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Showing posts from August, 2008

Features of the week

Please enjoy our, "Features of the week".

1. US Q2 GDP revised up to 3.3% on higher exports, spending.

But is the BEA measuring growth or inflation?

2. As the credit crisis continues, consumers will be forced to save.

3. Merrill losses wipe away longtime profits.

4. Credit crisis has produced some surprising winners and losers.

5. Derivatives law sheds light on the financial ripple effect.

6. Pressure mounts on Thailand's PM as protests spread.

7. Reports of Steve Jobs' death are greatly exaggerated.

8. Economist: Is farmland overvalued?

9. FT dopes out the long-term outlook for emerging markets.

10. China's tallest skyscraper meets surging office demand (video).

11. Skyscrapers and Business Cycles - Mark Thornton.

12. Cambodia is building up its economy and attracting investors.

13. Mark Mobius finds Vietnam's stock market attractive.

14. Brother, can you spare some gold coins?

15. "GSEs: too big to survive", says Michael Pento.

Thanks for reading Finance Trends …

Commodities and post-Olympics China

Monday's notes regarding Jim Rogers' views on oil and commodity prices left us with a few questions about the state of the long-running commodity bull market.

Here's how we left off Monday's post:

"Did the recent, sharp summer correction in oil and resource prices mark the end of the 2000s commodity boom, or will the drop seen in leading commodity indexes such as the GSCI and CRB turn out to be a cyclical down move in a continuing, long-term bull market?"

Today we're going to try and answer some of these questions, while also looking at the prospects for China's post-Olympics economy, since China's growth has played such a large role in fueling the rise in commodity prices this decade.

First off, how is China's economy doing and what is the overall economic effect for a country hosting the Olympics?

Historically, economic benefits to host countries have been small, and most observers would regard the national financial impact of an Olympics host…

Jim Rogers: Oil rise will continue

Jim Rogers is on record as saying that the rise in oil prices should continue over the coming decade.

In a recent Bloomberg article, Rogers reiterated his call for higher oil and commodity prices over the next several years.

"Investor Jim Rogers, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, said Aug. 23 that crude oil prices will climb.

``Over the course of time, it's a bull market,'' Rogers, 65, chairman of Rogers Holdings, said after an investor conference in Kuala Lumpur. While oil could fall to $75 or rise to $175, prices will appreciate during the next 10 years, he said."

Did the recent, sharp summer correction in oil and resource prices mark the end of the 2000s commodity boom, or will the drop seen in leading commodity indexes such as the GSCI and CRB turn out to be a cyclical down move in a continuing, long-term bull market?

More on this to come.

Features of the week

Hope your Friday is going well. We have some great articles and video features to help start your weekend in our, "Features of the week".

1. US stocks gain on Lehman buyout rumors (the "good" kind of rumors).

2. Investors quit Russia after Georgia war.

3. Nonidentical twins: solvency and liquidity.

4. Three hours with Warren Buffett: CNBC videos and transcripts (Thanks, BMB).

5. Lessons from Warren Buffett and Charlie Munger.

6. In defense of short-selling: Doug Kass.

7. Key to happineness is freedom, not income.

8. "Thinking outside the game" - The Financial Philosopher.

9. Charlie Rose speaks with artist, Francesco Clemente (Thanks, Luke).

Thanks for visiting Finance Trends Matter. Enjoy your weekend, and stop by often.

Lessons from Charlie Munger

Yesterday's post, "Lessons from Warren Buffett", highlighted some of Buffett's shared wisdom on business and investing.

In today's post, we will learn from Buffett's long-time friend and business partner, Berkshire Hathaway Vice-Chairman, Charlie Munger.

While Charlie Munger is not as well known as Warren Buffett, his thoughts on investing, education, and life are highly prized by those who have followed his investment career. Shareholder meetings for Berkshire Hathaway and Wesco Financial Corporation, of which Charlie is the chairman, have yielded many valuable insights from Mr. Munger over the years.

