Economic Analysis

The Dollar Teddy Bear Market

Thoughts from the Frontline

June 7, 2002

Every week, as I sit down to write, I think about the scores of research reports and articles I have read in the past few weeks. Is there a new theme? What trend is developing? What is the picture coming into view from the pieces of the puzzle at which I get to look? What have I seen that I should bring to your attention?

Usually one or two things jump out, and this week is no exception. A number of articles, all about the dollar, and when taken in concert, are beginning to concern me. The...

Investing’s Double Standard

Thoughts from the Frontline

May 31, 2002

I get a lot of reader questions and comments along the following lines:

"John, how can you believe we are in a Muddle Through Economy when (pick a statistic) is so strong? Look at this indicator. Don't you think we are finally in a strong recovery and a new bull market?"

Then, I get even more like this: "John, how can you believe we are in a Muddle Through Market when (pick a statistic) is so disastrous? Look at this number. Don't you think we are headed for a stock market crash?"

Gravity and the Dollar

Thoughts from the Frontline

May 24, 2002

As I predicted several months ago, the dollar is beginning to show signs of real weakness against the euro and a host of other currencies. It has the potential to happen even faster than the gradual process I originally thought it would. But what does it mean for you and your investments? Today, we are going to look at some of the implications of a weaker dollar, whether or not it means inflation or, even worse, stagflation is in our future and what the implications of a weaker dollar will mean...

The End of Disinflation

Thoughts from the Frontline

May 17, 2002

I must confess I like to work jigsaw puzzles. If you have ever worked on one, you know there are times when the pieces come together, and you can begin to see a major part of the puzzle. There is a certain sense of satisfaction when that happens.

The Meaning of “Excess”

Thoughts from the Frontline

May 10, 2002

Over the past few months, I have commented about how large corporations are using their company pension funds to bolster their corporate earnings. Under accounting rules, if a pension fund has "excess" funding, the excess can go to the bottom line of the corporation. Nothing particularly wrong with that, except the meaning of the word "excess" is as loose as Bill Clinton's definition of "is." Today we will visit an amazing statistic that clearly shows just how deceitful, large and widespread...

Risk Premiums Get Scary

Thoughts from the Frontline

May 3, 2002

What a week. A whirlwind tour through Southern California visiting clients has left me quite tired, but driving through ridiculous freeway traffic has given me a lot of thinking time. I needed it, as I have been meditating in the implications of a very important new article in the AIMR Financial Analysts Journal. It is a lengthy and devastating analysis of what investors should expect by way of returns in the stock market over the next decade or so. I will do my best to give you the...

Why Investors Succeed

Thoughts from the Frontline

April 26, 2002

As I leave the country today, headed for Mexico's beaches, I can't help but notice the stock market seems to be stuck in neutral, where it has been since the first of the year. So far, at least, my Muddle Through Market prediction at the beginning of the year seems to be the right one.

House of Credit Cards

Thoughts from the Frontline

April 19, 2002

Today, we will look at a company that will pay you 8.7% a year because you are getting older. Yes, my Maine Source for value investing has come up with a gem for this month's value stock.

Analyse This, Merrill

Thoughts from the Frontline

April 12, 2002

Life in the Muddle Through Economy goes on. With all of the sturm and drang going on in the markets, most stock indexes are not too far from where they were at the beginning of the year, except for the NASDAQ, which has been far from reality for a long time.

Of Deficit and Dollar Directions

Thoughts from the Frontline

April 5, 2002

Two summers ago, I went on an Alaskan Cruise with #2 daughter. One of the highlights was flying by helicopter to several glaciers. Seeing the huge valleys these glaciers had dug into the bare rock of massive mountains was impressive.