Yearly Archives: 2013

When Dominance Leads to Incompetence and Catastrophe

"It's rather staggering to list Microsoft's failures over the past decade. The strategy that worked in the 1990s--copy rivals and add more features to the copycat products and services--is no longer working. Dominance in any space breeds complacency and enables the luxuries of political squabbling, sclerosis and loss of focus. Competence becomes incompetence, and the infrastructure that fosters creativity and flexibility--that is, a keen appreciation of risk and spontaneity--is slowly dismantled. That applies not just to corporations but to governments, nations and empires." Continue reading →

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20 Investment Insights from Peter Lynch

"5. Stocks are most likely to be accepted as prudent at the moment they’re not. For two decades after the Crash, stocks were regarded as gambling by a majority of the population, and this impression wasn’t fully revised until the late 1960s when stocks once again were embraced as investments, but in an overvalued market that made most stocks very risky. Historically, stocks are embraced as investments or dismissed as gambles in routine and circular fashion, and usually at the wrong times." Continue reading →

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WATCH OUT BELOW: S&P 1987 Compared with S&P 2013

"It's a terrible mistake to just look at the data from two time periods and forecast the trends to continue. However, as I have been pointing out at the EPJ Daily Alert, there are many reasons to suspect another crash may be on the way: 1. Money supply growth has declined dramatically since the start of the year. 2. There is a natural tendency for the consumption-savings ratio to move towards consumption, starting in September. BTW: In the summer of 1987, money supply, in the manner I track it in the EPJ Daily Alert, collapsed, just like it has this summer." Continue reading →

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The Joke Shack of the Housing Sector

"REITs, or real estate investment trusts, are companies that own and manage real estate. Before December of last year, there was no such thing. Now there are three, with more on the way. Do these vehicles deserve a spot in your portfolio? I’m going to make the case that they do not. I say this as someone who has been a housing bull. I still think housing is OK, but not as attractive as it was. The investment case for rental homes was plain and I made the case a number of times in these pages in 2011 and 2012. I even bought a rental property for myself. And it’s worked out very well so far. I was far from the only one who saw such an opportunity." Continue reading →

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Gold Declines Trigger Brief Trading Halt

"Exchange operator CME Group Inc. said it briefly halted gold trading on Thursday morning to prevent excessive price volatility. Stop Logic, a type of circuit breaker that pauses trading for between five and 20 seconds, was triggered in the December-delivery gold futures contract at 2:54 a.m. EDT and lasted for 20 seconds, the spokesman said. A set of automatic sell orders were triggered as futures neared $1,350 an ounce early in European trading hours, said George Gero, a vice president and precious metals strategist with RBC Capital Markets, in a note. The sales sent gold prices as much as $10 an ounce lower in the space of a minute, triggering the trading pause." Continue reading →

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The Treasury Secretary on How Unstable U.S. Government Finances Are

"Treasury Secretary Jack Lew made the following statement during remarks today before the Economic Club of Washington D.C.: '[W]e are relying on investors from all over the world to continue to hold U.S. bonds. Every Thursday, we roll-over approximately $100 billion in U.S. bills. If U.S. bond holders decided that they wanted to be repaid rather than continuing to roll-over their investments, we could unexpectedly dissipate our entire cash balance.'" Continue reading →

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‘Beanie Babies’ creator will pay $53.5 million to IRS for $885,300 delinquency

"The creator of the wildly popular Beanie Babies toy line agreed to plead guilty to felony tax evasion charges and will pay a $53.5 million penalty as part of a settlement agreement, the Chicago Tribune reported on Wednesday. Prosecutors accused Warner of failing to notify his accountants about both a Swiss bank account and the $3.1 million in foreign income it generated. He subsequently did not disclose that income in his 2002 tax return, enabling him to avoid paying $885,300 in taxes for that year. UBS revealed Warner’s account as part of a 2009 agreement with the IRS after admitting that it helped U.S. clients hide their accounts." Continue reading →

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How to Finance a Second Passport, and More…

"Financing is available for this purpose from a few banks, but at less favorable terms than in the USA. You won't find a regular 30-year mortgage, for instance. The best most banks offer is a five-year mortgage on 50% of the purchase price with a balloon payment at the end. Interest rates are higher, too. After five years, you can roll over the mortgage for another five years. But you might not need to... a recent change in the law lets you sell your real estate five years after you qualify for citizenship. You can even sell it to someone else seeking economic citizenship." Continue reading →

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Bill Bonner: Larry Summers Was a Lousy Choice Anyway

"Yes, Summers is smarter than we are. Yes, he has a better academic record. Yes, he is a real economist. Yes, he has widespread political support and a winning personality. But beyond those things, studies find that people with lower IQs make better truck drivers than people with high IQs. Which puts the critical question right out in the open: What kind of thing is running a central bank? And how smart do you have to be to be a successful central banker?" Continue reading →

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