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Archives
July 31, 2008
The Incarcerated CEOs ETF
With Imclone stock raging higher today on the Bristol-Meyers takeout offer, I'm think that we need an incarcerated ex-CEOs ETF. After all, Imclone ex-CEO Sam Waksal has been in jail for five years, and is getting out in August.
Nice list/map of companies and incarcerated CEOS here (via Portfolio).
Jeremy Grantham: "I'm officially scared!"
This post is a guest contribution (really just a snippet) by Prieur du Plessis, writer of the Investment
Postcards from Cape Town blog.
The bearer of the bad tidings today is money manager Jeremy Grantham, chairman of GMO, who has just published the July edition of his quarterly newsletter entitled "Meltdown! The Global Competence Crisis".
In terms of strategy, Grantham summarizes his view in what he believes should be investors' motto: "Don't be brave, run away. Live to fight another day."
Specifically, as far as house prices are concerned, Grantham looks at the ratio of US median house prices to family income and states: "In order for house prices to reach normal from here, they must either decline 17% immediately or experience four flat years while income catches up, or some combination." Even more worrying, however, is the normal tendency for bubbles to overrun on the downside.
Across the pond, the situation looks even more dire as shown by the graph below. According to Grantham: "If UK house prices go all the way back to trend, and history says that is extremely likely, then the UK financial system will definitely need some serious bailouts and the global ripples will be substantial. Of all the negative possibilities out there, and there are plenty, real pain in this area is the most likely; I would say, nearly certain."
In short, Grantham opines: "Events must now be disturbing to everyone, and I for one am officially scared!"
Click here for the full report on Grantham's reasoning for his bearish stance.
Source: Jeremy Grantham, GMO, July 30, 2008.
Peak Matthew Simmons?
This morning on CNBC I was on a peak oil panel with Matthew Simmons. I'm a fan of his, even if I don't always agree with some of his comments, but I thought this morning wasn't one of his best performances.
First, I thought he pushed out the peak, talking squishily about a few years rather than saying it was already here. Correct me, but I think that's new.
Second, he was softer about the Saudis than usual. First he argued that fields there may not be in decline, but we are seeing higher production costs. Then he turned around and argued that production is in decline, and Saudi data can't be trusted so we need to send in auditors. I have trouble with both of those arguments, and both seem like material changes in his views.
Finally, he concluded by saying prices are headed higher, but wouldn't take a strong stand on amounts and timing. That too struck me as strange.
What's up Matt?
Housing Sucks There. There Too. And There. But California is Good.
A collection of Bloomberg articles today on the collective suck-itude of housing here, there and pretty much everywhere. Interestingly, the sole semi-positive news was on -- wait for it -- California housing. You have to know things are seriously surreal when California housing constitutes the good news.
- Housing slump hits Northern Ireland economy harder than bombs
- California's discount foreclosure sales point to housing bottom
- Spain's inflated home values infect mortgage bonds
- Australia facing 'once-in-100-year' housing slump
And I would be remiss if I didn't mention one more. This time's it's my buddy Alan Greenspan saying things are going to get much worse in the U.S. Thanks Alan. Timely. Full video interview from CNBC today is here.
Living on a Tightrope: Phillippe Petit
I am eager to see the new documentary about a hero of mine, high-wire artist Phillippe Petit. Called Man on Wire, early reviews have been raves, and the 1080p trailer has been on permanent rotation this afternoon here at Casa Kedrosky.
It's impossible. That's sure. So let's start working.
-- Phillippe Petit
Contest Time: Win Copies of Robert Shiller's New Book
The first two readers to submit a correct response to the following question each win a copy of Robert Shiller's new book, The Subprime Solution.
Question: Which OECD country has had the highest percentage housing price gain since the U.S. housing market began tumbling in January of 2006?
Post your answer below. First two to post correct responses are the big winners.
[Update] The contest is over and I have declared two winners. See the next post.
