What we make of it is that dividends used to account for a much larger percentage of your total return in stocks than they have in the last twenty years. Times change. There’s no rule that says the future has to be just like the past. But if stocks beat inflation, should you invest in stocks for income or capital appreciation? That’s the second question.
October 19th, 2009 | Dan Denning | 4 comments | ContinuedAll Posts Tagged With: "credit depression"
Equity Premium Will Be Replaced With a Tangible Asset Premium
Geez. Last Friday we made the case that the equity premium in stocks is going to revert to its historic mean. Remember that the equity premium is your willingness to pay more for future corporate earnings today because you believe stocks do better than bonds and cash over time.
July 27th, 2009 | Dan Denning | 2 comments | Continued
Your Actively Managed Superannuation Fund Cannot Beat the Market
There are at least two points worth noting in this survey, three actually. First, actively managed funds, on average, don’t beat the market. Unless you know a genius manager, paying for results doesn’t deliver them.
July 6th, 2009 | Dan Denning | 10 comments | Continued
Attack of the Bond Yields
Just to be clear though, the big trends now are soaring inflation and falling financial asset prices, along with increased energy scarcity. This produces a variety of pair trades, which include: short government bonds, long energy, short residential housing, long gold, and probably short commercial real estate and corporate bonds as well, while going long farmland and agriculture.
June 11th, 2009 | Dan Denning | 4 comments | Continued
A Credit Depression
You don’t need to own subprime loans to take loan losses in a credit depression. Smith said the area that concerned him most was the surge in small and mid-size businesses simply closing up shop unexpectedly. “In the real economy,” he said, “there is no evidence that the world economy is yet bottoming.”
April 30th, 2009 | Dan Denning | 5 comments | Continued
The Mining Finance Black Hole
Could this have worked out any better for China? We’re talking about the position Rio Tinto put itself in by taking on US$38 billion in debt to acquire Alcan—and stave off the unwanted advance of an amorous BHP. Now, in a world where refinancing that debt is near impossible for one of the world’s largest miners, it must sue for peace with a strategic partner…
February 13th, 2009 | Dan Denning | 4 comments | Continued
A $4 Trillion ‘Big Bang’
In The Monthly, Rudd plants a Neo-Marxist flag in the ground of the current debate with the kind of jargon-laden elitist preening that makes academic critics of the free market (who’ve never spent a day in the business world creating value) so nauseating. (…)Why not proclaim, since he is apparently in the position to make such proclamations, that the experiment in paper money and the deliberate policy of inflation it implies is theft?…
February 2nd, 2009 | Dan Denning | 21 comments | Continued
Australian House Prices Are Severely and Seriously Unaffordable
Let’s consider a new study on global housing affordability by Performance Urban Planning. The report concluded that Australia has the most unaffordable housing of all the nations surveyed. Not only that, but according to the report, Australia doesn’t even have a single urban area in which housing is merely “moderately unaffordable”…
January 27th, 2009 | Dan Denning | 183 comments | Continued
Gold Reaches One Month Low
Good news everyone. Gold has reached a one-month low. In fact, February gold futures on Comex fell the most in six weeks. They tumbled four percent on the day, down US$34. This is very good news. It means you will have a chance to buy gold at lower prices before it goes up higher later this year. Much higher, in fact, according to the 2009 forecast made by Diggers and Drillers editor Al Robinson…
January 13th, 2009 | Dan Denning | 11 comments | Continued
Life After the Credit Depression
Life after the credit depression (or LACD, as we now call it) is going to be very challenging. It’s a subject that deserves a lot more thought. So we promise more to come. But our main point today is that the institutional keystone of the modern state is, well, crumbling. Why? Go back to 1694 when the British were in perpetual war with the French while trying to build a commercial empire AND kick of an Industrial Revolution…
January 9th, 2009 | Dan Denning | 1 comment | Continued