By 2 Cents on June 16th, 2011 | Category: Economics |  Truth is after all a moving target Hairs to split, And pieces that don’t fit How can anybody be enlightened? Truth is after all so poorly lit.
~Neil Peart, Turn the Page
The following is an excerpt of an article that was originally published on Seeking Alpha as premium content. You can read the entire article there.
I read two fascinating articles this week that shed a little light on the opaque workings of our global financial system. One used recently declassified documents to show that foreign banks were the greatest beneficiaries of the Federal Reserve’s efforts to quell the financial crisis. The second elucidated a recent BIS report that revealed the relative exposure of U.S. versus European financial institutions to a PIIGS default. The former article posited that the data provides the grounds for Ben Bernanke’s impeachment. The latter [...]
Read on and enjoy … Overexposed: European Debt, Systemic Risk, and Stealth Bailouts
By 2 Cents on June 1st, 2011 | Category: 20 Cents |  Another month has flown by and it’s time once again to point out a few choice pieces writing from the web for May of 2011. Finally, some nicer weather has arrived here and I hope some of it has made its way to where you are too! This month’s selection of articles is as eclectic as always. Enjoy!
1. Most of us like to look on the bright side. Although this Optimism Bias may not always be rational, it can be quite adaptive. Take a few minutes to read this fascinating article by Tali Sharot courtesy of Time.
2. Staying on the brighter side, how about taking a look at 50 Creative Questions to Create the Life You Really Want. Tiny Buddha shares some excellent food for thought in this article by Lynn Zavaro. I love the opening quote: “If you focus on [...]
Read on and enjoy … 20 Cents from May 2011
By 2 Cents on May 30th, 2011 | Category: Investing |  The future is an opaque mirror. Anyone who tries to look into it sees nothing but the dim outlines of an old and worried face.
~Jim Bishop
Most people would agree that it’s pure folly to try to predict the future – especially that of the financial markets. And yet we don’t want to invest blindly either. We need to have at least some concept of where we’re at in the economic and market cycle, as well as the future prospects and valuation metrics for any company we may choose to buy.
Every investment decision is a bet on the direction of a given company, sector, or index. I know some passive investors out there don’t think they’re making market calls, but buying any financial instrument is a wager it will be worth more by the time we sell it. Otherwise, why buy it in the first place?
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Read on and enjoy … Will the S&P Fall to 400?
By 2 Cents on April 19th, 2011 | Category: Economics | Nothing is more desirable than to be released from an affliction, but nothing is more frightening than to be divested of a crutch.
~ James Baldwin
This is an excerpt of an article that was originally published on Seeking Alpha as premium content. You can read the entire article there.
There’s been no shortage of potentially market-moving news for investors to digest so far in 2011. From major geopolitical strife in the Middle East to the sovereign debt crisis in Europe to the multilevel Japanese catastrophe, markets have been remarkably resilient so far. Perhaps that’s because these types of events aren’t what’s driving the markets.
The only news items that seem to have any lasting impact on the stock and bond markets these days are those that pertain to monetary policy, particularly that of the US Federal Reserve. David Rosenberg recently pointed out that there has been [...]
Read on and enjoy … What Happens After QE2?
By 2 Cents on March 4th, 2011 | Category: Investing |  Because quantitative easing has affected all risk spreads, the withdrawal of nearly $1.5 trillion in annualized check writing may have dramatic consequences.
~ Bill Gross
The Ides of March will soon be upon us, but it’s not the 15th of this month that has PIMCO’s Bill Gross a little concerned. He’s more worried about June 30th, the date on which the Federal Reserve’s latest Quantitative Easing program is set to end. His latest Investment Outlook extends the concerns about U.S. Treasuries which he outlined in last month’s missive.
Gross, like many others, has been a critic of the Fed’s Quantitative Easing programs, wondering “whether [they] actually heal, as opposed to cover up, symptoms of an unhealthy economy.” Among a couple of other factors, its success, according to Gross, depends on “the willingness of creditors to believe in future real growth as a [...]
Read on and enjoy … End of QE2 Marks D-Day for the Markets: Bill Gross
By 2 Cents on January 5th, 2011 | Category: Planning |  Always watch where you are going. Otherwise, you may step on a piece of the Forest that was left out by mistake.
~Pooh’s Little Instruction Book, inspired by A.A. Milne
Update: This article was included in the Carnival of Wealth #20 at Personal Dividends as well as The Wealth Builder Carnival #23 at My Wealth Builder. Thanks!
On Monday we reviewed our thoughts on 2010. Today we’ll look at a general outlook for 2011. It’s difficult to predict the direction of the economy and next to impossible to foresee the twists and turns of the stock market over the course of a year, so I won’t attempt it. Still, it’s good to at least be aware of some of the key themes that could affect your money and your life in the coming 12 months.
There will be two [...]
Read on and enjoy … 2011 What Ifs: Overview
By 2 Cents on October 29th, 2010 | Category: Economics |  Debt and deficits are not inventions of ideology. They are facts of arithmetic.
~Paul Martin, Canada’s finance minister at the start of the country’s “Redemptive Decade”
Update: Thanks to The Financial Blogger for choosing this article for the #1 spot in the Best of Money Carnival – My Favorite Money Quote Edition.
Usually our Friday Food for Thought posts highlight a single article. Today, I’m going to highlight and compare 3 great pieces, so this article is a little longer than usual. I think you’ll find, however, that these articles will provide you with a lot of food for thought that’s well worth your time.
On Monday I laid out some of the reasons why most of our capital is in cash. I then went on to look at What Would Make Me Invest in the Stock Market again. I [...]
Read on and enjoy … Time to Stop the Bubble Machine?
By 2 Cents on October 15th, 2010 | Category: Economics |  In my opinion, the crisis and the sharp recession of the past two years and the subsequent rescue packages around the globe did not provide the necessary catharsis that recessions need to bring to economies.
~ George Athanassakos
Update: This article was selected for the Best of Money Carnival #73 posted at Redeeming Riches. Thanks!
I chose a recent article from the Globe and Mail for today’s Friday Food for Thought. This one is by George Athanassakos, a professor of finance. He has been wondering about what the rise in both bonds and gold means for a couple of years now and provides some updated insights in this article: Who Is Right? Bond Bulls or Gold Bugs?
Usually a rising gold price indicates that investors see inflation coming. Rising bond prices, and the accompanying lower yields, usually portend slowing [...]
Read on and enjoy … Can Gold and Bonds Both Be Right?
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