Finance Trends Letter

Well I'm a bit skeptical that any modern news outlet will accurately pinpoint the true value of gold , but let's give the Financial Times points for trying in this latest piece (hat tip: James Rickards ): " The Baird & Co warehouse sits in a dreary business park, half a mile east of London’s City airport. A black Mercedes and a blue Jaguar near the entrance are the sole touch of glamour. Step inside, and men in overalls are fashioning medallions, bars and rings from molten gold, purified in vats next door. From an office upstairs, Tony Baird, the company’s managing director, and a former coin dealer, presides over the hubbub. “Gold is stable,” he says. “It’s the value of money that goes up and down.” Baird & Co sells gold to everyone from pension funds to jewellers, and as the MD says: “Our machines can’t work fast enough these days...” Gold is still hot with investors, especially with leading hedge funds who have entered the trade in recent years, and with...

Last Friday, StockTwits announced they would partner with SecondMarket , an independent marketplace for private company stock and illiquid assets, to provide an expanded new commentary stream for discussion on private companies . Some thoughts from Howard Lindzon on the new partnership: " I love stocks and I LOVE investing in startups. About 8 months ago I started calling Facebook $ fbook and Twitter $ twit when I tweeted. I felt the IPO market was struggling and it would be cool if Private Companies had a lightweight exchange or center of conversation to point people too to learn about them in real-time. A place where employees and investors could get a pulse of what people were saying about private companies. It would be cool for the Companies and REALLY COOL for STOCKTWITS is we could own all the company conversations on twitter. When I had the idea and Fred Wilson noticed me doing it, at least he thought so and his hunches are better than mine. Through a partn...

Nassim Taleb, author of Fooled By Randomness and The Black Swan , joins Russ Roberts at EconTalk for a discussion on Black Swans, Fragility, and Mistakes . You'll find an audio podcast of the interview, along with a transcript and some related articles & links, at the link above. Be sure to check out this very worthwhile and wide-ranging discussion on the nature of debt, robustness in Mother Nature versus lack of robustness in certain man-made systems, and the harm that is levied on society by its overreliance on forecasting and vulnerability to the large mistakes made by "expert" forecasters who are not held accountable for their hubris and error-prone guidance. Here's a choice quote from Taleb on the difference between small, relatively inconsequential mistakes and large-scale mistakes which impact the greater society: "I want to live in a society in which human error doesn't penalize the multitude. This is pretty much my mission for the rest of my lif...

Bank fees and ultra low interest rates continue to hit US savers hard. Bloomberg has the story in, "Savers Pay Banks to Keep Cash as Rates Dip, Fees Rise" : " It’s getting tougher for U.S. savers to find a bank where they won’t end up paying to keep their money safe. The average interest paid on savings, checking, money-market and certificate of deposit accounts fell to 0.99 percent in July, the first dip below 1 percent in a decade, according to researcher Market Rates Insight. Banks also have been raising fees and adding new ones, most recently in response to the financial-services overhaul bill that became law July 21. The result is that an increasing number of savers are seeing their deposit earnings eaten up by charges. That’s frustrating people like Ken Ward, who recently passed on a savings account with a 0.01 percent interest rate at the Chase bank branch near his home in Wantagh, New York..." As if years of hyper-spending and livin...

Nice inspirational article from IBD on Pete Sampras' quest to find his winning edge : " In a career defined by victories, Pete Sampras learned his most valuable lesson in defeat. At 19 years and 28 days, Sampras made a global splash by becoming the youngest men's champion of the U.S. Open in 1990. For the next two years, he was ranked as high as sixth in the world. He was making a good living and was content with his career. Then came the 1992 Open final. It was Sampras' first Grand Slam title match since his 1990 breakout. This time he lost to Stefan Edberg. Sampras usually stayed even-keeled even after a defeat, but the way he lost ate away at him. "You know as an athlete when you're fighting hard or not. All I did was just sort of play. I didn't dig deep. I didn't fight hard. I felt mentally I just sort of gave up," Sampras, 39, told IBD. For the next few months, that loss stayed with him. "It bothered me to the point where it w...

Financial Times sits down to lunch with Adam Fergusson , author of the newly revived classic, When Money Dies , a social history of the Weimar hyperinflation. Fergusson's 1975 book has recently been republished to sate demand from a new generation of investors eager to learn the lessons of Germany's inflationary catastrophe. In fact, recent reports that the book had been recommended by none other than superinvestor Warren Buffett (a rumor later reported to be false) seemed to stoke readers' demand. Author Fergusson notes that Mr. Buffett is now in possession of a copy, so it will be interesting to see if the lessons of Weimar Germany take hold and influence Buffett's thinking on our own inflationary path and the ability of central planners/bankers to manage our monetary affairs. An excerpt from FT's interview with Adam Fergusson : " Fergusson wrote When Money Dies in the early 1970s when the British economy was buckling in the wake of the first oil shock – w...

Jeff Watson recently posted a Mises Institute video discussion of Henry Hazlitt's classic text, Economics In One Lesson. You can read Hazlitt's wonderful primer on economics for free online (PDF download also available) at mises.org (new link). Here's what the Mises Institute has to say about Hazlitt's widely appreciated lesson on applying sound economic principles to the functions of our everyday world: " Henry Hazlitt wrote this book following his stint at the New York Times as an editorialist. His hope was to reduce the whole teaching of economics to a few principles and explain them in ways that people would never forget. It worked. He relied on some stories by Bastiat and his own impeccable capacity for logical thinking and crystal-clear prose... ...Written for the non-academic, it has served as the major antidote to fallacies in the popular press, and has appeared in dozens of languages and printings. It's still the quickest way to learn how t...

