Wealth International, Limited

Finance Digest for Week of July 19, 2004


When liberal politicians bash “the rich” or “the wealthiest”, they overlook the fact that many Americans someday would like to be “rich” or “wealthy” and do not want their dream blocked by regulation or confiscatory taxation. The good news is that it is not necessary to become a master of game show trivia to become a millionaire, as the 2004 World Wealth Report, published by Merrill Lynch and the consultancy Capgemnini, demonstrates. One in every 125 Americans is a millionaire, according to the study, and last year the number of American millionaires jumped 14%. The number of “high net-worth individuals” in the United States -- i.e., those with $1 million in financial or other liquid assets -- reached 2.27 million in 2003, up from an estimated 2 million in 2002. Those figures, by the way, do not include the value of homes, the most valuable thing most people possess, but do include assets held in retirement accounts.

So how do people get to be millionaires today? Mostly the same way they always have: by building businesses, many of them starting as small businesses. Barring the imposition of incredibly stupid anti-entrepreneurial policies from Washington and the state capitals (sadly a very real possibility), almost any American still can become a millionaire. Link here.

How to get rich. First, tell yourself “I want to be rich.”

Sure, you would like to be rich. You cannot stop humming that song, “If I Were a Rich Man”, from Fiddler On The Roof, and you fantasize about what you are going to do with all that cash. But can you say, with conviction, that you are actually going to be wealthy? That you have decided to be wealthy? That, according to Mr. Wee Tiong Howe, is the first step to good financial planning. The chairman of IPP Financial Advisers recommends that right at the start, your must make the conscious decision that you are going to be wealthy.

Of course, just making the decision is not going to put you on the path to millions. That is just the fuel. Financial planning is the ignition. What simple steps can the layman follow to keep his reserves in order? First, plan your cash flow carefully. Mr. Wee recommends saving up to 30-40% of income per annum. Budget for high savings, and work hard to build up your cash reserves. Second, keep an eagle’s eye on your insurance. Third, invest wisely. Mr Chong urges investors to fight against the emotions of greed and fear. Fourth, review your home loan every year, especially since interest rates are likely to be rising. Fifth, keep a tight hold on your debts. He advises that the ideal level of debt is equivalent to your annual income, but with such high living costs, limiting debt to the optimum will be hard to achieve.

Link here.

What the rich really want.

“The rich are different from you and me,” as F. Scott Fitzgerald famously said. “Yes, they have more money,” Hemingway said. He might have added that those who have it do not flaunt it and are “more interested in enriching experiences than living luxury lifestyles, or being pretentious or ostentatious.” Thus concludes the “Portrait of Affluent Travelers” for 2004 published by Yesawich, Pepperdine, Brown and Russell in Orlando, Florida, co-publishers with Yankelovich Partners of the National Business Travel Monitor, www.ypbr.com. The study looks at the attitudes and behavior of travelers from the top 5 percent of U.S. households, with annual incomes of more than $150,000. More than half, 66%, say they are more concerned about buying things that are comfortable and understated rather than stylish; 72% try “to avoid flaunting what I have,” and 52% buy products that are understated in style.

Link here.


They are not panicking yet, but the geezers -- those newsletters around at the 1974 stock market bottom -- are distinctly grimmer. When I last checked at the end of May, the general tone was one of relief that the market had rebounded from its break below the Dow 10,000 -- the prospect of which had worried the geezers to the point where they were actually using the C-word (“crash”). Now, however, a significant number of geezers have become sharply more bearish. Which is not to say they are bolting. Thus James Dines of the Dines Letter put out a short-term sell signal July 1. But he is very explicit that the “line” that the market has been walking could be resolved either way.

Dines’s long-run view is positively apocalyptic. He writes: “Precious metals are so emotional that anything could happen short tem, but ‘The Coming Currency Crisis’ [U.S. dollar devaluation] yet lies in wait somewhere ahead, and it will be what we call a ‘Killer Wave’, so let’s hope it doesn’t happen soon.” This is eerily similar to 1960s and 1970s, Dines’s glory years. But he has also done well, according to the Hulbert Financial Digest, in the past five years.

