Tranquilmeditation

Vanguard's Bogle: Buy and Hold Is Alive and Well

"There is an appointed time for everything. And there is a time for every event under heaven. A time to give birth, and a time to die; A time to plant, and a time to uproot what is planted."
- Ecclesiastes 3:1-2

The "Buy and Hold" koolaid is for the historically challenged. It blew up in the 1930's, it blew up in the 1970's and it is blowing up now. You just cannot be invested in stocks during secular bear markets which we are in now.

The time to get back into equities will be when the collective mass psychology believe that stocks are an inappropriate investment for serious money (maximum pessimism) i.e. Business Week Magazine "The Death of Equities". Other telltale signs will be high dividend yields and low p/e's. We are years away from that and still have a nasty rising credit rate cycle in front of us.

When one door is closed another is open. Investing in precious metals, energy, agriculture, clean water, selective forex and materials will serve you well.

That being said, I pay my respects to Saint Jack. He is a great man and has done more for the individual investor than anyone I know. He is right on the money concerning indexing and low costs. Many kudos to him.

Triple-Digit Oil Prices: Rubin vs. Yergin

Daniel Yergin was a little blindsided by $147 oil last summer but his research at CERA over the years has been thorough and thoughtful. That is why so many large institutions rely on his analysis. To his credit, Mr. Yergin predicted that $147 oil was speculative and that it would have to come down, which it did.

Jeff Rubin strikes me as being a peak oil cheerleader. It makes great headlines (and sells books) when you predict $225 a barrel oil like he did and still does. He did not see the drop in oil to $35 a barrel coming at all. Following his advice, you would of been buying oil at $147 and been totally wiped out.

My hard earned money would follow the wise counsel of Mr. Yergin.

The Final Hours of GM?

Show me a business with a strong union and I will show you a business ready to go under.

5 Reasons Bank Shareholders Will Take a Hit

"Simplicity is the ultimate sophistication."
- Leonardo da Vinci

Thank you Mr. Schulman for sharing your bias free analysis. You won't read stuff like this from your Citi analyst.

Markets are often illogical but even more so now with all the Fed, Treasury and Congressional money sloshing around; $12.8 trillion in stimulus and loan guarantees. How do you calibrate an amount of money that large in an investment strategy?

You have to hold your wealth in something. Energy (the non-renewable kind) and precious metals seem to make the most sense to me in an investment climate clouded with volumes of white noise.

California: More than Just Economic Problems (Plus Some Potential Solutions)

My entire life has been lived in California and the problem is people like the author. His ilk is inclusive of the group that has caused this California meltdown. Where does he get these terms: "auto age", "leveraged to the price of oil", "water problem"?

Once considered the Golden State, self reliant, home of Reagan, bastion of freedom, low taxes and small government, California has been transformed into a hideous gulag by the democratic bolsheviks in Sacramento. I kid you not, it is against the law to drive on a rainy day with windshield wipers going and not have your headlights on.

California boasts the highest tax rate and the worst credit rating. Yes, our credit rating is even worst than Louisiana's. What a combo! That's quite an accomplishment when you have the largest GDP of any state.

No talk in this article of the police and fire in California retiring at age 50 with the nation's most generous pension benefit. Public safety's 3% at age 50 retirement benefits undermines the stability of California's finances and creates a massive liability for taxpayers. California is the GM of government employers. This little fact must of skipped the author's mind. Understandably he was too busy worrying about the "auto age" whatever that is. By the way, does that mean there is something wrong with me liking the personal freedom my car provides myself and my family?

Business and retirees are moving out enmasse to avoid the crushing confiscation of both income and sales tax which are again the highest in the nation. I guess this will be discussed by the author in part 2 of his series.

California has no water problem. California has a water storage problem. Left wing kooks like the Sierra Club have tied up in court efforts for years efforts to expand our water storage capabilites. With the 20 year surge in population, much of it illegal, not building out our water storage capacity was certain disaster. Now water shortages threaten our world class ag business. I guess this gets discussed in part 3.

