Wealth International, Limited

Finance Digest for Week of January 26, 2003


After a 20-year bear market, gold recently hit an eight-year high of $408/oz. This is a 40% rise from $282/oz in January 2000. Pundits predict that this may be just the start of a major bull market. You should definitely keep a nest egg of small-denomination gold coins at home or in a safe place for use in a financial emergency. Beyond that, you may wish to keep a portion of your gold holdings outside your domestic jurisdiction.

The benefits of holding gold offshore are the same as holding any other asset offshore: the gold disappears from the domestic radar screen. If someone tries to find your assets to determine if you are “worth suing”, offshore assets will not show up in the search. You have three primary options to buy and store gold offshore.

Link here.

The risks you run when you own gold, and the danger you face if you don’t.

Some folks think that the greatest risk of all to the gold owner is confiscation. They use 1933 and the events that took place that year as their evidence. I do not share the view that confiscation is that great a threat. The situation today is unlike 1933. Gold is not circulating money and those who own gold are regarded as wackos. Let them go unnoticed seems to be government strategy.

I am not minimizing the threat government poses to assets and privacy. They can come and take your living room furniture, but I do not think confiscation would be their weapon. Some who contend that there is safety in holding gold coins dated prior to 1933 have not thought out the premise. Can you imagine the absurdity of a bureaucrat standing at your front door with an eye loop examining your gold coin to see if it is legal or not?

Let’s review what happened that fateful year. On April 6, 1933, a month after his inauguration, FDR demonetized gold. The $20 gold piece was no longer money. Well, since it was not money any longer, bring it to the bank, they said, and we will give you a $20 bill for it. That is called theft. In January of 1934, The Gold Reserve Act changed the value of an ounce of gold from $20.67 to $35. Somebody almost doubled their money! Anybody we know?

Link here.


Virtually everyone -- and I do not use that word lightly -- believes that inflation will accelerate. Stock-market bulls think that the economy is going to boom, bringing inflation. Economic bears expect an inflationary, if not hyperinflationary, monetary crisis. Economists believe that the Fed can inflate at will and is committed to an inflationary policy. The general population is convinced that prices of their homes and property can only go up. The consensus is not merely overwhelming but reflects a belief as vast and deeply held as a religion.

Against this backdrop of opinion, M3 since September has fallen over two percent, its largest decline in 60 years. This is different from a lack of inflation. It is real, actual, deflation. The decline happened despite the strongest quarter of economic growth in decades, the lowest interest rates in half a century and a central bank committed verbally and by action to facilitating the expansion of credit! The dichotomy between what is happening and what people think will happen is colossal. Inflation is dead. Deflation is here, now. The monetary trend is no longer close to the edge of the cliff; it is beginning to slide down its face.

A persistent decline in the money supply will have consequences. Some things will have to give. One of them will be prices for goods and services. A severe deflation will also devastate the economy, as it has done in each of the rare times it has occurred over the past 300 years. With M3 dropping, it should be only a matter of months before the economy follows suit.

Link here (scroll down to Bob Prechter piece).


If you go back and look at the early 1970s, you will see that inflation follows a pattern: precious metals move first, then soft commodities, and finally oil. Soybeans have been the first of the soft commodities to jump...the others soon follow. But the more dangerous inflation -- asset inflation -- is not so easy to track or quantify. Alan Greenspan claims that one cannot detect asset price inflation (otherwise known as a stock market bubble) without the benefit of hindsight. But I think common sense gives plenty of warning.

Today there are 98 companies trading in the United States that have at least $1 billion in market capitalization and a price-to-sales ratio equal to or greater than 10. This $1 billion/10x sales hurdle is my favorite measure of bubble valuations: it is simple and objective. When a very large company is trading at 10 times its annual sales, it is hard to imagine how it will be able to grow fast enough to provide an economic return to new investors. The 98 companies compares with only 12 last summer.

