Thoughts From the Frontline, September 2002

Knocking at Deflation’s Door

September 27, 2002

Today we are going to examine a war going on in the central banks of the world. The central banks of the world continue to do what is necessary to make their respective nation's products attractive to the American consumer, doing the best they can to make their currencies cheap. There are increasing calls for the US to let the dollar fall as a weapon in the war against deflation. Both can't happen at the same time. You don't want to let your investments get caught in the crossfire. There will...

The Sweet Buy and Buy

September 20, 2002

This week we are going to depart from the usual format of surveying the economic landscape for investment insights, and ask ourselves:

"What type of returns should you expect from the stock market for the next 5, 10, or 20 years?"

Over the long-term the Ibbotson study, used by stock market cheerleaders everywhere, says we should expect to make real returns of 6-7%. This statistic is used by brokers and fund managers who urge investors to buy and hold. Maybe more to the sales point, it...

Bubble, Bubble, Everywhere a Bubble

September 13, 2002

There has been more important and interesting economic analysis that has come across my desk in the last few weeks than at any time I can remember. I have spent a lot of time pondering the meaning of several very different items, and trying to see how the dots connect. I think it will give us some clues as to what our investment posture should be. I think you will find this letter to be much different from the usual economic analysis.

First, I have masochistically thought long and hard about...

All God’s Children Got Themes

September 6, 2002

September is the month set into my personal rhythms, and that of my generation, as a time to reflect upon the past and look to the future. The first week of school was always a time for review and to get a sense of what we would be looking forward to in the new school year. Even though school has been in session for several weeks, to those of us who went to school in the 50's and 60's, it does not feel right until after Labor Day.

With that cycle in mind, it seems that we should briefly...