My afternoon train reading:

• Credit Suisse Global Investment Returns Yearbook 2013 (CS PDF)
• Why Do People Hate Rising Stock Prices? (Pragmatic Capitalism)
• 100 Startling Facts About the Economy (The Motley Fool)
• Mr. Buffett on the Stock Market circa 1999  (Fortune)
• E-Mails Imply JPM Knew Some Mortgage Deals Were Bad (DealBook) see also How to Get an “Iffy” loan approved at JPM Chase (TBP)
• The Government’s S&P Lawsuit Could Sink McGraw-Hill (Businessweek)
• Coke Engineers Its Orange Juice—With an Algorithm (Businessweek)
• ‘Fragmentation’ leaves Android phones vulnerable to hackers, scammers (Washington Post)
• Understanding Apple Requires an Analysis of Fundamentals and Psychology (Institutional Investor) see also iTunes Store Sets New Record with 25 Billion Songs Sold (Apple)
• The 2013 Sony World Photography Awards (The Atlantic)

What are you doing for the blizzard?

 

Corporate bond issuance

Source: The Economist
Source: WSJ

Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

18 Responses to “10 Thursday PM Reads”

  1. swag says:

    Obama, Geithner supremely stupid on payroll tax.

    Higher Payroll Tax Pinches Those With Least to Spare

    http://www.nytimes.com/2013/02/08/business/restored-payroll-tax-pinches-those-with-the-smallest-checks.html?hp

  2. BoulderPatentGuy says:

    Google Joins JPMorgan in Seeking Software Patent Limits (Bloomberg): http://www.bloomberg.com/news/2013-02-07/google-joins-jpmorgan-in-seeking-software-patent-limits.html

  3. Lariat1 says:

    The blizzard? Well if we get at least the foot that is being called, the snowmobiles will be out on all the roads, old school but cool. Plows, snowmobiles and cops. Have to love being in the ” country”.

  4. MikeW says:

    Outstanding link to the 1999 Buffet article, Barry.

    About halfway through reading it now, I remembered having read it at the time and being filled with foreboding.

    Almost every time I’ve read people second-guessing WB, he turns out right in the long run.

  5. Bob is still unemployed   says:

    This article has prompted me to hope I continue to have power through the storm so I can dig out some of my old 78′s from the spare bedroom..

  6. RW says:

    The Myth Of The Money Multiplier

    That Fed control over the money supply has become a phantom has been quite clear since the Minsky Moment in 2008, with the Fed massively expanding its balance sheet without much resulting increase in measured money supply. This of course has made a hash of all the people ranting about the Fed “printing money,” which presumably will lead to hyperinflation any minute (eeek!). But the deeper story that some of us were unaware of is that apparently this disjuncture happened a long time ago.

  7. Angryman1 says:

    The payroll tax cut? Gotta be kidding me. Made little difference. Bigger problem is dealing with higher oil prices due to capacity restraints. Once the chicken little’s figure out “shale” and “fracking” won’t solve that problem. It was what kept the Bush expansion from becoming a Bush boom universally throughout the economy despite the huge credit surge. This will suppress consumption in the US of course(along with the decline of the Boomers).

    The energy crisis is the problem that should be worked on as a infrastructural problem. Whether gaining more efficiency elsewhere or replacing oil with something different.

  8. VennData says:

    RENEWABLE ENERGY NOW CHEAPER THAN NEW FOSSIL FUELS IN AUSTRALIA

    http://about.bnef.com/2013/02/07/renewable-energy-now-cheaper-than-new-fossil-fuels-in-australia/

    NO! We must support the jobs that go along with oil and coal etc. We are threatening people’s livelihoods here. We must maintain the same number of oil jobs each and every year or there will be hell to pay at the ballot box. Give them more tax breaks, more credits, they are the job creators. Don’t listen to the alt. energy people. They’re freaks. Un-American weirdos!

    Remember George W. Bush! Remember Reagan tearing the solar panels off the White House!

  9. VennData says:

    Mr. Solar Installer, Tear off these panels! Go REAGAN! STOP THIS LIBERAL MADNESS

  10. mad97123 says:

    Thank you for the Buffet link, some of the best reading in a long time.

