Archive | January 2015




Europe is a mess, everyone agrees: poor demographics, sclerotic and oppressive regulation, political dysfunction. European stocks lost 6% last year as the US gained 13%, about as wide a performance gap as we’ve seen in at least the past 50 years. So how do we explain this chart: small/mid-cap French stocks are at an all-time high. Consensus is (almost) always logical, but not always right. There are many very good reasons to avoid/underweight European assets. And it’s certainly possible that investors in small cap French stocks have become detached from reality. But it’s also possible that conditions are not as Read More




Mark Twain wrote in his autobiography that there are three kinds of lies: lies, damned lies and statistics. How true. Revenue can be deferred (or accelerated), profits are easily manipulated, inventory gets adjusted: most data have to be scrutinized and dissected, and even then, can be misleading. But there are some statistics that just don’t lie, and the amount of goods hauled around the country is one of them. The reason is that no one in their right mind would haul goods from one place to another for the fun of it: real goods get moved around the country to Read More


Swiss Cheese


Back in 2011, as talk of the Eurozone disintegrating was at high pitch, investors fled to the perceived safety of the Swiss franc (CHF). Naturally, the value of the currency spiked higher, threatening the competitiveness of Swiss exports. So the Swiss National Bank (SNB-the country’s central bank) announced that it would sell an unlimited amount of Swiss francs at a rate of 1.20 per euro indefinitely, thereby effectively capping the value of the CHF. For 3 1/2 years, investors exchanged their euros, rubles, florints or any other currency at this fixed rate, and the SNB accumulated these foreign reserves on Read More




Among new year resolutions, losing weight tops the list for the majority of Americans. Actually, I made up that statistic, but in my defense, (a) it probably is true, and (b) it most certainly should be true. As the chart below shows, 50 years ago, more than half the population was at a healthy weight, with about one-third overweight and less than one-in seven obese. The good news is that the percentage of overweight Americans hasn’t changed much over the past 50 years, it’s still about one-in-three. The bad news is that more than one-in-five migrated from healthy to obese. Read More




First, happy new year to all! I walked into the office this morning to a crystal clear view of the Pacific. What a beautiful start to the year! In the distance, I could see a giant container ship which, these past few months, has not been an unusual sight, although it should be. The Palos Verde peninsula separates Santa Monica Bay to the north with the bustling twin ports of Los Angeles/Long Beach to the south. The LA harbor handles nearly half of all container shipping into the US. But if I can see container ships waiting in Santa Monica Read More