QE2 won’t work and has not work and its failure will damage the Fed by damaging the Fed’s credibility.
My fundamental rules of investing:
The spike in oil prices will create a recession because it will dampen consumer spending on other things. Further if interest rates rise in the bond market in response to the alleged threat of inflation then those higher interest rates will pop the stock market bubble.
Bank Loan Funds are mutual funds that invest in corporate loans created and sold by banks. An article in Bloomberg at praised these investments, but I disagree. The loans are typically below investment grade with grades averaging “B” or even “CCC” and are thus “junk bond” credit quality. My research is that junk bonds actually provide a total return that is less than “A” paper because of permanent losses to capital that occur during crashes. I have determined that a bond or loan is a work tool and that a tool should be used for the purpose for which is intended or else an injury could occur. If you want bonds please insist on
The housing market will not repeat its previous patterns over the last 45 years. Using underwriting standards and looking at the inflation adjusted cost of money, we are in a new era in which the eras from 1965 to 2008 are not comparable.
Today there was a lot of bearish news. After the stock market had been going up with minimal dips for six month it finalled dipped with the SP decling 2%, Nkkei down 1.8%, Shanghai down 2.6%.
Book review: Capitalism 4.0 The Birth of a New Economy in the Aftermath of a Crisis by Anatole Kaletsky. The author is Chief Economist with GaveKal investment company in London.
Book Review: Wall Street Revalued: Imperfect Markets and Inept Central Bankers, written by Andrew Smithers. The author is mentioned by Jeremy Grantham as one of only five intellectuals in the investment advisory industry. The book’s theme is that the stock market is not efficient; instead the author has developed his “Imperfectly Efficient Hypothesis”. The author demonstrates that the Random Walk Hypothesis is wrong and clearly shows the market is not efficient. My own experience with the tech bubble of 2000 and the real estate bubble crash of 2007 shows that the market is incredibly inefficient. The author assures the reader that eventually the market comes to its senses and adjusts to fair value. However,
Please download my free Special Report: Avoid these investment mistakes at http://www.mayflowercapital.com/Avoid-These-Investment-Mistakes/
According an article in the Economist today at http://www.economist.com/node/18175493 inflation may actually be good for emerging market countries. They quoted Arthur Kroeber of Dragonomics, a Beijing-based research firm. This is usually only if inflation is caused by faster wage growth.