2013
June 14, 2013
Last Tango on the Titanic?
We don’t think so. In recent weeks stock markets in many parts of the world have declined, sometimes quite sharply, as in Japan where the previous gains had been strongest. This has led a number of people to fear that the next big move of stock prices will be down. Among . . .
April 30, 2013
The Big Engine That Wouldn't
Signs of slowing economic growth are everywhere. China has slowed from decades of annual gains near 10% to a merely rapid growth rate of less than 8%. Europe has waded deeper into recession with already negative growth dropping further as Germany has chosen to join periphery countries in . . .
January 14, 2013
A Famous Victory
The curtain has come down after Act One of the Fiscal Cliff. Some critics have proclaimed it a victory for the President over his Republican enemies. Others have complained that, once again, the President failed to take a sufficiently firm stance in favor of the positions he took as . . .
2012
October 16, 2012
Europe
Rarely has a Nobel Peace prize been more timely or appropriate than this year’s prize awarded to the European Union. By the start of the 21st century the European Union was a tremendous success. Europe had finally ended thousands of years of near constant warfare, and turned itself . . .
July 12, 2012
Sleepless in Brussels... Madrid and Athens
Who
A couple of weeks ago European leaders held another all-night pajama party, staggering out into the morning light to proclaim that they had reached yet another game-changing agreement. The spin from France and the troubled peripheral . . .
May 21, 2012
Could It Happen Again, Already?
After two years of slow motion the train wreck of the Euro is picking up speed. The inevitable default by Greece on its sovereign debts now appears imminent. This will have a direct impact on banks in Greece and the rest of Europe. It will also make a Greek exit from the . . .
2011
August 8, 2011
Déjà Vu All Over Again
Many of our clients and readers are worried about the recent sharp declines in stock markets around the world along with increasing turmoil in other markets and ominous indications of increased violence and political malice.
This is indeed a proper time to be worried. . . .
June 13, 2011
MELTDOWN
Much has happened in the world since the early March earthquake, tsunami, and nuclear meltdown in Japan. And much of it has been consistent with our gloomiest forebodings. Even the assassination of Osama bin Laden — so reminiscent of the way Roman emperors and medieval princes . . .
May 31, 2011
Make Believe
USA
In the days before people could do anything “virtually” on the Internet, restless teenage boys used to play a game called “chicken” in which two contestants would race their cars directly toward each other. The first to swerve in order to avoid . . .
March 31, 2011
Double double toil and trouble, Fire burn and cauldron bubble
The witches’ cauldron is boiling furiously with momentous effects all over the world. An Arab Spring of popular protests against autocratic governments has spread to almost every country in the Arab world, resonating also in Iran and parts of central Africa and eliciting protective . . .
2010
December 15, 2010
OBAMA DOES A "W"
Never in his term as President or before has Barack Obama proposed or negotiated a public policy so beneficial to America’s workers as the “deal” he hammered out at the White House with the Republican leadership. And perhaps never in all of American history has a . . .
October 13, 2010
Been down so long . . .
A glum consensus about the economic future has enveloped our collective minds like fog descending on the coast at sunset. It is now almost universally agreed that economies in the United States along with Europe and Japan are likely to grow at only about two percent a year or less for the next . . .
September 16, 2010
Addiction
Corrupt regulatory oversight, cutting corners to save costs, plus citizens and politicians chanting “Drill, baby, drill”— is the BP Deepwater Horizon catastrophe really any surprise? The spill in the Gulf of Mexico, the worst man-made environmental disaster in the U.S., is a . . .
June 28, 2010
Lost
Not long ago, Japan lost a decade. “Japan once invited admiration” said The Economist in a 1998 article, “Now, however, it invites despair, as it fails to escape from the economic stagnation of this lost decade.” Since then Japan has had another dozen years of negative . . .
April 12, 2010
Beat the Devil
The rise from the ashes of the American and world economies has been slow and is likely to continue to be slow, at least in the world’s highest income countries. As with all previous recoveries from major financial crises, there is a serious drag from large debts remaining to be paid and . . .
