A New Year often brings New Year's Resolutions! I made two this year: to hug my wife more and to learn Italian (at least some). Today was the first day of Italian class (Beginner Level). The only other student there was a 16 year old young lady, who is way mature beyond her years. She wants to learn enough Italian before she is 18 to go study there, in an Italian university. Good luck, Alejandra! Hey, Alejandra, you're famous! Work like a dog at this, and your dream can come true!
After class, I picked up this weekend's Barron's at 7-11, kind of without even thinking about it. When I got to the cashier, I was pleased to note that I had picked a promising issue of the big fat newspaper. They have Part 1 of their Roundtable (and also the Cover Story), in which they invite "investment pros" to discuss investment opportunities around the world. Among the famous personalities: Marc Faber, Bill Gross, Mario Gabelli and Abby J. Cohen. Most of you know their names.
Before I discuss what they had to say, I cannot let slip the opportunity to see how they did with their recommendations for 2011! Keep in mind that stocks were VERY CLOSE to flat last year (0%). I average their percentage gains and losses on their various picks. Price movement only, apparently does NOT include any dividends. Also keep in mind this is just one year...
Scott Black's Picks: -13.5% Oops!
Abby J. Cohen's Picks: -2.7% Oops! But, not too bad.
Marc Faber's Picks: -14.3% Oops! (20 picks)
Mario Gabelli's Picks: +6.1% A Winner!
Bill Gross's Picks: +8.3% Another Winner!
Fred Hickey's Picks: +9.2% Another Winner!
(Archie MacAllaster passed away last year, so I do not tabulate his)
Oscar Schafer's Picks: -6.1% Oops!
Meryl Witmer's Picks: -3.9% Oops! But, not too bad.
Felix Zulauf's Picks: -13.3% Oops!
Summary: six of nine "investment pros" did worse than the market. Grand total average of all Barron's Roundtable 2011 stock picks: -3.35%, bummer! GOLD was up some 16% in 2011, nyaah, nyaah!
In this year's Roundtable session, there was definitely a more gloomy atmosphere... Here's a snippet:
Gabelli: Let's look at the history of deleveraging. How do you get out of it?
Zulauf: You either default and have a large deflationary accident or hyperinflate, which just delays the collapse. Politicians are trying to find a painless solution, which doesn't exist.
Gabelli: You're just describing the lobster trap we're in. Give us the pain now.
Gabelli: Across the board.
Zulauf: Yes. Or raise taxes, which further destroys confidence.
Faber: It would be best for all governments to cut spending by 50%. Then the private sector would expand again.
[ed. note: Faber is kind of famous for his use of substances, evidence of that just above...]
A lot of gloomy talk this year. Another choice quote, Marc Faber: "It is not that the gold price will go up. It is that the value of paper money will go down."
This week Faber's picks and Schafer's picks were featured. Faber recommended 13 companies (just 2 in the USA) and 3 shorts (IBM, Salesforce.com and the Aussie dollar). Schafer picked United Rentals (URI), Verint (VRNT), Crown Holdings (CCK) and Walgreen (WAG).
The next two editions of Barron's will continue the Roundtable discussion.
Alan Abelson offers the rather alarming prospect of class war starting up. The Pew Research Center poll of 2048 citizens found 66% think believe that there are strong conflicts between the rich and poor (vs. 47% in 2009).
The not very cheerful Alan goes on to write about Europe. He notes that Mark Grant (Southwest Securities) says that Greece's total debts (sovereign, bank and municipal debts) as well as $90 billion derivative exposure all add up to a cool $1.1 trillion. Hmm, big money at stake from such a little country...
Abelson finishes with some comments on Dave Rosenberg (Gluskin Sheff) growling again...
Tiernan Ray issued a grade of "A" to Intel (new and exciting chips) and a "B" to Microsoft for their new products at the Consumer Electronics Show in Las Vegas.
Andrew Bary wrote up their "2011 Report Card", which I gather is a compilation of all company reviews (positive reviews and negative ones). Their Bullish reviews averages a loss of 6.9% while their Bearish reviews rose 16.9% (that is, their "shorts" were good calls). But, there were about three times as many Bullish picks vs. Bearish, so the net would be: ((-6.9% * 3) + 16.9%) = -3.8% (very approximately), in a year that was essentially flat.
This week's look at Mutual Funds looks at the Ave Maria Rising Dividend Fund, in which the managers pick dividend payers from companies that pass their "morally responsible screen" (from a Catholic Church viewpoint). The average annual return over the past three years is an impressive 18% (per year note)! The largest holding is ExxonMobil. The fourth largest perhaps made it through their above-noted screen (General Dynamics).
Murray Coleman's "ETF Focus" writes up a new ETF (AdvisorShares Rockledge SectorSAM, ticker: SSAM) which purports to be run like a hedge fund! They go long and short with wild abandon! If you need some extra beta, do not already fool around with options (etc.) and trust others, then maybe SSAM is for you!
Jim McTague's almost always interesting column ("D.C.Current") this week says that Romney will take South Carolina and probably the nomination.
I had wished for Ron Paul.
Editor Thomas Donlan writes about the huge mess that Medicaid (-aid, not -care) has become. Mostly because of long-term care. It seems that many elderly have had money, they spent on their medical condition(s) and have become poor, and so eligible for Medicaid. And this is hugely expensive.
Note that I do not have any answers or even suggestions as to how we resolve this one...
In the Market Week section, there is a nice cartoon, which maybe I can give you a flavor of.
"Small Talk in a Police State" (Condron)
In a city with pictures and a statue of the General running the country, two men approach each other and say:
Man 1: "How ya doin'?
Man 2: "Oh, I can't complain."
Jonathan Buck writes this week's "European Trader" and discusses Europe's woes. Nothing really new here.
"Commodities Corner" and the Classifieds are on the same page (my edition anyway). Because the author believes we will NOT go to war with Iran and because of a recessionary world, he expects the price of crude oil to fall.
All five of the Classifieds are interesting to a degree or another:
* 100% Performing Lease Portfolio for Sale (commercial real estate I imagine)
* Investment partnership (renting residential houses in Las Vegas)
* A company wants 235K to develop a new magnetic motor ( I will call them)
* Bakken Shale opportunity: help them build housing for all the oilfield workers there)
* 10 banks for sale trading at 50% of book
-- Total Fed Holdings: -0.6%, the second meaningful decline in a row (if you believe the Fed)
-- Currency in circulation: -0.5%
-- Monetary Base: +2.1%
-- M1: + 3.1%
-- M2: + 0.8% (credit grew SLOWER than M1...)
The Peruvian Sol continues to kick the dollar in the teeth! In a week which saw the US$ go up sharply vs. the euro, The Sol just keeps going up! Vamos Peru, pues...
Verdict: Yes! Buy this if you want to see the "investment pros" in action!