Archive for December, 2011
New Year’s Day Hangover Cures, 5 Steps to Happiness, and other Weekend Reads
Friday, December 30th, 2011
Here are this week’s reading diversions for your personal enlightenment. Have a Wonderful and Happy New Year’s Eve Celebration Weekend.
All the best to you and your loved ones and wishing you greater prosperity, happiness, and peace in 2012.
6 Ways To Beat Your Post-Christmas Sugar And Junk Food Cravings
“Ginger ale and soy milk are high in tyramine, which can help relieve chocolate cravings. Pekoe tea is high in chocolate’s other stimulating ingredient. theobromine.”
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Randy Taran: 5 Steps to Happiness
As the autumn leaves fall, consider shedding old habits that no longer serve you. It’s a great time to focus on who you are and what practices will grow your happiness. What are the attitudes that will move you along? Here are five ideas that can make a difference:
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Coffee – The Good and The Bad | Be Well Buzz
Stimulating Breath – Caffeine dilates and opens up the airways, and is great for those who face breathing difficulties such as asthma/bronchitis. People who have recently undergone a surgery are sometimes treated with caffeine to help stimulate breathing.
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Medicinal Uses of Honey | Be Well Buzz
Today, many people swarm to honey for its antibacterial and anti-inflammatory properties. Holistic practitioners consider it one of nature’s best all-around remedies.
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A Top Dermatologist’s 5 Best Anti-Aging Tips | Caring.com
One word: sunblock. Use a full tablespoon of sunscreen with a sun-protection factor (SPF) of at least 30 on your face, spreading it to your neck and ears. Know that older skin tends to be more vulnerable to the effects of the sun than younger skin.
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5 Things That Probably Won’t Help You Live Longer | Caring.com
Your parents’ ages. Don’t count on repeating long-lived ancestors if you yourself smoke, have high cholesterol, and lead a couch-potato life — all factors associated with shortening one’s lifespan. Lifestyle factors can trump genetics.
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Feel-good mashed potatoes — with extra… | Chatelaine.com
Like many people, I absolutely love mashed potatoes. I just love them when they are creamy, garlicky, smooth ‘n chunky, skins and all. Buttery, salty, piled with salsa or ketchup. It is fun to dress them up.
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TUESDAY, Feb. 22 (HealthDay News) — People with inflammatory bowel disease have double the risk of developing a potentially deadly blood clot (venous thromboembolism) in the legs or lungs as do people in the general public, a new study finds.
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Zucchini Oven Chips – Health.com
Good to Know
Not all chips have to be unhealthy and fat-laden. Zucchinis are more nutritious than potatoes, which are usually used for chips. Baking the zucchini cuts back on fat that is needed for frying.
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Smoking – 12 Surprising Causes of Depression – Health.com
Smoking has long been linked with depression, though it’s a chicken-or-egg scenario: People who are depression-prone may be more likely to take up the habit.
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Almond Health Benefits – Southern Living
They lower your risk of heart disease.
Almonds are high in monounsaturated (“good”) fats, which help lower cholesterol. By adding almonds to a low-fat diet, you can reduce your chance of heart disease by 30% to 45%. Choose nuts with little or no salt, which can raise blood pressure.
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Easy Health Tweaks That Make a Big Difference – When to Snack – Oprah.com
Caffeine can actually inhibit the growth of cancer cells—and may lower your risk for the disease. (Click here to learn what your morning brew can do for your brain.)
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3 Foods That Whiten Your Teeth Naturally : Vitamin G: Health & Fitness: glamour.com
USA Today had the scoop on the foods, according to dental experts, that can scrub away stains and keep them sparkling white. The so-called “toothbrush foods” are as follows:
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TLC Cooking “Benefits of Vitamin D”
Topically applied, vitamin D may be helpful for psoriasis by limiting the growth of abnormal skin cells. Topical vitamin D for psoriasis is available only by prescription and can be quite expensive.
