Friday, February 29, 2008

Features of the week

We have a rather wide range of interesting subjects and stories for you in today's "Features" wrap-up.

As we scroll down this list, you'll hear about Warren Buffett and Berkshire Hathaway's ever-increasing cash hoard, get Tim Iacono's view on the underpinnings of the US economy, and take an audio slideshow tour through Putin's Russia.

Sound good? It's all here in this Friday's edition of, "Features of the week".

1. US economy: spending eroded by inflation, business sentiment falls.

2. The US dollar breaks down against a range of foreign currencies.

3. Vacant homes and developer ghost towns.

4. Detroit Housing = ~$0. House prices in Motown may signal a bigger Rust Belt trend.

5. John Rubino profiles the canny moves of real estate investor Marcel Arsenault.

6. The three trillion dollar war. Costs of conflicts in Iraq and Afghanistan.

7. Across Putin's Russia. An FT "In depth" audio slideshow tour.

8. Sheep in human clothing - scientists reveal our flock mentality. (Hat tip to The Big Picture).

9. Speaking of crowd mentality: our review of Mobs, Messiahs, and Markets.

10. What if conventional wisdom is wrong? Tim Iacono on the economy.

11. Soviet art emerges from behind the Iron Curtain.

12. Weak dollar, record sales at Sotheby's London auction.

13. Alt-A mortgage securities tumble, signaling losses.

14. Pimco's Gross plans to buy subprime-casualty assets.

15. Buffett's big problem: an ever-increasing cash hoard.

16. Overheard in Chicago: a banker tells a friend that the loan business is locked up, and "nothing the Fed has done has helped".

Thanks for reading Finance Trends Matter.

If you'd like to keep up with our regular posts, you can subscribe to our site feed or bookmark this site for future visits.

Have a nice weekend!

Thursday, February 28, 2008

Expecting a dollar rally?

(EUR/USD chart courtesy of ForexRate.co.uk).

The dollar hit new lows against the Euro yesterday, and today.

Here's the latest update from RTTNEws:

Forex - Greenback Drops Further Against Majors [EUR/USD]

2/28/2008 12:23:15 PM The US dollar dropped further against its major counterparts at about 12:15 pm ET. As of now, it is trading near 1.5201 versus the euro, 1.0509 versus the franc, 1.9911 against the pound and 105.38 against the yen.

At this point, anyone who's been banking on an imminent dollar rally probably feels a bit like Linus waiting around for the Great Pumpkin on Halloween night.

Still, some well known investors, like Jim Rogers, are expecting a short term dollar rally at some point in the not-too-distant future.

Rogers told reporters at a Dublin investor conference that he expects the dollar to continue its long-term decline, but that he also expected an upcoming dollar rally, as current sentiment toward the currency was overwhelmingly bearish.

"There are so many people bearish on the dollar right now including me and normally when that happens something comes along to cause a rally even if it is a bear market," he said."

Nevertheless, Rogers held to his negative longer-term picture for the dollar, and said he would use any upcoming dollar rally as an opportunity to unload the rest of his dollar-denominated assets.

You can listen to Jim Rogers' comments in this Bloomberg audio clip.

Lately, we're hearing more and more about the dollar's diminishing status as the world's reserve currency. The dollar has been declining against most major currencies over the last several years, and most of those currencies have not been so great themselves, as rampant global inflation becomes evident even to casual observers.

It seems more people are slowly waking up to the fact that it's not just the US dollar that's in trouble, it's the global system based on fiat currency and debt.

Wednesday, February 27, 2008

Recession: a self-fulfilling prophecy?

Will growing worry over a possible US recession help bring one about? In other words, is the fear of recession a self-fulfilling prophecy? Are we doomed to economic slowdown just by thinking about it?

Well, we're starting off with a lot of question marks here. Let's get down to the answers.

On Monday, we talked about some of the main ideas in Bill Bonner and Lila Rajiva's recent book, Mobs, Messiahs, and Markets, which shows how susceptible the individual can be to the influence of crowd behavior and mentality. We know that mood and psychology can drive manias, booms, and bubbles; can they also drive busts and recessions?

It would seem logical to think so. After all, if social mood and sentiment can fuel a boom, wouldn't the same factors of mood and psychology be at work during the ensuing bust? The boom and the bust are both just different parts of a larger cycle, just as euphoria and despair are the flipsides of human emotion.

