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If you really want to understand what is going on in the housing market, look no farther than banks’ loan loss reserves. In fact, look no farther than Citigroup: Citigroup is standing firm against releasing loan loss reserves on its mortgage portfolio because of the overhang of foreclosures that have yet to hit the market. The banking [...] On Friday last, Warren Buffett’s right-hand man and Berkshire vice chairman, Charles Munger, told CNBC, “Gold is a great thing to sew into your garments if you’re a Jewish family in Vienna in 1939,” “but I think civilized people don’t buy gold; they invest in productive businesses.” Your meaning is well taken, Charles, but your [...] Playing with expectations works temporarily. The risk-on trade is in a mini bubble, as today’s, buyers want to be ahead of the slower ones. The buying trend is sustainable only if the global economy strengthens, which is unlikely. The stocks aren’t cheap. Desirable consumer stocks are selling for 20 times earnings. Banks are cheap [...] —We have entered the time of year when lists of best- and worst-performing assets are made. Gold-oriented sites point out that gold has risen about 23% against the USD this year. Often they expect you to assume the inevitability of a massive further depreciation of said dollar versus gold. Gold and oil, as in the [...] Readers who followed me at my original blog, Econblogreview, may recall that about a year and a half ago, I was harping on the relative weakness of the banking stocks as a harbinger of a new economic and stock market downturn. Certainly I have been vociferous about that in these months at The Daily Capitalist. [...] Ben Stein reports in Fortune about an interview he did with some people’s favorite uncle figure, Warren Buffett. Mr. Stein, valedictorian of his Yale Law School class and the son of the eminent economist Herbert Stein, strikes me as an unlikely person to be awed by Uncle Warren, but his article begins as follows: The [...] I like the fact that our society elevates people like Buffett and Munger to celebrity status. After all, we don’t have kings to adore. We Americans like and respect money and we admire people who make money. Ask de Tocqueville who was amazed at the audacity of poor people who thought they could elevate themselves through diligence [...] |
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