Archive - Jun 2011 - Blog entry

Nearly all of Japan's corporate pension funds, which collectively manage more than $900 billion, have lowered their guaranteed yield in the last decade from about 5.5 percent to below 3.5 percent on average, and are now looking at hedge funds and other alternatives to juice their returns...

'And don't spend your time lookin' around...for something you want that can't be found'

And it's NOT just Greece ...

We’ve already had a taste of this in 2008 when the Credit Default Swap (CDS) market, which was $50-60 trillion in size, blew up. We’re now rapidly heading towards an interest rate Crisis and the interest rate-based derivative market is four times as large roughly $200 TRILLION.

“The system would be safer if we also went back to horse and buggies.”--Jamie Dimon

Much of our debt is due to the wars in Iraq, Afghanistan, Libya and elsewhere.

And yet the top American military and intelligence officials say that debt is the MAIN THREAT to our national security.

D'oh!

Nothing to worry about here. But I just voted with my feet.

Happy Summer Solstice 2011

1999, the year the Matrix was released and the year dot.com companies trampled on the rules of fundamentals in investing. A look at the sustainability of Groupon's valuation and business model...

According to Mebane Faber, by investing in a portfolio with uncertain outcomes, pension funds could experience increasingly volatile and even negative returns. Paradoxically, in an effort to chase the universal 8% rate, pension funds may be laying the groundwork for returns even lower than the risk free rate...

Until the next one...

An accident waiting to happen ...

With industrial production falling, the likelihood of an economic recovery seems farther and farther away for Messrs. Bernanke and Obama. The way I look at the data, the US economy continues its slide into stagnation. This isn't a "double-dip" -- we never did recover from the '08 Crash -- but a consequence of monetary and fiscal stimulus.

Other countries are rapidly dropping US debt like a hot potato. Russia has sold off 30% of its US Treasury holdings. China has lowered its holdings for five months straight and has even suggested selling off 2/3 of its exposure. And with even legendary bond investors like Bill Gross avoiding Treasuries, we’re rapidly heading into a debt Crisis that will make 2008 look like a picnic.

"I'm not sure I would say it was a house of cards..."--Dick Fuld