Chart of the Day: Dollar Dilemma

So far in 2008, the dollar has managed an impressive rally that regained the uber-important 80 level. This rally has recently begun to fizzle, however, setting up another test of this key support.

If it breaks down, it suggests we should see a resumption of inflation: yippeee! If it holds 80 and resumes the rally it began this year, it tells me deflation may only be just beginning to take hold: yowsers.

Either way, I’ll be watching like a hawk.

"Did You Know? 3.0"

Simply fascinating video presentation here:

(Click for Video – Thanks, Bren)

Who’s Gonna Bailout Uncle Sam?

Source:
Editorial Cartoon
Nick Anderson
Houston Chronicle
December 3, 2008

The Oracle Opines, Part Deux

Warren was on Charlie Rose last night. Here are some highlights:

“You want to be greedy when others are fearful and fearful when others are greedy; it’s that simple… and in my adult lifetime I don’t think I’ve ever seen people as fearful economically as they are right now.”

“This really is an economic pearl harbor. That sounds melodramatic but I’ve never used that phrase before and this really is one.”

“If I could take one percent of that seven-hundred-billion pot [proposed by Henry Paulson] and take the gain or loss from it and be their partner and they would buy the stuff at market I’d make a lot of money.”

“The biggest single cause [of the current crisis] was that we had an incredible residential real estate bubble… when four-trillion dollars in [real estate-related] losses land in the wrong part of the economy it can gum up the whole place.”

“Confidence in markets and in institutions it’s a lot like oxygen. You know, when you have it you don’t even think about it. I mean, it’s indispensable. You can go years without thinking about it. When it’s gone for five minutes it’s the only thing you think about. And the oxygen has been sucked out of the credit markets.”

“Beware of geeks bearing formulas.”

“As long as you have markets you’ll have excesses. People went crazy with tulip bulbs; they went crazy with the South Sea bubble; they went crazy with internet stocks; they went crazy with uranium stocks when I was first getting started… you’re not going to change the human animal.”

“I believe in mark-to-market [accounting]… I don’t think anybody gets hurt by telling the truth on that sort of thing.”

“We are going through a very, very tough period and I did not think I would see the day when, you know, an AIG would not have its checks clear.”

Good stuff, as always.

Source:
An Exclusive Interview with Warren Buffett
Charlie Rose
October 1, 2008

"A moment of silence. PLEASE!!"

Source:
Editorial Cartoon
Deb Milbrath
Freelance
September 11, 2008

The greenback gets some green back

I’ve been bullish on the buck for quite a while now and in the past couple of months it’s ramped over 10% higher. However, it’s now running into some long-term resistance and looks more than a bit overbought in the short-term:

I Call That A Bargain

Almost two months ago I featured a chart that suggested our equities market looked cheap to foreigners. Today we get a couple of news stories that confirm this view:

Japanese Banks Go on a Shopping Spree

Canada’s Largest Drilling Company to Buy a U.S. Rival

And the NY Times recently ran a piece about foreigners flying into Manhattan for weekend shopping sprees:

They’ll Take Manhattan, in Cash

So international businesses are finding value in our assets and foreign consumers are celebrating the weak dollar by buying up Manhattan. And I expect it won’t be long before this bargain hunting tranfers to our relatively cheap (in terms of currency) stock market.

(Click for audio)

Sources:
Chart of the Day: S&P 500 in Euros
Jesse Felder
My Back Pages
July 2, 2008

Japanese Banks Go on a Shopping Spree
Leslie P. Norton
Barron’s
August 25, 2008

Canada’s Largest Drilling Company to Buy a U.S. Rival
Reuters
Augst 25, 2008

They’ll Take Manhattan, in Cash
Alex Williams
The New York Times
August 3, 2008

Chart of the Day: Commodities Bear Market

With the decline over the past month now reaching 20% the commodities market has officially entered bear market territory, as it is technically defined, joining the world’s stock markets.

Dissing the Dollar

Editorial Cartoon
Dick Locher
Chicago Tribune
July 30, 2008

A Noble Soul Passes

One of my personal heroes, Sir John Templeton, passed away today. He was well-known in the world of finance as a true investing pioneer.

My favorite Sir John quote is “the four most dangerous words in investing are ‘this time it’s different.’” A close second is “help people. When people are desperately trying to sell, help them and buy. When people are enthusiastically trying to buy, help them and sell.”

He famously recognized the peril of the internet bubble (and its supporters who fully embraced the “this time it’s different” mantra) and heavily profited from the decline of tech stocks after March 2000 by indiscriminately shorting them (“helping” them frantically buy by selling to them).

During the recent real estate boom he again warned of a bubble (while the mantra again surfaced) but was mainly written off as out of touch. Though he would be the last person to ever celebrate at any misfortune, his call was vindicated with the current real estate crash.

But he was probably best known around the world as a philanthropist.

In his book Agape Love, Templeton describes his life goal of “developing [a] divine ability” to love, best expounded in 1 Corinthians 13:4-7:

Love is patient; love is kind; love is not envious or boastful or arrogant or rude. It does not insist on its own way; it is not irritable or resentful; it does not rejoice in wrongdoing, but rejoices in the truth. It bears all things, believes all things, hopes all things, endures all things.

Well done, Sir John. May you rest in peace.

(Click for audio)