Ray Lopez

Surprise: Bill Gross Forsees Weak Returns

Seems my reply got cut off...

Hyman 0.236
Levkovich 0.200
Gross 0.189
Bernstein 0.189
Jones 0.164
Birinyi 0.157
Yardeni 0.152
Galvin 0.147
Applegate 0.147
Kerschner 0.136
Cohen 0.128

So Gross is the "best of the worse" so to speak, or above average in picking turning points in the market, but hardly infallible.

See if this comment makes it...

Surprise: Bill Gross Forsees Weak Returns

Bill Gross is one of the better forecasters out there--but he's not perfect.

Here is a list of people who supposedly time the market (Source: smartmoney.com) from 1997 until recently. As can be seen, Bill Gross is near the top as the "best" but hardly infallible.

Edward Hyman 0.236

The Dollar's Decline: Quite a Spectacle

Excellent article! Points out the fact that only a few percent of Americans hold passports and care about foreign exchange--how true. The other countries have to sell in the US since the US is a monopsony (monopoly buyer). For this reason a French economist (Rueff?) once called the dollar deficit a "deficit without tears". What is true for Japan is true for America: less than 15% of the GNP depends on foreign trade, so the US can spend beyond its means as long as the dollar is accepted by all countries "as good as gold". When the dollar is no longer esteemed, watch out, since the total dollars in circulation I believe are greater outside the US than inside. But that's 10-20 years down the road IMO.

Dehedging Gold -- Why Barrick's In Trouble

Great article, points out that hedging is good during a bear market but bad in a bull market for gold. BTW ABX once sued and won a judgment in Canada against an (eccentric) internet poster who kept saying they were going to go bust due to their hedges. I got out of ABX just for that reason (figuring where there's smoke...), though I'm long gold through a mutual fund.

Dollar Breakdown to Ignite Gold Market

I agree with alpha24seven though I have large bets in my personal portfolio in both a appreciating Renminbi, a short dollar (RPIBX) and a long position on gold. And I live in Europe. Another factor to consider is that if the US dollar collapses it will create inflation which will require more interest rate increases and might jeopardize the US consumer led economy. Then who is to buy Chinese and especially Japanese exports? The Chinese and Japanese know this and their jawboning about the dollar is just talk. Of course, never discount over the short term another "Plaza Accord": en.wikipedia.org/wiki/... especially now that the Democratic party is in power and might make the 'excessive' Renminbi an election year issue. This short term is what I am banking on, including Au going over 1000 and the Renminbi:USD going from 8:1 to 6:1

Interoil: The Next Enron?

Ouch! I feel your pain author. Chart looks like a short squeeze. Hope IOC goes bankrupt before the shorts do.

Gold vs. Stocks: Merely a Short-Term Advantage To The Metal

"I get the most mail whenever I write about gold."
Then you must like to get mail--writing again about AU.

"That's a logarithmic chart, so you can see that the ratio has grown very dramatically over the years. In 20 years (1980-2000), stocks beat gold by an amazing 72 fold. Gold's advantage over stocks during the past few years is truly just a small dip in a long-term rise."

Unless I'm reading the chart wrong, the "small dip" over the past few years is 3x (from 90 to 30).

The Rise and Fall of Oil: Roach Motel Theory

Has anybody considered the fact that perhaps "Peak Oil" is the reason oil is rising (aside from China's increase in demand)? Note also the below article, implying 40$/BBL is a floor. RL

Market Scan
Shell Grasps At Oil Sands
Scott Reeves, 10.23.06, 12:45 PM ET


Royal Dutch Shell effectively told the world on Monday that it does not think that oil prices will decline from current levels. The energy company said it would pay $6.8 billion to buy the 22% of Shell Canada that it does not already own, giving it access to the subsidiary’s growing oil-sands division.


The oil sands are profitable when the price of crude is above about $40 a barrel, so Shell’s interest is a sign it does not think prices will fall below that level.

Oil has risen about 80% since 2003, making Canadian sands projects competitive. The price of a barrel of oil peaked in July of this year at $78.40 and traded Monday morning on the New York Mercantile Exchange at $58.58, a decline of 25.3% from that level. The recent drop has led the Organization of Petroleum Exporting Countries to institute a production cutback, although oil traders seem unconvinced that it will be able to increase prices from the current level.