If you look at commodity prices, exchange rates and asset prices, you see the building of another bubble -- one that is even more dangerous than the last. Given the amount of inflation we are seeing it would be almost impossible for stocks and bonds not to appreciate in the next several months. Traders may have a field day. But we are in the twilight of a 24-year bull market in financial assets and at the dawn of a long bull market in commodities.

Link here (scroll down to Porter Stansberry piece).


The United States, with 5% of the world’s population, consumes more than one-quarter of the world’s oil production. The United States is guzzling oil at record rates. U.S. oil production is at its lowest level since the early 1950s and is declining by more than 2% per year. Since 1970, U.S. oil reserves have fallen from 50 billion to 20 billion barrels. In December, OPEC announced that it would not increase its output quotas despite a wellspring of worries regarding the region. Canadian and Chinese oil production will rise, but their output will not nearly offset the decline in North Sea and Russian oil production.

The author predicts that even if a political calm settles in the Middle East, oil prices will move above $30 per barrel by the second quarter 2004. The only solution, said speakers at a November energy symposium in Ottawa, will be higher energy prices from the gas pump right on through to household electricity.


Link here.


After rallying for almost a year, the blue chips are now hovering only some 1000 points below their all-time high. And the question on everyone’s mind is: Is this rally for real? Financial media will have you believe that low P/E ratios, the most widely used measure of a stock’s potential, are reason enough to be happy. Stocks are “cheap” because their P/E’s have decreased significantly in the last 4 years -- right? But a little look at history indicates that the P/E ratio today is not bullish. The recent dichotomy between bearish market data and an upbeat public mood is consistent with bear market second [Elliott] wave behavior.

Link here.


Historically every new technology that has introduced a major increase to the efficiency of markets has produced an initial deflationary period as the markets take time to digest the overcapacity from the previous era. Thereafter follows a period of massive growth resulting from the increased productivity caused by the new technology. This happened with the railroad in the nineteenth century, and the effect has been seen several times in the twentieth century as a result of the internal combustion engine, refrigeration, interstate highway systems, telecommunications, and most recently the combination of the microprocessor and telcom to form the Internet.

The world is in a deflation, and the world needs a deflation in order to achieve the most effective use of the time, money and resources in the world. Indeed the world markets have clearly entered a deflationary period, but central banks and socialist welfare states are trying to keep the old system alive by inflating their way out of a deflation. The injection of trillions of dollars, euros and yen into the world’s capital markets via low interest rates is certainly stimulating spending in some sectors. But the end result of trying to inflate ones way out of a deflation is the creation of distortions in the global economy that the markets are not asking for. Those distortions represent overcapacity that will in-turn be corrected by the markets in the future.

Link here.


Beneath the optimism about America again powering the world are deep worries about huge imbalances in the U.S. Those include more than the vast current- account and government deficits, which are expected this year to top 4.9% and 4.5% of GDP, respectively. “There is the rapid depletion of savings and the rising tide of private indebtedness,” says Morgan Stanley Chief Economist Stephen S. Roach. “The engine of the global economy, the U.S., is running not on gas but on fumes -- on little more than tax cuts and borrowing.”

Link here.

US federal deficit to rise by extra $1 trillion over next decade according to CBO.

Economists said the new estimates from the Congressional Budget Office, the non-partisan agency of Congress, suggested President George W. Bush would struggle to meet his administration’s pledge to halve the deficit over the next five years. The CBO predict a cumulative deficit of $2,350 billion between 2004 to 2013 -- $986 billion more than it forecast just six months ago. Of the deterioration in the 10-year outlook since the CBO’s previous forecasts last August, $681 billion is due to legislation enacted by Congress last year, including $400 billion from the plan to add a prescription drug benefit to Medicare. The CBO is also assuming that lower inflation will eat into federal revenues and that even strong economic growth will produce more modest tax revenues than in the late 1990s. Analysts warned that the fiscal outlook could be even more gloomy than the CBO’s headline forecast. Many economists are sceptical that the administration will be able to keep discretionary spending increases under control over coming years.

