If you haven't gotten into the gold rally yet, now is the time to get in:
http://www.telegraph.co.uk/finance/newsbysector/industry/mining/6546579/Barrick-shuts-hedge-book-as-world-gold-supply-runs-out.html
Showing posts with label investing. Show all posts
Showing posts with label investing. Show all posts
Wednesday, November 11, 2009
Friday, January 09, 2009
Funding Retirement, Building Wealth
Many, but not all, doctors make high incomes. Most doctors are not wealthy. This blog post at Liberated Doc discusses why having successful medical practice often does not translate into the conversion of income to wealth:
the limited or complete lack of equity that physicians have an opportunity to build is a major shortcoming of clinical practice....
The money left after direct expenses are paid and that is left for the partners is equal to what it would cost to hire other doctors to do the work in place of the partners. In other words, the partners often don’t make much more than if they were just receiving a salary as an employee.
The days when doctors could hope to fund retirement by selling a medical practice are long over.
Personally, I'm hoping that my investment in junk bonds (within retirement accounts, primarily a Vanguard SIMPLE IRA) will pay off. I started gradually investing in high yield bond funds in Mid-December and have done well so far. I have sold a portion of my holdings over the last several days and now plan to monitor market conditions for a few days before deciding whether to stay in junk bonds or switch back into a money market fund.
the limited or complete lack of equity that physicians have an opportunity to build is a major shortcoming of clinical practice....
The money left after direct expenses are paid and that is left for the partners is equal to what it would cost to hire other doctors to do the work in place of the partners. In other words, the partners often don’t make much more than if they were just receiving a salary as an employee.
The days when doctors could hope to fund retirement by selling a medical practice are long over.
Personally, I'm hoping that my investment in junk bonds (within retirement accounts, primarily a Vanguard SIMPLE IRA) will pay off. I started gradually investing in high yield bond funds in Mid-December and have done well so far. I have sold a portion of my holdings over the last several days and now plan to monitor market conditions for a few days before deciding whether to stay in junk bonds or switch back into a money market fund.
Sunday, October 12, 2008
The Carnage Continues
While world leaders announce rescue measures to fix the crumbling global financial system, Israel stocks drop 7.68%:
Israel's main stock index dived 7.68 percent on Sunday when the Tel Aviv Stock Exchange opened after a four-day holiday weekend and a 45-minute delay enforced after a sharp drop in preliminary trading.
Israel's main stock index dived 7.68 percent on Sunday when the Tel Aviv Stock Exchange opened after a four-day holiday weekend and a 45-minute delay enforced after a sharp drop in preliminary trading.
Saturday, October 11, 2008
Recommendations for your Investments
I think the broad market indices are going to decline approximately 15% more before hitting bottom. I believe this will happen near the end of October. Once the Dow drops below 7500, I would recommend gradually moving your money into a stock market index fund or ETF.
Given the recent strength of the US dollar and its likely future decline, moving some of your money into international fund is also reasonable (once the Dow drops below 7500).
Given the recent strength of the US dollar and its likely future decline, moving some of your money into international fund is also reasonable (once the Dow drops below 7500).
Monday, September 22, 2008
Democrats responsible for the Financial Crisis
Bloomberg has a collumn today, written by Kevin Hassett, explaining why the Democrats are responsible for the current financial crisis:
Alan Greenspan warned Congress about the coming financial crisis in 2005:
... If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''
Republicans tried to act:
For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.
But Democrats opposed the reform bill:
But the bill didn't become law...... Democrats opposed it on a party-line vote in the committee..... Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.
If only the Senate Democrats hadn't obstructed the Republicans in reforming Fannie Mae and Freddie Mac, we wouldn't have the serious financial crisis that we are in today.
Alan Greenspan warned Congress about the coming financial crisis in 2005:
... If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''
Republicans tried to act:
For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.
But Democrats opposed the reform bill:
But the bill didn't become law...... Democrats opposed it on a party-line vote in the committee..... Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.
If only the Senate Democrats hadn't obstructed the Republicans in reforming Fannie Mae and Freddie Mac, we wouldn't have the serious financial crisis that we are in today.
