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Hi! This group spawns from a personal interest in investing ideas
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Chris
Recap - "Zero Hour," Oil Exploding, Condo Sales Dropping, & Entrepreneurship Solving Global Poverty + -
Below is a recap of some of my recent blog entries on my site. It's been a strange 10 days since I last posted - oil hitting new highs which somehow is looked upon as good for the economy because stocks are rising too; consumers are tapped, and Marc Faber believes we are closing in on Zero Hour, that magical time when additional debt taken on by our country officially adds ZERO to GDP.
Read about "Zero Hour" here:
http://chrisgrande.com/2008/05/09/wow...
Read about Oil exploding here:
http://chrisgrande.com/2008/05/06/her...
Read about falling condo prices here:
http://chrisgrande.com/2008/05/04/con...
And read about Entrepreneurship solving global poverty here:
http://chrisgrande.com/2008/05/02/ent...
Also, if you like visiting Maine, I made a quick entry on Ogunquit and some of the cool places to visit there on this entry:
http://chrisgrande.com/2008/05/11/ogu...
Enjoy!
Chris
Chris
Another big up day + -
I will be short and sweet with this. Investors like to believe that good news is ahead and additionally, there is an upward bias to the market. Therefore, the strangest things seem to be construed as good news.
Today's good news - after lowering rates again, the Fed will now focus on inflation - are you kidding? How? By raising rates back up again? Makes no sense. Oh and consumer spending was up more than expected - such joy. I don't see it.
Also, Investors Business Daily, an influential source for a lot of money managers gave a general market green light on March 20 - so there has been a 'buy' bias this past month.
As I mentioned in my last post about 4 weeks and 2 out of town trips ago (to SF and then to UK&Ireland), it was time for commodities to cool down. With the dollar rising and the Fed ready to "fight" inflation, you now see commodity prices dropping.
Long term trends haven't changed. If you're a trader, you have some good material to work with here. Long term, our rates must rise and global demand for commodities will continue. Emerging markets will grow benefiting them and as Jeremy Grantham of GMO thinks, will also benefit what he calls "Quality US Companies."
On a side note, I will soon post a pithy blog entry on how Ben Bernanke is "robbing" our seniors with his bailout. By tonight i will post this at www.chrisgrande.com -
Chris G
Chris
Explosive Up Day + -
Let's see how things play out. I added some Asian value to the positive list last week and so far it looks good.
A much needed correction in commodities is underway - but folks, don't think that's over. Recently, China negotiated with Vale, a Brazilian company, to raise the price of iron from $50/ton to $80/ton. Never mind that it trades for over $200/ton in the Chinese spot market. Believe me, the commodities run is not over...
Chris
Chris
A Week That Told Alot But Seemed to Not + -
Or did it? Some voices are trying to say we have a bottom and think the market will rise. Others are pointing out the market's stubbornness on holding this bottom (I am actually not quite sure how a triple bottom will fair - most people are more familiar with double bottoms).
We did see some important signs though even though it seemed not much happened.
1. we are getting more proof that the financials are dangerous - trying to find a bottom here is not the kind of work I want to try
2. the macro set up is still in place for a continued fall in the dollar - invest accordingly
3. the commodities resource run - part global growth story, part inflation hedge story, part dollar decline story still seems to be only in the mid stages of a move (are the developing countries fully developed yet?)
4. New thought for you all: the Fed might lose the long bond - what does this mean? If you noticed in January, the Fed cut short term rates significantly but the 30 year mortgage rate did not adjust as significantly. Why? The mortgage rate is tied to the bond market and investors were in no mood to take lower rates of return on long bonds in an inflationary environment. Therefore, yields could rise, bonds could drop in value - consider allocating accordingly. However, I may be very early with this thought...we might need more exposed pain for this trade to be kick started...
By the way, I posted some interesting short blog entries on the blow-up of Schwab's High Yield account, Asian markets, and a comment about Boone Pickins and his thoughts on the politicians "knowledge" of the oil and resource markets. See them here:
www.chrisgrande.com
I am particularly irascible in that post:)
Chris
Chris
FYI - Another Ridiculously Good Article and a 3rd! + -
www.chrisgrande.com
enjoy!
Chris
Chris
Ridiculously Good Article on the Fed's Recent Action + -
go to my blog to see a link to a Bloomberg interview of Jim Rogers discussion the recent fed bailout. if you care about INTELLIGENT economic discussion, then you will enjoy this.
http://chrisgrande.com/?p=55
Thanks,
Chris Grande
3.19.08
Chris
Another Blow Up for Uncle Ben and His "Hammer" + -
This morning, the latest “monkey,†the esteemed brokerage/investment house Bear Stearns, will be bought by JP Morgan for $2/share. This was a $159 stock within the last 12 months! Basically, they own a lot of bad mortgage paper and would have effectively gone bankrupt if not bailed out. The Federal Reserve guaranteed some debt on the books of Bear Stearns also to help make this happen.
http://biz.yahoo.com/ap/080317/jpmorg...