But since we're talking about the authors' views on crowd behavior, let's hear what one of them has to say. Markets co-author, Lila Rajiva was recently asked if crowd psychology could affect the onset of a recession. Here's what she had to say:

"Recessions are a result of mood and psychology," says Rajiva, coauthor along with Bill Bonner of Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics."

"That statement is true because economics is not driven by only rational self-interest, but by crowd behavior as well. That's why if everyone else is buying a certain stock you want to buy it, too, and that's why if everyone else is panicking and selling because the market seems to be headed south, you panic and sell, too."

"We're human," says Rajiva. "It's hard for us to think on our own when it comes to issues that are difficult to understand. So we listen to the experts who say they know what they are talking about. And since they're saying we are heading for a recession, guess what happens? We listen and stop buying, the economy suffers, and faster than you can say 'self-fulfilling prophecy,' a recession occurs."

This view seems rather similar to the ideas proposed by Elliott Wave theorist Robert Prechter, who notes that market cycles and societal trends are created and driven along by varying tides of social mood and crowd psychology.

Most people would take an opposing view of how financial events and cultural movements unfold; they believe that trends already in force shape or dictate human behavior and social mood. Prechter and Rajiva would argue that mood tends to influence events, or that there is at least some sort of feedback-cycle occurring that causes social mood and crowd psychology to influence trends and economic events, and vice-versa.

Anyway, how does this discussion on recession relate back to the lessons of Bonner and Rajiva's book? Rajiva explains that a knowledge of crowd thinking and its effects could help us to better anticipate the likely outcomes (in this case, a recession) and allow us to prepare and steer through the event with clearer heads.

"I'm not saying that the economy isn't in real trouble right now," says Rajiva. "In fact, the reality is that money problems are likely around the corner for many Americans for some time to come. All of the debt and purchasing on credit we've been doing for years now is about to catch up with us. But because everyone-experts, the media, your neighbors, and so forth-are now screaming that a recession is coming, the mob in us attaches to that viewpoint, and we are closed off from looking for solutions that could help us avoid a recession.

"My hope is that by recognizing how mob sentiment works, at least some of us will start looking for ways to adapt to what's ahead and to find solutions to our problems instead of just giving into panic and turning to the government to save us-something that will only make our problems worse," says Rajiva. "We don't have to walk blindly into a recession. We can take our medicine, and then use our heads as rational individuals to break away from the mob. We can steer our way through the shifting currents rather than head straight for the rocks."

So, Rajiva is saying that by understanding how the crowd works and influences us, we can better understand our own thought process and hopefully step back a bit to think and act with a clearer head. Let's hope she's right, and that more people take note of this idea.

Related articles and posts:

"Fear of recession could help drive one". (Reuters)

"Seven ways mob thinking is making the 'R' word a self-fulfilling prophecy". (NewsBlaze)

"Recession in real terms". (Finance Trends Matter)

"Roubini: US in recession". (Finance Trends Matter)

"Marc Faber, Jim Rogers on Bloomberg". (Finance Trends Matter)

Monday, February 25, 2008

Mobs, Messiahs, and Markets

Think for yourself and act accordingly.

If I were to sum up the ideas and underlying theme of Bill Bonner and Lila Rajiva's book, Mobs, Messiahs, and Markets, in a single sentence, that would be it.

It's a seemingly simple and succint philosophy, but executing this principle is where the difficulty lies. Because we are subject to the influence and demands of experts and leaders, along with the groupthink of crowds, our ability to reason and stand alone in a state of independence is constantly compromised. At one time or another, we are all subject to the pull of the crowd.

This is the idea that authors Bonner and Rajiva develop, or rather, expound on during the length of this book. This is not a new idea; many readers are likely to recall similar lessons on the dangers of groupthink and crowd behavior, as recorded in Charles Mackay's, Extraordinary Popular Delusions and The Madness of Crowds. What the authors of Markets do is update those lessons and apply them when chronicling some of the widely held delusions and popular manias of our time.

The book rolls along in a kind of acerbic, H.L. Mencken-style prose, with the authors addressing topics ranging from politics and finance, to mass hysteria over media-fueled scandals and events. Their tone is damning as they point out the hypocrisy among both the political left and the right, and in the motivations of the ever-burgeoning crowd of professional do-gooders and "world-improvers".

