Flooding the market with cash has not yet led to inflation, because the recession created a Grand Canyon of underutilized capacity to be filled first. When it is, though, expect inflation, and lower prices for long-term bonds. For a parallel situation, consider The Great War Loan Conversion, described in my Famous Financial Fiascos, where bond investors lost 99% of their money.
Read more...Entries about 'investing'
Indexing
Index investing makes excellent sense in most situations, and is necessary in some. And three cheers for John Bogle, who has spent decades popularizing the idea.
Read more...How to Invest in China
When you go to Hong Kong, Ronnie Chan is a man you are told to try to meet. A U.S. citizen, he has high contacts in Beijing, and it usually turns out that he has just had lunch with Henry Kissinger. On a trip in China, I was able to collect his views on conditions in that country.
Read more...What About the Stock Market?
Pre-election years are usually good for the stock market. The defending president pumps oxygen into the system to produce a rosy glow as the voters go to the polls. That’s politics though, not economics.
Read more...When Large Matters Go Awry
When large matters go awry, they often follow standard patterns—groupthink, hubris-nemesis, the Ponzi scheme, speculative manias, the “distance lends enchantment” mirage, and other raptures—alone or in combination.
Read more...Investing Like Mr. Morgan, Not Like Mr. Ford
The great venture capital investors have a number of common traits. J.P. Morgan, of whom my grandfather was a partner, had a cardinal rule: look first at the character of the people involved.
Read more...The Shortest Possible Course in Reading a Financial Statement
To invest sensibly you need to understand what the company is trying to tell you in its financial statement. Though the elements are fairly simple, I observe that many of my clients have trouble reading one. So here is a simple guide to help get started.
Read more...Swarm Theory
The Dance of the Money Bees was the first book ever to use a biological example to describe financial phenomena, writes Christopher T. May.
Read more...Twelve Choruses of a Market Cycle
Major market cycles have a life of their own, like the ups and downs of a manic depressive patient. The choruses sung at each stage are not based on objective data. They are just rationalizations.
Read more...When to Sell, or How to Boil a Frog
The investor’s first concern must be to survive; that is, not to lose a lot of money. I mean in real terms, not quotational terms. The market rises and sets all the time. Don’t worry too much about that. So does the sun. Truly losing money is when an asset you own falls apart. That’s […]
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