Link here.


Depending on whose figures you believe, there are 6,000 to 8,000 hedge funds around the world, which together manage $1 trillion or so. In the first quarter of this year, some $38 billion flowed into hedge funds, according to Tremont TASS, a research firm -- over half of the total for the whole of last year. Small wonder that hedge funds, hitherto lightly regulated, should be attracting the attentions of financial-industry watchdogs. Yet hedge funds still control less than 2% of all investible assets.

It used to be that most of this money came directly from rich people. Now much of it comes via private banks, which these days advise clients to invest in hedge funds as a matter of course. Increasingly, however, a lot of the money comes from pension funds and insurance companies, which once viewed hedge funds with the utmost suspicion, but after the dismal stockmarket of 2000-02, cannot now invest quickly enough. Mickey St. Aldwyn of International Fund Marketing, a hedge-fund marketing company, reckons that such is the weight and momentum of institutional money flowing into the market, hedge funds will be managing a colossal $3 trillion within three years.

But therein lies a problem. Traders flock to set up hedge funds because they can earn a lot: typically, funds charge a 1% management fee and 20% of profits. Good, or at least popular, managers can charge what they like. Renaissance Technologies charges a 5% management fee and takes 35% of the profits. SAC takes no fee but half the profits. But whether investors should fork out such sums is debatable: the large amounts pouring into hedge funds are driving down the returns that attracted that money in the first place.

Most hedge-fund strategies are broadly market-neutral. That is, rather than bet on a market moving one way or the other, they play the difference -- arbitrage, in the argot -- between markets or individual securities. Thus they buy a cheap share and sell an expensive one; or they anticipate the effect of news on the prices of an array of companies. The need for speed helps explain why hedge funds pay up to one-third of all stockbroking commissions, and account for 10-30% of trading on the London stockmarket, depending on the day. Such strategies might make money when there are few players and lots of inefficiencies, but they are much less lucrative when there are many funds doing the same thing. Nor are hedge funds the only ones pursuing these strategies.

Performance in general seems to be deteriorating. In the late 1990s, says Mr. St. Aldwyn, no one would touch a fund that did not claim to be able to make 15% a year. Now investors seem happy with a promise of high single-digit returns. Even this seems beyond many. In the first six months of this year, most funds were flat or slightly positive: the CSFB/Tremont investible hedge-fund index is up a touch over 1% so far this year. April and May were two of the worst months for years. Many in the industry find that disturbing, given that almost nothing nasty happened in the markets. “It’s all doomed in one way or another,” says one hedge-fund manager.

Link here.


Behind a series of recent events lie sweeping change in an industry that sells $60 billion worth of jewellery alone each year. For generations it has been run by De Beers as a cartel. The South African firm dominated the digging and trading of diamonds for most of the 20th century. Yet the system for distributing stones established decades ago by De Beers is curious and anomalous -- no other such market exists, nor would anything similar be tolerated in a serious industry.

De Beers runs most of the diamond mines in South Africa, Namibia and Botswana that long produced the bulk of world supply of the best gemstones. It brings all of its rough stones to a clearing house in London and sorts them into thousands of grades, judged by color, size, shape and value. For decades, if anyone had rough diamonds to sell on the side, De Beers bought these too, adding them to the mix. A huge stockpile helped it to maintain high prices while it successfully peddled the myth that supply was scarce. De Beers has no interest in polishing stones, only in selling the sorted rough diamonds to invited clients -- who then cut and polish the stones before selling them to retailers.

With its near monopoly as a trader of rough stones, De Beers has been able to maintain and increase the prices of diamonds by regulating their supply. It has never done much to create jobs or generate skills (beyond standard mining employment) in diamond-producing countries, but it delivered big and stable revenues for their governments. Botswana, Namibia, Tanzania and South Africa are four of Africa’s richest and most stable countries, in part because of De Beers.