Sunday, May 04, 2008
My Predictions for the US Dollar
Although the long-term trend of the US dollar has been to weaken, especially against the Euro, for the last 2 weeks the US dollar has strengthened.
Warren Buffett predicts further weakening of the US Dollar (Bloomberg.com):
The U.S. dollar will keep weakening and Buffett feels ``no need to hedge'' against currency risk when buying large companies outside the U.S., he said.
Who am I to disagree with the legendary Buffett? He takes a long-term view on investments, and I agree with him that in the long-term the US dollar will continue to weaken. However, I believe that the US dollar will (mildly) strengthen against the Euro over the next 4 to 6 months. The Fed rate cuts are over, and there will probably be a rise in the Federal Funds rate this summer, which will have a strengthening effect on the dollar. The economic slow-down will also tend to strenghten the dollar. On the other hand, current inflationary pressures will have a weakening effect. I expect the dollar to resume its long-term trend of weakening late in 2008, as increasing inflation and economic expansion will cause the US dollar to fall to new lows against the Euro.
Warren Buffett predicts further weakening of the US Dollar (Bloomberg.com):
The U.S. dollar will keep weakening and Buffett feels ``no need to hedge'' against currency risk when buying large companies outside the U.S., he said.
Who am I to disagree with the legendary Buffett? He takes a long-term view on investments, and I agree with him that in the long-term the US dollar will continue to weaken. However, I believe that the US dollar will (mildly) strengthen against the Euro over the next 4 to 6 months. The Fed rate cuts are over, and there will probably be a rise in the Federal Funds rate this summer, which will have a strengthening effect on the dollar. The economic slow-down will also tend to strenghten the dollar. On the other hand, current inflationary pressures will have a weakening effect. I expect the dollar to resume its long-term trend of weakening late in 2008, as increasing inflation and economic expansion will cause the US dollar to fall to new lows against the Euro.
Thursday, January 03, 2008
Fallling Knives
Slate has a nice article today about the dangers and rewards of trying to catch a falling knife:
One of the nice things about being a billionaire, or a private-equity magnate, or the CEO of a gigantic bank is that you don't fret about paying retail. If you see an object you desire—a plane, a mansion, a car, a suit—you don't wait for it to go on sale. You just buy it.
In their professional lives, however, such players are attracted to marked-down merchandise like post-Christmas shoppers are drawn to Macy's. Picking through the discard bin and sifting through marked-down inventory of formerly hot products is a highly respected investment strategy. But efforts to catch such falling knives depend on perfect timing. Stick your hand out too late, and you get nothing. Grab the handle at precisely the right moment, and you've got yourself a set of Wüsthofs on the cheap. Stick your hand out too early, and you're simply impeding the blade's fall to earth. Today, several savvy financial operators who tried to catch falling knives in the formerly hot housing and credit sectors are walking around with huge gashes in their hands.
On Aug. 22, Bank of America decided things couldn't get worse for Countrywide Financial, the massive mortgage firm whose stock had been halved since the beginning of the year. Bank of America boldly announced a $2 billion investment in the form of a security that pays a 7.25 percent annual interest payment and "can be converted into common stock at $18 per share." In the months since then, Countrywide, stung by a deteriorating housing market, has fallen another 50 percent. Today, its stock trades at about $9. Bank of America, which is already licking its wounds from an ill-timed plunge into investment banking, is already out several hundred million dollars on its investment in Countrywide.
In the fall, Bear Stearns, the mortgage-dependent Wall Street firm that soared to dizzying heights as the credit market boomed only to crash back to earth, attracted an international cast of falling-knife catchers. In September, Joseph Lewis, one of Britain's wealthiest men, spent $860 million on a 7 percent stake in Bear, paying an average of about $107 per share, according to the Wall Street Journal. In December, he boosted his stake twice. Today, with Bear's stock trading at close to $85, Lewis has turned his massive fortune into something slightly smaller. He's likely lost about 15 percent of his investment. In October, Bear agreed to a complicated deal with CITIC Securities, in which the Chinese firm would invest $1 billion in Bear Stearns for a stake worth at least 6 percent. Since then, Bear's stock has fallen about 20 percent.