No talk in this article of our pathetic school system that forks out $11,000 per k thru 12 student each year (yes, the highest in the nation). I guess the much needed school voucher system will get addressed by the author in part 4 of his series.

Lest we forget the horrors of illegal immigration on our schools, hospitals, jails, prisons, home foreclosures, etc. Michael Lewis writes that an illegal strawberry worker bought a home for $720,000 in Bakersfield, CA with $14,000 in annual income and a wife who didn't work. Maybe this gets discussed in part 5 of this author's articulate and insightful series on California.

Author writes: "Throughout the month of May I will tackling these issues one by one, on a more in-depth level. For example, I want to see how much utility grade solar California would need to build in its deserts to carry the state’s present electrical load."

This provided me the best laugh I have had in a long time: "Utility grade solar"??? I guess the author also believes we would be able run our cars on water if the oil companies hadn't assassinated the guy with the secret formula out in the New Mexico desert. The rational and pragmatic all understand that natural gas and nuclear are the energy sources of our nation's foreseeable future.

Note to Editor: Please spare us from this nonsensical, leftist, global warming, club of rome, sandinista, Che Guevara, communist, green party ramble. Isn't this site rooted in an attempt to embrace our nation's free market heritage and intelligently commit our capital in an effort to make money? . I am sure the author is against that, too. There are plenty of left wing blogs out there for the author to pollute with his silly ideas that end up hurting real people.

Swine Flu: Why You Can Ignore the Hype

"The deficit was on its way up long before Obama got into office smartguy."

Fiscal Budget Deficit 2008 - 2009 /Bush: (- $462 Billion)
Fiscal Budget Deficit 2009 - 2010 /Obama: (- $1.8 Trillion)

Facts are inconvenient things when you are political cheerleader. I don't pimp for Democrats or Republicans.

Bush and Obama are both reckless. It is just that Obama is significantly more reckless by a factor of 400%

Obama's $1.8 trillion deficit is horribly irresponsible. Trillions of hard earned taxpayer dollars thrown away on useless, wasteful and unproductive spending. Attempting to artificially sustain a bubble economy by running massive deficits (the largest in the history of man) is hoodoo economics.

Swine Flu: Why You Can Ignore the Hype

Thank you for a view well taken.

Anything to get the Obama administration's $1.8 trillion deficit off page one. That is what people in a free society should be debating.

Gold Price Forecast: Market-Long-Wave Analysis 2009-2012

"So presumably there might be a correlation between the "disequilibrium" of the US housing market and the price of gold?"

My elbows are correlated 2 to 1 to my ass but I am not sure what that means either.

The Impending Mother of All Oil Shocks

Last summer's oil price of $145 a barrel was a speculative bubble fueled by the cheap credit of hedge fund mania. The resulting collapse to $32 a barrel was an overreaction to the downside.

My guess, which is probably as good or as bad as anybody's, would suggest that the true market price of oil under normal economic conditions would be between $70 - $90 a barrel. That means oil is an attractive investment opportunity.

It is important to point out, market responses to the high prices of oil last summer were quite impressive. Major oil and gas finds in Haynesville, Tupi and Azulao-1, etc. added significantly to the world's known reserves. Weren't all major oil reserves supposed to have already been found? Tupi is under 7,000 feet of water. Enhanced technology of oil and gas recovery is also significantly improved (Nansen Saleri WSJ article).

T. Boone Pickens has formulated an impressive plan of using natural gas as a transportation fuel which would greatly reduce U.S. dependence on foreign oil.

The point I would like to make is that the doom and gloom sayers of peak oil have been foiled again. Forecasting a future that suggests starvation, chaos and political upheavel is bereft of man's ability to organize, cooperate and use his immense God given intelligence.

