Prieur’s readings (May 9, 2011)

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This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Cullen Roche (Pragmatic Capitalism): Gary Shilling’s 11 investment themes, May 4, 2011.
Gary Shilling’s Insight newsletter is always full of interesting market commentary.  While he’s been excessively bearish on the equity market in recent years, Shilling has nailed the overall macro outlook including the weak economic outlook, bear market in housing and the debt deflation environment.  His latest monthly newsletter contains some good macro investment themes for the investor who is not overly enthusiastic about the economic backdrop.

• John Hussman (Hussman Funds): The menu, May 9, 2011.
Investors should understand that attention to valuation and risk-management are likely to be their greatest assets as they address the low-return investment menu that is presently available, and the changes that will be offered in that menu as the coming years unfold.

• Barry Ritholtz (The Washington Post with Bloomberg): When should you fire your mutual fund manager? May 8, 2011.
When you buy a mutual fund, you are essentially hiring a manager to handle your assets. Typical investors research various fund families, use Morningstar to review history, review the fund’s top holdings, consider long-term track records. They do all of this work to answer the question, “Which fund should I buy?” But in Ritholtz’s experience, they hardly ever consider the other side of that equation.

• Mark Hulbert (MarketWatch): Get ready for another flash crash, May 6, 2010.
Last year’s infamous “flash crash” was not a one-time event.

• John Mauldin (Thoughts from the Frontline and Investors Insight): Muddle through, or crisis? May 7, 2011.
This week Mauldin finishes his two-part letter on the Endgame and gives you his thoughts on the economy and how it all plays out over the next five years. (Click here for part 1, The endgame headwinds.)

• Any Xie (Caixan Online): Chimerica’s slippery slope to stagflation, May 6, 2011.
The global economy is heading toward another double-dip scare, possibly in the third quarter, in what could be a repeat of summer 2010. Financial markets may stumble in a few months, and that could prompt the U.S. Federal Reserve to introduce a third round of quantitative easing or an equivalent, which would be another step down the path toward stagflation. In this scenario, China’s current monetary tightening policy would be difficult to sustain.

• Christian Reiermann (Spiegel Online): Greece considers exit from euro zone, May 6, 2011.
The debt crisis in Greece has taken on a dramatic new twist. Sources with information about the government’s actions have informed Spiegel Online that Athens is considering withdrawing from the euro zone. The common currency area’s finance ministers and representatives of the European Commission are holding a secret crisis meeting in Luxembourg on Friday night.

• Jennifer Ablan (Reuters): PIMCO would only buy Treasuries on recession risk, May 6, 2011.
PIMCO’s Bill Gross, who runs the world’s largest bond fund, said on Friday the only way he would reverse his “short” position on U.S. government-related bonds and purchase Treasuries again is if the United States heads into another recession.

• Dmitry Zhdannikov and David Sheppard (Reuters): Goldman sees new oil rally after predicting drop, May 6, 2011.
Goldman Sachs, which in April predicted this week’s major correction in oil prices, said on Friday that oil could surpass its recent highs by 2012 as global oil supplies continue to tighten.

• Anthony Mirhaydari (msn money): How the Fed made the rich richer, May 4, 2011.
The “QE2” project was supposed to ease borrowing and get consumers to spend again. Instead, it has benefited only a few while raising most people’s cost of living.

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