2009
October 20, 2009
Capitalism Has the Last Laugh (Again)
There can no longer be any doubt that the U.S. and global economies came out of the tunnel of the Great Recession into the light of an economic recovery in the middle of this year. The trouble is that most people don’t see the light at the start of an economic recovery. Unemployment always . . .
July 16, 2009
The Limits to Growth
The future is always unknown, and at present it remains rather more uncertain than usual. Nevertheless, some answers are taking shape to the outcome of what we have described as an unprecedented economic “experiment.” It appears nearly certain that the enormous amounts of government . . .
February 6, 2009
May You Live in Interesting Times
Although there have been a few hopeful straws in the wind recently, investors who grasp them may be in peril still. The forces of depression remain fierce and relentless. While monetary and fiscal economic stimuli continue to proliferate in number and size, their ultimate effectiveness is yet . . .
2008
September 26, 2008
Bailed Out or Outfoxed?
Secretary of the Treasury Paulson has offered a dramatic new rescue plan. Most Americans hate it. Stock markets love it. When the plan was carefully leaked last Thursday it produced what was probably the biggest two day advance ever in global stock market prices. Since then stocks have soared or . . .
July 7, 2008
Between Scylla and Charybdis
Our previous three Memos, from last August through this January, each focused on the wide consensus about what had to be done to avoid another financial and economic disaster like the Great Depression. Each of them argued that since everyone, including the most powerful, had much to lose in an . . .
January 3, 2008
In the mid 1930’s with the Depression still causing widespread unemployment, idle factories and poverty, John Maynard Keynes wrote his famous treatise arguing that we had it in our power — any sovereign government had the power — to end the Depression promptly and to end or . . .
2007
October 3, 2007
Even before our last Investment Memo reached most of you, we were turning in a more cautious direction. The Federal Reserve Bank and its European and British counterparts, performed exactly as we had forecast almost immediately after our August 14th Memo. However we are now more concerned about . . .
August 14, 2007
In January 2000, Steve Case the Internet entrepreneur who founded and owned a large part of AOL, persuaded the management of Time Warner to a merger between the two firms. AOL was much smaller than Time Warner: a one service (Internet access) company versus a venerable titan of publishing, . . .
April 16, 2007
As we write this, the U.S. stock market is setting a new, post-911 high, and markets in the rest of the world have mostly done the same in the past couple of weeks. In our view the U.S. market is now quite fully priced and will probably provide disappointing returns to investors over the . . .
2006
October 3, 2006
Since our last commentary stock markets around the world have advanced moderately, while the portfolios that we manage have, for the most part, advanced minutely. Our portfolios were solidly constructed to withstand unexpected inflation or political/terrorist calamities. In the absence of . . .
May 17, 2006
It’s been nearly eight months since we committed to writing our thoughts about world events and the outlook for investment markets. A lot of water has gone over the dam since then. The Bush administration juggernaut has continuously and by now almost completely broken down. Iraq has moved . . .
2005
September 26, 2005
Hurricanes Katrina and Rita have devastated lives, homes, a whole city, and significant portions of the American oil economy and transportation network. Still, as has been true of almost all previous natural disasters, the overall impact on the nation’s current and future economic . . .
May 5, 2005
It’s Spring and Democracy is breaking out all over, or so it seems, especially in American media and political orations. In just a few months there have been elections in Afghanistan and in Iraq during which significant numbers of voters turned out in the face of deadly threats and actual . . .
January 3, 2005
Apparently the majority of voters who re-elected George Bush believe it is necessary to engage in violent destruction and torture overseas and to restrict our rights at home in order to protect ourselves from the dangers that lurk in the poor and angry majority of the world, or perhaps in order . . .
2004
September 27, 2004
Where to begin in this time of turmoil and turpitude? How about roughly 2,100 years ago? Julius Caesar had just been born. But, the Roman Republic had already transmuted into an entity that belied its name and its principles. The landed gentry, who had been the backbone of Roman citizenry as . . .
May 26, 2004
It remains difficult to produce these commentaries through the tears of shame and grief (but not surprise) at the unfolding news from the remote outposts of the American empire, and against the astonishingly egregious lies of the Bush Administration, supported, implicitly or explicitly by the . . .