All this criticism (and more) is richly deserved, and the opening chapters on the methods and stated ideals of the "global agenda" set are a personal favorite. Rajiva and Bonner later build on these opening thoughts, and frequently refer back to them as the similarity between the seemingly disparate fields of politics and finance becomes more apparent. And the bridge that joins these seperate worlds is the idea of the public spectacle, and the effect that it has on our thoughts, emotions, and personal drives.

It seems that many of our actions and ideas are spurred on not by a careful consideration of things we know or are qualified to learn more about, but by simply reducing things we cannot fully understand down to manageable concepts and ideas. Slogans, if you will.


Here are a few examples of the simplified reasoning which lies behind many of our popularly held notions: "Stocks for the long run", "real estate prices never go down", "deficits don't matter", "you are either with us or against us", and so on.

When we get wrapped up in a belief set, or the excitement and consensus-building push of some powerful agenda, these factors and slogans can influence our thoughts and opinions, and shape our actions and decisions. Whether you are deciding to purchase stocks for your retirement fund, or reviewing arguments of a political nature, the selection process and your motivation to act is often influenced by factors of simplification and shared belief.

The crowd, and the crowd manipulator, seeks to reduce its message to the most popularly acceptable form, the lowest common denominator. The individual gives in to crowd mentality or the proclamations of experts and politicians when confronted with too much information and not enough time or reasoning ability to fully comprehend their message, its meaning, and its after-effects.

In time, the widely-held beliefs and slogans can drive a public spectacle, and all the reckless behavior that accompanies it. This holds true for politics, business, the world of finance and investments, and almost any area of human interaction and endeavor.


As the authors point out, the crowd is something that takes over in our minds and grabs hold of our passions. It exists within us, just as it coalesces outside into a raging mob. Learning to recognize the dangers of crowd thinking and behavior, as opposed to constructive voluntary group behavior, is essential to navigating a more successful course in our investments and our daily life.

If you are willing to reflect on this message, and are able to withstand the skewering of many of our society's deeply-held values and "truths", then you may enjoy this book.

Friday, February 22, 2008

Features of the week

Wow, we've got a lot in store for you in this Friday's edition of our, "Features of the week".

New highs for commodities, a bull market in Africa, interview clips with T. Boone Pickens and Marc Faber, and a whole lot more. So make yourself comfortable, and peruse these latest offerings of financial and cultural news. Enjoy!

1. Germany vs. Liectenstein: "Tax scandal has reached a new level".

For more on this issue, please see the following articles:

"Tax Evasion is German National Sport...", The Economist's report on tax havens and OFCs, "Places in the Sun", Ilana Mercer's, "The War on Tax Havens", Karen De Coster's 2003 article entitled, "Will Liechtenstein's Autonomy prevail?", and, "German Tax Bullies Attack Liechtenstein", from the Offshore Asset Protection blog.

After all, we promised you the bigger picture view.

2. Commodities mark time near peaks, as the CRB hits records highs.

3. Pickens expects oil, natural gas prices to fall. For now, that is. Boone expects oil to be back above $100 by the second half of the year.

4. Ron Paul reactivates GOP candidacy, vows to fight. (LA Times).

5. Marc Faber sees a bright future for Cambodia and investors.

6. If stocks are so cheap, why won't investors buy them?.

7. Africa has enjoyed a bull market in stocks in recent years.

8. Gold bull may have just two to three years left to run, says Paul Walker of GFMS. Hat tip to the Gold Equals Money blog.

9. Pimco's Bill Gross says the US budget deficit will hit $800 billion in due course. Meanwhile, the Mises blog wonders who benefits from all this debt and government spending.

10. Marc Faber tells CNBC Europe that emerging markets may be even more vulnerable to decline than US stocks. Hat tip to reader Diel.

11. Technical or fundamental analysis? Clif Droke offers a view of the markets which incorporates technical analysis, valuation models, and current sentiment.

12. Frank Barbera looks at the Financial Sense Junior Gold Mining Index.

13. The non-core of the issue: Core vs. non-core inflation.

14. "You can't turn back the ocean". Reason magazine interviews MTV's Kurt Loder about the collapse of mainstream media, the encroaching police state, and "the rising tide of free expression that can't be stopped".

That's all for this edition. Thanks for reading Finance Trends Matter.

If you'd like to keep up with all our regular posts, you can subscribe to our site feed or bookmark this site for future visits.

See you soon, and enjoy your weekend!

Thursday, February 21, 2008

Will US stocks go higher?

What could take the stock market higher from here?

