“What the hell happened to the world of finance?”

In past posts I have talked about understanding the moment. This applies to many things including markets and investing. The above tweet from financial acrobat captures the moment that we have been living through for the last fill in whatever time period you think fits. The other day I made a comment about how we have wriggled out of actions without any consequences (yet?) where there should have been consequences and so we should not be surprised if that continues but in terms of understanding the moment, the world of finance has been turned inside out. The markets has gone up for years in the face of all that and it is important to have captured at least some of it but if anything about finance theory and how markets and capitalism are supposed to work is correct then we also need to be cognizant that a severe coming to Jesus moment could be waiting around some corner for us. This is not an attempt to predict an apocalypse. The world did not end because of 2008 (remember some people actually thought the world was going to end), the market has obviously since made a new nominal high but a market that falls a lot can permanently impair capital depending on human reaction to it falling a lot. There clearly was a lot of selling at the financial crisis lows and some unquantifiable portion of the selling never came back thus permanently impairing capital. The next time the market cuts in half, whether as a consequence for the last five years or for some other reason, there will be...

"What the hell happened to the world of finance?"

In past posts I have talked about understanding the moment. This applies to many things including markets and investing. The above tweet from financial acrobat captures the moment that we have been living through for the last fill in whatever time period you think fits. The other day I made a comment about how we have wriggled out of actions without any consequences (yet?) where there should have been consequences and so we should not be surprised if that continues but in terms of understanding the moment, the world of finance has been turned inside out. The markets has gone up for years in the face of all that and it is important to have captured at least some of it but if anything about finance theory and how markets and capitalism are supposed to work is correct then we also need to be cognizant that a severe coming to Jesus moment could be waiting around some corner for us. This is not an attempt to predict an apocalypse. The world did not end because of 2008 (remember some people actually thought the world was going to end), the market has obviously since made a new nominal high but a market that falls a lot can permanently impair capital depending on human reaction to it falling a lot. There clearly was a lot of selling at the financial crisis lows and some unquantifiable portion of the selling never came back thus permanently impairing capital. The next time the market cuts in half, whether as a consequence for the last five years or for some other reason, there will be...

Are We A Country Of Moochers?

Invictus, a frequent contributor to Barry Ritholtz’ blog had a post up that dissected some stats about how many people are receiving some form of government assistance. In referencing a news story he pointed out that there are 108 million receiving some form of help, they may be working or not, but receiving something. The 108 million is slightly higher than the number of people working and getting no assistance. Invictus then goes on to tackle the idea that we have become a country of moochers. Of interest to me is the plight of fast food workers cited in the the post who simply do not earn enough to stay above the poverty line. This is something we have addressed before in terms of people taking on second jobs to make ends meet. Part of the equation here is income inequality which I believe is a huge negative for society (this is the liberal side of my brain). The country has been able to wriggle out of the consequences from other seemingly terrible economic dilemmas so no one should be surprised if we wriggle out of this one but I think this is a serious threat. The conservative side of my brain however tells me that front line fast food jobs aren’t intended to be careers are they? My younger sister started working at a chain when she was very young making minimum wage or close to it and was able to move into managing a store. She did not make a lot of money from this but she made career level money that was well above poverty line...

Are We A Country Of Moochers?

Invictus, a frequent contributor to Barry Ritholtz’ blog had a post up that dissected some stats about how many people are receiving some form of government assistance. In referencing a news story he pointed out that there are 108 million receiving some form of help, they may be working or not, but receiving something. The 108 million is slightly higher than the number of people working and getting no assistance. Invictus then goes on to tackle the idea that we have become a country of moochers. Of interest to me is the plight of fast food workers cited in the the post who simply do not earn enough to stay above the poverty line. This is something we have addressed before in terms of people taking on second jobs to make ends meet. Part of the equation here is income inequality which I believe is a huge negative for society (this is the liberal side of my brain). The country has been able to wriggle out of the consequences from other seemingly terrible economic dilemmas so no one should be surprised if we wriggle out of this one but I think this is a serious threat. The conservative side of my brain however tells me that front line fast food jobs aren’t intended to be careers are they? My younger sister started working at a chain when she was very young making minimum wage or close to it and was able to move into managing a store. She did not make a lot of money from this but she made career level money that was well above poverty line...

Faber Likes The Gold Miners?

In a brief interview in this week’s Barron’s Marc Faber offers the following; Gold peaked at $1,921 an ounce in September 2011. Since then, it has been in a correction mode. Sentiment is bearish, but some countries are accumulating gold, notably China, which will buy an estimated 2,600 tons this year, exceeding annual production. Prices probably are bottoming.Gold-mining shares aren’t expensive either, although many exploration companies won’t make it. If you buy the miners, look for companies that have raised capital already or have sufficient reserves. They are best-positioned to survive the next few years if there is no upturn in the gold price. The Market Vectors Gold Miners ETF (GDX) is down 43% this year and down 51% in the last two years. Who knows if gold is bottoming as Faber says might be the case or if it is bottoming what that will mean for the miners but in terms of remembering how markets tend to work, at some point truly hated sectors and industries do come screaming back and the gold miners will be no exception. This is not a call to buy a specific thing right here just a reminder that things go from loved to hated back to loved all the time. It may or may not be rational but it happens. People who are very comfortable with investing in mining stocks will have a better sense of when they will turn around but they will and this will be worth paying attention to.  In related news, that dude still loves...