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Investment Legends LOST MEMO…

Posted March 26, 2010 at 12:04 pm

by Christopher Ruddy:

When Sir John Templeton passed away in July of 2008, we lost one of the greatest investment minds of our time.

But with great lucidity, in June of 2005, Sir John penned a memorandum to friends and family that is uncanny and prophetic in its vision of what would happen to the U.S. and global economy.

The first two words — so pithy yet so powerful — are bolded and highlighted on his original document. They read, simply: “Financial Chaos.”

Recently, Sir John’s son, Dr. John Templeton, or “Jack” to his friends, shared with me the memo that has never seen public light.

As Jack relates, his father wanted the memo to be widely circulated. Unfortunately, it was not; instead it was discovered in a file cabinet only after Sir John’s passing.

Full article…


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Mark Mobius: The Case For Frontier Markets

Posted March 23, 2010 at 12:26 am

by Lara Crigger:

Just as emerging markets dominated headlines in 2009, resource-rich frontier markets are quickly becoming “the” hot investment for 2010. Investors have flocked to these small, notoriously illiquid economies, seeking to get into the next China or Brazil at the ground floor. But with so much hype and misinformation surrounding the space, how can investors avoid getting burned?

Who better to ask than famed emerging and frontier market experts Mark Mobius? Known for his extensive expertise on international markets, Mobius was fund manager for the U.S.’ first ever emerging markets equity fund, the Templeton Emerging Markets Fund. Today, he serves as the executive chairman of Templeton Asset Management, where he manages more than 35 funds.

Recently, HAI associate editor Lara Crigger caught up with Mobius about the case for investing in frontier markets, including what makes a good frontier market, what connection they have to commodities, and why frontier markets offer lower volatility than many developed markets—including the U.S.

Crigger: So why should investors consider adding frontier markets to their portfolio? What’s the appeal of these tiny, illiquid economies?

Mobius: The first and foremost appeal is the valuation. In these markets, we’re able to find cheaper stocks that are significantly better valued than those in normal emerging markets. That’s not true of every single company, of course, but it’s certainly true of many.

Of course, the reason why these frontier markets tend to be cheaper is because they have not yet been fully discovered by investors. They tend to be under-researched, and not so readily available to normal investors.

Crigger: What do frontier markets offer investors that emerging markets don’t?

Full Interview…


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10 Solid Markets in Risky Economic Times

Posted March 19, 2010 at 10:08 am

by Steve Tobak:

When times are tough, the tough get creative. Whether you’re looking for a job or looking for business, which covers most of us these days, here’s a creative way to figure out which markets might be fertile ground to explore.

On March 5th, Goldman Sachs released its much heralded list of stocks most widely found in top ten holdings of hedge funds. The aptly named VIP list (Very Important Positions), has done a pretty handy job of outperforming the S&P for the past decade or so. Here’s my thinking. In tumultuous times – like we have now – hedge funds look for calm in the storm. And markets that are broadly represented in hedge fund top holdings should be solid growth markets, right?

To be entirely accurate, Goldman only looks at hedge funds that employ “fundamental” strategies, as opposed to ones that employ “technical” methods. Otherwise, this would be a meaningless exercise.

Moreover, if you assume that the average hedge fund manager, tasked with managing billions of dollars of other people’s money, is pretty good at that sort of thing, and you look at an aggregate of 487 funds, as Goldman does, then you can get a pretty good idea of some solid growth markets, even in this extraordinarily challenging economic and political environment.

That’s exactly what I did and came up with 10 solid markets in risky economic times:

Full article…


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10 Funds That Buy Like Warren Buffett

Posted March 13, 2010 at 12:31 am

When Warren Buffett talks, people listen. Any time the legendary investor weighs in on market matters, either through his words or through the actions of his investment vehicle,  Berkshire Hathaway (BRK.B), knowledgeable investors pay close attention.

That’s why the release of Berkshire’s annual report each February is such an eagerly anticipated event: It includes Buffett’s annual letter to Berkshire shareholders, in which the Oracle of Omaha gives his take on recent events and drops nuggets of investing wisdom.

This year’s letter (released Feb. 27 and available here) is as quotable as ever, as Jason Stipp reported after it came out.

Full article….


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Everyone Wants Security, As Farmland Prices Go Parabolic

Posted March 9, 2010 at 5:18 pm

by Courtney Comstock
via BusinessInsider.com

Earlier this year and late last year, there was a steady drumbeat of investment gurus telling you to “buy farmland” as a protection against war, inflation, and whatever else.

It seems investors have taken the message to heart.

The price of high quality farmland is now generally in the rage of $5,500 – $7,000 per acre in Iowa and $6,200 – $7,500 in Illinois.

