My Two Cents - Weekly Commentaries

Short-Term Rates Cause Long-Term Problems

Thu, 25 Feb 2010 19:36:10 -0500

One of the first orders of business that goes on during most initial meetings with a mainstream financial advisor is an inventory of assets, income, and other particulars. What generally follows next is series of pie charts that lumps you into one of three or four categories along with ‘projections’ of your future wealth if you’ll only contribute $3,000/year to that IRA for two decades. We’ve all heard the spiel. By contributing a mere pittance, you too can retire to millionaire acres in just 30 years. While there have been many candidates for financial crime of the century (even though we’re only 10 years in), this one has to rank right up there.

Club Med and the Dollar

andy@sutton-associates.net — Fri, 12 Feb 2010 10:39:14 -0500

News junkies, currency buffs, and economists of an Austrian tilt have been having quite an entertaining few weeks. Between massive blizzards from Virginia to New England, another baseless Dollar rally, and the hilarious notion that a little Greek debt could unwind the Euro, there certainly has been plenty to talk about.

Keeping Your Options Open (and Valuing Them)

andy@sutton-associates.net — Thu, 28 Jan 2010 11:14:46 -0500

It is often said that there is nothing new under the sun. Truly, economic events of late have demonstrated this in spades. There is little that is new, just different flavors of the same. So, in the absence of anything substantially new to add to the collection of events this week, I am going to take an opportunity to return to some of the analytical topics that I’ve had but a few precious chances to deal with over the past three and a half years.

Corporations are People Too??

andy@sutton-associates.net — Fri, 22 Jan 2010 15:32:21 -0500

Thursday’s landmark Supreme Court decision has been called everything from proper to despicable and misguided. Clearly in the historical realm, every nation, empire, and circumstance of human organization has clear signposts that mark first progress, then the eventual destruction of the entity. That is not meant to be melodramatic; it is simply the natural progression of societies.

The Search for Income Continues...

andy@sutton-associates.net — Fri, 08 Jan 2010 12:09:57 -0500

One thing that is unlikely to change as we begin a new year and decade is the fact that savers continue to sit in the corner wearing the proverbial dunce cap. They’re an often unmentioned casualty in a world of bailouts, big government spending, and general financial irresponsibility. In a normal, healthy economy, savers would be the focus of attention...

CARD Law: Benefits and Fallout

andy@sutton-associates.net — Wed, 23 Dec 2009 21:19:24 -0500

It is probably very appropriate as we close in on the traditional climax of consumer largesse to discuss the backdrop of this year’s consumption binge...

Closing out 2009

andy@sutton-associates.net — Fri, 11 Dec 2009 11:30:41 -0500

In an effort to get out ahead of the rush of year-end summaries, commentaries, and reviews, we’re going to try something a little bit different this year and leave 20 days of 2009 on the table.

Bernanke is not the Problem

andy@sutton-associates.net — Fri, 04 Dec 2009 13:41:12 -0500

Yesterday a poll was released that only 21% of Americans support giving Helicopter Ben Bernanke a second term as chairman of the US Fed. This compared to 41% thinking that someone else should be given the job. I must say this is quite an improvement. I wonder if Rasmussen would have been able to say 2 years ago that 21% of Americans even knew who Bernanke was?

A Wiser Use for Borrowed Money

Fri, 20 Nov 2009 16:26:50 -0500

It nearly slipped through the cracks this week as mediastocracy marveled at the apparent lack of inflation as the PPI and CPI reports hit the wires. However, just beneath the surface, the financial and economic metamorphosis continues unabated. I am talking about Qatar and its very successful bond sale.

Gold... Do we finally have your attention?

Thu, 12 Nov 2009 10:47:45 -0500

The past two weeks have brought two massive paradigm shifts to a Gold market that has been morphing literally on a daily basis for the past few months. During this time, the pundits and purveyors of misinformation and tripe have done their best to ‘student body left’ Gold back into obscurity as an ancient, barbaric relic. They certainly get an ‘A’ for effort.

Stimulus Nation

andy@sutton-associates.net — Fri, 30 Oct 2009 09:43:02 -0400

The result really wasn’t all that surprising. The reaction wasn’t either. On Thursday morning the Commerce Department released its advance GDP reading and proclaimed the end of the recession by asserting the American economy ‘grew’ at an annualized rate of 3.5% in the third quarter.

