil spill on the regional economy, helicopter flyovers, etc. I will report back in this week's letter what I learn.
Have a great week.
Your wishing he was still fishing in Maine analyst,
This week I am really delighted to be able to give you a condensed version of Gary Shilling's latest INSIGHT newsletter for your Outside the Box. Each month I really look forward to getting Gary's latest thoughts on the economy and investing. Last year in his forecast issue he suggested 13 investment ideas, all of which were profitable by the end of the year. It is not unusual for Gary to give us over 75 charts and tables in his monthly letters along with his commentary, which makes his thinking unusually clear and accessible.
Gary was among the first to point out the problems with the subprime market and predict the housing and credit crises. You can learn more about his letter at http://www.agaryshilling.com. If you want to subscribe, you can call 888-346-7444. Tell them that you read about it in Outside the Box and you will get not only his 2009 forecast issue but an extra issue with his 2010 forecast (of course, that one will not come out for a year. Gary is good but not that good!)
I trust you are enjoying the holidays. And enjoy this week's Outside the Box.
This week I have a very special Outside the Box for you. Peter Bernstein is recognized as one of the more brilliant and insightful analysts of our times. At 89, he has been writing prescient material longer than most of us "young guys" (I am 59, and hope I am still writing at 89, or even able to write!) have been even marginally in the markets. His Economics and Portfolio Strategy Letter is read by the true cognoscenti of the investment world.
He has given me permission to reproduce his latest letter in which he offers two insights. Rather than give you some teaser copy, why don't you just jump in a read. And trust me, anything that Peter writes is worth reading more than a few times.
For those interested, you can learn more about Peter and subscribe to his letter at www.peterlbernsteininc.com.
This week's letter is from two of my favorite economists, Van Hoisington and Dr. Lacy Hunt of Hoisington Investment Management Company in Austin, Texas. They specialize in management of fixed income portfolios for large institutional clients by setting long-term investment strategies based on economic analysis. They have been one of the most successful of bond managers in the country. (I have no affiliation with them.) I eagerly read all of their writing and analysis, and find it to be some of the most thought-provoking anywhere.
Their third quarter 2004 Quarterly Review and Outlook examines where the economy might be going by looking at inflation, savings, consumption and jobs. Let's explore the current economic environment in this weeks "Outside the Box."