Link here.

Debt = Potential Inflation

The higher the national debt goes, the higher the potential for hyperinflation. Today, the national debt exceeds $7 trillion. The accompanying table shows how rapidly this debt load is growing. As this mountain of debt grows, it becomes less likely that it will be repaid in “today’s” dollars.

Link here.

Do these deficits look familiar? Meet Richard Milhous Bush.

A polarizing Republican president, reviled by liberals, unseats the Democrats, talks like a conservative, but then sails blithely into a cataract of red ink. President Bush’s record is beginning to shape up that way, uncannily resembling the record of... Ronald Reagan? From a fiscal point of view, however, the early 2000s resemble, perhaps even more, the early 1970s and the Nixon era. Which is not a resemblance that Bush or the Republican leadership in Congress should find reassuring. In 1972, Nixon faced a choice between political one-upmanship and fiscal grown-upmanship, and we all know which he chose. But Nixon was as crass an opportunist as ever entered American politics. Bush is a better sort of man. Isn’t he?

Link here.


After more than a decade in the wilderness, the companies that dig rocks out of the ground are capturing investors’ imagination. The newfound glamour of the mining sector extends beyond the price of gold, which has gained much attention during its 17% climb since last January. Nickel recently traded at a 15-year high, while copper surged by almost 40% last year, rising above $1 a pound in December for the first time since the fall of 1997. Aluminum, coal, lead, platinum and even silver, which is up 40% since mid-2003, are among other metals and minerals that have posted sizable price gains.

Tom McKissick, who manages the TCW Galileo Large Cap Value fund, notes that the basic-materials component of the S&P 500-stock index has climbed from a low of 1 percent of the index’s total value in the fall of 2000 to 3.3% now. That share, however, is still well below the peak of 12.2%, in 1981, so Mr. McKissick says he is confident that commodity-related stocks will continue climbing for some time.

Link here.


Our disbelief in the U.S. economy’s breakout from its protracted sluggishness has one main reason: All the economic growth of the past two years, anemic as it was, is traceable to a seemingly endless array of asset and borrowing bubbles. Quoting analyst Stephen Roach, “the Fed, in effect, has become a serial bubble blower” -- first the stock market bubble; then the bond bubble; then the housing bubble and the associated mortgage refinancing bubble. As a result, consumer spending has been surging well in excess of disposable income for years.

Link here.

Note: Former Fed Chairman Paul Volcker once said: “Sometimes I think that the job of central bankers is to prove Kurt Richebächer (the article author) wrong”!


One of the deadliest illusions persistent among the American public is the belief that Empire’s foreign policy is partisan by nature. A closer look, however, reveals that both the Balkans and Babylonian expeditions have the essential bipartisan support. Both major parties favor massive taxation, government spending, and foreign wars. People halfway around the world get bombed, killed in droves, and occupied by US and satellite troops.

Link here.


From 1997 through last spring, property values fell by nearly 70% in the former British colony even as they surged in other financial capitals. Although residential real estate values remain less than two-fifths what they were at their 1997 peak, they are up more than 15% since May. The city is acting more like its old, confident self again. Investment bankers are lauding the virtues of China’s roaring initial public offering market. Local punters are crowing about the 40% gain over the past 12 months in the Hang Seng index and the 150% surge in Hong Kong-listed China companies.

Look a little closer, though, and you will see a Hong Kong that is much more dependent on largesse from Beijing than it was 10 years ago. Beijing has helped reignite the city’s economy by a variety of measures encouraging trade and industry, as well as tourism.

Hong Kong isn’t out of the woods. Deflation continues: Consumer prices have fallen for each of the past 61 months. Although unemployment is expected to drop to 6.4% by yearend from 7.3% today, it remains more than double the levels of the 1990s, and payrolls have stagnated. Government spending has exceeded revenues for the last three years, and this year the deficit is expected to swell to $10 billion -- nearly 6% of GDP.

