1. Mortgages are not an expense but a form of savings
2. Mortgages are evil and must be minimized at all costs

• Natural gas in the US is considerably cheaper than in other parts of the world. They provided the following graphic that demonstrates the discrepancies.

• Recent technological changes now make it possible to ...

We're going to try this again. If you will recall I made a tidy little profit by arbitraging The Spain Fund (SNF) against the Ishares MSCI Spain Index fund (EWP) a few months ago. Well, the premium on the Spain Fund is baaaack and in a big way. This morning it is probably in excess of 22%. Why would you pay a 22+% premium to invest in a country that you can invest in through an ETF with no premium? I doubt that SNF's stock picking ability is that awesome. And as recently as December 21 the ...

I love it when I get to say "I told you so". In fact, I've requested that my epitaph be inscribed with the words "I was right".

In this case I'm referring to my July 19 article on market timing, where I pointed out just how high the market really was. It turns out that the day of my article coincided exactly with the market peak. I won't take credit for getting the timing perfect. That part was pure luck. But one of the main points of the article was that trimming back one's ...

I've been out of the country for a while, which is why I haven't posted lately. While in Peru we discovered why the Incas sacrificed their children: the kids were always complaining about being in Peru with nothing to do. You won't find this fully covered in the history books.

Upon my return I checked up on my investments and discovered a few opportunities. One of my bigger holdings, The Asia Pacific Fund (APB), had worked it's discount down to 4.6%, probably as a result of a hefty distirbution. ...

Back in July I set up a test of the analysts to see if we could identify situations where their earnings estimates were out of whack (that's a technical term). The idea was to see if stocks with low forward P/E ratios were more likely to have their prices rise or their estimates lowered for next year. At that time I promised to follow up in a few months to see what pattern was emerging. It's been about 4 months so let's check in on our experiment. 

I can't even drive a car without looking for investment opportunities on the road. On the way to Brian's house yesterday morning it took a bit longer than normal because the roads were literally choked with UPS trucks. They were everywhere, 2 or 3 in front of me all the way there. Of course, it's their busy season but I don't remember it being like this last year. With gasoline prices going up, people having less time, and becoming more comfortable with ecommerce I would expect  their ...

The other day I was getting ready to invest some money for my parents in a European ETF when I decided to peruse the closed end funds. I ran across something interesting. The Europe Equity Fund (EEA) is trading around a 13% discount which is historically high for this fund. So if this discount goes down to more typical levels you can pick up a few percentage points right there. But in addition they are due to pay a $.75 distribution, ex-dividend 12/19. Now the current NAV on this fund is $14.69 ...

The Economist ran an interesting story in their November 17 issue that compared the various emerging markets in terms of their valuations and risks. The attached graphic shows both the % increase in the markets since January 2003 and the current forward P/E ratio for those markets. Interestingly, it shows Brazil, Turkey, Russia, Hungary, South Africa, and Thailand with the lowest valuations, while India, China, and Argentina have the highest. Of course, you can't look at these P/E ratios in a ...

It was the early 90s when I was sitting in a business development staff meeting at General Electric watching everyone's heads nod in agreement with the speaker who was extolling the virtues of the Japanese management style. Why, the Japanese were conquering the world with their focus on market share! After all, they had recently purchased Rockefeller Center. If only Americans could learn from the Japanese that profitability was not the most important thing!

As I watched this incredible display ...

• Is it real?
• Why does it exist? You need to understand this in order to know whether or not the weirdness will go away.
• How do I make money off of it?

I was fortunate enough to own a few shares of Rio Tinto since August and as of today, when BHP Billiton made an offer to buy them, my position was up around 70%. Not bad for 3 months. Since at that price I no longer believed that it was a great value I sold it at 9:32 this morning for $452.81/share. However, I was perplexed by the fact that with my constant monitoring of the bid during this time period I never saw it go below 453 and change. So I had to call Fidelity to find out what happened. ...

Gary's theorem: Some people just don't deserve the jobs they have. Actually, quite a few people don't deserve the jobs they have. Just look at all the management teams that make stupid moves.