I am highly suspect of fear based agendas: peak oil, global warming (oops, I'm sorry "climate change"), ice ages, african killer bees, legionaire disease, nuclear energy, mad cow disease, over population, under population, etc. ad nauseum. The hysteria speaks realms about the demigods espousing them. Their solutions suspiciously always require a reduction of my individual liberties.

BofA, Wells Fargo: No Equity After Accounting for Bad Loans

Three Rules of Work:
1. Out of clutter find simplicity.
2. From discord find harmony.
3. In the middle of difficulty lies opportunity.
- Albert Einstein

Of the four remaining mega money centered banks still standing, Wells Fargo is the most attractive.

The future earnings power of Wells and JPMorgan Chase is immense. Earning $10 a share for each of these companies will not be hard when the economy normalizes. Let's not forget that banking is a hugely profitable business and has been in existence for hundreds of years.

The only reason I don't like JP Morgan Chase is their huge derivatives book. It is referenced as the largest in the world. When derivative contracts transact through a clearing house (I don't know why this is taking so long), and there is transparency, then JP Morgan Chase may be a strong buy.

BofA grossly overpaid for both Countrywide and Merrill. As stupid as they are, they still may survive this.

I looked up the definition of a zombie bank and found a picture of Citi. They are toast and will cost the taxpayers billions. Like AIG, Citi's losses are too overwhelming to shut them down right now. Citi were the stupidest and greediest guys in the room. A lethal combination that would be knee slapping funny if I wasn't an American taxpayer.

I know every one on this website is a trader but it might be more profitable to forget about tomorrow and anticipate where values might be 12 months from now.

The End of the Credit Crisis

I appreciate the author's optimism in a time of despair but this is fantasy. For example, 50% of the mortgages in California are now under water (negative equity) and real estate prices are still dropping. Someone will have to realize these massive losses.

Not until real estate values stop dropping will this crisis abate. No Obama economic team accounting gimmick can rescue this. As real estate values crater, business declines, unemployments rises, foreclosures increase and real estate craters more: a nasty self feeding cycle. It is something, painful as it will be and as much suffering as it will cause, we have to go through. Markets work, government's artificial solutions don't.

There are a lot of sins that a society can commit but it can never fool with its real estate / mortgage markets. They are just toooooo big. Unfortunately, that is what we did: supprime, mortgage equity withdrawals, liar loans, teaser loans, fannie/freddie, etc. The losses are mind blowing. They will need to be amortized by our nation over many years.

This is not a Black Swan. This was a guaranteed time bomb put into motion by the government's stupid but well intentioned desire to have everyone own a home, structured finance thievery and our old capitalist friend, unabated greed.

Too bad Aeschylus is not still around. He would of written a wonderful tragedy with this material.

Jim Rogers on the Economy - Bearish on Stocks and Government

Jim Rogers is one of the best investment minds extant. I have followed him for years. Disagree with him at your own risk.

Ex U.S. Comptroller David Walker claims the U.S. has $56 trillion in unfunded liabilities. Shorting America and its currency is not a difficult call. We might as well protect our wealth in the process.

Gold: Not an Effective Hedge Against Inflation

Is this the same financial writer who in his books refers to diversification as large cap, mid cap and small cap stocks and throw in a little growth and value for good measure? If you had followed his advice your wealth would of vanished this year. The Modern Portfolio demigods are dead and so are their silly bull market metrics: standard deviation as a measure of risk, bell curves, efficient markets, r squared, and the most costly (to taxpayers), valuation at risk models.

We are in a bear markets for stocks that is no where near over. Gold is extremely attractive given the irresponsible policies governments around the world are following. Someone should inform the U.S. congress they are broke and have no money to bailout: banks, insurance companies, auto manaufacturers, home builders, states, and on, and on, and on.

Gold has maintained its relevance as a source of wealth for 5,000 years. What has been the longest standing fiat currency Mr. Swedroe? You just happened to leave that out of your biased article.