Link here.


That was the topic of a panel discussion last week in Davos, Switzerland. Put another way: Is anyone going to make any money by investing in China? Amid the surfeit of optimism expressed by conference attendees, someone in the audience asked: What is the risk that the red-hot Chinese economy is overheating? Is there more investment going into China than it can absorb? Will interest rates have to rise to beat back inflation?

These are questions that have implications for the global economy. China is the world’s fastest-growing market for cars, and the biggest market for cellular phones. It consumes about a quarter of the world’s steel, a third of its oil and half of its cement. China has been a bigger contributor to global growth than the United States for the past two years. Investors may do well to keep in mind that the Lunar New Year, which got under way as the Davos discussion was taking place, is the year of the monkey. And in the year of the monkey, anything can happen.

Link here.

World Bank arm to double China budget.

The International Finance Corporation, the private sector arm of the World Bank, plans to double its investment in China to about $500 million within two years. The company also aims to spend $700 million on stakes in and loans to Asian companies this year, a 20% rise on 2003. The move by the IFC -- which helps companies in developing countries by purchasing shares and providing loans and financial advice -- is a sign of confidence in Asia’s corporate sector and of China’s growing importance to the region’s financial prospects.

Equity investments by the IFC, one of the biggest private sector investors in Asia, with $4 billion committed to companies ranging from Vietnamese banks to Chinese pig farms, often prompt similar moves by other overseas investors, which are reassured by the presence of an international public sector body. The IFC holds shares in five retail banks and is looking at taking stakes in asset management companies, brokers and leasing companies.

Link here.


The news just keeps on getting gloomier for European Union leaders already battered by a year of sniping over Iraq and their failure to agree to the bloc’s first-ever constitution last month. Less than six weeks after EU governments ripped up the eurozone’s rulebook, the European Commission Wednesday confessed the 15-member club had no chance of overtaking the United States to become the world’s No. 1 economy.

In a startling admission buried in its annual economic progress report, the commission concede: “The Union cannot catch up on the United States as our per capita GDP is 72% of our American partner’s.” The news is a bitter blow to EU leaders who set themselves the ambitious goal of becoming the “the most competitive, knowledge-based economy in the world by 2010” at a summit in Lisbon, Portugal, four years ago.

Link here.


As the stench of the mutual fund scandal lingers over the land, anxious investors ask where they can find good, clean funds. The answer is to look for good, clean managers. Like other mortals, managers range from saints to sinners. Some are seasoned pros with superb instincts and analytical skills who want to do their best for investors. Others are content to do little more than rake in lush fee income.

Questions to ask when vetting managers: Are they frugal? High expenses eat away at returns. How have they performed over the long term in their current funds -- and in previous funds? There are a lot of funds out there, so you do not have to put your money with a neophyte. Do they maintain a consistent investment style you can count on? You should not buy a self-labeled value fund that is really into go-go Net stocks. Do they buy and sell shares at a dizzying pace? High turnover means hidden costs in the form of commissions, bid/ask spreads and, outside a retirement account, capital gains taxes. Our Mutual Fund Guide offers unique advice in answering these questions.

Link here.


A commentator characterized the year 2003 as an investors’ “flight to garbage”. Indeed, some assets perceived to be of lower quality, such as Ecuadorian and Brazilian debts, Argentinean and Venezuelan stocks, as well as money-losing high-tech companies, enjoyed huge price gains in 2003. In fact, 2003 will enter the financial history books as the year in which all asset classes -- including equities in developed as well as emerging markets, government as well as any kind of corporate bonds, industrial commodities, precious metals, real estate, and art -- increased in value.

It should be clear to any rational thinker that commodities, and especially the precious metals, cannot forever rise in price while at the same time interest rates decline and bonds continue to appreciate. In 2004, we expect asset markets again to show diverging performances.