But this stable, established and monopolistic system is now falling apart. Three things have happened. First, other big miners got hold of their own supplies of diamonds, far away from southern Africa and from De Beers’s control. In Canada, Australia and Russia rival mining firms have found huge deposits of lucrative stones. De Beers once controlled (though did not mine directly) some 80% of the world supply of rough stones. As recently as 1998 it accounted for nearly two-thirds of supply. Today production from its own mines gives it a mere 45% share. Only a contract to sell Russian stones lifts its overall market share to around 55%.

That is a painful shift, but De Beers is still the biggest diamond producer. And rival mining firms do share one big interest with it: high prices for the stones they dig from the ground. That is why, although it is under pressure, the central clearing system that sustains high prices could yet survive a bit longer. Rather than controlling a pure monopoly, De Beers might be able to run a quasi-cartel that stops the market from opening fully. De Beers says the price of rough stones is still rising; the price of polished stones has risen by 10% this year, according to polishedprices.com, an independent diamond website that tries to track such things.

The next challenge might be manageable too. De Beers’s system is highly secretive. Nobody knows the ultimate source of particular diamonds it sells, as all are mixed together in London. Although the regulations make it easier to track the flow of rough diamonds, they have not required De Beers to open all its books to public scrutiny. Most of the diamond-fuelled African wars are over. And the firm has a declining interest in buying up any rough stones that appear on the market. It knows that its ability to control world supplies is dwindling. It is the third challenge that is much more troublesome. This is a threat to break up entirely the way De Beers organizes the industry. It can best be summed up in two words: Lev Leviev. But while De Beers’s days of market dominance are clearly drawing to a close, consumers should not get too excited just yet. Whether a duopoly or oligopoly emerges, diamond prices are not going to plummet.

Link here.


It is claimed that home ownership is the American dream. In days gone by, married couples would save enough money to make the once-standard 20% down payment on a house. Unless one could obtain financial assistance from a relative, there were typically no shortcuts to building up the savings necessary to make the aforementioned down payment on a starter home. Therefore, a future-oriented mindset would become the order of the day (a wonderful and measurable side-effect, of future orientedness/low time preference, is that of low interest rates). Americans would sacrifice some current consumption and set aside the savings necessary to reach that home-ownership goal. The virtues of hard work, thrift, and discipline were rewarded when the day came that the local banker approved the mortgage loan -- naturally, the local banker approved the loan as he took the time to get to know his customers and felt that hard-working, thrifty, and disciplined people were good credit risks. If you did not have the work ethic and discipline to save for a house, then too bad; envy be damned.

Alas, these days are long gone. America has devolved from a republic to a social democracy. Politicians exploit, and pander to, the basest of human feelings: envy. (As John Adams wrote in a letter to Thomas Jefferson “…democracy will envy all, contend with all, endeavor to pull down all, and when by chance it happens to get the upper hand for a short time, it will be revengeful, bloody, and cruel.”) In turn, everyone is now entitled to own a home. Indeed, even if the federal government needs to redistribute wealth, to help Joe and Jane Slackard buy a home, then redistribution it will be. If interest rates are too high, because of a present-oriented American populace (i.e., Americans do not save anymore due to high time preferences), then the Federal Reserve will lend a helping hand by creating billions upon billions of dollars -- right out of thin air -- in order to drive down interest rates. In essence, the Federal Reserve is monetizing envy (or should I say unleashing “animal spirits”) so that everyone can borrow and spend to buy a home, furnish it, put two new cars in the garage, and live the American dream. Of course, the United States’s housing bubble is going to end in an economic nightmare.

With key factors falling into place, it appears this housing bubble has come about as an accident of history. When combining all of the factors, a volatile cocktail has been concocted. Inevitably, when a high-time-preference populace collides with artificially low interest rates, something unsavory is going to happen. In this case, the monetary “energy” unleashed is flooding into the housing market. What has ensued is a housing bubble destined to go supernova. How in the world have we gotten here? I will try to explain.

Link here.


