Here's a new anecdotal indicator of when the top of the market is reached. How about when a country starts building the tallest skyscraper in the world, that means it is time to sell. Read about the Burj Dubai.
These seem like five solid reasons for a pause in the stock market rally. Investors should beware that momentum is a powerful force and it could drive the market higher.
Iraq has big plans to develop its oil resources with the assistance of western oil companies. The country wants to move its production from 2.5 to 7.0 million barrels per day in six years.
Tuesday, December 1, 2009
Weekly Link Orgy - December 1, 2009
Wednesday, September 30, 2009
Weekly Link Orgy - September 30, 2009
The Chief of Staff of the Brazilian Government said in a speech that pre salt reserves off the Brazilian coast may hold "between 25 billion and 100 billion barrels" of reserves. If this is true and much of it turns out to be recoverable then this should put any peak oil nonsense to rest.
U.S. oil demand in July 2009 dropped to a 13 year low, according to the Energy Information Administration. Demand was 18.771 million barrels per day, down from 19.557 million barrels per day on July 2008. Although gasoline demand is moving higher, other refined petroleum products saw weak demand.
If you think Wall Street suddenly became greedy during the recent financial crisis, then read this book "The villainy of stock-jobbers detected, and the causes of the late run upon the bank and bankers discovered and considered (1701)"
Sunday, September 20, 2009
Weekly Link Orgy
The New York Times joins the debate over whether the market rally has gone too far. are we on the cusp of more irrational exuberance?
Did you know that Charlie Munger went to Harvard Law School?
It still sucks to be an architect, but things are getting a little better.
Get the latest copy of Grant's Interest Rate Observer for free.
Wednesday, August 12, 2009
Weekly Link Orgy - August 12, 2009
Are you one of those doom and gloomers who think the U.S. is bound to fall like other civilizations? Do you have a theory about how it will happen? Then check out this list of 144 possibilities and see if your theory is on there.
One hundred and forty four scenarios for the fall.
Jim Simpson of BENTEK Energy, LLC, presents a compelling case that prices for natural gas may stay low for quite some time and never return to the levels that the exploration and production industry can only dream about for now.
Read a summary here.
Tuesday, August 4, 2009
Weekly Link Orgy - August 3, 2009
The folks at Barron's weigh in on the seesaw battle between Growth and Value Investing. This is a conflict that has almost reached biblical proportions and is clouded by the use of unreliable statistics due to the composition of the indexes that are used. See my post here for more details.
Another guerrilla conflict also rages on in the financial markets - Are Speculators or Fundamentals responsible for high Oil prices? I'll make two Devil's Advocate points here. We are all speculators if you use a broad definition of the word, and if it's so damn easy to drive up the price of oil, then how come the Speculators can't drive up the price of Natural Gas?
Psychology Today shares its point of view in regard to the latest market scapegoat - the Speculator.
Thursday, July 9, 2009
Daily Link Orgy - July 9, 2009
The Social Science Research Network is an excellent source of academic papers regarding many different topics. Don't be misled by the Social Science name, as the site has many financial and investing related papers.
Over the next week or so, I will post a list of the top ten downloaded financial or investing related papers. Some of them are classics and some may be a little surprising. Most of them are free to download as well.
This is the tenth most downloaded paper related to a financial or investing topic.
Optimal Capital Allocation Using RAROC and EVA - By Neal Stoughton and Josef Zechner - Downloaded 21,718 times.
Abstract
"Equity capital allocation plays a particularly important role for financial institutions such as banks, who issue equity infrequently but have continuous access to debt capital. In such a context this paper shows that EVA and RAROC based capital budgeting mechanisms have economic foundations. We derive optimal capital allocation under asymmetric information and in the presence of outside managerial opportunities for an institution with a risky and a riskless division. It is shown that the results extend in a consistent manner to the multidivisional case of decentralized investment decisions with a suitable redefinition of economic capital. The decentralization leads to a charge for economic capital based on the division's own realized risk. Outside managerial opportunities increase the usage of capital and lead to overinvestment in risky projects; at the same time more capital is raised but risk limits are binding in more states. An institution with a single risky division should base its hurdle rate for capital allocated on the cost of debt. In contrast, the hurdle rate tends to the cost of equity for a diversified multidivisional firm. The analysis shows that hurdle rates have a common component in contrast to the standard perfect markets result with division-specific hurdle rates."
Tuesday, July 7, 2009
Daily Link Orgy - July 7, 2009
The Social Science Research Network is an excellent source of academic papers regarding many different topics. Don't be misled by the Social Science name, as the site has many financial and investing related papers.
Over the next week or so, I will post a list of the top ten downloaded financial or investing related papers. Some of them are classics and some may be a little surprising. Most of them are free to download as well.
This is the ninth most downloaded paper related to a financial or investing topic.
Understanding the Subprime Mortgage Crisis - By Yuliya Demyanyk and Otto Van Hemert - 21,793 downloads.
Abstract
"Using loan-level data, we analyze the quality of subprime mortgage loans by adjusting their performance for differences in borrower characteristics, loan characteristics, and macroeconomic conditions. We find that the quality of loans deteriorated for six consecutive years before the crisis and that securitizers were, to some extent, aware of it. We provide evidence that the rise and fall of the subprime mortgage market follows a classic lending boom-bust scenario, in which unsustainable growth leads to the collapse of the market. Problems could have been detected long before the crisis, but they were masked by high house price appreciation between 2003 and 2005."
Number 10.
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