Alphameister

Chinese Wind Power Plant Coming to U.S. Soil

I have a substantial stake in APWR (it pays to follow the political winds), but I share the disgust of Davewmart that the US is not making a major commitment to nuclear power. Thanks for the valuable insights, Dave.

Our Steroid Pumped Economy

Fed head, Bernanke, recently insisted that there are no bubbles in the U.S. economy. His opinion was soon echoed by other members of the Fed. I only wish that one member of the NY Economic Club had asked the Fed chairman if he is familiar with the sculptural concept of "bas relief." I am confident he would have known about bas relief and would have understood the meaning of the question.

Michelangelo loved sculpture because it involved cutting away useless material in order to set free the work of art contained within that material. One of his more famous sculptures, Madonna of the Stairs, was a work of bas relief, created in his teens. Bas relief involves cutting away the background so that the resulting subject of the artwork stands out from a recessed background. U.S. coins are a classic example. With coins, "low relief" is desired where the subject art is lower than the edge of the coin. If the bas relief is "high relief", as was the case with the badly designed buffalo nickel, the date and image are steadily eroded over time.

But I digress. The point of this comment is to suggest that 1)Bernanke was wrong in denying the existence of bubbles in US markets, that 2) he realizes he was wrong, that 3) he is deliberately promoting asset bubbles in the US, and that 4) he can get away with it only because most such bubbles are "bas relief" at this time.

Does it seem ludicrous to talk of bubbles in the US housing and stock markets when both are well below former highs? Well, if a bubble is defined as artificially boosted prices well above the levels that would be determined by supply and demand in the absence of such artificial stimulus, then it is not unreasonable to see a bubble in a host of US markets, starting with housing, treasuries and commodities and including, as well, stock prices that imply a future growth rate that is totally unrealistic given extant obstacles to future economic growth. When the only meaningful market for housing mortgages is Uncle Sam, you can be sure that house prices are artificially inflated and thus in a bubble.

For a disciplined trader, the more bubbles the merrier. If you use the right technical disciplines, there will either be a greater fool willing to let you exit your fundamentally unsound position with a profit or you can disengage with only a modest loss as some trendline is broken. For an investor, the greater-fool school of investing tends to be more problematical. I left a lot of money on the table in 1999-2000 by seeing the tech bubble too clearly and too early. But the retail stocks, such as Chicos and Christopher & Banks into which I switched when my tech stocks got silly, enabled me to sail through the tech crash of 2000-2002. I've left a lot of money on the table in 2009 by hedging my longs since August. Today, I'm net short the US and net long on China where I see a much better reward-risk ratio. Even many bulls on CNBC these days are admitting their advice is all about respecting momentum without regard to fundamentals.

U.S. and China: Lecturing Each Other on Trade

I doubt there has ever been an economic expansion, in China or elsewhere, that did not have its imbalances and imperfections. I'm curious as to whether you have ever commented on an economic expansion where your focus was not on the imperfections. I hate central planning, but China seems to do it better than Washington. With huge reserves and a continuing trade surplus, China can afford to make some mistakes while adapting to a new world order in which the U.S. plays a large but decreasing role.

China’s Foreign Direct Investment on the Rise

Money follows the opportunity for growth and return. No surprise that it is gravitating to China.

Chinese Wind Power Maker A-Power to Set Up Factory in U.S.

Just like Toyota establishing manufacturing plants in America. APWR (one of my largest holdings) looks like a giant in the making. I hope it can manage effectively all the promising alternative-energy ventures it has initiated in the past year.

Is This the Beginning of a New Secular Bull Market?

Very shallow and disappointing article. An ignorant statistician might compare the current rally to the average rallies of the past hundred years and draw bullish conclusions from such an exercise. A perceptive analyst would be more inclined to compare this rally to the 1938 market rally and explain why he's convinced things will be substantially different this time around. Even if the lows have been seen in March (as I deem likely), this is a cyclical bull in a secular bear market and the accompanying economic cycle is on very shaky ground.

China's Domestic Market Still Heating Up

Whatever the problems China faces going forward, they pale in comparison with thosse of the US and most developed countries. I am grateful for the opportunity to invest there.

Why Is China Booming? Surprise, It’s Not the Stimulus

Assuming the truth lies somewhere between your very welcome and positive assessment of the Chinese economy and those who insist it's a house of cards, I've no doubt that reality is much closer to your view than to that of the doom-sayers. Thank you for the article and for the restaurant stat.

Chance of a Depression Now 5 Percent

>>When America looks in the mirror, it sees vigor, determination, confidence in a strong future.
But that is not the Marxist/Socialist Obama Plan. <<

Liked your comment and gave you a thumbs up. I'm afraid, though, that the mirror to which you refer is a rear-view mirror. When today's America looks in the mirror, it sees a need for cosmetic surgery!