I think this is a question that's had a few investors thinking lately. I know that I've been wondering the same thing, especially after hearing some of my favorite investment minds mulling this question over in recent days.

You may be bullish on the market, bearish, or indifferent, but it's still a rather interesting puzzle to look over. So I'm sitting here wondering, where do we go from here?

Recently, I looked at the cards in front of us and said, "Yeah, it's a bear market". No sooner had I uttered that, than others began looking for a rally, albeit one within the context of a longer-term (secular) bear market.

This was something we had to take seriously. After all, no market goes straight down without a fight. We are bound to get some rallies along the way, even if they don't take us back above previous highs.

But even if we re-enter a period where the Dow Jones Industrial Average is building strength and making new nominal highs, as it did from 2003-2007, we still have to ask ourselves how well the stock market is doing in terms of stronger currencies and gold.

Why? Because an extended rally measured in terms of a steadily depreciating currency, like the dollar, won't tell us much about how our investments are faring in real terms, as investor Marc Faber likes to remind us:

"So let’s say someone said the Dow will go up to, oh, I don’t know, double. Say for argument’s sake, from 13,000 to 26,000. We would have to measure that increase –this doubling of the Dow Jones – in a hard currency such as either a foreign currency or in gold.

And if the Dow doubles because of money printing by the Fed to 26,000, it wouldn’t mean necessarily that economic conditions improved, but it would mean maybe that inflation picked up dramatically and that the gold price goes up three times."

Now we have a bigger perspective of what an upward movement in the Dow might mean. So let's get back to the question at hand. What would cause stocks to move higher (or lower) from here?

Well, as we've seen from Dr. Faber's comments, some good old-fashioned money printing just might do the trick. But let's assume that easy money conditions are only a partial prop up for the stock markets in the near future. Maybe there is some good news ahead or improving fundamentals for business and the economy.

Could that be why, as Richard Russell has pointed out, the Dow Transports have been so strong after bouncing off their January lows? Are the Transports seeing better business and better days ahead?

Russell recently noted that certain parts of the economy were doing well (energy, agriculture, mining) while others were not, and that outright bears and bulls are likely to be frustrated by the movements of the stock market in coming months.

Similarly, investment manager and author Jim Puplava recently noted the overwhelmingly negative sentiments on the markets in his recent survey of articles and research reports. The dour tone eminating from his reading pile has made him wonder if it might be time to start looking at the value in blue-chip shares.

Combine that sentiment with the ongoing moves by sovereign wealth funds to invest in shares of leading Western companies, and you have what looks to be some measure of support for the shares of large, blue-chip companies.

Still, investors like John Hussman and Jeremy Grantham are not totally convinced that the overall stock market is attractive, and they both cite valuation as a main conern. Meanwhile, trader and technical analyst Frank Barbera has been talking about a possible breakdown in leading European market indices which could lead US stock markets in a move to new lows.

Tough stuff, and there are bound to be interesting times ahead, for sure. What is your take on the markets, and how will you position yourself for the months ahead? Interested to hear your thoughts, all.

Tuesday, February 19, 2008

Jeremy Grantham x 2

If you've already checked in on Monday's post, you probably noticed our mention of investor Jeremy Grantham's recent interview in Barron's.

Well, today we have two Grantham profiles for you: a link to his recent Barron's interview, and a profile of the famed Boston investor in today's Financial Times.

Grantham, a founding member of the Boston-based investment management firm GMO, is known for his ability to take an unpopular stance on the markets and stick to his guns, in spite of doubters and detractors. An excerpt from the FT piece illustrates this point:

"I remember when Jeremy made a stand against tech stocks in the late '90s, and was in the wilderness for what must have seemed like 50 years," says Jim Grant, founder and editor of Grant's Interest Rate Observer, who has known Mr Grantham for 15 years. "He lost many clients during that time, but he's a fighter, and just doesn't back down from a deeply held conviction. I think the British army lost a talented field general when Jeremy migrated to the States and took up finance."

So far all you fans of the "field general", here are two for you. Enjoy.

Monday, February 18, 2008

Monday - Global view

US stock markets are closed today due to the Presidents' Day holiday. Nevertheless, the rest of the world's markets are open for business, and that being the case, I had some interesting links and stories to share with you.

First off, I'm reminded, by the comments in our recent, "Features of the week" post, of two noteworthy weekly roundup posts that you may want to check out.