The Incarcerated CEOs ETF
With Imclone stock raging higher today on the Bristol-Meyers takeout offer, I'm think that we need an incarcerated ex-CEOs ETF. After all, Imclone ex-CEO Sam Waksal has been in jail for five years, and is getting out in August.
Nice list/map of companies and incarcerated CEOS here (via Portfolio).
Jeremy Grantham: "I'm officially scared!"
This post is a guest contribution (really just a snippet) by Prieur du Plessis, writer of the Investment Postcards from Cape Town blog.
The bearer of the bad tidings today is money manager Jeremy Grantham, chairman of GMO, who has just published the July edition of his quarterly newsletter entitled "Meltdown! The Global Competence Crisis".
In terms of strategy, Grantham summarizes his view in what he believes should be investors' motto: "Don't be brave, run away. Live to fight another day."
Specifically, as far as house prices are concerned, Grantham looks at the ratio of US median house prices to family income and states: "In order for house prices to reach normal from here, they must either decline 17% immediately or experience four flat years while income catches up, or some combination." Even more worrying, however, is the normal tendency for bubbles to overrun on the downside.
Across the pond, the situation looks even more dire as shown by the graph below. According to Grantham: "If UK house prices go all the way back to trend, and history says that is extremely likely, then the UK financial system will definitely need some serious bailouts and the global ripples will be substantial. Of all the negative possibilities out there, and there are plenty, real pain in this area is the most likely; I would say, nearly certain."
In short, Grantham opines: "Events must now be disturbing to everyone, and I for one am officially scared!"
Click here for the full report on Grantham's reasoning for his bearish stance.
Source: Jeremy Grantham, GMO, July 30, 2008.
Peak Matthew Simmons?
This morning on CNBC I was on a peak oil panel with Matthew Simmons. I'm a fan of his, even if I don't always agree with some of his comments, but I thought this morning wasn't one of his best performances.
First, I thought he pushed out the peak, talking squishily about a few years rather than saying it was already here. Correct me, but I think that's new.
Second, he was softer about the Saudis than usual. First he argued that fields there may not be in decline, but we are seeing higher production costs. Then he turned around and argued that production is in decline, and Saudi data can't be trusted so we need to send in auditors. I have trouble with both of those arguments, and both seem like material changes in his views.
Finally, he concluded by saying prices are headed higher, but wouldn't take a strong stand on amounts and timing. That too struck me as strange.
What's up Matt?
Housing Sucks There. There Too. And There. But California is Good.
A collection of Bloomberg articles today on the collective suck-itude of housing here, there and pretty much everywhere. Interestingly, the sole semi-positive news was on -- wait for it -- California housing. You have to know things are seriously surreal when California housing constitutes the good news.
- Housing slump hits Northern Ireland economy harder than bombs
- California's discount foreclosure sales point to housing bottom
- Spain's inflated home values infect mortgage bonds
- Australia facing 'once-in-100-year' housing slump
And I would be remiss if I didn't mention one more. This time's it's my buddy Alan Greenspan saying things are going to get much worse in the U.S. Thanks Alan. Timely. Full video interview from CNBC today is here.
Living on a Tightrope: Phillippe Petit
I am eager to see the new documentary about a hero of mine, high-wire artist Phillippe Petit. Called Man on Wire, early reviews have been raves, and the 1080p trailer has been on permanent rotation this afternoon here at Casa Kedrosky.
It's impossible. That's sure. So let's start working.
-- Phillippe Petit
Contest Time: Win Copies of Robert Shiller's New Book
The first two readers to submit a correct response to the following question each win a copy of Robert Shiller's new book, The Subprime Solution.
Question: Which OECD country has had the highest percentage housing price gain since the U.S. housing market began tumbling in January of 2006?
Post your answer below. First two to post correct responses are the big winners.
[Update] The contest is over and I have declared two winners. See the next post.
