Economic Analysis

The Doom and Gloom Fed

Thoughts from the Frontline

December 13, 2002

Today we explore the very interesting differences between what the Fed told us about its last interest rate cut and what they actually said in the meeting. Then we look at my analysis of how Japan can have deflation when the money supply grows 21%, which will annoy the gold bugs among my readership. Then we look at why gold is really going up, and why it will continue to do so, which will make gold bugs happy. All that and more, as along the way we look at why it is so hard to predict anything...

Fighting Deflation at Point Blank Range

Thoughts from the Frontline

December 6, 2002

My letter last week on Fed Governor Bernanke's speech drew a great deal of comment from readers. I still read every one of your letters to me, even though I cannot answer them all.

Bill Gross of Pimco fame also weighed in on the implications of the speech this last week. Because I think this speech represents a defining moment for investors and our economy, we are going to touch upon points of it again, but from a different angle. I shall attempt to show why I disagree with some of the...

What the Fed Believes

Thoughts from the Frontline

November 28, 2002

Today we are going to look at a very important speech by new Federal Reserve Governor Ben Bernanke. I think this is one of the more important letters I have written in a while. The speech has received a lot of publicity for some of it's speculations about potential Fed policy. Some seem to find very dire and immediate negative implications in the speech. I, frankly, do not.

However, I do think the speech is important because it gives us insight into the nature of the operational (and...

Sucker Rally or New Bull?

Thoughts from the Frontline

November 22, 2002

Today we are going to look at the world economy, muse on why the dollar is holding its own and when and why it will drop. Then I make a few comments on the current stock market rally. Finally, in a departure from the normal letter, I am going to close the regular e-letter, but add a PS in the form of an essay on the risk of derivatives for those who find the subject interesting.

The US Muddles Through

The world economy is clearly not healthy. Let's look at the US, and then we will go...

Will You Be Able To Retire?

Thoughts from the Frontline

November 15, 2002

Today we turn our attention to the question of retirement: Will the Boomer Generation be able to retire on time? Will Social Security go bankrupt? Is Harry Dent in his book The Roaring 2000s right when he asserts that we will have a boom until approximately 2008-9 because Boomers are saving and spending? And then watch as things go bust (an actual depression) because Boomers start selling stocks and retiring?

Valuation Madness

Thoughts from the Frontline

November 8, 2002

This week we will look at a fascinating debate between two well-known investment analysts, I show you how to spot a stock market cheerleader, and ponder the significance (if any) of what the surprising GOP win of the Senate portends for our investments.

I am on the road as I begin to write this week's letter, speaking at the National Endowments and Foundations Symposium on the prospects for the economy and the markets for the coming year. Interestingly, when I spoke at this conference last...

Greenspan: Fight Deflation Now

Thoughts from the Frontline

November 1, 2002

Today we examine the deluge of month end data, which continues to confirm we are in the Muddle Through Economy. I politely respond to George Gilder (even after he called me a Keynesian and an economist) and look at the very long term implications of tax policy. There is a lot of very interesting ground to cover, so let's get started.

As long time readers know, I am in the process of writing a book called Absolute Returns . The basic premise is that we are in a long term secular bear market...

Glass Ceiling Investing

Thoughts from the Frontline

October 25, 2002

Earlier this year I wrote that the deduction of option expenses and proper accounting for pension liabilities would become an issue, and that it was highly likely that when new accounting standards are adopted that these would be addressed. If so, then it would be a large drag upon future corporate earnings. These new accounting standards are going to create a glass ceiling, if you will, over the stock market.

The Grandfather of Bear Markets

Thoughts from the Frontline

October 18, 2002

Today we return to our assigned task of trying to find some patterns in the data to help us determine the direction of the economy and the markets. There are lots of bread crumbs on this trail, so let's see what conclusions they lead us to.

First, the evidence mounts that we are still in what I call the Muddle Through Economy - a slow growth, no-new-jobs type of recovery that seems to be alternately teasing us with potential for growth and frustrating us with weakness. Weakness is winning.

Why Investors Fail

Thoughts from the Frontline

October 11, 2002

Exactly what use is past performance? How can you spot a trend before it starts, and determine when it will stop? And when will the next big bear market rally start? This week we examine why so many investors fail, and why a few succeed over and over again. While I am sure that none of my regular readers make these mistakes, this will be a useful column to send to your friends who have not been as successful as you. Oh, yes, and I tell you how to know when the next big rally starts. Let's...