Kent at The Financial Philosopher offers up the latest edition of his "Weekend Wisdom" series, while Prieur du Plessis at Investment Postcards weighs in with a week-in-review of the financial markets in, "Words from the (investment) wise...". You'll find a lot of market data and investment analysis here; be sure to check out that Jeremy Grantham interview in Barron's that Prieur has linked to in his post.

And now, on to the stories of the day. We've got a few articles for you which will offer a view of what's happening in the global financial markets, and clue us in on what to expect in the days and weeks ahead. Stocks, commodities, Sovereign wealth funds: you name it, we've got it all right here.

"The great Indian stock market tumble".

"Platinum trades above $2,1000 an ounce in London".

"Copper rises to four-month high in London".

"Stocks rise in Europe, Latin America; Credit Suisse, Vale climb".

Sovereign wealth funds: al-Thani of Qatar Investment Authority speaks to Bloomberg about his nation's investments in European and US financial shares, and new investments in Finland and Malaysia.

Fintag on the UK's move to nationalize Northern Rock.

"Asian markets finish mixed".

"Africa sees bull stock market in recent years".

That's all for now. Tune in tomorrow for more on the markets, and later this week we'll be taking a look at the factors that could push the US stock market higher or lower in the weeks and months ahead. See you then.

Friday, February 15, 2008

Features of the week

We have a lot of great stuff to share with you in this weekend's edition of, "Features of the week".

From the high price of platinum, to a sit down with investment author and historian Peter Bernstein, you're sure to find something of interest here. So read, watch, and enjoy!

1. Warren Buffett's bid for municipal bond contracts guaranteed by MBIA, Ambac, and FGIC was one of the biggest business news stories this week. Some say the plan will save the muni market, and doom MBIA & Ambac.

2. Jim Chanos talks to Bloomberg News about regulations constraining investment managers in the midst of the ongoing credit crisis.

3. Investor, author, and historian, Peter Bernstein is interviewed for FT's View from the Markets program.

4. Will the UK housing market follow the US? UK house prices have surpassed US prices both in absolute terms and relative to income.

5. China spurs coal-price surge. Yes, this is likely to affect Europe and the US; some background info on this topic.

6. New era dawns for rail building, at least in America.

7. The Frightful Face of Stimulus. The return of populism and New Deal politics.

8. Essential texts on Austrian economics? Ten books to read, for free.

9. Did you miss part of the recent 2008 Barron's Roundtable series? No sweat, we've got you covered, courtesy of Barron's Online.

10. Very high quality gems and diamonds continue to bring high prices from rich buyers in Asia, Middle East, Russia, and the West.

Fears of inflation and a preference for tangible assets have driven the trend in recent years, much like the diamond boom of the late 1970's and early 80's.

Still, many say would-be investors should beware. For instance, take this 1982 article in The Atlantic, entitled, "Have you ever tried to sell a diamond?".

11. Platinum hits a new record high. Platinum keeps outpacing palladium in terms of price gains.

12. Jim Rogers interview with Resource Investor: Where to Put Your Money. Hat tip to Kaspar's Market Insights.

13. A profile of the renowned trader and forecaster, W.D. Gann, published in 1909 by "The Ticker and Investment Digest" (later known as the Wall Street Journal).

14. Dumb and dumber: are Americans hostile to knowledge?

15. Is college a waste of time and money? Fascinating discussion of James Altucher's recent FT column at Controlled Greed.

16. Who am I? The Financial Philosopher on emotional intelligence and learning.

Thanks for reading Finance Trends Matter. If you've enjoyed this week's posts, why not share our blog link with a couple of friends?

You can also subscribe to our site feed, or bookmark this site for future visits.

Do you have any comments or suggestions regarding the site? Let us know; we're listening.

Enjoy your weekend.

Thursday, February 14, 2008

2008 Barron's Roundtable review

For anyone who didn't get a chance to fully read the three-part 2008 Barron's Roundtable issues, we're posting them here. All three parts from Barron's Online.

You may want to bookmark this post and refer back to it at your convenience. Especially if you missed out on one or two of the January Barron's Roundtable issues, as I did. Now let's get started with a quick overview of what you'll find inside.

First off, the Roundtable participants. Regular readers of the Barron's Roundtable will note that 2008's panel is made up of most of the usual suspects. Namely, Marc Faber, Art Samberg, Oscar Schafer, Felix Zulauf, Archie MacAllester, Meryl Witmer, Abby Joseph Cohen, Bill Gross, Scott Black, Mario Gabelli, and Fred Hickey.

