• June 30, 2006

What the Fed Really Said

Thursday saw a powerful response by the markets in stocks, bonds, commodities, and currencies to the communique from the Fed after its recent two-day meetings. Clearly, some were interpreting the communique to mean that the Fed had finally come to an end of its interest-rate-hiking ways. The immediate spin was quite "dovish" in terms of future rate hikes and concern about inflation.

That has become a pattern in the last year. The Fed releases its minutes, the immediate spin is that we...

• June 23, 2006

2006 Mid-Year Forecast

This week we will venture into the always hazardous area of making my semi-annual forecast. I make some non-consensus projections as to the economic climate for the next six months, and of course look at Fed policy. We will also quickly review my beginning of the year (2006) forecast and see what changes should be made. I also point you to a solid resource on gold and gold stocks at the end of the letter. It will be a very interesting letter, I think.

But first, a quick note on today's...

• June 16, 2006

The Problem With Indexes

This week we look at index funds, and specifically at problems that certain types of capitalization weighted index funds have. It is intuitively obvious that capitalization-weighted indexes have a larger proportion of their assets in the larger stocks. (Capitalization-weighted means that larger stocks are given more "weight" or proportion of the index or fund.) But is this what a rational investor should actually want? I think the information we look at today will surprise many.

On...

• June 9, 2006

Central Bankers of the World, Unite Again!

Is the Fed right to be worried about inflation, or is that so last quarter? What do musty old academic papers suggest about Fed policy? And can we translate that into something that gives us a clue as to why markets around the world are in seeming lockstep on their way to the exits? (Quick, guess which market has done the best in the last month. No peeking!) Whatever happened to the diversification of our portfolios? This week we look at a wide range of topics trying to get some insights...

• June 2, 2006

It’s All About the Data

The Fed tells us that whether or not they continue to hike short-term rates is now dependent upon the data. Since that has always been the case (I mean, has there ever been a time when they ignored the data?), what they are really saying is "We are not really sure what we are going to do at the next meeting, so we will look at the recent data and make up our minds at that point."

I actually find that rather hopeful. In the past, it has been typical for the Fed to just keep raising...