There was oodles of participation in the contest I held earlier today on naming the country with the largest gain in residential real estate prices since the U.S. began tumbling in January of 2006. Thanks tons for all the guesses -- even if a few of them were a little unusual (especially Wisconsin: thanks Dick). 

Anyway, this was a tough one admittedly, with the 2006/2007 data being difficult to collect for many countries. Nevertheless, via a host of sources (the OECD, Economist, Knight Frank, IPD, etc.) I have the top three countries by price gain since 1/1/2006 as follows:

1. Poland -- 62%
2. Slovakia -- 35%
3. Greece -- 32%

So, our Poland-guessing winners are JB and Gustav. Congrats you two. Send me an email with your address and I'll sort out getting you the books.

This post is a guest contribution by Prieur du Plessis, writer of the Investment Postcards from Cape Town blog.

In spite of a "teaser" of a rally and stock markets holding their July 15 lows, equities were still in the red for the month of July. In short, the MSCI World Index was down 2.5%, with the MSCI Emerging Markets Index (-4.2%) faring even worse.

The biggest loser for the month was the Russian Trading System Index, which lost 15.2% on the back of Putin's heavy-handed approach to changing the corporate landscape, as well as a plunge in oil prices. The slide in commodity prices also negatively impacted the Brazilian Bovespa Index, pushing the benchmark 8.5% into the red.

Beneficiaries of weaker resources prices performed relatively well, with the Indian Bombay Sensex Index gaining 6.6% for the month, followed by the Hong Kong Hang Seng Index (+2.8%) and the Chinese Shanghai Composite Index (+1,4%).

Short-term gains notwithstanding, the Shanghai Composite Index remains the biggest loser for the year to date, down by 47,2%. Given inflationary pressures and a rise in interest rates, the Sensex Index (-29.2%) is the second-biggest loser since the start of 2007.

Not a single index registered a gain for the first seven months of 2007, at least not in local currency terms. The Bovespa Index, however, bucked the trend in dollar terms with an increase of 5.2%. Needless to say, all stock markets, in both local and dollar terms, are significantly down from their respective previous highs.

This is an exceptionally difficult market to read. I maintain we are still in a primary bear market, but this does not preclude powerful rallies. On a multi-year horizon, however, we are probably in for a convalescence period of relatively low returns. In short, not a dartboard market, but also not necessarily bad from a perspicacious stock-picking perspective.

Click here for a larger table.

Click here for a larger table.

 

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Today GM turned in a jaw-dropping $15-billion second quarter loss. Coming on top of a $3.2-billion first quarter loss, and 2007's $38.7-billion loss, investors are naturally wondering one thing: Is GM now, like the airline industry, cumulatively unprofitable across its entire history as a public company?

An excellent question. Well, as surprising as it might seem, GM has only managed to wipe out its profits back to the mid-1980s. Here are GM cumulative "earnings" for the two periods:

• 2007-present:  -$57,483b
• 1985-2006: $59,598b

Not bad, however. GM did manage to wipe out 22 years of results in a mere seven months.

A few quick links to get people going "hmmm" on this foggy Friday (here in San Diego, anyway):

• Resurgent bearish macro hedge funds have people seeing next Soros (Bloomberg)
• Copper thieves cause delay in cancer surgery (LA Times)
• Live ATask updates from YHOO annual meeting (Twitter)
• Nice new realtime news feature at ever-excellent Finviz (Finviz)
• Andy Lo presentation on quants in 2017 (SoFIE)
• Lovely slideshow from the near future of abandoned gas stations (NYT)
• The absentee end-of-the-world trade (SPS)

A guest post from trader, surfer and semi-pro poker player, Jeff Norman.
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Should the fed be more worried about inflation or deflation?  There are compelling arguments to worry about both and your answer may depend more on where you are from. Europeans and the ECB, mindful of Germany's hyperinflation, are more apt to worry about inflation whereas Americans and the Fed, remembering the depression, focus on possible deflation.

Louis Uchitelle's article in today's New York Times rehashes this discussion, and includes the fascinating chart below.  For the correlation between inflation and wages to change from nearly 1 to nearly 0 is astounding both from a mathematical and an economic point of view.

Correlation is of course not causation, but the low recent correlation shows that some of the old inflation causes will not be a factor this time around.

Meant to weigh in on this sooner, but Google is going to launch a corporate VC fund. I've registered various times my general skittishness about such things, so I won't belabor that here, other than to say I can't imagine the world needs another Valley venture fund, corporate or otherwise.

The part that bugs me, however, is this: The guy running the fund was apparently a coworker of Sergey Brin's wife. You remember, the wife who runs the company in which Google already made an investment. Anyway, you would think the Google braintrust would try a little harder to look less conflicted in its investing decisions. Apparently, however, it's not enough that it invested in a company run by a founder's wife; Google had to go on and wrap a fund around one of her former colleagues.

Am I the only one who thinks Google doesn't do a great job skirting real/perceived conflicts of interest? I'm no nag on this subject, and have a dizzying number of conflicts myself, but I least try not to go out of my way to trip over them.