An all-star cast, no doubt, but I'm sure that, like me, you have your favorites among this crowd. So let's jump in and get an idea of what each of them are saying in this year's Roundtable.

This year's Roundtable found most of the participants rather bearish on the markets and the economy, at least as far the first part of 2008 is concerned.

Part I introduces us to the overall sentiment that prevailed at this year's panel, while offering investment ideas from Bill Gross and Oscar Schafer. You'll also find online videos with Bill Gross and Oscar Schafer, sharing their ideas with Barron's reporter Michael Santoli.

Part II brings us the investment ideas of Art Samberg, Meryl Witmer, Fred Hickey, and Mario Gabelli. Samberg's picks for 2007 turned out to be big winners overall, with a few individual picks yielding triple-digit returns and only one significant loser among them.

Fred Hickey was defending a couple of prominent tech-stock shorts in Apple and Research in Motion that would have been very painful to keep on, had he been short the stocks themselves with no stop limits. Both stocks went up over 100 percent from their January 2007 price when the shorts were put on.

Fortunately for Fred, his short trades were executed through puts. The "four horsemen" of tech have started breaking down since last December, but are still far above their price of early 2007. His long positions in Gold and Silver ETFs fared much better.

Meryl Witmer notes that she's having an easier time finding value in this market, and Mario Gabelli offers his picks as well. Video clips of Witmer, Hickey, and Gabelli are included.

Part III, the final issue in this year's Roundtable series, highlights the market outlook and investment picks of Scott Black, Abby Joseph Cohen, Felix Zulauf, Marc Faber, and Archie MacAllester.

Zulauf was flawless in last year's Roundtable; all his long picks yielded healthy gains. We look forward to tracking his ideas from 2008 as the year progresses.

Marc Faber added some interesting ideas, as always. This year's picks highlighted currency trades and the future investment potential in Cambodia. Archie MacAllaster likes financials and a leading natural gas play. Video clips of all these panelists are included.

You'll find everything in the issue links above, including the scorecard for each investor's picks at the 2007 Roundtable. Enjoy.

Tuesday, February 12, 2008

Healthy habits, longer lives

A report out today on health and longetivity shows certain health habits are associated with longer lives in men.

Want to know more? Here's an excerpt from the article, "Men Who Maintain Healthy Habits Lead Much Longer Lives ".

"BOSTON, Feb. 12 -- The same lifestyle-related factors that help men survive middle age also help them stay healthy to age 90 and beyond, researchers here said.

More than half of men in their early 70s who exercised regularly, were not obese, didn't smoke, and didn't have diabetes or high blood pressure survived to 90, reported Laurel B. Yates, M.D., M.P.H., of Brigham and Women's Hospital, and colleagues in the Feb. 11 issue of Archives of Internal Medicine."

I've included this article today because, as the saying goes, "health is wealth". And monetary wealth and achievement may often turn out to be less meaningful or enjoyable in the absence of good health.

The study's researchers note that while the findings here are not surprising, they are reassuring, and imply that healthy habits seem to improve quality of life in old age.

"Modifiable healthy behaviors during early elderly years ... are associated not only with enhanced life span in men but also with good health and function during older age," the researchers said.

Quants and other statistically-inclined people will appreciate the numbers breakdown on health risks and survival statistics in older men included in the article. No fluff for my readers!

So have a look at this article, and check out the interview with researcher Dr. Laurel Yates in the attached audio clip. Good health can pay dividends now, and when you're old.

Monday, February 11, 2008

Active Value Investing: interview

Vitaliy Katsenelson, author of the book, Active Value Investing: Making Money in Range-Bound Markets, was recently interviewed by the Financial Sense Newshour.

What is "active value investing"? Author Katsenelson and FSN host Jim Puplava delve into that topic at length during the interview, but here is a brief introduction to the ideas Katsenelson presents.

"For the next dozen years or so, the U.S. stock market will be a wild roller-coaster ride—setting all-time highs and multi-year lows in the process. While the twists and turns of this ride are still to be written by history, the long-term, sideways "range-bound" trajectory has already been set by the eighteen-year bull market that ended in 2000. When the dust settles, only those who adapted their investment strategies to this range-bound market will have captured any meaningful profits."

If you'd like to know more, just click on the Financial Sense interview link above and select your preferred audio format.