Corollary to Gary's theorem: Some people don't deserve to be stockholders. Alternatively, some stockholders deserve what they get. Just look at how often stockholders reject the dumb ideas of management or reject dumb managers.

The latest case in point is First Defiance Financial (FDEF), a small bank stock ...

Back in August I wrote about my concern for the safety of my cash invested in money market accounts. If you will recall, because a substantial portion of my net worth is tied up in a single fund, I actually moved money out of that money funds into a muni money market fund after realizing that my fund was too exposed to mortgage backed securities.

After a couple of months I felt things had calmed down enough, and the exposure had been sufficiently reduced, that I moved my money back into ...

I'm baffled by the market reaction to the Yahoo earnings release Tuesday evening. Wednesday morning the stock opened up 9%.

Now, don't get me wrong. I own this stock and think it's been undervalued. I should probably explain that statement. It's undervalued based upon the potential of the company but God knows the company has not been realizing that potential. So, it's not really a bargain at 56 times trailing earnings. We need to see some evidence that management has their act together. ...

I feel a need to publicly flagellate myself one more time for an error in judgment back in June. Well, "error in judgment" may be a bit strong. You can't blame someone for making the right decision based upon the information available at the time just because that decision turns out to be less than optimal based upon new information that subsequently materializes.

What I'm talking about is the Biogen Idec tender offer, where I tendered my shares for $53 after watching them idle for 7 ...

On July 8 I wrote about my attempt to arbitrage the considerable premium at which The Spain Fund was trading. At the time I was under the impression that the cost of borrowing shares of The Spain Fund was only 2.5%. However, after a few statements came in from Fidelity I realized that I was being charged a bit more than that. I called them the other day and was told that these shares carried a higher borrowing cost of 7%. Since they had told me 2.5% they agreed to credit me the difference (Have ...

As pointed out in my September 19 post we’re going to incur indirect costs from the Fed’s interest rate cut that bails out investors and borrowers from the subprime fiasco. But as pointed out in a September 22 WSJ article it’s worse than I thought. It looks like you and I (taxpayers) are going to be buying free lunches for a few folks. The government has decided to go into the subprime lending business themselves, insuring the refinancing of subprime loans at lower ...

My favorite nuclear power play, USEC, just had its stock price nuked over the last few weeks. From a high of almost $25/share back in late May the stock has recently traded below $10, which corresponds to about 12 X earnings. The only explanation that I’ve seen is in a Forbes Article that points a finger at their recently announced public offering of additional shares that will be used to build a new uranium enrichment plant. The article, which references an effective offering price of ...

Well, I have to agree with Brian's latest blog post about the Fed's rate action and the market reaction. Frankly, I was disappointed in the Fed's action - especially since they didn't even consult with me first. It looks like Bernanke has reinstituted the Greenspan put, which some people believe was responsible for many of the excesses of the last decade - e.g. the tech boom, followed by the housing boom. 

But there's no free lunch. What's the harm? Well, it's twofold:

First, there's the ...

In the past I’ve written about the difference between the Chinese A shares and H shares. Due to government-imposed restrictions the A shares have traded at much higher multiples of earnings.

Well, recently the Chinese government has indicated that they are willing to lift these restrictions and allow their citizens to invest in the H shares. This should bleed off some of the pressure on the A shares and pump up the price of the H shares. In anticipation of this move the H shares ...

As I’ve mentioned before Nuclear Energy is currently the only practical alternative to carbon based energy generation. With all the concern about global warming it is sure to take off. And I understand that the economics are quite favorable now. To paraphrase Einstein, you get a lot of E with a little bit of m when you multiply it by the speed of light squared (trust me…that’s a really big number).

Therefore, it’s no surprise that this week’s Economist has a ...

A few days ago I wrote about my brilliant analysis of the Home Depot Dutch auction that was going to save me from the mistake I had made with the Biogen Dutch Auction (that stock continues to hit new highs after I sold it at the high end of the offer range). This time around I decided not to sell after determining that the stock was worth more than the high end of the range and the repurchase could only help the stock price.

Well, it appears that I got it wrong again! The company repurchased the ...