It’s a Fed, Fed, Fed, Fed World

With apologies to the 1963 movie, “It’s a Mad Mad Mad Mad World” starring Spencer Tracy and Milton Berle, we are currently in the midst of something new: the Federal Reserve is in control of our stock markets. Their quantitative easing and low interest rates have not boosted the economy as much as intended, but they have certainly been wonderful for stocks, bonds, and real estate. In today’s Wall Street Journal, page A-13, in the...

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The debate doesn’t matter.

Whoever is elected president is likely to be a weak leader, beset on all sides by extremely unhappy factions. The debate tonight is likely to feature bluster and storming. Meanwhile we’re on Fantasy Island when it comes to economic issues. Read more here. 

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The Bank of Japan thinks nothing will happen, and the stock markets of the world love it.

The Bank of Japan issued its plans for future economic stimulus last night.  Consider the rather stunning implications of the Japanese 10 year bond having a 0% yield. That means they expect the economy to grow…0%. Another thought to be derived from all this is that the giant increase in debt in Japan over recent decades and the vast complexification of Japanese society hasn’t worked, yet the Bank of Japan is doubling down on the...

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The (possible) future of interest rates

Few people are considering that regardless of which candidate we elect in November, she or he may possibly be a weak president because an iron wall of hatred has been nourished into existence in our society. As a result, the central banks may run the global economy by default. Then you get guessing games like today. Note that this was originally written in 2015 and has been updated. Read the exciting Forbes article which was...

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Hangin’ out at the Federal Reserve Soup Kitchen

Where we are all dependent upon a handout. They’re in charge of what happens next, since the investment markets are dysfunctionally addicted to low interest rates. Meanwhile, Andresen & Associates is now AGGRESSIVELY rebalancing our portfolios in anticipation of…something. Today’s downturn is an indication of restless spirits, but whether it turns into anything meaningful is dependent upon news…and especially interest rates.

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In peace, prepare for wars. In calm, prepare for storms.

In 1994, when the world was awash in optimism and military funding was in decline, I read a small book, “The Transformation of War”, and its relatively radical predictions. At the time I wrote a newsletter to my investment advising clients suggesting that the “peace dividend” and the “kinder, gentler world” might be illusory. I had no idea how right Martin Van Creveld would be. Now I’m watching the current expansion of China and the...

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The “sell it all” decision is most often regretted.

We’ve had all-time highs in the stock markets in recent days. Valuations are stretched. Some sort of correction is more likely. But we can’t just sell out of the stock market and wait for better days, because markets often ignore valuations in the short run. Instead it’s better to rebalance and diversify, and BUY when markets fall. Check out the wonderful graph at the bottom of the article here.

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We are in the Mother Of All Bubbles in the bond markets…

We appear to be in the Mother Of All Bubbles in the bond markets. The fear-mongering of negative interest rates created by central banks is having genuine and unforeseen consequences. We genuinely haven’t been here before. This means…well, we don’t really know what it means. Except that bond prices are sky-high and bond interest rates are historically low. Our investment response is that we aren’t trying to guess interest rates in the short run. We own...

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