There are some worthwhile ideas and concepts presented here, and it may challenge you to shift your outlook for stock investments in the coming years. Enjoy the discussion.

Friday, February 08, 2008

Features of the week

Are you in the mood for a little weekend reading? Good, because we have some great stories and interview clips for you today. Enjoy our, "Features of the week".

1. Congress passes $168 billion "stimulus" package. Yep...

2. Please don't help. "Mr. Practical to the bureaucrats: don't try to fix the markets".

3. The rogue rebuttal. Questions over Société Générale's role in the Jerome Kervail "rogue trader" scandal. More on the unfolding drama from FT.com.

4. Financial Sense Newshour "Energy Roundtable" interview with Matt Simmons, Dr. Robert L. Hirsch, and Jeffrey G. Rubin.

Check this one out. There were some very interesting points made about the economics of finding and producing oil. It is, as far as we know, a finite resource (something economists tend to overlook).

5. So you want to be in charge of monetary policy? Bloomberg's Mark Gilbert on how to be Federal Reserve Chairman.

6. Chapter II: A commerical real estate bust. The Journal thinks the commercial real estate sector might be in trouble.

7. More Fun with the S&P Case-Shiller index. Tim Iacono looks at the economy and home prices.

8. Is natural gas an undervalued commodity? Elliot Gue thinks so.

9. Biofuels deemed a greenhouse threat. Yeah, we know.

10. Khodorkovsky still defiant. Mikhail Khodorkovsky in a face-to-face interview with the Financial Times, his first since 2003.

11. Putin: Russia will match West in new arms race.

12. Controlled Greed points to a Forbes profile of "Superinvestor" Walter Schloss. He's thrifty, follows simple investment guidelines, and loves simple pleasures. My kinda guy.

Thanks for reading Finance Trends Matter.

If you've enjoyed our posts and would like to visit us again, you can subscribe to our blog feed, or bookmark our site to your favorites folder or your favorite social bookmarking site.

Enjoy your weekend!

Thursday, February 07, 2008

Charts: dollar, bonds, PMs

Bear Mountain Bull has got a few interesting charts up for us in today's "Chart Chatter" post.

For technical commentary on the US dollar ($USD), 30 year Treasury bond yields ($TYX), and the precious metals, gold and silver (GLD, SLV), head on over and check it out.

Plus, you can always head on over to the Bear Mountain Bull blog for end-of-day commentary on US trading and updates on market news throughout the day. If you're curious to know how things are looking in the markets and the economy, BMB offers an individual investor and trader's perspective. Check it out.

Wednesday, February 06, 2008

China's gold rush

You may have seen the item in last week's Features post describing China's recent climb to the top in global gold production.

While the Mineweb article cited China as the world's number 2 producer, just behind South Africa in terms of gold production, a recent Financial Times article holds China up as the new number one producer of gold.

Here are some excerpts from the FT article, "Rewards spur China gold rush".

"China’s mini-gold rush made it the world’s biggest producer in 2007, the first time any nation has surpassed South Africa since the late 19th century.

“Because of the higher gold price, companies with enough capital are lifting production,” said an official of the China Gold Association, citing one mine in Shanxi province planning to quadruple output over the next two years.

Gold production in China rose by 12 per cent to reach 276 tonnes in 2007, according to GFMS, the London-based precious metal consultancy, ahead of South Africa, with 272 tonnes."

An accompanying map shows the existence of gold mines spread throughout the large country, and the article states that China, "has more than 1,300 licensed gold mines and more than 1,000 gold mining companies, according to official figures".

Much of the gold production comes from "small, semi-private mines" which mine low-grade ore, now profitable due to recently higher gold prices. It is also noted that the lack of environmental regulations, compared to those prevailing in western countries, has helped to reduce costs for the mining companies.

The situation seems somewhat reminiscent of the Chinese coal-mining industry, with its many small-scale mines and environmental hazards. An overwhelming number of mine accidents and fatalaties in recent years led to increased media scrutiny of China's coal mining industry and calls for tighter regulation and closure of unsafe, and often unlicensed, mines.

While China's metals mining industry has yet to draw any similar comparisons, we do have to wonder when concerns about the environmental toll from metals mining will start to mount.

Pressure over environmental regulations, along with the exhaustion of smaller, less sustainable deposits, may lead to widespread consolidation in the Chinese gold mining industry over the next several years. It may be that larger companies with wider project portfolios would have an easier time dealing with regulatory measures and associated costs than companies centered around smaller mines.