The government of Argentina failed its people. If the government will not follow the laws that it makes, and will not keep its promises, and will confiscate most of the citizens’ wealth, why should the citizens follow the letter of the law to a tee? Heck, the fact that they follow the laws at all, after what they have been through, is amazing...

The government failed the people of Argentina, culminating in a massive economic crisis that bottomed in early 2002. The stock market fell more than 90% in U.S. dollar terms from peak to trough in this time. The banking system collapsed, shutting down the banks for 60 days. Effectively, three quarters of the people’s savings were confiscated. On the streets, survival became more important than obeying the government, which saw five Presidents in three weeks.

Then a funny thing happened... things just started to get less bad. Argentina reached a point where things could not get worse. Stocks became extremely cheap. By late 2001, the price-to-earnings ratio of the entire market was 5 (compare that to the P/E of the Nasdaq today of 62). Now the government has become just a little less ridiculous. And as things have gotten less bad, the stock market has risen by 292% in dollar terms (from the 2002 lows to today).

I tell this story because it relates to another interesting investment opportunity... As of June 17, things just got less bad in Russia. As of June 17, Russia’s President Vladimir Putin -- after a year of mugging business tycoon Mikhail Khodorkovsky -- just got a little less ridiculous. If you have got a speculative bone in your body, it is time to buy... It still looks ugly... but the trend in oil giant Yukos shares and the overall Russian market is up in the last two weeks. As my regular readers know, the perfect time to buy a share is when everyone hates it, yet it is starting to rise. Even after this second bounce, the stock now trades at a forward P/E of -- get this -- 4. It is like Argentina in 2002... stocks are super cheap... and things just got less bad.

Until Putin claimed he did not want to push Yukos into bankruptcy, the oil giant was either a zero or a home run. Now the prospect of a zero has been taken away. The 30%+ move in the shares was a reflection of that. I expect Yukos to have an Argentina-like run from here. And at a P/E of 4 based on 2005 earnings estimates, the downside in Yukos should be limited.

Link here (scroll down to piece by Dr. Steve Sjuggerud).

Yukos faces dismantling.

Russian oil giant Yukos faced being torn apart after bailiffs said they would sell off its main operating arm to settle a $3.4 billion bill for back taxes. Analysts said it was the worst-case scenario for the firm, which has been trying to agree a deal with the authorities over payment of the bill. Steven Dashevsky, head of research at Aton Capital, said that “Yukos is now going to experience privatization in reverse, seeing its prized asset being sold at likely pennies on the dollar.”

Link here.

Creditor banks hold off demanding Yukos cash back.

Foreign banks owed $1 billion by Russian oil company Yukos are still holding off from demanding their money back, despite the oil giant’s warning that it may be less than a month away from bankruptcy. Banking sources familiar with the situation said the banks were talking to Yukos and to each other and studying various scenarios. Creditor banks declared a technical default on the $1 billion loan in early July, but have not demanded repayment. Under Russian bankruptcy law a company is obliged to file for bankruptcy if any one creditor claim is going to compromise the ability of the company to pay other creditor claims.

The sources said that while the company continued to pump oil and pay interest on its debt the banks would not be under pressure to take further action. Russia’s largest oil producer faces $3.4 billion in back tax demands, its assets have been frozen, its core operating unit put up for sale and its main shareholder jailed on charges of fraud and tax evasion.

Link here.

Yukos: We’ll be bankrupt in weeks.

A looming liquidity crisis brought on by court marshals’ asset freezes could force Yukos to halt its operations and exports and plunge it into bankruptcy as soon as mid-August, company executives warned Thursday. The announcement by the country’s embattled No. 1 oil producer sent shock waves through both rattled domestic trading floors and international oil markets, causing shares to fall across the board and world oil prices to soar on fears of supply shortages from Russia.

Link here.