Other uses for vitamin D include reducing the symptoms of some forms of arthritis and maybe even helping to reduce the risk for insulin-dependent diabetes in young children.
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The idea of “lining your stomach” before a night on the booze is not just an old wives’ tale. Drinking on an empty stomach can cause a build-up of acid and damage the stomach lining. Eating a substantial carb-based meal will help reduce excess acid as well as preventing blood sugar levels dipping during the evening.
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Posts from the Health Category – Walletpop Canada
Mo’ Canadian men than ever donated their upper lips to fight prostate cancer this Movember, raising a stash of over $35 million — the most of any country in the world.
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The 25 Worst Passwords of 2011 – Walletpop Canada
Here’s a tip for creating a more secure password: Make it eight characters or more, and use multiple types of characters — upper- and lower-case letters, numbers and symbols. (For more tips, read DailyFinance’s article on how to create safe, memorable passwords.)
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Spicy and sweet nuts – Chatelaine Recipes
Spiced nuts make a great snack during the day. Opt for the healthiest nuts – almonds, walnuts, Brazil nuts, or pistachios are all good choices.
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Tags: 5 Steps, Breathing Difficulties, Celebration Weekend, Chocolate Cravings, Couch Potato, Eve Celebration, Ginger Ale, Hangover Cures, Happy New Year, High Cholesterol, Holistic Practitioners, Junk Food Cravings, Lifestyle Factors, Medicinal Uses Of Honey, Old Habits, Parents Ages, Personal Enlightenment, Stimulating Breath, Sun Protection Factor, Tyramine
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A Gift from Risky Markets
Friday, December 30th, 2011
By Scott Ronald, Steadyhand Investment Funds
Michael Nairne, president of Tacita Capital, wrote a good piece in the Financial Post last weekend, titled A Gift From Risky Markets, which looks at historical stock market returns and valuations (dating back to 1825) and provides some perspective on the level of long-term returns investors can expect going forward.
If you got stiffed this holiday season or are looking for a little cheer as the bills come rolling in, this short article may be just the elixir you need.
Tags: Cheer, Elixir, Historical Stock Market Returns, Holiday Season, Investment Funds, Investors, Perspective, Steadyhand, Stock Market Returns, Tacita, Valuations
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Jim Rogers: Why He’s Shorting Stocks and Favouring Commodities
Friday, December 30th, 2011
Jim Rogers discusses his outlook for the economy, stocks, and commodities.
Call Notes:
Jim Rogers: I’m not optimistic about 2012, and maybe even not 2013.”
Favouring agricultural commodities – huge shortages developing of just about everything, and even, particularly, a shortage of farmers. Agriculture’s going to be a great place the next 10-20 years.
Shorting emerging markets stocks, American technology, European stocks;
JR: “I don’t see much reason to own stocks, when one can own commodities. If the world gets better, i’m going to make a lot of money in commodities because of the shortages, and if the world doesn’t get better, governments will print money. Whenever governments have printed money, the only way to protect one’s self is to own real assets.”
China: Hard or Soft Landing?
JR: “Some parts of the Chinese economy will have a very hard landing; the Chinese government has been trying to kill the real estate boom for 2 1/2 years. They’ve raised interest rates 6 times, raised reserve requirements a dozen times; they’re gonna pop the real estate bubble, but that’s not the whole China story. There’s gonna be parts of the Chinese economy that are gonna boom no matter what happens to real estate in Shanghai and Beijing.”
How about beaten down stocks like Potash and Mosaic?
JR: “I’m not familiar enough to give you a good comment; I just remember in the 70s, stocks went down and did nothing, and economies did nothing, and yet commodities themselves went through the roof. Some commodities stocks did well in the 70s; A recent Yale study showed that you would have made 300% more investing in commodities themselves rather than commodities stocks, unless you were a very good stock picker. So I’m sticking with the real commodities.”
Comment: Jim Rogers travels everywhere in the world with his family, and he eats his own cooking.
