Change We Can Believe In

Posted on March 14, 2014 by MN Gordon

Look around.  Reach for the sky.  Breathe deeply.  Listen peacefully.  From here, at the mile high mountain village of Idyllwild, surrounded by tall pines, sweet smelling cedars, and panoramic views…we can do all of these things with great attainment.

We see the natural world with awe and inspiration.  From this vantage point – a rare escape from the frenetic Los Angeles Basin – not only do we get fresh oxygen…we get fresh perspective.  The spirit of the San Jacinto Mountains is extremely lucid: “Change is in the air,” says Saint Jack.

Winter turns to spring.  Spring turns to summer.  The seasons cycle through with predictable expectations.  It is generally cooler in the winter and warmer in the summer.  Fall is when old life fades away and spring is when new life comes to be.

Change, however, is a subtle thing.  For real change rarely comes to pass.  Generally, what appears to be change is just a slight variation of something that’s come before. Continue reading →

Posted in MN Gordon, Stock Market | Tagged , , , , , | Leave a comment

Where the Stock Market Must Go

Posted on March 11, 2014 by MN Gordon

“May you live in interesting times,” goes the ancient Chinese proverb.  While this sounds like a blessing at first…it’s really not.  Rather, it’s a curse.

Without a doubt, we live in interesting times.  Events unfold in sequences so rapid no one can truly keep up with them.  For example, while everyone was gawping at Russia’s incursion into Ukraine last week, President Obama unveiled a $3.9 trillion budget proposal for fiscal year 2015.

The plan includes $56 billion in increased spending.  Tax hikes for the rich and tax cuts for the poor are proposed to cover the additional costs.  There’s also $50 million for preservation of bee habitat, among other things, if you’re into that sort of thing.

Still, we won’t hash out the budget proposal today.  Nor will we offer the latest on Ukraine…or the Malaysia Airlines plane that mysteriously vanished on Saturday.  We merely highlight these matters to juxtapose the stimulating news stories that appear on a daily basis. Continue reading →

Posted in MN Gordon, Stock Market | Tagged , , , , | Leave a comment

A Buy Low Sell High Opportunity?

Posted on March 7, 2014 by MN Gordon

Russian stocks, as measured by the Market Vectors Russia ETF (NYSE: RSX), are down 15 percent year-to-date.  On Monday alone, when it looked like President Vladimir Putin had lost his marbles, the RSX dropped 10 percent.  On Tuesday, however, following Putin’s decision to not use force in Ukraine – for now – Russian stocks jumped 4 percent.

On Wednesday the RSX was flat and yesterday it was down about 1 percent.  Could this be a turning point for beaten down Muscovy stocks?  Naturally, we don’t know.  But we think it merits pause for consideration.

According to Jacob Nell of Morgan Stanley, “[Monday’s] sell-off has taken the market to technically extreme oversold levels.  Valuation multiples have only been cheaper in the depths of the 2008 crisis (when earnings fell about 60 percent).  And oil markets are stable in contrast to sell-offs in Russia historically.  Despite the obvious hit to growth expectations implied by the crisis, any sign that tensions are beginning to de-escalate would constitute a buying opportunity.” Continue reading →

Posted in MN Gordon, Stock Market | Tagged , , , , , | Leave a comment

How the Fed Works to Spoil Your Retirement

Posted on March 4, 2014 by MN Gordon

Chicago Fed President Charles Evans wants inflation above 2 percent.  Somehow he thinks this will strengthen the economy and bring about full employment.  To Evans, more inflation will result in greater demand…and greater demand means more jobs.

Fed policy, according to Evans, should promote higher inflation.  Later this month, when new Fed Chair Janet Yellen leads her first Fed policy meeting, we’ll find out if she does too.  Based on her track record, she most likely does believe Fed policy should encourage inflation.  For example, in 1995, at a Federal Open Market Committee meeting, Yellen argued in favor of allowing inflation to exceed inflation targets for moral reasons…

“Ms. Yellen told the committee that ‘the moral’ of all this is ‘that the Fed should pursue multiple goals,’” recounts the Economic Policy Journal.  “She said that ‘when the goals conflict and it comes to calling for tough trade-offs, to me, a wise and humane policy is occasionally to let inflation rise even when inflation is running above target.’” Continue reading →

Posted in Inflation, MN Gordon | Tagged , , , , , , | Leave a comment