A buying stampede happens when a whole bunch of investors and speculators all decide at once that a market is moving and they have to get aboard, now. We saw something like that recently when despite a poor jobs report, no inflation pressure, Fed waffling on QE2 and other ambivalent news, the stock market started heating up. There are a lot of underinvested or un-invested people who decided this was what they were looking for, proof that the coast was clear to begin investing in this ongoing bull market. Sure stocks are up 70% from the bottom eighteen months ago, but there is a good argument why it should keep going up. The argument goes that the Fed will engineer what looks a lot like stockholder nirvana, lower rates, mild inflation, better growth, a lower dollar and yet not inhibit strong earnings (if you believe that, we’ve got some real estate we’d like to sell you just as soon as the tide goes out.) Read more

We hope you enjoyed your Labor Day weekend.

A while back, I was thumbing through my bookshelf copy of Graham & Dodd’s classic text, Security Analysis, first authored in the 1930’s.  Coincidentally, this was just before the recent Wall Street Journal article declaring the “Decline of the P/E Ratio,” among other articles that occasionally allude to their work.  Strangely, the two seem to be most readily acknowledged either in times when they’ve been dismissed as passé, out-of-step with cutting-edge quantitative techniques, or, conversely, their traditional and straightforward ways of looking at the world have been “rediscovered” by investors discouraged by complicated modern methods. Read more

Summer Is Almost Over, Thank Goodness!

We’ve just past an anniversary. It might have been in May but more likely in June or July. Our economic recovery is now a year old, hard to believe since there is about as much angst about the economy now as there was a year ago or two years ago. Most people in the investing world worry about the economic future all the time, but usually the worry is about just how fast we’re growing. Today the worry is whether or not we’re growing. This whole debate misses one very important point, we’re still growing! Read more

Investing is a confidence game. Without a certain expectation of return, no one will defer current consumption and invest for future consumption. Currently, we are being overwhelmed by a lack of confidence in that return. People have been fed a fairly steady diet of bad news about nearly everything and never given the whole story in such a way as to increase that expectation of return. It was Will Rogers who quipped “I’ve stopped worrying about the return on my money. Now I just worry about the return of my money.” We all have a piece of Will Rogers in us these days. But, the big question is whether that attitude is warranted and will it continue? Read more

As Herb Stein Might Say

Let’s take A Look at Our Cumulative Debt. The topic seems to be much in the news, so maybe a little data would help understand just where we are. Read more

We have been getting a little short-term focused in recent missives. We apologize for this short-coming. We really need to think and act long-term all of the time. What does it mean to think and act long-term? Well, not everyone has the same idea about that, but here is ours: don’t worry about the short-term outlook, worry about meeting long-term goals. No one is going to meet their long-term goals by sitting in cash, especially at 0.10% yields. Very few people are going to meet their long-term goals by buying bonds with coupons of 3%, especially when you have to pay a premium to get them. The math just doesn’t work that way. The only way for anyone with a long-term return requirement of 6% or 7% is going to meet that goal is by owning stocks, real estate and commodities most of the time. Read more