The Flip Side of a 'Jobless Recovery'

andy@sutton-associates.net — Fri, 16 Oct 2009 14:02:49 -0400

Perhaps one of the most preposterous statements made during the ongoing financial crisis was by Ben Bernanke when he stated that we would have a ‘jobless recovery’. Certainly this is not a new term, but that doesn’t change the fact that in concept, the idea that a real recovery can occur with rising unemployment seems pretty ludicrous.

Another October Surprise?

Fri, 02 Oct 2009 14:44:41 -0400

I have been asked countless times in the past month why it is that share markets seem to have a difficult time navigating the autumn months. Obviously, there is a healthy amount of fear regarding the next 29 days, as the memories of last year are still firmly intact. Yesterday’s 203-point drop in the Dow Jones Industrials Average has done nothing more than rekindle those sour memories. While the question ‘Why October?

Hurricane Hunter

andy@sutton-associates.net — Fri, 25 Sep 2009 09:10:24 -0400

As global stock markets navigate through the eye of the ongoing financial hurricane, it becomes increasingly important for investors still impacted by these markets to be able to gauge when the storm’s fury will reassert itself and plan accordingly.

The Quiet Grab

andy@sutton-associates.net — Thu, 17 Sep 2009 22:12:57 -0400

While all the hubbub here in the US has centered around abominations such as cash 4 clunkers, tax credits for buying homes, and the other machinations directed at returning the US to the blissful year of 2005, other portions of the world have taken notice and have been conducting some activities of their own...

The Opportunity.. A Year Later

andy@sutton-associates.net — Fri, 04 Sep 2009 21:32:06 -0400

Last October was a pretty brutal time to be in the prognostication business. I had just called Gold the opportunity of a lifetime at the end of August at a price of around $800/ounce. By the time late October came around, the price had fallen to around $725 and the catcalls had begun in earnest...

Leading to What?

andy@sutton-associates.net — Fri, 21 Aug 2009 17:24:53 -0400

Last week’s essay centered on the fact that America has borrowed nearly $12 trillion dollars yet achieved very little, if any real economic growth in the last half century. If that wasn’t alarming enough, this week’s effort should suffice to turn some heads.

Raising the Bar - Again

andy@sutton-associates.net — Sat, 15 Aug 2009 09:50:46 -0400

Apparently, a bazooka wasn’t enough. Last summer, that is what then Secy. of the Treasury Henry Paulson asked for when he made his case for sweeping financial powers...

Pass out the 3D Glasses

info@suttonfinance.net — Fri, 31 Jul 2009 15:45:28 -0400

It doesn’t take long these days to find an economic bull that’s for sure. Whether you turn on the television, radio, or pick up a newspaper, they’re everywhere...

Portfolio Diversification & Risk

info@suttonfinance.net — Sat, 25 Jul 2009 10:13:12 -0400

The cliché’s are plentiful and well known. Putting all of one’s eggs in a single basket is probably the most popular example. One of the biggest manifestations is when an investor looks at their portfolio and realizes that it is grossly underperforming a particular market index or that the same portfolio has performed much worse than a given benchmark.

Basic Financial Analysis - Part III

info@suttonfinance.net — Fri, 10 Jul 2009 16:52:08 -0400

Before we begin, it must be understood that there are many perceptions of value. In fact, if you took 10 investment professionals polled them individually; you’d likely get several very different definitions of value. If you put them together and forced them to come to a consensus, you would do well not holding your breath waiting for an answer...

Basic Financial Analysis - Part II

info@suttonfinance.net — Thu, 02 Jul 2009 14:52:41 -0400

Last time we discussed the concept of valuation for some different types of investments and the formation of themes that can be used to help zero in on potential areas for focus...

Basic Financial Analysis - Part I

info@suttonfinance.net — Fri, 19 Jun 2009 14:57:37 -0400

In an age of green shoots, fluff, and spin, it is probably worthwhile to put our feet on the ground every so often and take a look at some old fashioned ways that we might value a project, a firm, or capital stock. Too many times over the past 15 years.....

