Market Updates

Trick or Treat

The past twenty plus trading days have witnessed the equity markets rise twenty plus percent while twenty plus trans-European meetings have been held in an attempt to determine how yet another bailout of Europe may be constructed. It is speculated that it was this later point that led the market to be in a continuous 'buy the rumor' footing. 'Selling the news' has probably not yet occurred mostly because there has not really been news of significant substance. The outcome of the twenty something meetings is the so called European Financial Stability Fund (EFSF). It is neither a solution nor … Read More

公孫軒轅 The Return of the Empire

China does not have a historical beginning. The earliest known text and verbal traditions explain the presence of the Yellow Emperor, 公孫軒轅, who is observed reconstructing the empire 4,700 years ago from devolution spawned out of an earlier time of unity. The Yellow Emperor, a farmer, reportedly accomplished various natural feats such as taming brown and black bears, tigers, the ferocious 貙 (there is no similar animal in the west), and the mythical 貔貅. The 貔貅, pictured below and similar to a winged lion, was described as having a ravenous appetite for gold and silver. Through legend we learn … Read More

Is Italy Next?

Italy, the last line of defense for Europe… In August, I was browsing a merchant’s shop in Italy that displayed the Visa and MasterCard logo.  When it came time to pay for a €20 souvenir, I pulled out my Visa Debit card but the merchant refused and wanted cash.  I obliged, paid cash and was given no receipt.  No official transaction occurred thus no sales taxes were collected. Last week in a meeting with a colleague, who has travelled and had numerous business dealings in Italy, we discussed this transaction.  This practice is very common in Italy and he estimated that 10-20% of their … Read More

Being Crazy Isn’t Enough . . .

For nearly a decade 'The Essays of Warren Buffett' have been required reading for employees and interns alike at our firm. This indexed compendium of Mr. Buffett’s Berkshire Hathaway annual reports contains valuable insight into the mind of one of the world’s few consistently correct investors. The rules he established kept him from forays into the difficult to value, capital intensive and volatile sectors of communications and computing – and rightfully so. His rules have also historically kept him from spending too much on potential acquisitions across other areas of the economy. Here is a … Read More

Debt is Public Enemy #1

My grandfather was reported to frequently assert “debt is public enemy number one!” Nearly 160 years earlier, in 1816, Thomas Jefferson wrote “I believe that banking institutions are more dangerous to our liberties than standing armies.” Both of these sentiments transcend the sands of time - mostly because they are accurate. Let us not forget that it is the heavily debt laden USA banking institutions that are a massive contributor to why the USA debt rating was revised from AAA to AA+ by S&P on Friday evening. It was only three years ago when the USA Treasury and the Federal Reserve … Read More

Let’s Not, and Say We Did

Two decades ago I became friends for life with a fellow from Ohio. He had all manner of wonderful sayings that still ring through my mind. One of my favorite was ‘safety first, or not at all’. Of course, many in our orbit of adventurers would focus on the ‘not at all’ portion. Because this was unhealthy and prone to end badly for a bunch of testosterone infused young men, my friend took to sincerely saying ‘let’s not, and say we did.’ It quickly replaced the first saying and led to a sifting out of some that were a bit too eager when it came to endangering our lives. These past two months I … Read More

The Fed Cannot Control Congress

While I don’t view Greenspan or Bernanke as the best chiefs ever, I also don’t lump massive amounts of blame on them.  The Fed Chairman has some very powerful tools but the Fed does not control the annual budget deficits.  Last week’s exchange between Ron Paul and Ben Bernanke makes for good theatre.  (View Here)  Ben is only using the tools available to him and the largest issue causing problems and limiting our ability to recover he has zero oversight: spending in DC. Debate continues about the level of our national debt, the relative safety of the US dollar and whether or not a full … Read More

The Blind Spot

People desire normalcy so intensely that they frequently attempt to disregard knowledge that is disruptive to their expectations of reality. In cases where mortal peril is involved this process is downright dangerous because paralysis sets in as assertiveness seeps away. Some refer to this process as somewhat similar as 'going into shock', but I prefer to call it 'the blind spot'. This is not to say that one is completely ignorant when such situations arise. In the recesses of our minds there may be some memory, recollection, or even a detached familiarity with what is occurring. I have … Read More

Silver America

Above ground silver is now likely scarcer than gold. The primary solution to alleviate this scarcity is through mining where the majority of the world's silver production and known reserves are - the Americas. The chart below shows 2009 silver production by country. The location of known silver reserves substantially approximates the location of current silver production. A year ago I provided an in person overview of Peru and its historical function as a primary crossroads for South America. At that time global financial pressures temporally appeared to abate and precious metals research … Read More

Change

Very little has changed in the Middle East since the Arab Revolt of 1916-1918 which was romanticized by my all time favorite movie, Lawrence of Arabia. This cinematically pleasing film relates 'a' story of peoples on the Arabian peninsula attempting to gain some measure of self determination. Of course the movie also relates part of famed WWI British Intelligence officer T.E. Lawrence's legendary exploits and bluntly presents his descent into insanity. While the movie really is a must see, it's plot line is somewhat disappointing. The real plot was more instructive for what is occurring today. … Read More