“There was a dramatic jump in the last 60 days,” says Loyd Brown, the president of Hertz Farm Management. He says land prices have been rising since 2009, but the biggest increase has occurred in the last 2 months.

Brown sells land to farmers, investors and investment firms….

Full article…

[ Editor's Note: For one very easy way to profit from the rise in farmland prices, login to your Wealth Vault member's area and go to the EDUCATION & IDEAS folder, from the 'Table of Contents.'   Also, via our report, we give you a list of 3 key contacts that can facilitate the buying of "physical" farmland. ]


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5 Reasons to Buy a Toyota

Posted March 9, 2010 at 11:40 am

by  Rick Newman:

It’s hard to think of another company that nose-dived as fast as Toyota has. A few months ago, millions of drivers considered Toyota the gold standard for automobiles, with quality and reliability you could practically take for granted.

Then came mysterious gas-pedal problems, claims of deadly “sudden acceleration” incidents, the global recall of more than 8 million vehicles, and vacillating assurances from shellshocked executives. The recalls could end up costing $2 billion or more. Toyota’s sales have plunged, and its U.S. market share has fallen from 17 percent to 13 percent in just two months. The collapse rivals Enron or Lehman Brothers.

What’s different about Toyota, though, is that it will recover. The automaker has deep pockets and tons of talent. Diffident CEO Akio Toyoda may not be the right man to lead Toyota through the worst crisis in its history, but sooner or later the company will regain control and get back on the pavement. It may even end up….

Full article…


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Top-Traders Trades for 2010

Posted March 3, 2010 at 12:03 am

from The Pragmatic Capitalist:

This week’s Guru Outlook brings you Paolo Pellegrini.  Although he is not the most well known of investment gurus Pellegrini has built quite a name for himself in recent years.  Before founding his own hedge fund PSQR (a play on PP Squared) Pellegrini was John Paulson’s right hand man at Paulson and Co.

Of course, Paulson and Co. made waves during the sub-prime crisis when they made billions shorting the market during the crisis.  Pellegrini was instrumental in devising the strategy.  Like Paulson, however, Pellegrini wasn’t a one trick, short the market, pony.

In 2009 he crushed the market with a 61.6% return in his fund after he made big bets on a rising oil market and a tanking treasury market.

So where does Pellegrini see the market going now?  In a recent letter to shareholders he said:

Read article…


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Greatness, Creativity, and Trading Success

Posted February 24, 2010 at 12:55 pm

by Brett Steenbarger:

Perhaps my greatest interest in psychology is understanding what differentiates highly productive, successful, and creative individuals from their more ordinary peers. Trading happens to be a worthwhile area to assess factors that lead to success, because success is so quantifiable.

In the next series of posts, I will be exploring factors associated with greatness: superlative achievement across various disciplines. An excellent overview of this area is Dean Keith Simonton’s book Greatness: Who Makes History and Why. Summarizing Simonton’s research, Dutton outlines several characteristics of creative geniuses:

* They have an unusually broad range of interests;

* They are open to novel and complex ways of viewing things;

* They are capable of defocused attention: thinking about one thing while focusing on others;

* They display flexibility in their work habits;

* They tend to be introverted and prosper during periods of relative isolation;

* They generally are independent and unconventional.

In combination, these qualities enable creative geniuses to draw upon a broad range of experience to understand things in new, enlightening ways.

Continue Reading…


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Banking on the grim reaper

Posted February 24, 2010 at 12:21 pm

from TheWeek.com

Some hedge funds have discovered a somewhat “ghoulish” trade: buying the rights to old folks’ life insurance, said Leslie Scism and Larry Light in The Wall Street Journal.

The sellers get an up-front payment and the promise that remaining premiums will be paid. The buyers get the proceeds from the policy when the insured party passes on.

Such policies are frequently packaged together by specialized firms and sold on to high-net-worth investors.

But a portion of the policy can be bought for as little as $50,000 from Life Partners Holdings.

“The appeal to investors is that betting on mortality doesn’t seem to be correlated to stocks, bonds, or anything else.”  The ghoulish part? The shorter the policyholder’s lifespan, the higher the returns.


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Ten Reasons to Invest in Chile

Posted February 23, 2010 at 7:55 am

From TopForeignStocks.com

After Brazil, Chile is the one of the attractive destination for overseas investors.  While Chile’s economy is primarily a commodity-based economy, there are many other factors that favor Chile.

From a recent report by OECD:

“Chile has managed the crisis better than other small open economies ,” said OECD Secretary-General Angel Gurría. “Thanks to sound fiscal policies and good monetary policy management during the boom years, there was room for decisive stimulus measures which are now proving their worth.”

The following are some of the reasons to invest in Chile:

Read Full Article…


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