What about the other BRIC nations? What about Brazil and its dependency on China? Would you short Brazil?
JR: “I’m short India, I’m short Russia. Brazil is a huge natural resource based economy, and in commodity bull markets they do well. Fortunately, I’m not long, I don’t have any positions – Unfortunately, the new Brazilian government is starting to do some pretty foolish things which I think will not make them participate as much as they could.”
Jim Rogers is long gold, long silver, expects correction to continue down to the $1300/oz. level.
JR: “I’m a terrible market timer, I’m a terrible trader. It would not surprise me if gold went down to $1,300-$1,200. If it goes that low, I’m going to buy a lot more. I’m not selling any ofo my gold or silver, but I’m not a good market timer. I’m just saying that gold has been up 11 years in a row, it deserves a substantial correction. Substantial corrections are not unusual in bull markets. If it goes that low, I’ll buy a lot more.”
Source: CNBC, December 28, 2011.
Tags: agricultural, Agricultural commodities, Agriculture, American Technology, Chinese Economy, Chinese Government, Cnbc, December 28, Economy Stocks, European Stocks, Gonna Pop, Good Stock, Investing In Commodities, Jim Rogers, Outlook, Potash, Real Assets, Real Estate Boom, Real Estate Bubble, Real Estate In Shanghai, Shorting Stocks, Stock Picker, Stocks And Commodities, World Doesn, Yale Study
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Doug Kass: Stocks to Reach All Time Highs in 2012
Friday, December 30th, 2011
In this video clip, Doug Kass, founder of Seabreeze Partners, discusses his market predictions for the new year. The interview essentially covers the same ground dealt with in my post of two days ago, “Doug Kass’s 15 surprises for 2012“.
Source: CNBC, December 27, 2011.
Tags: All Time Highs, Cnbc, Doug Kass Stocks, Market Predictions, New Year, Seabreeze Partners, Surprises, Video Clip
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George Soros Sees Gold as the “Ultimate Asset Bubble”
Friday, December 30th, 2011
Gold is set to finish its 11th consecutive year of gains, the longest winning streak in at ninety years, and is on the brink of a bear market, says George Soros. The billionaire who called it the “ultimate asset bubble” two years ago, reduced his gold and gold related by 99 percent in the first quarter of 2011, according to the Securities and Exchange Commission data.
Betty Liu reports on Bloomberg Television’s “In the Loop.”
Gold Bubble Seen by Soros on Brink of Bear Market
Source: Dec. 29 (Bloomberg)~~~
See also
George Soros Says Markets Are `Always Fallible’
Billionaire investor George Soros talks about global financial markets and his philanthropy. He speaks with Francine Lacqua on Bloomberg Television’s “Eye To Eye.” (Source: Bloomberg)Oct. 10 (Bloomberg)
Tags: Bear Market, Billionaire, Bloomberg Television, Brink, Eye To Eye, First Quarter, George Soros, Global Financial Markets, Gold, Investor, Liu, Longest Winning Streak, Market Source, Philanthropy, Securities And Exchange, Securities And Exchange Commission, Securities Exchange
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Summarizing 2011 In Nine Easy Charts
Friday, December 30th, 2011
If one had to summarize 2011 in one sentence, it probably would be: “a year in which the market ended unchanged, in which the world got within seconds of global coordinated bankruptcy, and in which central planning finally took over everything.” Simple. On the other hand, conveying a comparably concise message full of hope and despair at the same time, using charts would actually be slightly more problematic. But not for the Economist, which has managed to do just that, however not in one but nine discrete charts. Here is what they did.
From the Economist:
IN 2008 banks were saved by governments. The question that dominated 2011 was how to save governments. The euro-area sovereign-debt crisis metastasised from a problem affecting small, peripheral states to one that threatens the single currency itself. The rise in Italian bond yields in particular marked a dangerous new stage in the saga (chart 1). European banks, stuffed full of government bonds, have suffered a severe funding squeeze since the summer (chart 2). The euro was oddly resilient against the dollar, but Switzerland and Japan intervened to hold down their currencies as investors sought shelter (chart 3).