This video conversation with Charlie Munger (click #1 in the iTunes playlist or watch on YouTube), filmed at Caltech in March of 2008, is testament to his unique thinking. Here, Munger shares his thought process with students and viewers, and challenges us to think across disciplines. 

Some important points made by Munger in this discussion: 

·Humility was a proble…

Lessons from Warren Buffett

We seem to be starting something of a value-investor's symposium this week, and you'll see why I say that as we get into today's post.

On Monday we featured the writings and interview thoughts of noted value investor Seth Klarman.

Today's guest of honor in our developing blog lecture series is Berkshire Hathaway chief Warren Buffett, an investor who, for most Americans, requires no further introduction.

Yet it is fair to say that Buffett was not as well known in international investment circles until a recent business trip to Europe this past spring, where he announced that Berkshire Hathaway would begin stepping up its investments and business acquisitions in certain foreign countries where business conditions were favorable.

At that time, Buffett gave a series of press conferences at each stop along the way through Europe. Today, we will outline some of the lessons learned from a press conference held for Buffett in Lausanne, Switzerland.

In this Bloomberg video clip,…

Seth Klarman: Margin of Safety (pdf)

Welcome, readers! Signupfor free email updatesat the Finance Trends Newsletter.

Update: PDF links removed due to DMCA notice. Please see our extensive Klarman book notes below. New visitors, please check the Finance Trends home page for all new posts.

Here's something for anyone who has been trying to get a look at Seth Klarman's now famous, and out of print, 1991 investment book, Margin of Safety

My knowledge of value investing is pretty much limited to what I've read in Ben Graham's The Intelligent Investor (the book which originally popularized the investment concept of a "Margin of Safety"), so check out the wisdom from Seth Klarman and other investing greats in our related posts below.

You can also go straight to Ronald Redfield's Margin of Safety book notes

Related posts:

1. Seth Klarman interviews and Margin of Safety notes

2. Seth Klarman: Lessons from 2008

3. Investing Lessons from Sir John Templeton

4. Lessons from Hedge Fund Market Wizards: Ray D…

Features of the week

Note: Apologies to readers for the late appearance of this week's Features post. I had started working on this one earlier Friday morning, but had to hold off publishing until now in order to finish other posts and tasks.

Please enjoy our, "Features of the week".

1. Georgia forced to accept a Russian occupation.

See also: "Russia's concept for dominating Europe", and "Georgia crisis comes in middle of new great game".

2. Gold, oil slump, leading commodities drop as dollar rallies.

3. Commodity correction: coming into an important bottom?

4. Mohammed El-Erian says the credit crisis is morphing into something much bigger (Bloomberg audio interview).

5. John Authers on signs the credit squeeze will get much more painful over the next year.

6. Rising profits in FASB wonderland...or "Wimpy's rule".

7. Hunter, Touradji hedge funds gain as commodities sink.

8. Banks and Brokers: exposure to Level 3 assets (charts).

9. Suburbia comes to China (For…

Review: Profit from the Peak

Are we nearing the end of the Oil Age?

Is the end of a cheap fossil fuel era at hand? How will we make the transition from a world dependent on hydrocarbon energy to one powered by a mix of hydrocarbons and renewable energy, and can we profit from this coming shift?

Answers to these questions, and further insights into our oil-dependent global economy, are found in a new book by Brian Hicks and Chris Nelder, entitled, Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century.

The Oil Age: An Epochal Shift

The book opens with an elegy to the end of an age: the Oil Age. As the authors tell it, that era recently came to an end when the world consumed its one-trillionth barrel of oil. By the end of 2005, we had used up half of the world's known oil reserves.

What's more, with global oil consumption growing steadily to over 85 million barrels a day, the world has, "only about 30 to 50 years' worth of oil left at present rates of consumption". …

Interview: Profit from the Peak

I am currently reading and taking notes on Brian Hicks' and Chris Nelder's new book, Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century.