The lesson here is that the lending/credit bubble created far too much excess in an industry that tends toward excess anyway. The reason for regulation in the banking/credit industry (reserve requirements for example) is to prevent “excess†in the system. Instead, the Fed encouraged excess in the form of super low rates, low reserve requirements, and lack of banking oversight in order to spur the economy. They went too far, and now I expect much more pain – eventual higher interest rates despite the Fed, much higher inflation caused by the falling dollar, and credit contraction (i.e. stricter lending standards) which will crush many people. Remember, often people and organizations overreact right? I expect lending institutions to overreact and further restrict lending and when that happens, along with rising rates, asset prices will FALL.
Point: the Fed did lower the Discount Rate this morning, a step I thought they would have started doing initially when trouble started last year. This is the rate that the Fed lends money directly to banks. Often, the Fed targets the Fed Funds Rate, which is the rate that banks charge each other to borrow money. Interestingly, I got into a mini-argument with a grad school professor about this with him insisting that the Fed doesn’t touch the discount rate – I countered that I learned in Econ 101 that the Fed could cut this rate. I never understood where a well-versed and well regarded professor got that idea, but I just stopped arguing before it got serious.
Part of the problem with the whole lending idea is that most institutions borrow money short (they borrow variable rate money, such as your passbook savings account, or from the Fed at the discount rate) and lend it long (such as 30 year mortgages). If you were a bank, and you offered folks a 5% CD, and only earned 6% on mortgages you originated, you wouldn’t make much money after expenses. Banks need 2.5-3% “spread†to be profitable. We had long rates below short rates and companies were blowing up. The discount rate cut could help, but it may be too late because we don’t even know where these problems (monkeys) might pop up next.
Urgent Note:
This may be irrelevant, but you might want to call your mortgage broker this morning. The last time the Fed cut rates, 30 year mortgage loans dropped to 5.11% for about 2 hours. They then proceeded to jump up to above 5.4% and then proceeded higher (part of the inflation problem I will try to explain in another post soon). If we get any kind of drop (we might not), then it won’t last long in my opinion.
Chris Grande
www.chrisgrande.com
Chris
I'm not uptight, not unattractive, turn me on tonight....I'm radioactive + -
If you look at the prices of various commodities, you will notice many are breaking out to the upside. In fact, the price of wheat of all things, is up over 230% over the last 12 months. The cost of food is rising as worldwide economic growth leads to increased demand for food.
CHASING PRICES?
If you were looking for an opportunity to catch something on the upswing, but you don't want to chase prices up. Since the prices of most commodities are up strongly over the past few years, you have to wait for "pullbacks."
PULLBACKS?
Watch the price action of anything rising over a long period of time. Notice that the line isn't straight up - you will see a rise, then a 15-30% drop, then a resumption in the ascent. You want to look for those drops to get involved.
WHERE NOW?
Following in line with my article title, I present an idea that will make you 'glow': uranium. Uranium was hot for quite a few years - it actually went against what I said above with prices rising straight without correction for years. The price finally collapsed and that's where we are now - it has become a forgotten element.
IDEAS?
The same problems that caused the rise in uranium prices still exist - often the market just forgets certain things for a while. Uranium has been forgotten but the prices may be resuming their rise. Why is there demand? In case you haven't noticed the past few years, we have $100 oil now and coal prices flying up. Nuclear power is back in vogue.
China is building a couple of dozen plants to provide electricity to a growing country. Europe is looking at adding more nuclear (85% of France's electricity is nuclear according to Areva's website) especially as Russia threatens Europe with gas supply issues.
Even the US has a working group composed of the Dep't of Energy and a few major players in the nuclear energy including Areva to develop nuclear strategy in the US.
If you are looking to power up your portfolio, you may want to consider uranium.
Chris Grande
As of this writing Chris Grande does not own shares of any company mentioned in this article
Chris
A Day for Natural Resources + -
Let's get right to the action shall we? First, the stock markets tried to rally but that was quickly snuffed when a rumor that a Nigerian rebel was killed in prison (later to be found out to be untrue, I think?) and oil spiked over $100/barrel (all time high).
Everything to do with oil, natural resources, and inflation hedging shot up.
What should you consider doing? First, I feel bad for most of you, since most of your 401(k) plans are terrible in my opinion. You don't have investment options in anything that could possibly provide you a hedge or (gasp) alternative investment. Your options are stocks, bonds, and money markets. Tant pis...
For those of you not trapped in a 401(k) like that, you may want to explore precious metals (gold, silver, and new all-tim high member Platinum), industrial metals (like copper). Also, consider the companies that mine these. Or, consider bonds and currencies of countries with strong national balance sheets (I don't mean the euro).
At some point in the next couple of months, I will try to publish a report on the following areas: water, alternative energy in nuclear, and alternative energy in goethermal. Solar is too wild for me but I do think it's exciting.
For more of my sarcastic snickering on today's action, go to www.chrisgrande.com for Feb 19 or see http://chrisgrande.com/?p=45 .
Hope this helps...
Chris Grande
Chris
Attention Graduating Seniors... + -
http://www.linkedin.com/answers/personal-...