Dow Theory Letters publisher Richard Russell was born in 1924 and began publishing DTL in 1958. He has been writing the Letters -- the oldest service continuously written by one person in the business -- ever since, never once having skipped a newsletter. A native New Yorker, Russell has lived through depressions and booms, through good times and bad, through war and peace. He flew as a combat bombardier on B-25 Mitchell Bombers during World War II. He shares with his his readers some things that have changed since his childhood, and since 1904.

Link here.


The student of economics is in­variably taught a certain myth­ology about the history of the study of business cycles. That mythology holds (a) that before 1913, nobody realized that there are cycles of prosperity and depression in the economy -- instead, everyone thought only of isolated crises or panics, and (b) that this all changed with the advent of Wesley Mitchell’s Business Cycles in 1913. Mitchell’s supposed achievement was to see that there are booms and then depressions, and that these cycles of activity stem from mysterious processes deep within the capitalist system. It is Part III of this work (the other parts being outdated historical and statistical material) that is here reprinted for the second time, this time in paperback.

It is certainly true that the late Wesley Mitchell had an enormous influence on all later studies of the business cycle and that he revolutionized that branch of economics. But the true nature of this revolution is almost unknown. For there had been great economists who were not only aware of, but also discovered theories to explain, the dread phenomena of boom and bust. They did this much before Mitchell’s time, and went far beyond him. For one thing, Mitchell and his followers have never tried to explain the business cycle; they have been content to record the facts, and record them again and again. Mitchell’s famous “theoretical” work is only a descriptive summary. Secondly, these same economists were discovering a great truth that escaped Mitchell and has continued to escape economists ever since: that boom and bust cycles are caused not by the mysterious workings of the capitalist system, but by governmental interventions in that system.

The real founders of business-cycle theory were not Mitchell but the British classical economists: Ricardo and the Currency School, whose doctrines have unaccountably been shunted by historians into the pigeonhole of the “theory of international trade”. They first realized that boom-bust cycles are caused by disturbances of the free market economy by inflationary injections of bank credit, propelled by government. These booms themselves bring about a later depression, which is really an adjustment of the economy to correct the interferences of the boom. The sketchy theory of the classicists was elaborated during the nine­teenth century; later, the important role of the interest rate was explained by the Swede, Knut Wicksell; and finally, the full-grown theory of the business cycle was developed by the great Austrian economist, Ludwig von Mises. Ironically, the work where Mises first outlined his theory appeared about the same time as Mitchell’s.

The classical, and now the Mises, theories have been generally scorned by modern writers, and mainly for this reason: that Mises locates the cause of business cycles in interference with the free market, while all other writers, following Mitchell, cherish the idea that business cycles come from deep within the capitalist system, that they are, in short, a sickness of the free market. The founder of this idea, by the way, was not Wesley Mitchell, but Karl Marx. The Mises theory, then, is universally dismissed as “too simple”.

It is true that, in recent years, the so-called “Chicago School” has been placing more emphasis on monetary causes of the cycle. But these economists have only thought of money as acting on the general price level and still do not realize that monetary inflation creates maladjustments in the economy that require subsequent recession. As a result, the Chicago School still believes that government can eliminate business cycles by juggling the monetary system, by pumping money in and out of the economy. The Misesian, on the other hand, sees government as having one and only one proper role in the economy: to keep its hands off and to avoid any further inflation. This is the only “cure” that government can bring to us.

Link here.


When Mr. de Tocqueville discussed “prosperity” in the 1830s, he does not define the term. He is discussing a conclusion, and only describing the foundations of the premise in a roundabout way. Perhaps the foundations and constructs of the term “prosperity” were so obvious and self-evident that they needed no description to readers in that age. Everyone knew that prosperity came from work and saving, from transforming one’s local resources into saleable capital. As de Tocqueville observed, the treasures of North America were there for the digging, the planting, the harvesting, the mining, and the lifting. Once harvested or gathered, the primary goods were available to ship to the mill or the factory and then to sell into the broader stream of commerce, thence to flow to final consumption.

The financial accounting for the prosperity that de Tocqueville discussed occurred in a gold-standard world of hard money, in which a gold-dollar would, one day, be worth the same as a gold-dollar the next day. It was a fairly simple and predictable economic system that mirrored the world of nature, a system that the late Geologist M. King Hubbert called a “material-energy” system.

