Outside the Box, June 2007


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The Relative Performance Derby And Other Evils Of Modern Investment

June 25, 2007

This week in Outside the Box we take a gander at the always-insightful research of good friend James Montier, who poignantly addresses the pertinent topic of portfolio diversification and the pitfalls that ensue on account of benchmarking, wherein investors obsess over relative performance and their respective tracking error. James asks the question, why does the average US mutual fund hold 160 stocks, when diversification could be achieved with around 30-40 stocks. The answer in word,...

US Equity Returns: What To Expect

June 18, 2007

This week's letter is by good friend Dr. Prieur du Plessis, who is managing director of Plexus Asset Management based in Cape Town, South Africa. What kind of returns can we expect from US equities over the next ten years? It turns out that while you can get an average number, the range of actual historical returns is actually larger than you might think. Thus, past performance is not indicative of future returns, but past performance and current valuations can give us some hints.

This is one...

Why the Big Money in Gold Shares Still Lies Ahead

June 11, 2007

This week in Outside the Box we take a quizzical gander at the gold market, its growth-to-date, and potential future investment opportunity. We have witnessed a significant rise in the gold market from a July 1999 price of $252 an once, to $653 an once today, an increase of 159%. David Galland, of Casey Research, provides an intriguing analysis of the gold market today and the inherit investment opportunity existent on account of severely curtailed research exploration, institutional obstacles,...

A New Step in the Ethanol Revolution?

June 7, 2007

This week in a Special Outside the Box we look at the discussion of alternative energy sources, specifically, ethanol derived from corn or sugarcane. The Stratfor piece discusses the economic implications of ethanol usage; geopolitical ramifications in terms of how current oil producers will be affected, comparable cost advantages between corn and sugarcane processing, and the advantages and disadvantages of ethanol production and consumption.

OPEC has expressed concern over capital allocated...

Asia: Hot Market or Frenzy?

June 5, 2007

The data from the companies which analyze where investors are putting their money tells us there is a lot of money flowing into international funds and especially Asia. This week's Outside the Box we look at a short but thoughtful piece by my good friend and partner Jon Sundt of Altegris Investments. Jon is personally bullish on Asia, but he offers us a graph and some thoughts of which you should be aware before you start putting money into the high flying Asian funds.

I will add a few comments...