Faced with skittish creditors, countries in Europe tried to instil confidence by cutting spending (chart 4). Austerity and growth do not mix, however. Euro-area GDP remains below its pre-crisis level. American output did at least regain that mark in 2011 (chart 5) but US unemployment remained very high.
The emerging economies again outshone their rich-world counterparts in terms of growth and jobs. But fears about inflation (chart 6) slowly gave way to fears about growth as the year went on and Europe’s problems worsened. Emerging-market stocks dropped sharply in the summer as investors put their money into less risky assets (chart 7). Gold also benefited from another year of fear. The metal was set to post its 11th consecutive annual gain in 2011 (chart 8). Google searches for “gold price” rose whenever measures of market uncertainty did (chart 9). If governments aren’t safe, after all, what is?
Chart 1
Chart 2
Chart 3
Chart 4
Chart 5
Chart 6
Chart 7
Chart 8
Chart 9
Tags: Austerity, Bond Yields, Concise Message, Countries In Europe, Creditors, Crisis Level, Debt Crisis, Economist, Emerging Economies, Emerging Market Stocks, European Banks, Google, Google Searches, Government Bonds, Hope And Despair, Risky Assets, Single Currency, Sovereign Debt, Squeeze, World Counterparts
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Fed Swap Lines Jump 59% In A Week As Japan Shows Its Hand
Friday, December 30th, 2011
It seems that it is not just the Europeans that are USD cash starved heading into year-end as the Swiss and Japanese gorged themselves on two-week maturity FX swap lines during the last week. The total outstanding under the Federal Reserve’s USDollar Liquidity Swap Operations jumped from $62.599bn to $99.823bn – or more than 59% during the week ending 12/28. Admittedly, the size of the additional Swiss draw-down, $320mm more compared to $75mm the previous week, is a drop in the bucket compared to the ECB’s additional $33bn this week. However, the more-than-$9bn additional draw-down by the Bank of Japan perhaps helps explain why USD-JPY cross-currency basis swaps eased so much this week (as the desperate need for USD through this counterparty-risk-exposed form of funding reduced by around 12bps or more than 25%). Perhaps it is time to take a closer look at some of the Japanese banks as while the stigma of borrowing from these lines is talked down, clearly there are funding/liquidity needs that are rising dramatically.
From the Fed’s website, the scale of the jump in the swap lines is evident for Europe and Japan.
While the velocity of the initial moves is not quite as historic as the Lehman moments, it is starting to gather pace – now above the pre-2008-crisis starting levels.
And the rise (an improvement) in the USD-JPY basis swap up to the 12/28 break is very notable as banks preferred to spend a little extra (58bps for 15-days versus 32bps for 3-months) and avoid the longer-term currency exposure (and counterparty risk) of the basis swap in favor of the Fed’s visible hand.
Tags: Bank Of Japan, Basis Swap, Basis Swaps, Closer Look, Counterparty Risk, Currency Basis, Currency Exposure, Desperate Need, Drop In The Bucket, ECB, Fx Swap, Initial Moves, Japanese Banks, Lehman, liquidity, Stigma, Term Currency, Usd Jpy, Usdollar, Visible Hand
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New 52 Week Highs – Notice a Pattern?
Friday, December 30th, 2011
As I scan my traditional watch lists most of the stocks in them are doing “meh” – they take 3 steps forward and 2 steps back. Or vice versa. They are really doing very little other than churning. Most of the leadership of the past 2-3 years has died – broken charts everywhere. See Mr. Amazon.com (AMZN) for but one example.