    For those counting on a new secular bull market due to the Great Rotation and rising rates think about this:

    “We need first to look at one of the two important variables that affect investment results: interest rates. These act on financial valuations the way gravity acts on matter: The higher the rate, the greater the downward pull. That’s because the rates of return that investors need from any kind of investment are directly tied to the risk-free rate that they can earn from government securities. So if the government RATES RISE, the prices of ALL other investments MUST ADJUST DOWNWARD, to a level that brings their expected rates of return into line. ”

    Lots of good stuff.

  11. DRR says:

    “96. In the 1960s, wages and salary income made up more than 50% of GDP. By 2011, it was less than 44%, as dividends, interest, and capital gains made up a growing share of the nation’s income.”

    Is this any surprise? Since the Regan/Greenspan Supply Side economics days, Fed stimulus has gone to asset inflation. Remember the days when the Federal Reserve minutes use to proclaim with great success that wage costs were subdued all the while the stock market was heading into irrational exuberance territory?

  12. leveut says:

    What blizzard? It’s 70 degrees outside.

  13. Cooter says:

    Buffet link very fascinating, worth a whole comment thread on its own.

    I don’t want to pretend I know as much as WB, so don’t take this as me trying to be anything more than a critical reader.

    I dug up the charts for the Ten Year and Sp500, and what is interesting is that markets had risen from 82-99 in nearly a straight line while interest rates had dropped in nearly a straight line, if you look in the big 17 year monthly.

    But drilling down to time horizons that are more relevant to me, I noticed that between 01/1987 and 01/1995 the Ten Year did a sine wave: starting at 7%, peaking at 10.2% in 10/1987 (Black Monday coincides) and then dip to 5.2% in 10/1993 and are back at 7% in 01/1995. The SP 500 in 01/1987 is ~250, and in 01/1995 is ~460.
    But what is interesting is that the bulk of the gains in the period were when rates were declining. When rates rose sharply, shocks were seen in the stock market not to long after (ie Black Monday in 10/1987, July-Sep 1990 lead up to Gulf War; 10/1993 – 10/1994 rates went from 5.3-8.1% and SP500 oscillated for a year with 5-10% swings).

    Then we see another spike in rates from 10/1998 (4.1%) to 01/2000(6.8%) and then the dot.com crash follows in fall of 2000.

    Since that time we see that the 2003-2007 stock boom coincided with 10 year going from 3%-5.2%, followed by the subprime crash commencing in fall of 2007.

    The 03/2009 – 04/2010 rally saw rates go from 204%-4%, followed by the flash crash…..

    That’s all I got for now…

  14. Anonymous Jones says:

    The Buffett article is, as already pointed out, fantastic.

    And it sets forth exactly why I think we are at a point in this market that, although there may be speculation that drives stocks forward a bit, very little upside (if any) remains for overall indicators.

    He says if you think bond rates are going to 3%, you’ll make a bundle in stocks (though more in bond options). Well, that’s played out now. Certainly, we might “go Japan” and get down closer to 1%, juicing this a little more, but the limit is really close…really close.

    He also says if you think corporate profits as a percent of GDP can rise, then you’ll also make a bundle in stocks. Well, that happened, but it’s pretty much played out now too. How much higher can that percentage rise without severe political consequences and pushback by the electorate? Maybe some, but probably not much.

    Hey, anyone can make money whether the overall market is going up or going down, but there’s good reason to anticipate that a decade from now we’re still looking at Dow around current levels, maybe 15,000. It happened from 1964 to 1981, and it can happen again. For mostly the same reasons.

  15. Greg0658 says:

    this was an interesting idea for you’all to consider – not me

    Jeremy Siegel – “Do Best Portfolios Own the World?”
    http://video.cnbc.com/gallery/?play=1&video=3000146806

    “the main lesson is diverse indication. where you diversify and how, that’s always — i have one-third, one-third in developed countries outside the united states, called efa and one-third in emerging markets diversified across all of them. one-third, one-third, one-third. an easy formula”

  16. ToNYC says:

    Lariat1 Says:
    February 7th, 2013 at 5:12 pm

    The blizzard? Well if we get at least the foot that is being called, the snowmobiles will be out on all the roads, old school but cool. Plows, snowmobiles and cops. Have to love being in the ” country”.

    Hey Lariat1,
    Enjoy the “country”, but can you move a few more miles away?

  17. [...] Credit Suisse recently published their Global Investment Returns Yearbook The Big Picture’s Barry Ritholtz: recently pointed us to [...]

  18. [...] Credit Suisse recently published their Global Investment Returns Yearbook The Big Picture’s Barry Ritholtz: recently pointed us to [...]