December 2008 - John Mauldin's Outside the Box

John Mauldin reads hundreds of articles, reports, books, newsletters, etc. and each week he brings one essay from another analyst that should stimulate your thinking. John will not agree with all the essays, and some will make us uncomfortable, but the varied subject matter will offer thoughtful analysis that will challenge our minds to think Outside The Box.

John Mauldin's Outside the Box

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  • Foundations of Crisis

    This week I have a special Outside the Box for you. My long-time friend Doug Casey wrote a very prescient piece back in 1997. He has updated it somewhat for today's times. The critical part is a summary of the work of Richard Strauss and (friend) John Howe and their book The Fourth Turning, which I consider one of the more important and prescient (that word again) books of the last 25 years. It should still be read today. It is seminal to understanding the times we live in. Doug summarized the book and makes some observations based on that understanding, many of which turned out to be true and some of which may well be in out future. I think you will find this to be very useful and enlightening if you are not familiar with their work, and a great review if you are....
  • A Daily Snapshot Of Market Moving Developments

    This week we look at David Rosenberg's latest missive. While listing a number of negative data points, the thing to watch for is all the deflationary news. I have been pounding the table for YEARS that deflation is going to be the problem, and there would be massive stimulus from the Fed to fight it. We are now coming to that inflection point. Rosenberg is one of my favorite main stream economists and the North American Economist for Merrill Lynch. I would say enjoy this week's Outside the Box, but it is not enjoyable reading, but you should read it anyway....
  • EU Summit: What is Not Being Talked About

    There are plenty of sources out there that are happy to tell you what's happening in the world, and much of it matters. But oftentimes, what's much more important is the dog that didn't bark. Remember Enron's undisclosed subsidiaries? Or the off-balance sheet holdings of just about every financial services firm? Sherlock Holmes uses the dog that didn't bark to solve the mystery -- the dog had to know the intruder. My friend George Friedman's company, Stratfor, uses the dog that didn't bark to highlight issues that are equally critical to the global economy -- that aren't being discussed. Traditional sources let me mitigate known risks. Stratfor tells me about the risks and opportunities I might not even be aware of. I'm including an example below: Stratfor's EU Summit: What is Not Being Talked About. As this analysis demonstrates, normal reporting on what was discussed might be helpful, but it's the missing topics -- those that the media misses -- that you really need to think about....
  • Semi-Annual U.S. Economic Outlook: Collapsing On Schedule

    This week I am really delighted to be able to give you a condensed version of Gary Shilling's latest INSIGHT newsletter for your Outside the Box. Each month I really look forward to getting Gary's latest thoughts on the economy and investing. Last year in his forecast issue he suggested 13 investment ideas, all of which were profitable by the end of the year. It is not unusual for Gary to give us over 75 charts and tables in his monthly letters along with his commentary, which makes his thinking unusually clear and accessible. Gary was among the first to point out the problems with the subprime market and predict the housing and credit crises. You can learn more about his letter at http://www.agaryshilling.com. If you want to subscribe, you can call 888-346-7444. Tell them that you read about it in Outside the Box and you will get not only his 2009 forecast issue but an extra issue with his 2010 forecast (of course, that one will not come out for a year. Gary is good but not that good!) I trust you are enjoying the holidays. And enjoy this week's Outside the Box....
  • Dow 5,000 Redux

    What is fair value for stocks? Are they now cheap? You can certainly make that argument by comparing valuations based on past performance. But repeat after me, 'Past performance is not indicative of future returns.' The investment climate of today is almost certainly going to be quite different than that of the 80's and 90's. Thus, to expect stocks to repeat the performance of the last bull market in a climate of government intervention, deleveraging and increased regulations may not be realistic? This week Bill Gross, the Managing Director of PIMCO (and one of my favorite analysts) moves away from his familiar neighborhood of bonds and offers a few thoughts on stock market valuations. This is not a lengthy read, but it is one you might want to read twice, as the concepts are important. And not just for stocks but for investments of all types. I trust you will enjoy this week's Outside the Box....
  • Eyeing Opportunities in the Global Financial Crisis

    As various companies go hat in hand to Washington for a bailout, a recurring topic is what guaranty do the taxpayers get that they're not just throwing more money down a hole. Good question. Who wants warrants or preferred shares if the company is doomed anyway? What you're seeing take place are negotiated backstops between the US Government and pools of capital. A couple of examples: The Big 3 may get a bailout. Financially the US taxpayer will get a stake - in what will surely be radically reshaped companies. Citibank just got a large infusion from Saudi Arabia's Prince al-Waleed bin Talal al-Saud - just days before a US government orchestrated rescue helped rocket the share price. Maybe these are just coincidental moves. Maybe not. What we're witnessing isn't finance or investment as usual. We're watching a shift to a managed economic structure, where government officials determine who will live and who will die. It's a shift from investments to agreements, where having access to large pools of ready cash is the ultimately persuasive argument. And lacking access means doing whatever you're told....
  • The Six Lessons from Last Week's Action

    This week we look at a short but excellent summary of the state of the current economic crisis. I always enjoy reading David Rosenberg, the North American economist of Merrill Lynch. He has a no-nonsense style that is refreshing from most mainstream economists. The reality is that things continue to deteriorate. Today's stock market action shows that we are not of the bear market woods just yet. Rosenberg gives us a few reasons why....