Lately, it has been a market whose leadership is in safety and yield. Not typically what you associate with a bull move. Many of these stocks are very overbought (in some cases extremely so) but each day the buyers come in and buy more…. one wonders if Mr. Bernanke with his multi year (and perhaps decade long) low interest rate policy has begun fomenting the next bubble: yield. No longer able to get yield in traditional havens, investors are pushed into equities that provide it. Seemingly, en masse.When stock price appreciation expands in excess of earnings or cash flow – that means multiples are expanding. Multiples are a judgement call – but generally fall within very long term historical ranges. We are now seeing excess in the ranges but like good lemmings the crowd is being herded…
Ironically these are considered ‘safe’ stocks – but we all have seen this game before and know how the crowded trade ends. But we never know when.
I think as you scan the 52 week high list a very obvious pattern should be apparent.
Disclosure Notice
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
Tags: 2 Steps, 3 Years, 52 Week High List, 52 Week Highs, Amazon, Bernanke, Cash Flow, Crowd, Disclosure Notice, Earnings, Havens, Interest Rate Policy, Investors, Judgement Call, Leadership, Lemmings, Mutual Fund, New 52 Week Highs, Personal Portfolio, Portfolio Securities, Stock Price Appreciation, Stocks
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Neils Jensen: Investment Outlook (December 2011) – “The Facts They Don’t Want You To Know”
Friday, December 30th, 2011
The Absolute Return Letter December 2011
The Facts They Don’t Want You to Know
by Niels Jensen, Absolute Return Partners
What have Bill Gross, John Paulson, Anthony Bolton and Bill Miller all got in common? They are all ‘rock star’ fund managers who have fallen on hard times more recently. Life in the fund management industry is not what it used to be like. Life is tough even for the supremely skilled. Markets are changing, fund managers are struggling to adapt and clients are growing restless as a result. If I told you that the composition of an average UK equity fund changes by 90% a year, would that startle you? How would you feel if I added that the 20 funds with the highest turnover returned just 4.7% to investors in the 3 years to the end of March 2011 whereas the 20 funds with the lowest turnover returned 16.8% over the same period?1
From the same source: Out of 1,230 funds across 12 different strategies, only 35 fund managers produced a performance consistent enough to earn their fund a place in the top quartile in each of the last three years (upper half of chart 1). In a universe of 1,230 funds, over a three year period and completely disregarding skill, the expected number of funds consistently ranked in the top quartile is 1,230*0.253=19.22.
In other words, more than half the 35 managers were there not because of skill but because, statistically, someone was always likely to ‘over-achieve’. This leaves about 15 fund managers out of a universe of 1,230 – ca. 1% – who could with some right claim that they have consistently been in the top quartile.
The problem is we don’t know who they are. All we know is that none of them are managing Asian equities, North American equities or Global fixed income funds as those three strategies didn’t produce a single top quartile performer between them. And when you look at the second, and slightly less demanding, part of the study – those who have been in the top half in each of the past 3 years – the picture is broadly the same (lower half of chart 1). 177 fund managers achieved the required consistency but 154 of the 177 are likely to have done so because of luck, not skill.
I have never come across a fund manager who openly admits that his (or her) outperformance is down to luck. On the other hand, I often come across fund managers who suggest their underperformance is down to bad luck. I suppose no manager ever skilfully underperforms, but to put it down to bad luck is an insult when we all know that human error is the most common cause of underperformance.
If a fund manager’s outperformance is based on skill rather than luck, wouldn’t one expect the majority of the outperformance to come from those stocks with the highest weights in the portfolio? This seems a reasonable assumption given that one would expect any rational fund manager to allocate the most capital to his/her highest conviction ideas.
However, in a study conducted by UK consulting firm Inalytics (see here), 39 of 42 Australian funds managers who outperformed their benchmark owed their outperformance to the ‘underweights’ in the portfolios – suggesting that human error is not only the source of underperformance but perhaps also of some of the outperformance.
