Feb

17

 In world cricket at the moment, I don't believe we have seen (I certainly haven't) a player of this devastation unleashed on batsmen with his fast bowling ferocity for decades. He almost single-handedly wiped out the best team in the world in the last 4 days, and for anyone who enjoys a sportsmen at the pinnacle of success this would have to be it.

It reminds me of outperformance in markets at every turn and that almost once in a lifetime manager no body comes close too.

Nov

21


I note the Market Mistress has settled in for the night at DJ 7552. With 1,000 homes destroyed in California of late and then remembering Galveston and New Orleans, I had a thought. It seems to me that over the long haul houses and cars (well, maybe not cars anymore — at least US built ones) used to fuel the economy in America. The US economy over time (next 4-6 years) will improve (note I did not say recover). As a builder/remodeler it appears to me that lumber/plywood stocks/futures would be a good bet for the long haul. However, I do not hold any of those stocks and this is only my 'gut' feeling.

Steve Ellison remarks:

I got a newsletter yesterday from a real estate agent in Reno, Nevada saying that 50% of recent sales in the area have been either short sales or foreclosures.

Mitchell Jones writes:

When you say "maybe not cars anymore, at least not U.S. built ones," your premise seems to be that the present difficulties of the U.S. auto industry provide us with information about underlying economic realities—to wit: they indicate that other countries are somehow intrinsically better suited for auto manufacturing than the U.S. (Even if that is not exactly what you had in mind, it is a premise which is often encountered nowadays. So bear with me).

My view, however, is that in a system of floating exchange rates calculations of comparative advantage tell us nothing about the underlying realities of goods production. In recent years the dollar index has fallen from the 120s down to around 70, then has risen back up to 89 or so (and presently has the potential, based on the ongoing enormous injections of liquidity, of falling close to zero in a hyperinflationary blowoff…). What, in such a context, can we infer about which countries are best suited to manufacture one thing as opposed to another?

The answer, to put it bluntly, is not a darn thing. We need a monetary unit that is firmly linked to reality, via convertibility to a precious metal such as gold or silver, in order for the underlying facts, the absolute advantages one nation intrinsically has over another, to manifest themselves in calculations of comparative advantage and, thus, to bring about a reality-based international allocation of capital. Without convertibility, what we get in the short run is malinvestment on a planetary scale, and in the long run what we get is a global financial conflagration.

That long run, for those who haven't noticed, is here right now.

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