Michael Zhuang

China Slowdown: Biggest Test For Communist Government Yet

Nouriel lives in NYC, not in Beijing. He may not know about China as much as Wall Street. It is true the China will face tremendous economic dislocation, I doubt the economy is gonna fall apart. On top of the trillions of dollar of reserve, the saving rate among common people is as high as 40%. That means China can afford to launch a Roosevelt style massive infrastructure project, such as building a mag-lev high speed rail network across the country, without running out of money. A project like that has tremendous derivative benefits to every part of the economy (and technology advancement.)

America does not seem to have the money, nor the political consensus to carry out such a project.

Warren Buffet, The Ultimate Dividend Investor

Despite their tax-disadvantage, high-dividend paying stocks are a great way to survive a prolong recession. As Robert Shiller discovered, stock prices fell more than 80% during the Great Depression while dividends only fell 11%-12%.

investmentscientist.co.../

The Plague of Short-Termism

In Maryland, our government has put a constitution amendment on ballot to allow slot machines. Ostensibly the tax revenue from slot machines will offset the current budget shortfall. This is exactly the shot-termism you talk about.

What Dividend Yield Can - And Can't - Tell Us

Yale professor Robert Shiller found that dividends are much less volatile than prices. Like during the Great Depression, prices fell close to 90%, dividends only fell about 11%. As the result, yields shot up?

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An Opportunity for Patient Investors - Barron's

Patience is in short supply. Already there are pundits mocking Warren Buffet because the market continued to drop after his "buy American" call. No wonder Warren Buffet said the smarts do not necessarily win in investing.

China Wants the U.S. Dollar to Drop Dead

The title of this article is provocative, but totally misleading. China has over $1T in dollar reserve. What good does China get if the dollar drops dead?

Ben Stein Watch: Oct. 26, 2008

Those who know nothing make a lot of noise, those who know something don't have time to make noise.

More from Grantham: S&P to 585?

Mr. Paul, what insight did you add by repeating other people's opinion?

An Opportunity for Patient Investors - Barron's

Regarding concerns that dividends will drop significantly, there is no doubt dividends will drop but will definitely not as much as prices. This is according to Yale professor Robert Shiller's research.

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Morningstar's New High-Dividend ETF: Mr. Kettle, Meet Mr. Pot (ETFs: FDL, DVY, PEY, SDY)

There are many better offerings than this MorningStar "index", see the complete list of high dividend yield ETFs below. Personally, I prefer the broader based WisdomTree ETFs.

investmentscientist.co.../

WisdomTree's New International High-Dividend ETF: Access to Worldwide Smallcaps

Here is a complete list of high dividend yield ETFs:

investmentscientist.co.../

Bank on Yield - Cramer's Mad Money (10/17/08)

Cramer gives very few sound advice, but this one "bank on yield" is sound. I did a study of the performance of high yielding stocks during the Great depression. Their prices fell by 83%, about the same magnitude as the Dow, but their dividends feel by only 11%. If dividends were reinvested, those stocks recovered their losses in three and half year time. However, don't invest in any individual stocks - who would have though AIG, FNM would go to near zero - invest in a high-yield index ETF instead.

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(or the Website link above)

Tuesday Outlook: Washed Out, or Oversold?

Pretty dizzying array of charts. I just stick with Warren Buffet's motto:"Be greedy when others are fearful."

A Relief Rally, But Is Anyone Really Relieved?

A week ago was when Jim Cramer was yelling "Sell, Sell, Sell" People who know history know that's the reason the market is up nearly 20% from the low. Just kidding ... ;-)

Paying attention to intra-day movements of the market is a sure way to lost your cool and do something stupid. Daniel Kahneman (the guy who invented behavioral finance) observed that long time ago.

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Taking Portfolio Lessons from Yale's David Swensen

Here is another study of David Swensen's asset allocation for Yale Endowment.

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