Bestinvest produces an annual survey called Spot the Dog (see here for the latest survey) which has gained considerable attention in the UK fund management industry, although it is not a league table you will be proud to be mentioned in. According to the 2011 survey published back in August, over £23 billion is currently managed in so-called dog funds2, an increase of no less than 74% since the previous report.
You don’t become a dog just because you have a bad quarter or two. The members of that exclusive club have a history of serial underperformance, yet they will generate in the region of £350 million of fees to their firms this year despite the obvious value destruction.
And the story gets worse – much worse in fact. According to an unpublished report conducted by IBM, our industry destroys $1,300 billion of value annually – a staggering 2% of global GDP (see here for details). This includes about $300 billion in fees on actively managed long-only funds which fail to outperform their benchmarks, $250 billion spent on wealth management fees for services which do not meet their benchmarks and $50 billion in fees on hedge funds which underperform. Do I need to say any more?
Why are fund managers finding it harder than ever to outperform and what are the long term implications of those miserable performance statistics? Let’s deal with the ‘why’ first. There is no question that managing money – in particular equity mandates – has been a delicate affair over the past decade.
Through the 1980s and 1990s global equity markets benefitted from a strong undercurrent of bullishness. As a result, fund managers went into the bear market of 2000-01 on a wave of optimism (who doesn’t recall the repeated calls in the late 1990s of a new investment paradigm?) epitomised by the record high P/E levels in 1998-1999 just before it all went pear shaped in 2000.
Tags: 3 Years, Absolute Return, Asian Equities, Bill Gross, Bill Miller, Equity Fund, Fixed Income, Fund Changes, Fund Management Industry, Fund Managers, Investment Outlook, John Paulson, Neils, Niels Jensen, Period 1, Quartile, Rock Star, Star Fund, Tho, Turnover, Uk Equity
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Wall Street Response To Italian Auction
Thursday, December 29th, 2011
Here is the kneejerk Wall Street response to the key event of the day. Funny how the Italians think it was a good auction and everyone else kinda sorta disagrees.
ALESSANDRO MERCURI, STRATEGIST, LLOYDS BANK, LONDON
“Decent even though slightly disappointing (compared) to yesterday’s auction. The 2022 bond was well bid, they sold 2.4 billion at the high end of the 2.5 billion range. The key thing that we saw yesterday was that Italian paper still commands a maturity premium. People are still concerned about the credit risk so the longer the maturity the higher they pay. All in all it’s a decent reception.”
DAVID SCHNAUTZ, RATE STRATEGIST, COMMERZBANK, LONDON
“While yesterday’s 6-month bill rates declined to half the levels of the previous auction, today’s decline in the auction yield by ‘just’ about 60 basis points versus end-November in such a high-yield territory underscores that the genuine pressure on Italy is still tremendous, despite bold ECB actions that has given the short ends a big boost.
“Not moving closer to the upper end of the target range is also very unusual for Italy, i.e. not a good sign.”
PETER CHATWELL, RATE STRATEGIST, CREDIT AGRICOLE, LONDON
“These have been rather average auctions. The amount sold is 7.02 billion euros versus a 5-8 billion euro range, and the yield improvements we see in the auctions were largely already priced into the secondary market in last week’s LTRO-fuelled rally.”
ALESSANDRO GIANSANTI, RATE STRATEGIST, ING, AMSTERDAM
“It is slightly positive that they were able to issue the full amount in the 10-year and we have started to see some reduction in yield … but 7 percent is still a very weak (result).
“The bid to cover ratio in the three-year was weak, but we are 200 basis points below the (yield) level of last month. The rally in the short-term is positive.
“It is also slightly positive that they were able to issue 7 billion given that we are on Dec. 29.”
Via Reuters
Tags: Basis Points, Chatwell, Commerzbank, Commerzbank London, CréDit Agricole, Credit Risk, Euro Range, high yield, Ing, Italian Auction, Italian Paper, Italians, Kneejerk, Lloyds Bank London, Maturity, Rally, Reuters, Strategist, Target Range, Wall Street
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