Outside the Box, December 2005


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The Little Essay That Beats the Market

December 26, 2005

Value investing is something most investors give lip service to but few actually put it into long term practice. There is a great irony in that. If everyone practiced value investing, it would not work as well as it does. Returns would drop to the market average.

How well does it work? In Bull's Eye Investing, I spent several chapters showing you that long term value investing could add anywhere from 5% to 10% over the market average using some fairly rote formulas.

However, if...

MEW Drag

December 19, 2005

This week's letter is by good friend Paul McCulley, Managing Director of PIMCO. About once a year he puts together an economic debate between his favorite friend and family pet rabbit, Morgan Le Fay. It always presents a very readable look at global economics and a forecast of what could be ahead.

My Friday letter, Thoughts from the Frontline, included a graph that looked at GDP growth and mortgage equity withdrawals (MEW) and Paul explores what could happen if MEWs come to an...

China Economic Service - November Report

December 12, 2005

This week we look at China. Simon Hunt is one of the smartest China hands I know of. He has been visiting the Middle Kingdom for many years and has numerous contacts throughout government and industry. If you read the official releases, it looks like things in China will stay on the same path as recent years. Simon has been saying privately and now publicly that there are some very significant changes happening in China that will affect a number of markets over the years, as China...


December 5, 2005

Whether short term rates are high today is one of the louder debates among economists. And why are long rates so low? Will an inverted yield curve mean what it has for the past 40 years, i.e., a slowdown and/or a recession?

This week's letter is a recent essay by Bill Gross, the Managing Director of Pimco, also known as the Bond King. Gross sits on top of the largest pile of bonds in the world. He thinks short term rates are high and nearing a peak for this cycle and that the...