» Posted by Martin Weil on July 28, 2007

The stock market sell-off this past week sent me scurrying to reread Robert Shiller's landmark examination of the 1990's stock market bubble Irrational Exuberance. It was a sobering read.

The parallels Shiller draws between the "New Era" thinking of the Gilded Age, the Roaring Twenties, the Nifty Fifty era and today are all too striking. The implications for investors, if these previous eras' denouements are to be repeated, are that it may be extremely difficult to make money in stocks, US stocks at least, over the coming twenty years. Shiller suggests that long-term generational bull markets in stocks, such as the one we have enjoyed since 1982, have had a strong tendency to be followed by long periods of very low or flat average returns. Such an outcome would wreak havoc with current assumptions about long-term investing and asset allocation theory.

While I have largely refrained from mixing political commentary with investment analysis in this space, one particular quote from Shiller (who does not so refrain), struck a very deep chord.

If we exaggerate the present and future value of the stock market, then as a society we may invest too much in business start-ups and expansions, and too little in infrastructure, education, and other forms of human capital. If we think the market is worth more than it really is, we may be complacent in funding our pension plans, in maintaining our savings rate, in legislating an improved Social Security system and other forms of social insurance. We might lose the opportunity to use our expanding financial technology to devise new solutions to the genuine risks... that we face.

» Posted by Martin Weil on July 27, 2007

PepsiCo Inc. will spell out that its Aquafina bottled water is made with tap water ... According to Corporate Accountability International, a U.S. watchdog group, the world's No. 2 beverage company will include the words "Public Water Source" on Aquafina labels. "If this helps clarify the fact that the water originates from public sources, then it's a reasonable thing to do," said Michelle Naughton, a Pepsi-Cola North America spokeswoman. MSNBC

In 2006, US consumers spent more than $15 billion, about $200 per family, on what is apparently largely tap water in billions of throwaway plastic bottles.

» Posted by Martin Weil on July 26, 2007

Gretchen Rubin of The Happiness Project says maybe. Check out her list of eight things to do with money that are sure to be more satisfying than buying a new big screen TV.

» Posted by Martin Weil on July 25, 2007

The average price of prime London homes, the ones brokers consider the most desirable, has soared 254 percent since 1997...Defying predictions that the market would sputter, that average rose 28.7 percent in 2006, the steepest increase since 1979, and then jumped 18 percent during the first half of this year....The decade-long leap in prices has made London the most expensive city in the world for high-end homes -- costlier per square foot than Monaco, New York, Hong Kong or Tokyo...
From Bloomberg

The article also mentions a parking place going for 250,00 pounds ($500,000 at the current rate of exchange).

» Posted by Martin Weil on July 23, 2007

During the 1990's, San Diego was one of the hottest real estate markets in the nation. Lately, it has led the nation in the real estate slump. Apparently, local economists see a serious risk of a spillover effect.

"Job growth has nearly ground to a halt in San Diego County, raising the risk of a recession later this year, two economists who track the local business climate said Friday....the worst job growth we've had since '93, said Kelly Cunningham of the San Diego Institute for Policy Research....The culprit is real estate"

From the North County Times

» Posted by Martin Weil on July 19, 2007

In the United Sates, an average of one tire per citizen is discarded annually -- that's a third of a billion, just in one year.

Being a single molecule, a tire can't be melted down or turned into something else. Unless physically shredded or worn down by 60,000 miles of friction, both entailing significant energy, it remains round. Tires drive landfill operators crazy, because when buried, they encircle a doughnut-shaped air bubble that wants to rise. Most garbage dumps no longer accept them, but for hundreds of years into the future, old tires will inexorably work their way to the surface of forgotten landfills, fill with rainwater, and begin breeding mosquitoes again.

That's from The World Without Us.

» Posted by Martin Weil on July 18, 2007

"Weeks after the meltdown of two prominent Bear Stearns Cos. hedge funds that bet heavily on the market for risky home loans, the brokerage has told the funds' investors that the portfolios' assets are almost worthless, according to people familiar with the matter. The assets in Bear's more-levered fund, the High-Grade Structured Credit Strategies Enhanced Leverage Fund, are worth virtually nothing ... The assets in the larger, less-levered fund are worth roughly 9% of the value since the end of April... in March, before their sharp losses, the enhanced leverage fund had $638 million in investor money, while the other fund had $925 million."
from today's Wall Street Journal (fee site)

In the Financial Times (registration required), one Bear Stearns investor comments, "They are a big investment house. They are supposed to be professional. There is nothing to do now except maybe go shoot the guy who did it."

» Posted by Martin Weil on July 14, 2007

Are you saving enough for retirement?
	Yes
	No
	Don't know
pollcode.com free polls

» Posted by Martin Weil on July 12, 2007

Make that for "anyone who even suspects they might have a debt problem," Debtors Anonymous has this list of 12 indicators.

» Posted by Martin Weil on July 09, 2007

If Wal-Mart were a country, it would be China's eighth largest trading partner.

As reported in All The Tea in China. Pointer Marginal Revolution.

» Posted by Martin Weil on July 02, 2007

According to a recent study in Foreign Policy magazine, it costs just $1.06 to fill up a Honda Civic in Turkmenistan. This is versus $31.42 in the US. The highest cost nation was Turkey, where the same fill-up sets drivers back $93.98.

The information is from the Wall Street Journal's Economics Blog. The article points out that the US is the largest gas consumer in the world (no surprise there). The WSJ additionally notes that the US uses more gas than that of the next 20 largest national consumers combined.

» Posted by Martin Weil on July 02, 2007

"A 30-year Fannie Mae inverse floater issued in early 2005 and sold by Brookstreet was designed to pay a maximum return of 23.25 percent. Current interest rate: Nothing.

"(Brokers) kept telling me 'You're going to make money,' " said Gary Stephens, a Brookstreet investor in Missouri. When his monthly statements showed his CMOs declining in value, Stephens said, brokers told him "there was more money there than the (statement) showed.""

From the Orange County (CA) Register