Today, however, the prosperity of the U.S. and the world is premised upon a “monetary system”. Monetary systems are based on fiat currencies issued by central banks, distributed to the public via a fractional reserve banking system. The current monetary and banking system is premised on the idea that economic activity is governed by interest rates. At root, this requires that quantities of, say, dollars “grow” via compound interest, and compound interest by definition creates an exponential pattern of growth. Fiat currencies can be and are created in essentially unlimited amounts, via accounting entries, and as a rule, in response to political pressures. Despite its favorable reputation in many circles, “Monetarism” has been unsuccessful in regulating the long-term stability of fiat currencies. The political-fiscal pull is always towards increased government borrowing and spending, and hence towards the creation of excess fiat currency by the central bank. The modern history of what passes for money is a history of money’s decline in value.

For many decades, certainly since 1913 and the creation of the Fed, the U.S. “money supply” has grown faster than the available supply of goods and services within the national economy and its world-trade connections. Thus the U.S., and by extension the world, has lived with inflation for most of the past 90 years. Between 1914 and the present, the U.S. dollar has lost over 97% of its purchasing power. Governments and citizens, consumers all, have simply adapted to spending more and more funds each year to purchase the same basic quantities of goods. However, as is becoming generally evident today in a crowded world of rising demand for basic commodities, the earth offers up its resources in a linear fashion, yard-by-yard, bushel-by-bushel, ton-by-ton and barrel-by-barrel.

Exponentially growing numbers of “monetary” dollars, and, by extension, other world currencies, are now encountering limits to production of material-energy resources. As the supplies of available material-energy resources grow linearly and eventually peak in production, an expanding monetary base dictates that prices must climb and eventually skyrocket. Modern “prosperity” will be revealed as an accounting fiction when certain critical goods are no longer available at any price in monetary currencies. Now China and India, with total populations over 2.6 billion, or nine times that of the U.S., and many other nations as well, have developed and are developing their economies. This new commodity-demand by developing nations, for basic energy and resource materials as well as for food and fresh water, is fueled by the West’s own credit-creation. And it is on a colliding trend with the strategic interests of the West.

The U.S. dollar is fast approaching the point where, as a unit of currency, it can no longer be trusted to reflect a proper price signal as to the value of basic commodities. Eventually the dollar will take a dramatic fall from favor. Contrary to what de Tocqueville described in the U.S. of the 1830s, “happy men, restless in the midst of abundance,” general prosperity will vanish in a world of scarcity. One can only speculate as to what will emerge from the economic wreckage.

Link here.


Jacques Rueff was accused of being a perennial prophet of doom -- a doom that never seemed to arrive. Rueff first began to voice his concerns in 1961, alerting the world to the dangers inherent in the world monetary system, then operating under the Bretton Woods agreement. It would take ten years before Rueffundefineds view was fully vindicated. The international community must have shivered as Reuff evoked the haunting memories of the Great Depression. He compared the years 1958-61 to the years 1926-29, which many could still chillingly recall as the prelude to an economic disaster none wished to see again. As Rueff notes, there was the same accumulation of Anglo-Saxon currencies in the monetary reserves of European countries, in particular France, and the same inflation in creditor countries.

The point of the comparison with the 1920s was that Rueff thought that, mutatis mutandis, the same thing was happening again in 1960. He noted how the international community held tremendous reserves of dollars against an ever-smaller base of gold reserves. Writing in 1960, Rueff felt that if foreigners requested payment in gold for a substantial part of their dollar holdings, they could really bring about a collapse of the credit structure in the U.S. Rueff called for a return to the old gold standard. The Le Monde article caused a stir, and a rash of criticism followed, in which Rueff was chided as an old-timer, applying a quaint antique analysis to a modern problem. The gold standard was a thing of the past, one author noted at the time, like sailing ships and oil lamps.