Link here (scroll down to Marc Faber piece).


Inflation has averaged about 3.1% annually over the past 19 years, so it may seem silly to ask if the average equity investor did better during the greatest bull run in U.S. stock market history. Alas, the S&P 500’s performance is one thing, but what investors earn is another. The average equity investor earned precisely 2.57% annually during the period in question, according to the respected financial research firm DALBAR. In fact, even the average fixed income investor’s annual earnings were better, at 4.24% -- yet even that is not so great, especially considering that the long-term government bond index gained 11.7% annually.

Two words explain it: Performance Chasing. Too many investors are in a never-ending chase after the latest “hot investment”. They not only chase stocks, but also bonds, precious metals, real estate, and more. And after 2003’s strong stock market gains, the chase after equities is “on” again, full-throttle.

(Link no longer available.)


The financial media would have you believe that all the “ducks” have lined up for the economic recovery, except one -- the weak job market. Yet at their latest meeting, the Federal Reserve left interest rates unchanged at 1% (a 40-year low). A reader recently asked: “The go-go cheerleading on Wall Street seems to fly in the face of the central bank’s position. In other words, if this ‘recovery’ is for real, why is the Fed Funds rate not at 3% or higher?”

This week’s release of data showing assets and liabilities of the U.S. commercial banks reveals that commercial and industrial lending has been steadily decreasing: from $964 billion in December 2002, to $892 billion this past December. And the figure for December durable goods orders was flat to boot! None of the “experts” expected a flat line for December after November’s 2.3% dive. It seems that despite the rock-bottom interest rates, U.S. manufacturers are neither borrowing, nor spending much on new equipment. Nor are they doing much hiring (in the U.S., at least), keeping the job growth slow.

So the weak job market may not be the last remaining “duck” after all. Instead, it may be a reflection of a much deeper economic weakness, regardless of what the media says. And the Fed cannot raise rates in this weak economic environment because that would slow down commercial borrowing -- and hiring -- even more.

Link here.


I just spent two days listening to learned people warn how the winds of global change are battering the U.S. economy in ways we still fail to grasp. All the gloom and doom caught me a bit off guard. I thought 2004 was shaping up to be a big boom year for the economy. Did I miss the forest for the trees?

Like blue-collar jobs before them, white-collar jobs are heading rapidly overseas to lower-cost countries. China is on a fast track to overtake the U.S. economy. Within a decade, China’s economy will overtake that of Germany, and it will surpass the American economy by 2041, according to a Goldman, Sachs study. The few new jobs created by the U.S. economy pay less and less at the very time that the U.S. deficit is soaring, endangering the American middle class and a way of life. These are some of the key themes debated at the rarefied World Economic Forum gathering of world economic and political leaders that just concluded in Davos, Switzerland.

Whatever happened to the clever theory that the United States would naturally shed low-skill jobs and replace them with higher-end, better-paying jobs performed by well-trained “knowledge” workers? It is not happening, says an analyst. “Only American arrogance could lead us to assume we could have an economy based on intelligence," he said. Are we really fiddling, fat and happy, while Rome burns?

Link here.


Investors have very little in cash; they hate Treasuries almost to a man (two-thirds of respondents think they are overvalued); and most think that shares are fairly valued, with prices likely to be propelled further upwards by higher profits. On this last question, a dose of scepticism is in order. Last week’s column looked at the astonishing profitability of American financial firms. Citigroup, to take one example, made more money last year than any company has ever made, and financial firms make up about a third of corporate profits, which is unsustainable. A bigger question is whether profits for non-financial firms are also being temporarily flattered, to which the answer is: most probably.

As in the late 1990s, however, investors are seeing what they want to see. And what they want to see is their risk-taking rewarded and a nirvana in which corporate America, cleansed of wrongdoing and excessive debt, can get back to the business of making lots of money. Share prices reflect this.

Link here.


