10 Apr 2009

Posted at 16:30h in The Friday Brief by
In the process of investing we spend a great deal of time in linear thinking. We measure, we weigh, we time, and we project. We draw lots of lines as we make our assertions and projections. The regulatory agencies require us to disclaim that past results do not guarantee future results, but we all, to various degrees, subscribe to that very notion. The multi-billion dollar marketing machine we’ll simply call Wall Street spends millions of dollars a day drawing lines which analyze, dissect, compare, measure, and highlight past results. There is an implication that the more colorful and complicated these reports are the better equipped we are to decide their appropriateness for the future.  

03 Apr 2009

Posted at 16:33h in The Friday Brief by
There are two categories of policy available to the government to influence an economy; monetary and fiscal. Fiscal policy employs government spending and taxation. Monetary policy, primarily overseen by the Federal Reserve and the Treasury is used to control and manipulate the supply and the cost (interest) of money in order to regulate the growth in the economy and the stability of prices. Of the nearly $12 trillion lent, promised and spent so far, Fed Chair Ben Bernanke’s program to drive down mortgage rates is delivering on its promise. Fixed 30-year mortgage rates are now down to 4.78% according to Freddie Mac. They are down for the second week in a row.

27 Mar 2009

Posted at 16:36h in The Friday Brief by
This was a good week from both the perspective of strong new monetary remedies as well as economic indicators that the economy may be turning. On Monday, Mr. Geithner knocked one out of the park (market-wise) when he announced his plan to buy as much as $1 trillion of bad assets from banks and avoid nationalization. Bond fund giants Pimco and Blackrock and others say they will participate in the plan. Economic reports on housing and durable goods also added to the prospect that the fourth quarter’s slide of 6.3% might have been its worst.

20 Mar 2009

Posted at 16:44h in The Friday Brief by
Today, there is a strongly held belief that financial markets are efficient. The efficient market hypothesis maintains that prices of traded assets such as stocks, bonds, or property adequately reflect the sum of all known information at any given point in time. With today’s rapid flow of information, we see prices adjusting ever more quickly and with greater volatility. The hypothesis also asserts that it is impossible to consistently outperform the market by using any information the market already knows, except through luck. There are strong and passionate opinions on both sides of this hypothesis and it is not our goal to defend or to debunk them today. Rather we aim to point out that because of the widely held belief in market efficiency there are some exciting opportunities that have strong potential if we lengthen our timeframe beyond nest week or next year. We want you to know about them.