Some investors have suffered deeper wounds. On Dec. 10, Warburg Pincus—a very sharp private-equity firm—agreed to invest up to $1 billion in struggling bond insurer MBIA, which had lost 55 percent of its value in the previous two months. Warburg bought 16.1 million shares at $31 a share and committed to fund another $500 million. (The deal also included warrants to buy several million shares of the company's stock at $40 per share.) Within days, as MBIA dealt with questions about its exposure to collateralized debt obligations and other exotica, the company's stock plummeted to $19. In less than two weeks, Warburg lost nearly 30 percent on its investment in the shares, or about $183 million. And that was before deep-pocketed investor Warren Buffett said he might start his own bond insurer to compete with MBIA.
Of course, it's early days, and these investments could well turn out to be genius moves. But the experience of these knife-catchers highlights a significant difference between the denouement of the dot-com bubble and the real-estate/credit bubble. In the former, the end came swiftly and violently. Since the bubble activity was concentrated in highly liquid, publicly traded stocks, investors—mutual funds, hedge funds, individuals—were all able to flee at the same time. The NASDAQ Composite—the epicenter of the bubble—fell 37 percent in two months in the spring of 2000, and nearly 75 percent between late March 2000 and April 2001. In some instances, this herdlike behavior created overreactions that set the stage for smart Dumpster-diving investors. In April 2003, Apple's stock traded for a split-adjusted $6.60; today it's at $198.
This time around, the bubble activity was concentrated in comparatively illiquid assets—like mortgage-backed securities, collateralized debt obligations, and houses. It may seem obvious now, but homes don't trade with the same speed and lack of friction that stocks do. And when housing prices fall, builders don't respond by slashing prices with alacrity; they respond by keeping prices the same and throwing in amenities, or, as the Wall Street Journal reported, by funneling cash back to buyers through third parties. The housing bubble popped, but between October 2006 and October 2007, according to the Case-Shiller index, housing prices fell only 6.1 percent. Housing prices may need to fall 30 percent or 40 percent before they bottom out, but it will take years—rather than months—for that process to play out. And as the market continues to slump, companies whose business models rest on making mortgages—and on buying, selling, and insuring securities based on mortgages—may face a string of losses.
Not all knife-catchers have been hurt, though. Goldman Sachs was one of the few Wall Street firms to prosper during the subprime tsunami, as it used its own cash to make bearish bets on subprime securities. By late December, First Marblehead, the student-loan company, had lost about 75 percent of its value over the course of 2007, as investors fretted over loan defaults and rising financing costs. On Dec. 21, Goldman's private-equity unit stepped in and agreed to buy up to 20 percent of the company for $260.5 million and offer a line of credit. With First Marblehead's stock having rallied from $11 to about $15 today, Goldman is solidly in the money on its investment. Many analysts already believe the sharp traders and risk analysts at Goldman have superhuman powers. Its ability to overcome the force of gravity and halt a plummeting financial-services stock may only add to the firm's legend.
One of the nice things about being a billionaire, or a private-equity magnate, or the CEO of a gigantic bank is that you don't fret about paying retail. If you see an object you desire—a plane, a mansion, a car, a suit—you don't wait for it to go on sale. You just buy it.
In their professional lives, however, such players are attracted to marked-down merchandise like post-Christmas shoppers are drawn to Macy's. Picking through the discard bin and sifting through marked-down inventory of formerly hot products is a highly respected investment strategy. But efforts to catch such falling knives depend on perfect timing. Stick your hand out too late, and you get nothing. Grab the handle at precisely the right moment, and you've got yourself a set of Wüsthofs on the cheap. Stick your hand out too early, and you're simply impeding the blade's fall to earth. Today, several savvy financial operators who tried to catch falling knives in the formerly hot housing and credit sectors are walking around with huge gashes in their hands.
On Aug. 22, Bank of America decided things couldn't get worse for Countrywide Financial, the massive mortgage firm whose stock had been halved since the beginning of the year. Bank of America boldly announced a $2 billion investment in the form of a security that pays a 7.25 percent annual interest payment and "can be converted into common stock at $18 per share." In the months since then, Countrywide, stung by a deteriorating housing market, has fallen another 50 percent. Today, its stock trades at about $9. Bank of America, which is already licking its wounds from an ill-timed plunge into investment banking, is already out several hundred million dollars on its investment in Countrywide.
