Outside the Box, November 2006


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Alpha/Beta Anemia

November 27, 2006

After a great holiday weekend, I hope that everybody is enjoying the recurring challenge of finding new ways to creatively eat turkey leftovers. For today's "Outside the Box," we turn our attention towards an interesting piece by Bill Gross on the changing investment landscape over the next decade. In his article "Alpha/Beta Anemia," Bill discusses his outlook for several asset classes and explains their implications on risk premiums in the marketplace.

Bill is a Managing Director at PIMCO...

Beyond The Horizon: Economics & EPS

November 20, 2006

I am excited to present to you today a very interesting piece by my good friend and local Dallas resident, Ed Easterling. Ed has performed an in-depth study on how several key fundamentals have performed over time and how they are likely to perform over the next several years. His analysis shows how EPS and corporate profit margins have correlated to the business cycle dating all the way back to 1950. I find his study to be very insightful and dead on in the midst of the current market climate....

Inflation, Bond Yields, And The Market

November 13, 2006

Today's "Outside the Box" will be a combination of 2 different writings. The 1st is an email that I received from Research Affiliates Chairman Rob Arnott in response to my letter last Friday, "Honey, I Created a Bubble." The 2nd is the latest article by the well-known fund manager, John Hussman. Upon reading both commentaries, I was struck by the similarity between the two. It behooves us to pay attention when two very intelligent gentlemen that both actively (and successfully!) manage billions...

Back to Iraq

November 9, 2006

The past couple of days have been filled with anticipation over the outcome of which party will emerge victorious during this year's elections. Adding to the flurry of activity, Defense Secretary Donald Rumsfield unexpectedly announced his resignation raising further questions about the future of American policy. Both the parties and individuals newly appointed to government positions will have an impact on both fiscal policy for the markets (dividend and taxes) and on our foreign involvement...

Near a Bottom in Housing?

November 6, 2006

I touched briefly on the subject of housing in my Friday letter, "Thoughts from the Frontline" (you can view it here). Data from across the country points to a number of trends including declines in both new construction and existing home sales. Market "experts" are calling for both sets of outcomes with some saying that we have been through the brunt of the contraction and with others saying that further declines await us yet.

This week's letter is from Paul Kasriel of The Northern Trust...