Throttling the Recovery?

info@suttonfinance.net — Fri, 05 Jun 2009 19:22:48 -0400

Despite the calm appearance on the economic waters of late, there is quite a bit of turbulence building beneath the surface on a multitude of fronts. Several developments have emerged that fly directly in the face of the idea that we’re headed for a green shoots recovery.

Confirmations and Conclusions

info@suttonfinance.net — Fri, 29 May 2009 15:16:28 -0400

In a mid-February editorial we took a look at some factors that were beginning to confirm one of our proprietary indicators that pointed to a bottoming in consumer prices in December 2008. Writing such an article at the time was a big risk since it flew in the face of a trend that had been firmly in place for the past half-year...

Triple-A or Bust?

info@suttonfinance.net — Fri, 22 May 2009 14:05:39 -0400

If you take a short walk down memory lane, it will not take you very long to find the carcass of New Century Financial along the side of the road back in March 2007. It would be a full 12 months before the word recession would be mentioned in the US mainstream media and stock markets would roar into their all-time highs six months after the disintegration of New Century....

Hedging Your Bets

info@suttonfinance.net — Fri, 15 May 2009 15:39:34 -0400

While it may seem rather inappropriate to talk about hedging strategies while the markets are retracing at least a portion of 2008’s devastating plunge, common sense continues to support the position that the worst is yet to come.

State of the Consumer

info@suttonfinance.net — Fri, 01 May 2009 20:18:31 -0400

This week’s surprise Consumer Confidence report gives us yet another reason to take a step back and survey the landscape. Much of the recent focus has deservedly been on unemployment...

Elephants and Tea Parties

info@suttonfinance.net — Fri, 17 Apr 2009 22:34:07 -0400

It is really no wonder that thousands of people across the nation showed up Wednesday to protest everything from the $787 stimulus package to big bank bailouts done under the cover of darkness. A failing economy, a government determined to insert itself fully in the specter of control, state sovereignty movements, and a good old fashioned tax day frown....

Commitments and Confusion

info@suttonfinance.net — Fri, 03 Apr 2009 15:30:10 -0400

Talk about mixed signals. Confusion reigns supreme. On Thursday the economy was recovering because factory orders went up for February, breaking a multi-month downtrend. However, today, there is no end in sight as the employment report was released and another 663,000 Americans have lost their jobs.

The Great American Banking Experiment

info@suttonfinance.net — Fri, 20 Mar 2009 18:29:26 -0400

One of the most common questions that folks who are becoming newly acquainted with terms like ‘fiat money’ and ‘fractional reserve banking’ are asking is “How did we get here?” For sure, the recent publicity of 21st Century Tea Parties along with the occurrence of the worst financial crisis in recorded history has people asking questions. In terms of the American obsession with central banking and fiat currency, 1913 is generally identified as the point where the country went wrong.

A Look Inside the Numbers

info@suttonfinance.net — Tue, 10 Mar 2009 20:02:19 -0400

This week we take a look inside the jobs numbers. We know BLS data is compromised and political, but there are some important take home messages - both in what the reports do and don't say.

A Game of Confidence

info@suttonfinance.net — Tue, 10 Mar 2009 20:02:29 -0400

We discuss the issue of confidence as perhaps the ultimate predictor with regards to the progression of our economy, and take a look at the 4 pillars of American confidence and the status of each.

The Turning of the Tide?

info@suttonfinance.net — Fri, 20 Feb 2009 14:10:26 -0500

This week we take a look at the increasing likelihood that the economic environment has changed from having deflationary characteristics to inflationary ones. What are the measuring sticks, and what has happened that leads us to this conclusion? Don't miss this one!

Twelve Zeros Worth of Protectionism

info@suttonfinance.net — Fri, 06 Feb 2009 12:33:34 -0500

This week, we take readers on a journey of globalization, and reliance of America on imported goods - to the point where we are unable to protect American industries and jobs. We also point out one possible positive use of the massive government spending package that is forthcoming any day now.

Income in a Zero-Rate World

info@suttonfinance.net — Fri, 30 Jan 2009 22:26:29 -0500

In this week's My Two Cents we explore some possibilities for making money in a market that has no idea where it wants to go. In particular, we explored a hedged dividend accumulating strategy and using covered calls to provide income.