In the fall, Bear Stearns, the mortgage-dependent Wall Street firm that soared to dizzying heights as the credit market boomed only to crash back to earth, attracted an international cast of falling-knife catchers. In September, Joseph Lewis, one of Britain's wealthiest men, spent $860 million on a 7 percent stake in Bear, paying an average of about $107 per share, according to the Wall Street Journal. In December, he boosted his stake twice. Today, with Bear's stock trading at close to $85, Lewis has turned his massive fortune into something slightly smaller. He's likely lost about 15 percent of his investment. In October, Bear agreed to a complicated deal with CITIC Securities, in which the Chinese firm would invest $1 billion in Bear Stearns for a stake worth at least 6 percent. Since then, Bear's stock has fallen about 20 percent.
Some investors have suffered deeper wounds. On Dec. 10, Warburg Pincus—a very sharp private-equity firm—agreed to invest up to $1 billion in struggling bond insurer MBIA, which had lost 55 percent of its value in the previous two months. Warburg bought 16.1 million shares at $31 a share and committed to fund another $500 million. (The deal also included warrants to buy several million shares of the company's stock at $40 per share.) Within days, as MBIA dealt with questions about its exposure to collateralized debt obligations and other exotica, the company's stock plummeted to $19. In less than two weeks, Warburg lost nearly 30 percent on its investment in the shares, or about $183 million. And that was before deep-pocketed investor Warren Buffett said he might start his own bond insurer to compete with MBIA.
Of course, it's early days, and these investments could well turn out to be genius moves. But the experience of these knife-catchers highlights a significant difference between the denouement of the dot-com bubble and the real-estate/credit bubble. In the former, the end came swiftly and violently. Since the bubble activity was concentrated in highly liquid, publicly traded stocks, investors—mutual funds, hedge funds, individuals—were all able to flee at the same time. The NASDAQ Composite—the epicenter of the bubble—fell 37 percent in two months in the spring of 2000, and nearly 75 percent between late March 2000 and April 2001. In some instances, this herdlike behavior created overreactions that set the stage for smart Dumpster-diving investors. In April 2003, Apple's stock traded for a split-adjusted $6.60; today it's at $198.
This time around, the bubble activity was concentrated in comparatively illiquid assets—like mortgage-backed securities, collateralized debt obligations, and houses. It may seem obvious now, but homes don't trade with the same speed and lack of friction that stocks do. And when housing prices fall, builders don't respond by slashing prices with alacrity; they respond by keeping prices the same and throwing in amenities, or, as the Wall Street Journal reported, by funneling cash back to buyers through third parties. The housing bubble popped, but between October 2006 and October 2007, according to the Case-Shiller index, housing prices fell only 6.1 percent. Housing prices may need to fall 30 percent or 40 percent before they bottom out, but it will take years—rather than months—for that process to play out. And as the market continues to slump, companies whose business models rest on making mortgages—and on buying, selling, and insuring securities based on mortgages—may face a string of losses.
Not all knife-catchers have been hurt, though. Goldman Sachs was one of the few Wall Street firms to prosper during the subprime tsunami, as it used its own cash to make bearish bets on subprime securities. By late December, First Marblehead, the student-loan company, had lost about 75 percent of its value over the course of 2007, as investors fretted over loan defaults and rising financing costs. On Dec. 21, Goldman's private-equity unit stepped in and agreed to buy up to 20 percent of the company for $260.5 million and offer a line of credit. With First Marblehead's stock having rallied from $11 to about $15 today, Goldman is solidly in the money on its investment. Many analysts already believe the sharp traders and risk analysts at Goldman have superhuman powers. Its ability to overcome the force of gravity and halt a plummeting financial-services stock may only add to the firm's legend.
Thursday, November 22, 2007
Chantix Linked to Suicide
The U.S. Food and Drug Administration is looking into reports that the anti-smoking drug Chantix may trigger mood swings and thoughts of suicide in patients taking it.