Shell Canada strip-mines oil-bearing sands and heats them to remove heavy crude. Its oil sands unit earned $790 million Canadian ($700.3 million) last year, 39% of the company’s $2.01 billion Canadian ($1.78 billion) earnings. In 2004, the oil sands division brought in just $378 million Canadian ($335.1 million).

Sarah Emerson, director of petroleum at Energy Security Analysis near Boston said the planned acquisition is an effort by Shell to expand its holdings and spread the risk.

"This doesn’t represent a right angle turn from traditional sources," Emerson said. "It's a portfolio approach to expanding reserves and spreading the risk. The price per barrel has to be in the $40s to get some kind of return from oil sands and current prices accelerate interest."

Beware New Real Estate Investment Products

Good article as it points out several RE indexes that I plan to follow and invest in. Schiller in his book Irrational Exuberance tried to make the case that RE has gone nowhere (it was written in 2004) and denied the Efficient Market Theory in favor of a overshoot/undershoot model, which, though valid, is hardly a roadmap on how to invest. The first poster Slavo is right--you need to diversify to get to the efficient frontier of risk/return, along the lines of CAPM (however flawed the model is, due to errors in measuring beta). Housing prices are firming btw as I type this is many cities--spring is in the air.

Why The West Needs Indian Outsourcing

True, true. Indeed the 75k engr. graduates figure is too low: "www.nsf.gov/statistics...
# The numbers of [USA] S&E bachelor's and master's degrees reached new peaks of 415,600 and 99,200, respectively, in 2002."

Another fact of interest: in this week's news a survey done by a private outfit (which of course is subject to debate) found that only one-fourth of India's 400k a year science and engr graduates are adequate by US standards; the rest are mere technicians and need extensive training.

So roughly speaking it can be said that India's best is only one-fourth of the USA's, vis-a-vis engineering and science.

The only reason to outsource to India is to save money, not for quality.

RL

Recession Around the Corner?

What a difference a month makes. Phily Beige book report was offset by strength from other regions. Yahoo, JetBlue are isolated, company-specific or sector specific (regional airlines suck) problems. Commodities, housing are simply coming off of decade highs (at the moment the Schiller housing futures forecast an average -7% decline over the next 12 months for housing--not a big deal). And Marc Faber is right, as usual.

One way of looking at it is to remember that the much heralded stock market Crash of 1929 did not bring on a depression. In fact, it was a routine (by preWWII standards) recession. Only when the herd panicked, and wages did not come down as expected, not to mention bad monetary policy by the Fed(s) (UK, US trying to reestablish the pre WWI Gold Standard), did the recession turn to depression. Sources: Charles Kindleberger, Barry Eichengreen.

Right now we've hit a soft patch but we should power through, unless something crazy like a Great Leader Kim Il Sung nuclear first strike springs into being.

China's Oil Demand in Perspective

I agree that you can easily write a "bull" case for oil as easily as a "bear" case. I've heard that a 2% difference in supply/demand will swing prices radically on the oil spot market, so China's 2% of the USA increase as pointed out in the article is, by spot oil standards, quite large.

Chicago Fed President: Las Vegas House Prices "Defied Gravity"

Nice speech that highlighted the fact that commercial and residential real estate construction are two different markets.

The End of Telecom As We Know It and I Feel Fine

"H/W is bad and S/W is superior" is a stale paradox caused by the lack of IP protection in the fomer and the inherent trade secret / trademark protection ("sticky") in the latter, which is self-executing and self-enforcing. If and when H/W is protected like S/W is today (a precursor was the Huawei-Cisco litigation suspended a few years ago), then the balance of power will shift back to H/W.

Short MSFT, buy IBM?

Plug Power CEO Talks About His Company

Hmm. The Russians, and in particular the metal mining sector of Russian businessmen, are investing cash in a NY based company.

Let's put it this way: it certainly incentivizes one to focus on making money (as quickly as possible). As the article says: "Dr. Saillant: My priorities never change; it is finding the shortest path to profitability."

I, personally, would not want that kind of incentive as either a employee or investor, but you, dear reader, can make your own choices. From what I know, having visited Russia a few times, the Russians can be hospitable, even generous, as long as no real money is at stake. And if you don't believe it, just pretend it's a fairy tale.

Good luck! You may need it.