Fast forward several years. European nations that had been accumulating dollars at a pace of $1-2 billion per year began liquidating them -- more than $2 billion were liquidated inside the twelve months of 1965 alone. By 1970, there was $45 billion in dollars held by foreigners against only $11 billion in gold stock. At this point, the ending was inevitable. Though there were some changes made to the monetary structure in the waning days of dollar convertibility, it would finally expire in the summer of 1971 when Nixon brought the Bretton Woods agreement to an end by taking the U.S. entirely off the gold standard.

There are many ways in which Rueff criticisms to the monetary systems of the 20s and the 60s apply to the monetary world of today. For one thing, note that the inflation of money and credit was able to continue for a long time after Rueff initial diagnosis that a crisis was brewing. Like any bubble, the pin is hard to find. A continued weakening of the balance of payments deficit, some banking or financial incident, some political event, a mere shift in opinion -- any of these could induce the dollar holders to request conversion of their dollar holdings in whole or in part, even at the risk of antagonizing the Washington authorities. In the end, the math simply became -- and is destined to become -- too stark to ignore.

Link here (scroll down to piece by Chris Mayer).


Between battling for the corner office, endless business trips and keeping shareholders happy, most executives already have enough on their plate to also worry about their physical well-being. Yet, as physicians and boards of directors would undoubtedly agree, health is an issue that corporate executives ignore at their own -- and their company’s -- peril. Just ask Coca-Cola, whose heavy-smoking CEO Roberto Goizueta died of cancer in October 1997 at the age of 65, or McDonald’s, whose CEO James Cantalupo suffered a serious heart attack at age 60 last April.

Fortunately for corporate executives who understand the benefits of watching their health, many of the nation’s top medical institutions offer “executive health care programs” tailored to their time-pressed needs. Typically arrayed in luxurious and business-friendly surroundings -- T1 lines in the waiting rooms, buffet breakfasts and lunches, etc. -- such programs offer comprehensive physical exams and lengthy physician consultations with an efficiency and attentiveness worthy of their high-powered clientele.

Executive health care programs not only make good health sense, but good business sense as well. Indeed, according to 2002 findings by the University of Michigan Management Research Center, executives who underwent physical exams had 20% fewer health claims and lost 45% fewer workdays than those who did not.

Link here.


Benjamin Graham (who, among other things, is famous for teaching Warren Buffett the ropes of value investing) proved you could make a fortune investing in companies that were selling for a huge discount to their intrinsic value. In other words, if a company was trading far below what its assets were worth (minus all liabilities -- things like debt and accounts payable), Graham was confident that, over time, the company’s true worth would be discovered...and anyone who invested while it was cheap would walk away much richer.

Think of it like this... if you went to a flea market and saw a rare three-legged 1937D Buffalo nickel selling for $900, you would buy it -- knowing that the real value of the nickel was somewhere between $3,000 and $4,000. In other words, if you sold it later and ONLY got the nickel’s fair value, you would still make about 233% to 344% on your investment. Not a bad deal, right?

So how can you tell if a company is cheap relative to its assets? The easiest way is to scan the market for companies that have a low price-to-book value. A company’s book value is its net asset value minus its intangible assets, current liabilities, long-term debt and equity issues. Divide the market-cap by the book value and you get the price-to-book ratio. If a company has a P/B value under 1, it is said to be undervalued. And if a company has a P/B value above 1, it is selling for a premium.

Link here (scroll down to piece by James Boric).


With regard to the stock market in particular, this year’s first half had to be a disappointment -- to bulls and bears alike. However, when you consider the extraordinary ebullience in evidence as the year commenced, disappointment must be much greater among those in the bullish camp. And if January through June proved disheartening to optimists, the market’s slide thus far in July certainly has done nothing to lift spirits. On the other hand, popular sentiment measures have remained quite buoyant. Thus, if my views about 2004’s second half are in line with what comes to pass, the really major disappointments lie ahead -- but not for the bears! In a nutshell, here is how I currently see the balance of 2004 ...

Link here.
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