General Motors (or "Government Motors" as some wags have dubbed it) prepares for its upcoming post-bailout IPO . I guess you could call this the investor road show .

China has surpassed Japan to become the world's second largest economy , in terms of nominal GDP. Yeah, I'd say that's a noteworthy trend on the world economic scene. Bloomberg has the details: " China surpassed Japan as the world’s second-largest economy last quarter, capping the nation’s three- decade rise from Communist isolation to emerging superpower. Japan’s nominal gross domestic product for the second quarter totaled $1.288 trillion, less than China’s $1.337 trillion, the Japanese Cabinet Office said today. Japan remained bigger in the first half of 2010, the government agency said. Japan’s annual GDP is $5.07 trillion, while China’s is more than $4.9 trillion. China led the world out of last year’s global recession with an economy that’s more than 90-times bigger than when leader Deng Xiaoping ditched hard-line Communist policies in favor of free-market reforms in 1978. The country of 1.3 billion people will overtake the U.S., where ...

All the news that's fit to print in our weekly review of the markets and cultural scene. Set a spell and enjoy our, "Features of the Week". 1. Why jobs have gone AWOL : Michael Pento on our structural unemployment problem - FSO. 2. Living history in Nantucket - WSJ.com 3. Grim voter mood turns grimmer on economy & war - WSJ.com 4. Doug Wakefield on the efficient wealth transfer - Safehaven. 5. The Point of Collapse : Keith McCullough on QE2 & QE3 - Hedgeye. 6. Psychological aspects of buying the bottom - Charts Gone Wild. 7. The mathematics of the short side don't require one to catch the top of rallies in order to make money - Smart Money Tracker. 8. As HFT continues to speed up, I look for ways to slow down - Chicago Sean. 9. Matt Simmons , energy insider who issued wake-up call, dies at 67 - Houston Chronicle. 10. More Money Than G-d: The Definitive History of Hedge Funds . Interview with author, Sebastian Mallaby - Martin Kronicle. Thanks for stoppin...

Kevin Depew at Minyanville has authored, "The Real Person's Guide to the Federal Reserve" , which should help set the record straight on what exactly was said in the most recent Fed release. Here's an excerpt from Kevin's guide: " Yesterday at 2:15 PM EST the Federal Reserve released what to most of us normal people was a bunch of gibberish, including this: "To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities." In the aftermath of the financial crisis, most of us are now at least vaguely aware that the Federal Reserve has intervened in financial markets to "help support the economic recovery." But what, exactly does that mean, intervention? It's actually not that hard to underst...

You might have seen this Huffington Post slideshow of 25 rare color photos from the Great Depression and World War II era. If you haven't already, check them out and then head on over to the Library of Congress' slideshow where you'll find more than 1600 images from their full collection of Depression and WW II-era color photos (Hat tip: Campaign for Liberty ). Seeing these images of late 1930s and early 1940s America in color seems to bring this period to life a bit more for modern viewers. The color images capture fragments of daily life across the USA, and the posed photos of farmers and homesteaders in this later period seem less bleak and dramatic than the stark black and white images of Depression era hardship that we're most familiar with. How do these newly released images shape your view of WW II-era (and late/post-Depression) America?

Saw an interesting tweet from Jim Rickards last night on the present top-down nature of our government and its power center of Washington DC, which he compared to Rome during its Empire. From there I clicked over to hear Jim's recent interview on the King World News broadcast, where he elaborates on this point. If you're a fan of economic history, or are simply interested in the parallels between modern America and the Roman Empire, I think you'll find this to be a very interesting discussion (see part 2 here ). One quick excerpt from Rickards' interview. Asked about the onerous taxation levied on citizens by Rome, Rickards noted that at one point during the barbarian invasion, "30% of all arable land was simply abandoned... in fact, farmers of the Roman empire actually welcomed the barbarian invaders with open arms, as this was an improvement to a central government that was taxing them to death." Surprising point to say the least! I'll be interested to...

Barry Ritholtz of The Big Picture interviews Felix Zulauf , legendary investor and long-time Barron's Roundtable participant, in the first episode of a new "Big Picture interview" series. It's great to see Barry delving into longer form interviews, and if his first guest is any indication, the series should be a rewarding one for all of us. Check out the two part interview with Zulauf to get his macro take on the world economy and hear all about his start in the world of finance and investing, as well as the story of some of his investing triumphs and the key lessons he has learned (often through making big mistakes) over the course of his long career.

Jim Rogers is predicting a new recession in 2012 . So sayeth the Telegraph in a brief overview of his recent comments to CNBC: " Mr Rogers, the respected currency trader and hedge fund pioneer, cautioned that when the downturn takes hold "the world is going to be in worse shape because the world has shot all its bullets." Speaking in an interview with business television channel CNBC, the septuagenarian investor said that "since the beginning of time" there has been a recession every four-to-six years, and that's mean another one is due around 2012... " Telegraph reporter James Quinn goes on to add that noted academic & Case-Shiller index co-creator, Robert Shiller is also expecting a double-dip recession, and that it may come sooner. This follows David Rosenberg's recent call of an increased likelihood for a double-dip recession based on the latest drop in the ECRI WLI (economic leading indicators). Meanwhile, Sir Alan w...