As Painful As It Is, Spend Free Cash To Build On Cheap Prices. Brazil Is Overselling
Posted by blodmell in Uncategorized on August 10th, 2011
This has been a stunning week and will likely have an ugly finish. The pendulum will also probably overswing with all the fear. This is exactly why we don’t get invested from the start, but it’s time to show courage and use cash to build. The crisis is political and not fundamentally economic. We are formally entering global equity bear territory. Assets are truly becoming cheap.
We’ve Already Weathered A Drop In Brazilian Stocks
Posted by blodmell in Bank account in Switzerland, Emerging Markets on July 27th, 2011
Its stock index is down almost 14 per cent this year. Bank share prices have lost 10-20 per cent, the construction sector is in an even worse state, and the shares of some industrial companies have dropped as much as 40 per cent. Our steelmakers in Brazil such as Gerdau and SID have been clobbered but they keep paying great dividiends. Inflation fear headlines are in the papers. Yet, the basic macroeconomic story is still very rosy. More on the patience theme.
Patience. Patience…With This Nerve-racking Market Volatility
Posted by blodmell in Global Economy on July 20th, 2011
Focus on hard economic data (global output/inflation/interest rates/current account balances/trade volumes) and corporate earnings which continue to be positive…not on the drama in Europe, however serious, or outsized fears of a “hard landing” in China, however possible. Just remember that the markets are constantly pricing in their greatest fear and greates hope at once. Meanwhile, speculation and massive trading volumes make that process ever more exaggerated. I always say markets are quite literally, hysterical. This is why we must focus on the long run and patiently build positions when prices are below our average price per share. It ain’t glamorous but any other strategy will turn us into traders. There is nothing wrong with “trading”. We just don’t think it is consistent with the goals of our individual investors.
www.crinvestmentadvisors.com
Don’t Doubt Vale Mining
Posted by blodmell in Emerging Markets on July 5th, 2011
Vale SA (VALE3), the world’s largest iron-ore producer, sees no slowdown in demand from China as the country seeks to build 36 million low-income houses in the next five years, Chief Financial Officer Guilherme Cavalcanti said. The country will continue leading global consumption of the steelmaking raw material as it invests in new dwellings and infrastructure, Cavalcanti said on Bloomberg Television’s “The Pulse with Maryam Nemazee” today in London. Difficulties in bringing new projects to the production stage will cause a demand-supply imbalance lasting six or seven years, he said. “We aren’t feeling any contraction in demand for iron ore mainly because infrastructure building is still going on in there and also social housing,” Cavalcanti said. “The urbanization process in China is far from over, so we think that these will keep leading the demand for iron ore.”
It Seems The Risk Rally Is Returning. Keep Focused on Economic Data and Corporate Earnings
Posted by blodmell in Emerging Markets, Global Economy, Investment Advisory on July 4th, 2011
The Broken record player repeats, “Watch this quarters flow of hard economic data and especially corporate earnings.” I know it is difficult for investors to stop obsessing over Greece, or China tightening fears or a hard landing in Brazil but we must emotionally detach from this news real. Financial journalism is no different than pop “Breaking news” journalism. They all need a hot story to keep the drama going. Nobody wants to get excited about leading economic indicators and earnings but that is the real story.
Frankly, the scary story that isn’t getting the attention it should is the likelyhood that the United States won’t deliver the tremendous budgetary cuts necessary to continue their role as the global economic leader and Champion of the global reserve currency. That’s a story.
A Thoughtful Sunday
Posted by blodmell in Bank account in Switzerland, Emerging Markets on June 26th, 2011
Dear Clients,
I just finished reading the entire June issue of Foreign Affairs, “The Secrets of Germany’s Success”, “Globalization and Unemployment”,
“The Financial Rebalancing Act, ” , and, importantly, “What China Wants”.
These were articles that touched my intellectual curiosity and affirmed my long term perceptions after pounding bloomberg reports and observing the last round of global hard economic data. What a Sunday.
Friends, the bottom line is that the markets have been falling the last 6 weeks. One has to ask whether you think it’s all falling apart or this is just another faze. I think it is short term. Commodities will become more dear and the population is growing. Emerging Markets have the momentum and will continue to for those reasons.
Keep buying our good assets if they fall in price and be patient. If prices fall beyond fifteen percent then we increase our limit orders out to twenty percent.
Equity Prices Are Awfuly Low. This is Why We Have Cash
Posted by blodmell in Emerging Markets, Global Economy, Investment Advisory on June 20th, 2011
I know it hurts to see those nice market gains as of the end of April disappear. A lot of commentaries imply that the sideways/volatile market is here to stay. Since we aren’t traders, we must patiently build positions when prices are down. The valuations on the
Brazilian steelmaker, SID, are stunningly low. This company pays big dividends. Keep buiding on these excellent long term stories.
Hold The Line
Posted by blodmell in Emerging Markets, Global Economy, Investment Advisory on June 13th, 2011
I’ve been awful busy lately and the markets have kept the pressure on. Folks are obsessed with Greece. The same ol’ China fears linger. Even Brazil is under pressure as the doubters ponder whether they are in a bubble. The “double dip” word is even being dropped again.
The USA is in an awkward “soft patch”. Remember, markets are being bought and sold in a rear view mirror. Prices are constantly pricing in “worst case scenario” fears. We have to be patient right now and keep building on our positions when prices are cheap. The commodity stories haven’t changed in a month just the fears around them.
By the way, that Amalgamood vision I posted on last week is being presented at a conference in London this week. I can’t make it but I’m eager to hear more about it.
Buy on dips! I know it is a cliche but a good one.
Clients: After A Long Trip….Some General Thoughts: Peruvian Election, Global Economy and Amalgamood
Posted by blodmell in Investment Advisory on June 6th, 2011
These are interesting times. I just had to jump to Peru and see what the heck is going on in the fastest growing economy in Latin America. I have a special relationship with Peru, nearly lost it all there in 1992. The Institute of LIberty and Democracy was the Heritage Foundations baby down there and I was an intern…bright eyed and bushy tailed until the bombing. However, things have changed since then. Peru is on fire in a different way now. The shocking point is that fast growth has met leftist politics. It didn’t “use to be like this”. The only thing I can imagine is that either candidate will stick to the script of growth.
In my mind, this is an affirmation for the overall growth story of the region. Commodities rule! The poor used to send that stuff to the rich to produce value and now the value is the raw material.
Anyway, I also met with as many money managers as possible. Those luncheons are always enlightening. There is a new mechanism on the horizon…assessing the “social mood” and all the indicators in the popular press to time market movements. It almost reminds me of the notion that art imitates reality and reality only tries to imitate art…vice versa.
The news real and all the feelings around it have a potent influence over markets and thus tracking the “mood” of markets is a legitimate way to divine the future. It’s catching on in the investment community.
I think the most forward looking mind on this subject matter is a brilliant hedge fund guy named Kevin Coogan. He basically created a system to digest the massive amount of info into Amalgamood concept. I am watching this carefully because the volatility of markets have made all investors hyper sensitive to the trading impulse. We have got to me sensitive to the volatility. That is the bottom line. I noticed John Augers in the Financial Times just wrote a piece arguing that we all need to learn when to sell and find mechanisms to determine when? It’s the same concept.
I Agree With Jim O’Neill, Of Goldman Sachs, Assessment That The Global Economy Is Basically Back On Track
Posted by blodmell in Global Economy on May 19th, 2011
Recent Comments