Finaxyz | Finance and Economics Commentary
Financial and Economic Perspectives for the Individual Investor
Friday, March 31, 2006
Thursday, March 30, 2006
Stock market commentary for Friday, March 31, 2006 in now posted
Bill Gross: *@?#»! Bond Trading and the Tyranny of Indexation
PIMCO's "Bond King" Bill Gross has posted his latest monthly April 2006 Investment Outlook (IO) letter, entitled "*@?#»! Bond Trading and the Tyranny of Indexation." I haven't read it carefully yet, but it is certainly an interesting rant.
It almost sounds as if he's trying to incite an exodus from the U.S. bond market and even from dollar-denominated assets. He says "PIMCO suggests in the near term that a total boycott of the bond market is impractical since non-economic central bank buyers should continue to dominate. We do suggest, however, a strategic boycott of most risk assets based on the reality that an investor is not being paid adequately to hold them, as well as the Greenspan assumption that todays low risk premiums ultimately lead to future periods that end badly. In turn, we currently suggest a substitution of near cash assets and non-dollar currencies for standard index assets."
I'll read his letter more carefully over the coming days.
Read his letter yourself and let me know what you think.
Wednesday, March 29, 2006
Stock market commentary for Thursday, March 30, 2006 in now posted
GM and Google stock
Also, with rising interest rates, it's getting more expensive for hedge funds to finance leveraged short positions. Some of these guys with a short-term trading mentality may be "tacking some money off the table". If your hedge fund had shorted GM at $19, how would you feel about their performance right now? That's a psychological consideration they have to accommodate, regardless of where they think GM will be headed next year or even longer term. GM is likely to be a yo-yo over the coming few years, but how many hedge fund investors will tolerate such yo-yo performance?
Tuesday, March 28, 2006
Stock market commentary for Wednesday, March 29, 2006 in now posted
Monday, March 27, 2006
Stock market commentary for Tuesday in now posted
Saturday, March 04, 2006
Warren Buffett's annual 2005 Chairman's Letter for Berkshire-Hathaway
Warren Buffett has just published his annual 2005 Chairman's Letter for Berkshire-Hathaway. It's well worth reading. If you think derivatives are a piece of cake, here's Warren's advice:
Long ago, Mark Twain said: A man who tries to carry a cat home by its tail will learn a lesson that can be learned in no other way. If Twain were around now, he might try winding up a derivatives business. After a few days, he would opt for cats.