I strive to be smart, wise, analytical, creative, intuitive, and informative. I hope to help make you a better active investment management pro.
I recommend you start with the Best of the Blog.
New Rules for the U.S. Electric Grid Are a Win
While the rest of the investment world focuses on the twin debt crises of Greece and the United States, there has been a very important development for improving the future of the environment. Specifically, the U.S. Federal Energy Regulatory Commission on 21 July, 2011 outlined principles that would guide new rules for the U.S. electric grid. Most of the electric grid in the United States is 90-110 years old and is noticeably ailing. Years ago when I was a co-portfolio manager at the Davis funds I uncovered a shocking statistic, only...
read moreA Hardened Solution to Greek Debt Crisis
Late Thursday evening in Europe a hardened solution to the Greek debt crisis appears to have been worked out. This solution is likely to bring to a close over 18 months of procrastination on the part of European leaders. Compromise won the day as the head of the European Central Bank, Jean-Claude Trichet, German Chancellor, Angela Merkel, and French President Nicolas Sarkozy, all gave in on entrenched positions to craft a tough solution. Merkel gave in and committed more of her country’s money to bailing out Greece. Sarkozy...
read moreCash On Balance Sheets Is Big Concern
U.S. corporations are amassing massive amounts of cash – I am guessing over $3 trillion – on their balance sheets and this is a big concern of mine. Why? Because these corporations are earning about what you and I earn on cash balances – between 0.25% and 2.0%. In business school they teach you that businesses have several uses for cash: To pay down debt To pay dividends to shareholders To fund stock buybacks To fund new projects Businesses are not by and large doing any of these three things. Let’s take...
read moreU.S. Debt Crisis Resolved?
U.S. President Barack Obama is endorsing a deficit reduction plan crafted by a bipartisan group, equally weighted between six Republicans and Democrats. The group, super creatively known as “The Gang of Six,” has announced a $3.7 trillion plan whose machinations would unfold over the course of a decade. Most politicos feel that the plan has a zero chance of passing intact. This is because the plan contains language that has changes intended for the tax code. And of course, the Tea Party has become ironically, the...
read moreEuropean Debt Crisis You’re Not Hearing About
Yes it’s true, I have been silent for the last several days and it’s because there isn’t any real news in the press. By ‘news’ I am referring to the root of the word news, ‘new.’ Why waste everyone’s time harping on the same stuff? So what’s new, if not news, quite yet? Little talked about in the European sovereign debt crisis is that a number of European banks are also in financial trouble. Largely this trouble stems from, you guessed it, bad mortgages underwritten in the real...
read moreEuropean Debt Yields Indicate Fear
Across the European continent debt yields on existing debt are rising and indicate a growing level of fear about their nagging debt crisis. Specifically, last week yields rose in Portugal, Italy, Ireland, Greece and Spain – alias, the P.I.I.G.S. nations. But even the bonds yields of Europe’s strongest economy, Germany, rose this past week. Why are rising yields evidence of fear? Let’s start with the price of a bond because it makes the case more obvious. If the perceived risk of default on existing debt...
read moreIntuitive Assessment of U.S. Debt Crisis Brief
Here is a brief intuitive assessment of the U.S. debt crisis. I say “brief” because the negotiations are still ongoing and the details of the resolution are not the important thing. What is important is that the crisis resolves before the 2 August, 2011 deadline. To me it feels as if Republicans and Democrats are finally focusing on a solution, rather than focusing on opposing one another. To me it feels like there is a very high probability of this resolving before the 2 August, 2011 deadline. At the moment, the...
read moreOverview of the U.S. Debt Crisis
Both Moody’s and Standard & Poors stated yesterday that they are prepared to downgrade the United States’ vaunted AAA credit rating if the country’s borrowing limit is not raised by Congress past its $14.29 trillion threshold. I consider the U.S. debt crisis to be a seminal moment for the country. Why? Regardless of the outcome, the United States is finally having a substantive conversation about its debt/leverage culture. Further, the two major political parties in the U.S., Republicans and Democrats, are...
read moreThe Economist’s Editorial About the U.S. Debt Crisis
Normally I do not reprint in entirety other publications’ work because it’s my job to create compelling content for you. However, the conservative financial periodical, the Economist, published an editorial about the ongoing U.S. debt crisis that I think needs to be reprinted. Why? Because it succinctly describes the absurdity of the negotiating position of one of the parties to the negotiation. I consider myself politically to be “A Thinker.” I do not recognize the limitations of archetypal thinking; I am not a...
read moreHype Sells in Investing
Yesterday, the Zurich based International Capital Market Association (ICMA) disclosed that it has been investigating a well know investment bank selling tactic: hype. I know that you are thinking something along the lines of: “I had already come to accept that hype was a part of the game – this is not news.” You would be correct. However, the ICMA is focusing on European bond sale where the big investment houses of the world are complaining that investment banks, when selling the sovereign debt of troubled European...
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