If This Is a Recovery...

Social Security was poorly conceived, has been poorly implemented, and can only be judged a colossal failure by anyone perceptive enough to imagine more well-conceived alternatives. It has been a major step in this country's willingness to trade freedom for a bit of security. There is a reason that Congress has adopted a much more generous, taxpayer-funded retirement program for themselves.

The Medicare program is equally flawed and irresponsible. Nothing has been more devastating to the black community than the "war on poverty." The road to hell is indeed paved with good intentions (though it is difficult to credit economic stupidity behind such good intentions when a cynic might easily see the protestations of such good intentions as merely an effective path to power and all the perquisites of power).

Warren Harding took a very provocative, "simplistic" approach to the depression he inherited in 1921. He slashed government spending and taxes. Within two years, the country was back to full employment and embarking on a boom that would end badly (giving Hoover and FDR a chance to work their mischief; neither had learned anything from Harding's success). Does anyone see a willingness in today's capital to learn from Harding's success?

Both the above article and comments make no mention of the current political leaders' determination to impose heavy new taxation (indirect or direct) in the form of health-care "reform" and cap-and-tax legislation. Any business owner/manager worried about the effects of such legislation on their profitability will be very slow to add workers in this "brave new world."

Does anyone believe that a younger generation steeped in the politics of entitlement and increasingly divorced from any commitment to excellence of performance as the path to success will accept graciously the obligations being foisted on them by the irresponsibility of their elders? We are heading toward a revolt, and I'm afraid it's a revolt that is long overdue.

If This Is a Recovery...

I think you wanted "antidote," not "anecdote" in your first paragraph, John, but otherwise an excellent warning of the economic challenges we face. Consumer sentiment took a big drop recently and there is a reasonably good correlation historically between consumer sentiment and stock prices.

You talk about fiscal stimulus coming to an end in 2011, but I see an almost certain succession of stimulus programs as politicos strive to thwart the most depressionary forces since the Thirties. The recent extension of unemployment benefits and the housing tax credit (the latter certain to show diminishing returns) are a good indication of the desperate patchwork fixes to be seen as we try to stave off the inevitable severe adjustments needed to become a viable economy once more.

The U.S. is not headed for a typical post-war economic recovery, and the bull market of the past eight months is on very fragile ground.

Two More Myths About Business in China

I appreciate your glass-half-full articles about China, Shaun. While I read all the glass-half-empty articles about China by Pettis, I think your overall perspective of the investment potential within that huge and rapidly growing economy is much more on target and useful. As has already been commented, poverty is relative. Most people in this world would consider themselves incredibly fortunate to be poor in America, a classification that usuallly includes such necessities of life as a TV, a video-game system, a microwave and other household appliances, and so on. "The poor will be with us always," for without them how would the bureaucrats paid to manage them and to keep them in poverty earn a living? China is following essentially the same path to prosperity that has been followed in the U.S. and all developed economies. And it seems increasingly obvious to me that the "benevolent dictators" in China are better read and more drawn to free-market theory than are the dolts who central plan for us in the U.S.

Exchange Rate Manipulation: Beggar My Neighbor, Or Myself?

There was a time when the answer to your question would be easy. Commodities have very little value in themselves. They gain value when the creativity of unfettered human minds generate ways to use those commodities productively and thereby give them value. America has its share of natural resources, but the cause of this country's greatness and the source of past strength in the US dollar was an unparalleled environment of freedom that has lifted much of the world out of poverty simply by showing the way. We have lost the way ourselves lately in an orgy of instant gratification and a growing preference for security over freedom. We are today doing all the wrong things if we hope to promote a strong economy and a strong dollar.


On Nov 13 04:31 AM Maxe Paul wrote:

> Here in Australia we have hard assets such as commodities, and a
> strong banking system. This gives us a strong dollar.
>
> What has America got to justify a strong dollar?

China's Recovering Export Sector: Less than Meets the Eye

If we are going to use anecdotal evidence to challenge official economic statistics, my take-away from this rather lame article is "the factory is encountering a worker shortage." It is not surprising that export recovery has been sluggish despite strong GDP growth driven by fiscal stimulus that has focused on infrastructure development.

7 Steps Towards Real Free Market Capitalism

The text did not live up to the title. If you'd read Milton Friedman, you would know he favored revocation of laws against insider trading. And Ron Paul is about the only outspoken advocate of free-market capitalism to be found in the U.S. Congress. Agree fully with your concluding sentence, though it doesn't appear you are quite there yet. All the best in refining your understanding of the free market.