January 12, 2004
The permanent “War on Terrorism” trudges across our TV screens wrapped in a spin of lies and various colored alerts. In this respect Orwell’s “1984” has finally arrived, and with it the War Against Democracy, whose victories at home are as real as the other . . .
2003
July 9, 2003
Whatever true things our last Investment Policy Memo may have said about the world, the war and the country, it was completely wrong about the stock market. On April 14th the market had risen more than 10% in the previous month. I was skeptical in word and in actual investment policy that it . . .
April 14, 2003
Now that an instantaneously famous victory has been won by the United States, even before the war was quite finished, it is appropriate to ask exactly what it is that has been won. And what has been lost. America now sits firmly astride the oil production facilities of Iraq, which covers the . . .
January 16, 2003
There is now no doubt that the U.S. is in the second year of an economic recovery, although most commentators continue to fret about how frail it is and thus likely to expire in its youth. As noted in my last Memo this recovery has been notably normal in every way. Growth has hovered steadily . . .
2002
April 16, 2002
As is often the case early in an economic and stock market recovery there is an abundance of alarming news on all fronts. The war on terrorism has spawned a war of terror against the Palestinians. America’s continuing shoot first response to 9/11 is breeding new terrorists by the country . . .
April 16, 2002
As is often the case early in an economic and stock market recovery there is an abundance of alarming news on all fronts. The war on terrorism has spawned a war of terror against the Palestinians. America’s continuing shoot first response to 9/11 is breeding new terrorists by the country . . .
January 25, 2002
From an investment perspective the most important news is that an economic recovery seems to be underway or getting underway right now. The stock market recovery that began in late September seems to have anticipated the economy with a typical three or four month lead. This is broadly consistent . . .
2001
October 16, 2001
The horrifying and quite unexpected events of September 11th dramatically changed the outlook for almost everything, including the economy and financial markets. To say this is commonplace but also true. Equally true but far less commonplace is the observation that the events of September 11 . . .
July 17, 2001
The business pages are full of gloomy news. Unemployment is rising. Profits are down sharply for many companies. Japan is back into its on-again/off-again twelve-year recession. Argentina is experiencing a currency crisis reminiscent of those that shook the world in 1997 and 1998. Every day . . .
April 11, 2001
Declines in stock market prices have been widespread, but not indiscriminate. Telephone, Internet and computer stocks have plummeted by astonishing percentages all over the world. Stocks of large companies in health care, food, insurance and other industries that are less affected by the . . .
2000
July 6, 2000
The U.S. economy has been showing the clearest signs in recent years that it is finally slowing down. Business investment spending is down. Auto sales, truck sales, home building, commercial construction are all down in the first half of this year. After a long spending spree consumers are . . .
April 12, 2000
The distinguishing characteristic of a bubble in financial markets is that, like its soap bubble counterpart, it bursts leaving behind a meager and ephemeral residue. In the case of soap bubbles our hopes sometimes soar momentarily and irrationally when a particular bubble goes farther, rises . . .
January 12, 2000
Since the spring of 1998 it has been a substantial challenge (at which I have failed) to make each quarterly investment policy letter sound different from the others.
For the eighth quarter in a row it remains true that I have avoided most large, U.S. multi-national growth stocks because . . .
1999
October 6, 1999
The spectacular stock market returns of 1995 through 1998 seem to have ended. Most large, multinational companies with reputations for consistent, high growth of their businesses have been disappointing investments for the past year and one half. Walt Disney, Phillip Morris, Coca-Cola, Gillette, . . .
July 14, 1999
For most of the past year and one-half my approach has been to reduce ownership of the extremely high-priced and vulnerable businesses of the largest American, multi- national growth companies. Since the end of April this group of stocks has declined in price while the market continued to . . .
February 8, 1999
In early October, I was still moving your portfolio away from stocks. In retrospect, starting exactly then, it would have been best to be 100% in stocks. The reasons stocks rebounded are clear although my mind was slow to grasp the entire picture. The Federal Reserve Bank and the central banks . . .
1998
December 8, 1998
The prices of large, successful, rapidly growing, multinational American companies are for the most part once again at new record levels relative to their earnings, assets and dividends. Is this pure speculative madness? Maybe. Has anything happened that might justify higher levels of stock . . .
