Tag Archives: Economics

Japan’s economy shrinks after sales tax hike

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“Japan’s economy contracted by an annualised 6.8% in the second quarter of the year, the biggest fall since 2011 when it was devastated by an earthquake and tsunami.  The official gross domestic product (GDP) figure though was smaller than the 7.1% drop economists expected.  The shrinkage was largely in response to a government sales tax, which held back consumer spending.  Japan’s sales tax rose from 5% to 8% in April.  On a quarterly basis, the economy contracted 1.7% in the second quarter after a 1.5% rise in the first three months. Private consumption, which makes up 60% of economic activity, was 5% down on the previous quarter.”

http://www.bbc.com/news/business-28767708

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Bill Bonner: Too Busy to Read Ben Graham? Do This Instead…

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“How do you figure out how much a stock is really worth? Read Ben Graham and David Dodd’s 1934 classic, Security Analysis. Everything you need to know is there.  No time for Graham and Dodd’s tome?  Well, our STS (Simplified Trading System) is about as simple as it gets. Buy when the Dow is selling for under 10 times reported earnings. Sell when it trades at over 20 times reported earnings. Otherwise, do nothing. (That’s the hard part.)  Your editor likes STS because he doesn’t have the temperament for detailed stock analysis.  Will it work for you?  No one knows. All we know is that it worked in the past.”

http://bonnerandpartners.com/busy-read-ben-graham-instead-market/

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Bill Bonner: The Best Wealth Building Advice You’ll Never Take

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“For most people, investing is not a good way to make a fortune. It is just a good way to keep… and maybe grow… a fortune.  You make your real money by providing real goods and services to others. It is not realistic to think you can make much money, while you sleep, from the hard work and enterprise of others.  Here’s our investment philosophy:  1) Think a lot. Do a little.  2) Always buy low. And for safe measure, buy very low.  3) Never believe anything a salesman says about an investment. There’s a good chance that he is ignorant, dishonest or stupid. Or all three.  4) Be reasonable. But take a swing at a grand slam pitch from time to time. Heck, it’s not just about the money; it should be fun, too. [..]”

http://bonnerandpartners.com/best-wealth-building-advice-youll-never-take-investing/

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A “Hidden” Bear Market Is Brewing

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“In 2000, the ratio of market cap to GDP for the Wilshire 5000 (a good proxy for the US stock market) reached 153%.  This didn’t stop investors pouring money into US stocks… which went on to deliver a negative total return over the next 10 years.  Fast-forward to today, and the ratio of market cap to GDP for the Wilshire 5000 stands at 125%. That’s not as high as at the peak of the dot-com bubble. But it’s higher than at the 2007 peak of the recent credit bubble.  And it’s more than two standard deviations above the average – a measure legendary contrarian fund manager Jeremy Grantham uses to pinpoint a bubble.”

http://bonnerandpartners.com/hidden-bear-market-brewing/

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John Hussman: A Warning from Graham and Dodd

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“The fact is that the most reliable valuation measures we identify are generally within just 15-20% of their 2000 extremes, and are already at or beyond levels observed in 1929, 1972, and 2007. Of course, that same advance to extreme overvaluation is also what has raised the total return of the S&P 500 from 2000 until today up to about 3.9% annually. We believe that even that total return is transitory, and presently estimate negative total returns for the S&P 500 on every horizon less than 8 years. We encourage buy-and-hold investors to understand and mentally prepare for the potential depth of interim losses inherent in that strategy (we would presently allow 40-55%).”

http://www.hussmanfunds.com/wmc/wmc140915.htm

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John Hussman: The Two Pillars of Full-Cycle Investing

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“While many observers pronounce victory at halftime, in the middle of a market cycle, at record highs and more extreme market valuations than at any point except the 2000 peak, remember the two pillars. First, the combination of high confidence, lopsided bullishness, overvaluation, and overbought multi-year advances has predictably been resolved by steep market losses, time and time again across history. Second, strong market return/risk profiles warranting constructive or leveraged investment positions emerge in every market cycle, generally following a material retreat in valuations, coupled with an early improvement in market action.”

http://www.hussmanfunds.com/wmc/wmc140908.htm

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Broken Links: Fed Policy and the Growing Wall Street-Main Street Gap

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“Probably the strongest feature of the foregoing chart is the tendency for inflation to move higher and lower in trends that have very little to do with unemployment, and for unemployment to move up and down in trends that have very little to do with inflation. Not to ruin a good theory with the facts, the failure of this misguided Phillips Curve formulation to describe the real world has resulted in a wide variety of ways to ‘augment’ it using expectations, varying ‘natural’ rates of unemployment, and so forth. The idea seems to be that using the right set of assumptions, we can make sense of the fact that the planets that circle around the Earth keep stopping and going backwards.”

http://www.hussmanfunds.com/wmc/wmc140825.htm

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Peter Schiff: How the Media Deceived Me

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“I’ve purchased property there, I have an office there, I have employees there so I’m developing my connections in Puerto Rico and they’re going to grow and ultimately, I’m going to be there. I just haven’t made a decision as to exactly when. I have family here, I have a son, so it keeps me here even though I would prefer not to be. Certainly from a tax perspective and even from a lifestyle perspective I think spending more time in Puerto Rico would be the right thing to do so ultimately, I am going to be out there. I think more and more Americans from the mainland are going to be washing up on Puerto Rican beaches because the opportunities and the incentives are really, really too big to pass up.”

http://www.thedailybell.com/exclusive-interviews/35628/Anthony-Wile-Peter-Schiff-How-the-Media-Deceived-Me/

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Bill Bonner on the Alex Jones Show (2014/08/07)

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“On today’s show, Jones welcomes author and economist Bill Bonner to speak about his latest book Hormegeddon, a work describing what happens when you have too much of a good thing in a public-policy context.”

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Bill Bonner: Can This Simple Trading System “Beat the Market”?

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“Large-cap US stocks, for example, tend to trade between 10 times earnings and 20 times earnings. Occasionally, they are more expensive. Sometimes they are less.  When they are more than 20 times earnings, buyers typically have a hypothesis that justifies the higher prices. ‘This time it is different,’ the sentence begins, followed by ‘because…’  We can never know that this hypothesis is true. We may know from experience that similar hypotheses have been proven false. But we can’t be sure that this one will be disproven too.  But as the price of stocks rise, the potential reward for betting against the extraordinary new hypothesis goes up.”

http://bonnerandpartners.com/can-simple-trading-system-beat-market/

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