Will mid-size and large-scale gold producers come to dominate the country's metals mining industry? Or will the precious metals mining industry stay relatively fragmented, with many smaller producers? It will be interesting to see how the future of metals mining in China plays out.

For more on the current and future state of Chinese and global gold production, please see Hard Asset Investor's recent article, "Gold Mining Output 2008".

Sunday, February 03, 2008

Future of Yahoo! Finance

Ever since Microsoft's $44 billion bid for Yahoo! was announced last Friday, I can't help wondering (along with the rest of the blogosphere) what will happen to Yahoo's highly prized web properties, particularly Yahoo! Finance.

Will a MSFT/YHOO merger kill Yahoo! Finance as we know it? In spite of our recent tirades against changes to the Finance portal, it still remains one of the most widely used investment sites on the web. If you're a fan of the site, you have to wonder about any further changes that may come about through a union with "big Red(mond)".

Now Microsoft is no stranger to the personal finance and investment game. Their MSN Money portal has long been a popular destination for investors, and the MSN stock screener deluxe tool is one of my personal favorites. Plus, if memory serves, MSN Money was further ahead in the adoption of interactive stock charts.

But these points are likely to provide little comfort to long-time users of Yahoo Finance, who may be hesitant to use Microsoft services. Some users may just want to know if their watch lists and other commonly used features will remain the same.

One thing is sure, most observers that I've read seem to think that this proposed deal is a likely wreck, for both the companies and the users of popular Yahoo services. Here's how one commenter at the Big Picture blog put it:

"Finally, the word I've gotten from every techie I've talked to is that the proposed MS/Yahoo merger is a train wreak. Personally, I think it's as good an idea as Mercedes buying Chrysler. It will destroy Yahoo, and do very little for MSN, of that I have little doubt.

Yahoo is programmed on a COMPLETELY different platform, and forcing a change (and MS will force) will send the vast majority of Yahoo programmers, in my opinion, elsewhere - voluntarily or involuntarily. To quote some of my friends, I don't see how two mediocre products add up to a good product. I fear Yahoo Finance will suffer."

I guess it's too early to tell what will happen now. Especially since Google is said to have entered the picture in a proposed alternate alliance with Yahoo.

We'll try to keep tabs on the situation, and hopefully some of our more tech-savvy readers will help keep us informed. In the meantime, here's a further sampling of views on the proposed Yahoo-Microsoft deal.

"Microsoft-Yahoo could skip culture clash" - BusinessWeek.

"Privacy groups vow to fight Microsoft Yahoo deal" - ITworld.com.

"Yahoo may consider Google alliance, source says" - Reuters.

"Comparing Yahoo's and Microsoft's services" - Center Networks.

"And then there were two..." - Erik Selberg.

Friday, February 01, 2008

Features of the week

Microsoft makes an unsolicited offer for Yahoo!, dealing with recession, and a few words with famous investors Jim Rogers and Julian Robertson. Coming up in our, "Features of the week".

1. Microsoft makes an unsolicited $44.6 billion offer for Yahoo! in an attempt to challenge Google's search dominance.

2. Jim Rogers speaks with Bloomberg about commodities and the reckless Fed, who are "debasing the currency" and making the same mistakes that the Japanese have made.

3. Ahh...politics. After bickering back and forth for weeks, Obama and Clinton say, "let's be friends". The Democratic candidates have plotted a change in strategy and now wish to highlight the incessant bickering between Republican frontrunners.

4. Tiger's Julian Robertson roars again. Fortune profiles the retired hedge fund star and his recent success out of the limelight.

5. Two billionaires describe our outlook. Lamont Trading Advisors match up with George Soros and Julian Robertson on bonds, interest rate views.

6. Real investment tax rate is 256% higher than stated, says Daniel Amerman.

7. Last year's model: stricken US homeowners confound predictions.

8. Financial Sense Newshour interviews Dick Davis, author or The Dick Davis Dividend.

9. Vulture investors circle. Warren Buffett, Wilbur Ross, and Ron Perelman seek bargains in the financial industry's fallout.

10. China is the world's second largest gold producer, just behind South Africa.

11. Hedge fund manager Bill Ackman has been betting against MBIA and Ambac for some time.

12. Dealing with Recession. An Austrian's view, by Clifford F. Thies.

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Thanks for reading Finance Trends Matter, and enjoy your weekend.