Down On The Farm?

This week’s post from Jeffrey Saut took a look at a different type of Permanent Portfolio that not shockingly to long time readers I found to be very intriguing even if very difficult to implement. Maybe more correctly, impossible to implement… for now anyway. Saut took this idea from a mentor from his early days in the business named Lucien Hooper who liked the idea of 25% into equities, 25% into bonds, 25% into precious metals and 25% not into cash like Harry Browne but that last 25% into farmland. I’ve written quite a few times about farmland as a potential investment and while it is intriguing on some level it is difficult to access. Saut mentioned Cresud (CRESY) from Argentina which owns a lot of farmland but also owns a lot of cattle. There is an English version of the website if you’re so inclined to learn about it. In the post Saut also mentioned an area in the Ukraine where the “black earth” is very suitable for farming without mentioning the one stock I have looked at casually before Black Earth Farming which is listed in Sweden with ticker BEF-SDB and on the US pinksheets with ticker BLERF. He does suggest (clients have their reps) calling “the desk” for specific names. There are other stocks around the world, but not many, and they are not easy to trade or even closely follow but conceptually stocks of this sort from Malaysia, Indonesia or elsewhere in Latin America could be of interest. On a related note BTW, Paraguay (mentioned the other day as being the world’s fourth largest grower...

Wednesday Roundup Of Doom

Doom and fear seem to be making the rounds this week as they are always compelling and there are reasons to be concerned. One thing that you have probably read a couple of times is that with budget deficits of $1.4 trillion and deficits likely to be in that neighborhood for years to come it means that the US must issue more debt to fund that gap. I read something the other day about this (apologies for not having a link) that made intentionally heroic assumptions to get to US investors buying up $500 billion of that through savings and then questioning where $900 billion of more demand will come from and if there is enough demand, where will it come from next year? Perhaps softening the blow a little is that included in these numbers is very short term debt rolling over very frequently which will soak up some portion of the supply–simple replacement– but clearly replacing paper that rolls over regularly will not solve the problem. The numbers are daunting. China, for all the talk will buy a lot of the debt issued but we can’t know how much or whether it will equal the US debt they have bought in recent years and keep in mind the US is going to be issuing more debt than before. Next on the doom parade is the latest letter from Jeremy Grantham (here is one link) with perhaps the big takeaway being his theme of seven lean years meaning poor equity returns for that time. The bull market from 2003-2007 was also lean by historical standards. According to past...

Wednesday Roundup Of Doom

Doom and fear seem to be making the rounds this week as they are always compelling and there are reasons to be concerned. One thing that you have probably read a couple of times is that with budget deficits of $1.4 trillion and deficits likely to be in that neighborhood for years to come it means that the US must issue more debt to fund that gap. I read something the other day about this (apologies for not having a link) that made intentionally heroic assumptions to get to US investors buying up $500 billion of that through savings and then questioning where $900 billion of more demand will come from and if there is enough demand, where will it come from next year? Perhaps softening the blow a little is that included in these numbers is very short term debt rolling over very frequently which will soak up some portion of the supply–simple replacement– but clearly replacing paper that rolls over regularly will not solve the problem. The numbers are daunting. China, for all the talk will buy a lot of the debt issued but we can’t know how much or whether it will equal the US debt they have bought in recent years and keep in mind the US is going to be issuing more debt than before. Next on the doom parade is the latest letter from Jeremy Grantham (here is one link) with perhaps the big takeaway being his theme of seven lean years meaning poor equity returns for that time. The bull market from 2003-2007 was also lean by historical standards. According to past...

China Is Getting Complicated

I’ve been writing about China’s ascending middle class as an investment catalyst since the start of this site. Quite predictably the story on the ground has been playing out either as fast we thought or slower than we thought but it is happening. The eye-popping number of how many cities are being built, how many have 1 million or more people, all the build-out connecting those cities, all the resource hoarding, all the exporting and all the buying of US treasury debt are all part of the story. We’ve all known about the water and air issues for a while, the Sichuan earthquake revealed some of the humanitarian short comings, there will be policy mistakes, as mentioned the other day the country faces a serious demographic problem 15-20 years from now and the latest (that I saw anyway) is that Andy Xie has a commentary up laying out a day of reckoning that might be ten years away based on the demographics and the end, or slowing down, of “urbanization.” One point I have tried to make repeatedly is that while I unambiguously buy into the stuff from the first paragraph it is going to be a lumpy ride and will not be a one way trade. As much as I buy into it, long time readers may recall I was out for a little over a year (June 2007-August 2008). I’m in now with China Mobile (CHL) and recently I added the iShares Emerging Market Infrastructure ETF (EMIF) which is about 1/3 China/HK. The risk factors or flaws or whatever you want to call them seem to be...

China Is Getting Complicated

I’ve been writing about China’s ascending middle class as an investment catalyst since the start of this site. Quite predictably the story on the ground has been playing out either as fast we thought or slower than we thought but it is happening. The eye-popping number of how many cities are being built, how many have 1 million or more people, all the build-out connecting those cities, all the resource hoarding, all the exporting and all the buying of US treasury debt are all part of the story. We’ve all known about the water and air issues for a while, the Sichuan earthquake revealed some of the humanitarian short comings, there will be policy mistakes, as mentioned the other day the country faces a serious demographic problem 15-20 years from now and the latest (that I saw anyway) is that Andy Xie has a commentary up laying out a day of reckoning that might be ten years away based on the demographics and the end, or slowing down, of “urbanization.” One point I have tried to make repeatedly is that while I unambiguously buy into the stuff from the first paragraph it is going to be a lumpy ride and will not be a one way trade. As much as I buy into it, long time readers may recall I was out for a little over a year (June 2007-August 2008). I’m in now with China Mobile (CHL) and recently I added the iShares Emerging Market Infrastructure ETF (EMIF) which is about 1/3 China/HK. The risk factors or flaws or whatever you want to call them seem to be...