Prieur’s readings (March 6, 2010)
This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.
• Brett Arends (The Wall Street Journal): The Oracle’s tips for the rest of us, March 1, 2010.
Every few years, critics say Warren Buffett has lost his touch. He’s too old and too old-fashioned, they claim. He doesn’t get it anymore. This time he’s wrong. As the Dow tumbled below 7,000, Mr. Buffett came under fire for having jumped into the crisis too early and too boldly, making big bets on Goldman Sachs and General Electric during the fall of 2008, and urging the public to plunge into shares. Now it’s time for those critics to sit down for their traditional three course meal: humble pie, their own words and crow.
• Robert Lenzner (Forbes): The Obama stock market is one year old, March 5, 2010.
Don’t expect another 70% gain. It’s capital preservation time again.
• John Authers (Financial Times): There’s money in stockpicking hills, March 5, 2010.
As the popularity of index funds has grown, so has the relative strength of funds that are prepared to behave most independently, and diverge most widely from the benchmarks. With everyone worrying about asset allocation, genuine stockpickers are finding mover bargains in overlooked stocks. Asset allocation is very important. But it is a fair bet that fund managers will soon pay a lot more attention to stockpicking. They may well find that there is money to be made from correcting the anomalies that the overemphasis on asset allocation has created.
• Jim Jubak (MSN Money): Is there anyplace to put your cash? March 4, 2010.
For the short term, look to dividends as a safe spot to park your money, but be ready to move into emerging markets when the time is right.
• Randall Forsyth (Barron’s): Market forecast – confusing, March 4, 2010.
Even the pros admit they don’t know where stocks are headed. Could Big Brother be dissuading some from giving opinions?
• James Galbraith (The Nation): In defense of deficits, March 4, 2010.
… the deficit phobia of Wall Street, the press, some economists and practically all politicians is one of the deepest dangers that we face. It’s not just the old and the sick who are threatened; we all are. To cut current deficits without first rebuilding the economic engine of the private credit system is a sure path to stagnation, to a double-dip recession – even to a second Great Depression. To focus obsessively on cutting future deficits is also a path that will obstruct, not assist, what we need to do to re-establish strong growth and high employment.
• Editorial (The New York Times): A.I.G., Greece, and who’s next? March 4, 2010.
Without effective reform, the derivative-driven financial crisis in the United States that exploded in 2008, and the Greek debt crisis, circa 2010, will be mere way stations on the road to greater calamities.
• Gordon Chang (Forbes): China bets big on America, March 5, 2010.
The country is increasingly relying on exports to the US.
• Kenneth Rogoff (Project Syndicate): Japan’s slow-motion crisis, March 2, 2010.
Are foreign leaders right to scare their people with tales of Japan? Certainly, the hyperbole is overblown; the Chinese, especially, should be so lucky. But nor should apologists for deficits point to Japan as reason to be calm about outsized stimulus packages. Japan’s ability to trudge on in the face of huge adversity is admirable, but the risks of crisis ahead are surely greater than bond markets seem to recognize.
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