Up to this point of 2012, the year has been very good for investors
in stock markets across the globe. All over the planet, indexes are up
anywhere between 10-25% for the year, which speaks for itself,
especially when compared to money market rates or Treasury bond yields
of 2-3% for the 10 and 30 year durations. Certainly, return is stock
specific and if a company reports poor top line growth or misses an
earnings per share estimate, chances are it will get punished. Still, I
think one reason markets have performed so well in 2012 is first,
buyers get more for their money with equities.
Dividend yields are
typically higher than any treasury bond yield, and corporate bond prices
are still very expensive. Why take the risk of a company defaulting on
its debt obligations when you can participate in the profits at a
cheaper price? Second, as an article later in the post explains, savers
are being penalized for saving their money. With that the case, people
vote with their pocketbooks and look for a better deal. In this
situation, they have turned to the equity markets, though in a still
rather modest manner. Look out though, if bond yields start to rise as
money will come pouring out of the bond market. It has not happened
yet, but it certainly could over the next 12-36 months.
Super Tuesday approaches and Mr. Romney is trying to put the nails in
the coffin sooner rather than later. I am sure he will lose a few
states on Tuesday, but if he wins Ohio and more than 5 on Tuesday, it
would not be surprising to see other Republican leaders start to call
for the other candidates to step aside. As a Republican, some of the
things fellow members of the party say and do just astound me with their
stupidity. For example, why would Rush Limbaugh say what he said about
the Georgetown student? What is there to be gained from that? Also,
what Christ Christy said about Warren Buffett's tax ideas? Every person
is entitled to his opinion about tax policy. If you are a politician,
don't you want to attract as broad a constituency as possible to garner
support for your ideas? The object is to have people join the party,
not piss them off so bad they are repulsed by you.
Not hard to
understand why the approval rate for Congress is now approaching 10%, an
all time record low.
Nice article on where the future of Mobile Phones are in China- http://techcrunch.com/2012/03/03/china-next-mobile-boom/
Yelp
goes public- hurray- not many impressed-
http://online.wsj.com/article/SB10001424052970203986604577257193903928040.html?mod=WSJ_hp_LEFTWhatsNewsCollection
Good discussion about the lack of benefits for savers and interest rate policy-
http://www.nytimes.com/2012/03/04/business/low-rates-for-savers-are-reason-for-complaint-fair-game.html?_r=1&ref=business
As always, on any company mentioned here, past
performance is not a guarantee of future returns. Investing involves
risk of losses on invested capital. One should research any investment
and make sure it is suitable with your objectives, risk tolerance, risk
profile liquidity considerations, tax situation, and anything else
pertinent to your financial situation. Also, the CFA credential in no
way implies investment returns will be superior for any charterholder.
(If
you are interested in seeing the latest Seeking Alpha articles about
specific stock picks from Yale Bock and Y H & C Investments, click
the following links)
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