Three Bears and a Missing Goldilocks

info@suttonfinance.net — Fri, 30 Jan 2009 22:25:19 -0500

An exploration into the drivers - past, present, and future of the economic Depression that is ensnaring the US. We discuss fact and fallacy regarding the causes and fixes for the current economic dilemma.

Themes for 2009

info@suttonfinance.net — Thu, 08 Jan 2009 21:38:59 -0500

Where is the economy headed in 2009? What factors will take center stage as the new year unfolds? Our themes from prior issues are not only still intact; they're beginning to assert themselves. Find out what happens next in our first issue in 2009!

Follow the Money

info@suttonfinance.net — Fri, 12 Dec 2008 14:56:54 -0500

This week's article discusses how we are losing perspective on our money. How much is a million dollars? A billion? A Trillion? We continue to drive home the point that bailout Dollars - no matter who promises them are all printed from nothing. We also debunk the idea that prices are ONLY a function of supply and demand.

Big Bank vs. Big Car

info@suttonfinance.net — Fri, 05 Dec 2008 17:02:40 -0500

In this commentary, we discuss the financial bailout as opposed to the potential bailout of the auto industry and compare the merits of each. Which really is more important? And why is Congress worried about private jets while Rome burns?

Can't miss episode of Spin Cycle

info@suttonfinance.net — Fri, 05 Dec 2008 09:19:24 -0500

This week, we discuss the trillions in bailout dollars, where they're going, and the likely unpleasant consequences of these realities. We also tie in oil and stock prices. If you want to know where things are headed, this is an episode you can't afford to miss.

http://www.contraryinvestorscafe.com/broadcast.php?media=164

Dominos and Themes

info@suttonfinance.net — Fri, 21 Nov 2008 22:29:19 -0500

A quick journey down the road of portfolio analysis as we take a look at some of the 'themes' which have been prevalent over the past year. In this issue we build some quick portfolio models and play out the past 6 months and let you know what has held up - and what hasn't.

Meet me at the Bottom

info@suttonfinance.net — Fri, 14 Nov 2008 09:55:48 -0500

An analysis of the ongoing Dollar 'rally'. Is it really the Dollar regaining its strength of old or a race to the bottom for all fiat currencies. Interspersed with economic news, this is an informative piece that is a must-read.

Ending the Recession Debate

info@suttonfinance.net — Fri, 07 Nov 2008 12:50:58 -0500

Despite everything that has happened, the mainstream press and pundits are still asserting that a recession might still be avoided. We take a look at some pretty reliable measurements of the economy, make the case, and let you decide.

Anatomy of a Disaster - Compilation

info@suttonfinance.net — Mon, 03 Nov 2008 21:50:49 -0500

The popular series "Anatomy of a Disaster" is now available for download in PDF format. Get all three articles in one easy to manage document.

Anatomy of a Disaster - The Next Stop

info@suttonfinance.net — Fri, 24 Oct 2008 22:51:03 -0400

We've laid the groundwork so where do we go from here? What drives us to that destination? And most importantly, what does it mean for your money?

Anatomy of a Disaster - Part 2

info@suttonfinance.net — Fri, 10 Oct 2008 22:51:08 -0400

In this second installment we look at the monetary phenomenon; specifically deflation. Where does it come from? How does the banking system create money. The article brings together these points in a concise manner that will leave you with a full understanding of how the money system in the US works.

Anatomy of a Disaster - Part 1

info@suttonfinance.net — Fri, 3 Oct 2008 22:51:14 -0400

The first in a three part series on comparisons between the Great Depression and now. This installment focuses on macroeconomic activity and the distribution of capital.

Capitalism: DOA

info@suttonfinance.net — Fri, 19 Sep 2008 22:51:19 -0400

Capitalism is under increasing attack. You'd be surprised as to who the attackers are. This article is a must-read in terms of understanding what has transpired over the past few weeks.

A Sobering Dose of Reality

info@suttonfinance.net — Fri, 5 Sep 2008 22:51:25 -0400

A look at the latest government employment situation report and what it means for consumers, spending, and the economy moving forward...

The Opportunity of a Lifetime

info@suttonfinance.net — Fri, 29 Aug 2008 22:51:39 -0400

Despite the recent correction, gold has still been the asset of choice over the past 8 years easily outperforming stocks. This week's commentary focuses on why gold and precious metals in general present the opportunity of a lifetime at these levels...