Well, 2009 is coming to a close. It will be interesting to see if 2010 is when the bear market finishes its work. What do I mean by that? Simply that as bad as the bear was earlier this year, we never saw the market-wide single-digit P/E ratios and fat yields typically seen in secular bear markets. And, if you believe as I do that we're in a bull rally within a secular bear market, that is something to keep in mind.
Here are five items you might check out over the next couple of days.
- Listening to Bloomberg radio out of Asia late last night, I heard that Mark Mobius has a blog. And he does! Mobius is Templeton's emerging markets guru, and John Templeton was certainly ahead of the curve in starting Templeton's emerging markets closed-end fund with Mobius in 1986 or thereabouts (here in the US anyway). Mobius has since been managing something like 30 different funds with many billions in assets, and that's probably hampered performance in many ways. The blog looks interesting, but "corporate blogs" are often less-appealing -- and for all sorts of regulatory reasons we shouldn't expect stock picks.
- Speaking of Bloomberg, this profile of investor Bob Rodriguez recently appeared on their website. Rodriguez is a value guy with First Pacific Advisors, and the fund he manages for FPA is known to have very high cash balances at times. In fact, he's averaged 30% cash since 1998 (the average for funds has been 4%). “People told me, ‘You are not paid to manage cash,’ ” he said in a telephone interview from his home in Zephyr Cove, Nevada, where he moved three years ago from California. “I am paid to exercise my best judgment. If you don’t like it, you can leave.”
- Martin Wolf wrote in the Financial Times this week about China's exchange rate policy: China’s exchange rate regime and structural policies are, indeed, of concern to the world. So, too, are the policies of other significant powers. What would happen if the deficit countries did slash spending relative to incomes while their trading partners were determined to sustain their own excess of output over incomes and export the difference? Answer: a depression. What would happen if deficit countries sustained domestic demand with massive and open-ended fiscal deficits? Answer: a wave of fiscal crises. Neither answer is acceptable; we need co-operative adjustment. Without it, protectionism in deficit countries is inevitable. We are watching a slow-motion train wreck. We must stop it before it is too late.
- Sticking with the FT and China, David Pilling has a must-read piece about Chinese investment in Africa: A few years ago, Lukas Lundin, a mining executive, rode his motorbike 8,000 miles from Cairo to Cape Town. His journey, which took just five weeks, meandered through 10 countries, including Sudan, Ethiopia, Malawi, Zambia and Botswana. He was amazed to discover that 85 per cent of the roads he travelled were tarred and of high quality. Many had been built by Chinese companies.
- I've long enjoyed the "High Life" columns Taki pens for The Spectator. They aren't investment-related pieces so they don't find themselves getting linked to my blog. But here's his take on the Dubai debacle: One of the most intriguing aspects of the Dubai debacle is how genius status is conferred upon business gambits by the creeps who descended to that crappy little place down south hoping to sell sand to the Bedouins. Many of them were Iranians and Pakistanis, and not a small number were Lebanese, all as honest as the day is long on 21 December in Helsinki. What they all did do was pay the poor Philippine and Pakistani workforce below-survival wages, confiscate their passports in cahoots with the Dubai authorities, and work them to death. So, it couldn’t happen to nicer people and I hope they eat lotsa sand (and they can also drink it if they like). They’ve held workers hostage for a very long time and in conditions far worse than those in Guantanamo — without the water boarding — so don’t cry for the Dubai Brothers as yet.
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