Until recently, estate taxes (also known as death taxes) were the almost exclusive headache of the super rich, their tax attorneys, and their estate planners. But a strong economy, an ever-widening distribution of wealth coupled with tax policy that has failed to keep up with economic growth have extended the reach of estate taxes well into middle-class America.

As early as 700 B.C., there appears to have been a 10% tax on the transfer of property at death in Egypt. Who pays the highest estate tax rates? Typically they are owners of small businesses, family farms, and savers who amass wealth during their lifetimes through hard work and thrift. Because wealth is often unexpected, these people may not be aware of, or take full advantage of, ways to reduce estate taxes. As a result, those who come late, or not at all, to estate planning end up paying most of the tax.

Link here.


Throughout most of the post-war period, a number of Treasury Secretaries conducted economic policy with an eye toward preventing a loss of US competitiveness. Faced with calls for protectionism from firms and workers whose industries and jobs were at risk, these former Treasury regimes were biased toward a low dollar exchange rate which would enhance the position of US industries in world trade without running the risk of trade wars posed by protectionist solutions. Most of these Treasury Secretaries remembered an earlier era when the US ran current account surpluses and was the world’s largest creditor nation. They also had the experiences of the so-called Third World debt crisis of the 1980s in mind and the corresponding fear of debt trap dynamics. In other words, dollar devaluation was grounded in sound economic theory, rather than desperation. It was pro-active, rather than reactive.

Under Treasury Secretary Rubin, all of this changed. From Rubin’s perspective, a strong dollar was always desirable to the extent that it encouraged short run speculative trend following capital inflows which buoyed domestic stock and bond markets and kept domestic interest rates low. The policy became too successful. The ultimate effect was to encourage yet greater reliance on short term speculative capital, thereby propagating greater potential financial fragility in the US economy.

Now Treasury Secretary Snow, the ostensible “custodian” of the strong dollar policy, has abandoned even the pretence of being interested in it. Similarly Fed Governor Ben Bernanke has gone as far as celebrating the American central bank’s ability to print endless dollars to ward off any incipient deflationary threats. The dirty little secret in today’s markets is that the Asians have grown to love a weaker dollar as well. But there are signs of a backlash elsewhere: It appears only a matter of time before the European Central Bank cracks and begins to join the game of global competitive currency devaluations, which would likely upset this delicate balance, a state of affairs that has enabled US and Asian capital markets to levitate in spite of the persistent weak dollar trend.

The embrace of a weak dollar has in effect placed both China and the U.S. closer to the Fisherian debt deflation dynamics which created prolonged stagnation and repeated recession in Japan. Therefore, the real risk is that today’s global credit blow-off ultimately places everybody closer to debt deflation dynamics and greater currency instability, hardly a conducive backdrop to perpetuate the current sanguine state of affairs in today’s capital markets.

(Link no longer available.)


The highly prized chunks of gold may be the product of generations of soil microbes at work. Researchers from the Cooperative Research Centre for Landscape Environments and Mineral Exploration (Australia) grew gold nuggets in the lab. The discovery could help in exploration for new fields of the precious metal.

Link here.


“Today we have substantially the worst prospects for long-term global investment returns of my 35-year career when all asset classes are considered, particularly for U.S.-centric investors. The asset classes collectively are simply the most overpriced they have been. There are no large categories that are good hiding places...,” according to Wall Street legend Jeremy Grantham, in his most recent report to his investors.

Back at the peak in 2000, there were still places to hide. For instance, to readers of my newsletter, True Wealth, I had recommended real estate and related stocks, and also several income ideas, which were once-in-a-generation opportunities. But now, in 2004, the pickin’s are slim... so slim that the most profitable investment approach now might simply be: Ride the markets as long as they continue surging. But do so like someone who understands that they are overvalued -- and that they will correct themselves. [Ed: Or learn how to trade from the short side.]