The notes are for an upcoming review of the book, which I'll post here tomorrow or early next week (depending on when I can finish it).

In the meantime, those of you interested in the subjects of peak oil, energy investing, and the transition from fossil-fuel energy to alternative energy might enjoy this recent interview with the book's co-author Chris Nelder.

Nelder recently spoke with the Financial Sense Newshour about the looming peak in crude oil production and the investment and lifestyle implications of this event.

While most of the interview seems to focus on the energy background side of the equation, rather than the investing side, I think you'll find a useful introduction to many of the book's concepts here.

Matthew Simmons: Energy still cheap

Matthew Simmons, chairman and CEO of Simmons & Company International, is a noted energy investor and chronicler of peak oil. His 2005 book, Twilight in the Desert, argued that Saudi oil reserves were overstated and that the world was reaching an iminent peak in crude oil production capability.

Simmons appeared on the Financial Sense Newshour last week for an interview about oil production and the future of energy prices.

In, "Energy: It's Still Cheap", Simmons and FSN host Jim Puplava discuss the possibility of coming oil shortages, as well as options for mitigating future energy crises through conservation methods and lifestyle changes.

Looking at prices in Europe and much of the rest of the world, Simmons notes that oil is still relatively cheap in America, despite Americans' growing outrage over steadily escalating oil and gasoline prices.

How will we cope with $9 or $10 per gallon gasoline prices and the possibility of future supply disruptions in an oil-depen…

Features of the week

Ready for news? Get set for our, "Features of the week".

1. US stocks rise, S&P posts best week since April as oil falls.

2. Emerging market shares drop to 1-year low as Russia, China fall.

3. Ford, GM survival odds deteriorate with the economy.

4. Where is the discount window for taxpayers? Protest at the Fed.

5. Marc Faber says we have entered a global recession (Bloomberg).

6. Commodities tumble as CRB index hits a four-month low.

7. America's smartest banker. How come Hudson City Bank is thriving?

8. Hermance says this credit crunch not the worst he's seen.

9. Niall Ferguson: How a local sqaull might become a global tempest.

See also: FT's in depth look at the credit crunch, "The Big Freeze".

10. A personal view of the crisis: Confessions of a risk manager.

11. War erupts in Georgia. Fighting between Russia and Georgia underway.

12. FT takes an in depth look at the Beijing Olympics 2008.

13. Hospitals and health care: EconTalk interview with Arnold Kling.

14.…

Responding to bear market conditions

We talked about the continuing global bear market in equities on Monday, but there was an important corollary to this discussion that was not addressed (we will address it here now). The question is this: how do you, as a trader or investor, respond to bear market conditions?

To spur your thinking on this subject, I will present two very different views on how investors might respond to the same bear market conditions. In the following passages, Bennet Sedacca of Minyanville, and Kent Thune of The Financial Philosopher, share their thoughts on planning for and investing through the bear market portion of market cycles.

As you read this, think about which of these perspectives works best for you. Do you try to identify and capture the various trend and counter trend moves, adopt long/short investment portfolio and trading strategies, time the market (through charting and historical data referencing) and attempt to avoid bear phases altogether, or continue to invest with a well-thought o…

A global bear market in shares

The global bear market in shares continues, as Bloomberg reports that nearly all of the countries in the MSCI World Index and MSCI Emerging Markets Index have entered bear market territory, as they define it.

"All of the 23 developed nations in the MSCI World Index except for Canada have experienced bear-market plunges of 20 percent or more since September as credit losses surged and record commodity prices stoked inflation. Brazil last week became the 23rd out of 25 developing countries in the MSCI Emerging Markets Index to enter a bear market. Only Jordan and Morocco avoided such slumps."

Of course, Bloomberg, like almost everyone else these days, is using the 20 percent rule (a drop of 20 percent from the price high) as their threshold for determining bear markets. Of course, if you're using this arbitrary marker as a guideline, you're likely to find that you've already seen (and sat through) a substantial portion of the average bear market decline.

So let'…