Information provided to the agency by Chantix manufacturer, Pfizer Inc. cited "erratic behavior" in an individual who had used Chantix. The agency is also investigating the death of the person who used the drug, but was also under the influence of alcohol.
The FDA has asked Pfizer for any additional information it has on reports of adverse reactions in people taking the drug. Its Center for Drug Evaluation and Research is analyzing the data and plans to release its findings to the public once the analysis is completed.
In the meantime, the agency recommends that health care providers monitor patients taking Chantix. Patients taking Chantix should contact their doctors if they experience behavior or mood changes, the FDA said.
The FDA also advises that patients taking Chantix use caution when driving or operating machinery due to reports of drowsiness.
From Foxnews
Ultimately, I don't think this is going to pan out. I don't think that Chantix causes suicide. However, in the short term I forsee further declines in Pfizer's stock price. Currently, it's just above its 52 week low. I think Pfizer will be a good buy at around 20, and recommend waiting until then to buy Pfizer.
Information provided to the agency by Chantix manufacturer, Pfizer Inc. cited "erratic behavior" in an individual who had used Chantix. The agency is also investigating the death of the person who used the drug, but was also under the influence of alcohol.
The FDA has asked Pfizer for any additional information it has on reports of adverse reactions in people taking the drug. Its Center for Drug Evaluation and Research is analyzing the data and plans to release its findings to the public once the analysis is completed.
In the meantime, the agency recommends that health care providers monitor patients taking Chantix. Patients taking Chantix should contact their doctors if they experience behavior or mood changes, the FDA said.
The FDA also advises that patients taking Chantix use caution when driving or operating machinery due to reports of drowsiness.
From Foxnews
Ultimately, I don't think this is going to pan out. I don't think that Chantix causes suicide. However, in the short term I forsee further declines in Pfizer's stock price. Currently, it's just above its 52 week low. I think Pfizer will be a good buy at around 20, and recommend waiting until then to buy Pfizer.
Friday, October 19, 2007
Gray Friday
The Dow Jones industrial average dropped more than 360 points Friday - the 20th anniversary of the Black Monday crash - as lackluster corporate earnings, renewed credit concerns and rising oil prices spooked investors.
The major stock market indexes turned in their worst week since July after Caterpillar Inc. (CAT), one of the world's largest construction equipment makers, soured investors mood Friday with a discouraging assessment of the U.S. economy. In a week dominated by mostly negative results from banks facing difficult credit markets and rising mortgage delinquencies, investors appeared surprised that an industrial name was feeling an economic pinch, too.
The major stock market indexes turned in their worst week since July after Caterpillar Inc. (CAT), one of the world's largest construction equipment makers, soured investors mood Friday with a discouraging assessment of the U.S. economy. In a week dominated by mostly negative results from banks facing difficult credit markets and rising mortgage delinquencies, investors appeared surprised that an industrial name was feeling an economic pinch, too.
The Dow fell 366.94, or 2.64 percent, to 13,522.02. The Dow was down for the fifth straight session and for the week was off 4.05 percent. For the year, the blue chip index is now up 8.5 percent.
Broader stock indicators also fell sharply Friday. The Standard & Poor's 500 index fell 39.45, or 2.56 percent, to 1,500.63, and the Nasdaq composite index dropped 74.15, or 2.65 percent, to 2,725.16.
Broader stock indicators also fell sharply Friday. The Standard & Poor's 500 index fell 39.45, or 2.56 percent, to 1,500.63, and the Nasdaq composite index dropped 74.15, or 2.65 percent, to 2,725.16.
Friday's pullback pales in comparison to what investors had to contend with 20 years ago. On Oct. 19, 1987 - Black Monday - the Dow plunged 23 percent amid concerns about interest rates and slowing economic growth. A decline of similar proportion given the market's current levels would mean a drop of some 3,100 points.
Friday's decline - the third biggest point and percentage drop this year - was the 9th biggest point drop in the Dow since Black Monday.
Friday's decline - the third biggest point and percentage drop this year - was the 9th biggest point drop in the Dow since Black Monday.
via Drudge
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