Take your pick: You can buy overpriced stocks, overpriced bonds, or overpriced real estate. In times like these, Richard Russell (who has been writing an investment newsletter for over 40 years) says, “He who loses the least, wins.”

Link here (scroll down to Steve Sjuggerud piece).


In 1999, real estate and housing values accounted for $11.5 trillion worth of household net worth, or about 27% of the $42 trillion total. Stocks and mutual funds, at $12.1 trillion, made up 28% of household net worth. They were about even. By the third quarter of 2003, real estate and housing values totaled $15.8 trillion, or 38% of household net worth. Stocks, still well down from their 2000 high, are only 19% of total household net worth at $8 trillion. If you are looking for inflation, here you go. This is where all the cheap money has been finding its way.

This bubble is even more dangerous than the stock market bubble. Housing and real estate are at the epicenter of American household net worth. A home is considered a “tangible”, not a “financial” asset. It has all the appearances of an asset with enduring value. But in reality, it can lose substantial value overnight. And if it was purchased on credit, the market value of the home could quickly be worth less than the value of the mortgage.

Link here. Also see this analysis, and this chart.


Citigroup, the world’s leading issuer of credit cards, has just announced the largest corporate profit in history. Judging from Citi’s recent results, it is easy to see why JP Morgan wants to get into the consumer market. The bank earns margins of 27.5% on its credit cards. Its business is growing strongly, with receivables up nearly a quarter on the year. The success of this division helped Citigroup earn a 33% return on equity last year. Such results normally signify an impregnable business franchise. Yet I suspect this is as good as it gets for the plastic-issuing loan sharks. The fundamentals of their business are poor and current profitability is vulnerable both to the return of inflation and the bursting of the credit bubble.

Since its inception fifty years ago, the credit card industry has been only intermittently profitable. In the late 1980s, American Express lost hundreds of millions of dollars when it launched its new Optima card. A few years later AT&T spent more than $130 million attempting to break into the market, but sold its card division in the mid-1990s after sustaining high write-offs. Credit card companies may report high returns in good years, but that is largely because past losses have been written off. And despite increasingly sophisticated computerised credit scoring systems, these companies have failed to bring down bad debt provisions, which in the United States currently stand at a record high of over 4%.

Credit card issuers have benefited in recent years from two trends: Their cost of funds has gone down more rapidly than the interest they charge their customers, and the robustness of consumers’ borrowing. Commentators have been warning for so long about the dangers of excessive consumer debt that people in the credit card industry may feel that they can safely ignore them. Perhaps they should consider the case of South Korea.

Link here.


A new technical service that uses “fractal geometry, chaos theory, and complex systems theory” seems to have made a string of good calls lately. Trading system afficionados might give the site a look-see.

Recent record here.


This morning, the Q4 GDP came in at 4%, a full point below the consensus estimate of 5%, and far below the dizzying 8.2% Q3 jump. Besides the GDP report, a host of other economic data was released today. Buried among it was a report about inflation that, not surprisingly, did not get much attention from the media. The Wall Street Journal mentioned it only briefly: “Inflation slipped during the period (4th quarter of 2003). The government’s price index for personal consumption, an important gauge for Federal Reserve policy makers, slowed to a 0.6% rate from 1.8% in the third quarter. When that indicator comes in below 1%, the Fed begins to worry about ‘excessive disinflation’.” So when does this worrying begin?

More on this story here.


Summary from the publication’s latest promotion follows. (Note that their record shows some dramatically correct calls, and plenty of incorrect ones as well. Often wrong ... never in doubt.)

Link here.


Business 2.0’s fourth annual review of the most shameful, dishonest, and just plain stupid moments of the past year. Grand prize winners are two greedy Richards: Former NYSE CEO Dick Grasso and his $139.5 million salary, and Strong Financial founder and chairman Dick Strong, who skimmed $600,000 from his own customers through market-timing trades contrary to his own company’s rules despite having a net worth north of $1 billion.

Link here.
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