Economic Analysis

The Outlook for the Housing Market

Thoughts from the Frontline

January 2, 2004

This is always a fairly intensive research time of the year for me, as I begin to format my thoughts about the possible trends for the coming year. Next week, I will sit down on Thursday and Friday to write my annual forecast edition. It will be a shorter letter this week, as I husband my energy for next week's marathon.

But today we will preview one part of the puzzle that will be 2004: the housing market and its implication for interest rates.

Oil, Stock Prices and the Dollar

Thoughts from the Frontline

December 19, 2003

This week we see what oil has to do with the price of tea in China, what they both have to say about the US stock market and the implications for the ongoing recovery. Plus, we travel a little far afield, from Rotterdam to Saudi Arabia, Iran to Venezuela, and then end up in your back yard to see what you can do to shed some light in Myanmar. It will make for a very interesting e-letter.

The Fed Said What?

Thoughts from the Frontline

December 12, 2003

Today we look at recent Fed statements, which give us more than a few clues as to what is really happening in the economy, plus a few thoughts on the markets.

The song in my mind the past few days has been "Free at Last." My book in progress is finished - all 24 chapters! It's in the hands of my staff and the capable editors at Wiley. They tell me it will be 400 plus pages, bordering on 500. I left about 300 pages on the editing floor. More on that below.

The Problem With Assumptions

Thoughts from the Frontline

December 5, 2003

Insanity, my bride tells me again and again, is doing the same thing over and over and expecting different results. This week we return to the concept of Bringing Out Your Inner Spock. We look at four more reasons why our psychological make-up makes us prone to making major investment mistakes. For those who missed it, I discussed one of them with Ron Insana and Sue Herera on CNBC yesterday afternoon. They invited me over to their spiffy new studios for some on air chat time about the markets....

The 22 Rules of Trading

Thoughts from the Frontline

November 28, 2003

This week we look at two very intriguing studies, one from James Montier where, safely perched in England, he forecasts future real returns on the US stock market. Then we give you Master Trader Dennis Gartman's 22 Rules of Trading, many of which you can apply to all sorts of life situations, as well as the markets.

I really need to thank these two gentlemen for letting me use their work almost verbatim, as I am finishing the last (!) chapter of my book this weekend and really need every...

Bras, Steel and Bush

Thoughts from the Frontline

November 21, 2003

Whenever I venture from my "assigned" space of economics and investing, and roam into the realm of politics, I am sure to offend more than a few readers. But today, I see the world of economics and politics meshing, as the threat of an international trade war is becoming more and more real. From Senators proposing insane 30% tariffs on the Chinese, (our new whipping boy, probably to the relief of Japan) to boneheaded steel tariffs, we put the economy of the world at risk. And the reasons are...

Your Inner Spock

Thoughts from the Frontline

November 14, 2003

Why do we continue to make the same classic investing mistakes, generation after generation, throughout the world, in all times and in every culture? It is as if history has no meaning for each new age, yet it is there for all to read. We explore this and more in today's letter.

But first, let me offer a few observations about the current mutual fund scandals. I find it interesting that the funds which are the target of investigations still have 90% of their assets. To illustrate this...

The Steroid Economy

Thoughts from the Frontline

November 8, 2003

Today's letter may be one of the more controversial, or at least debatable, letters I have written in some time. I take a very out of consensus position on interest rates. As promised last week, we deal with the question, "What ever happened to the Muddle Through Economy with the GDP is growing at 7.2%?" Is it time to abandon the concept? I think this week I will leave you a few things to think about, so let's get started.

First, let us recall Keynes' bon mot when asked about why he changed...

Demography is Destiny

Thoughts from the Frontline

October 31, 2003

This week we will look at the very long term trends in demographics. I find this whole topic fascinating and one that is fraught with investment implications, not to mention the basic issues of life with which we will soon be dealing.

But first, I want to bring a couple of items to your attention. Last week, I lead off with a few paragraphs from a 1946 article from Life Magazine talking about how we won the war in Europe but were losing the peace. I was not trying to make some comparison...

Earnings Deflation

Thoughts from the Frontline

October 24, 2003

Earnings season is upon us, and with each announcement the market seems to surge on new ecstasies or retreat with disillusionment. Each new announcement is cut open, like so many sheep, to see what its entrails will divine to us about the future, as if one more bit of fresh data will give us the clear forward vision we think we so desperately need. Is the bull finally back? Are we climbing a wall of worry, or just on another fool's errand, rising in a bubble toward the inevitable pin? Yet,...