March 2011 - 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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  • What Happened to the American Declaration of War?

    You're probably aware by now that I'm an avid reader of the global intelligence company STRATFOR. But this piece by their founder George Friedman is truly exceptional.  If you're an American voter, interested in politics, or anyone interested in or affected by U.S. military actions (in other words, everyone), you should read this article. Why has no one else asked this question? And, as George points out, if this one part of the Constitution can be so repeatedly and publicly ignored by Congress and the president, what's next?

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  • The Confidence Game

    This week’s Outside the Box is a little different. It’s a stroll down history lane and thoughts on confidence, from Grant Williams, in the form of an introduction to his letter Things that Make You Go Hmmm. Grant currently resides in Singapore, and I find him a very thoughtful read and a wonderful resource. Sit back, relax, and enjoy.

    And for those interested, I think I am scheduled to be on Marketplace on your local NPR Radio station on Tuesday, which is today for most readers. Good to be back home for a few days! And now, let’s think about confidence in a little different way.

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  • Japan, the Persian Gulf and Energy

    The Prime Minister of Japan recently stated that his nation was facing its worst crisis since World War II. While most of the world is focused on tragic images of floodwater and rubble, and fixated on radiation levels, there is a bigger picture to be examined – one that also includes  energy, coal and the Strait of Hormuz.

    Human nature draws our focus to the present. We look for immediate repercussions to a devastating world event. But the real advantage lies in understanding the broader perspective. In order to get this deeper understanding, you could choose to spend endless hours scouring global new sources day and night, constantly questioning their legitimacy and bias. Or you could take a better approach and hire a team of geopolitical experts and uber-intelligent analysts.

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  • Game Changer

    This week we look at another except from Ed Easterling's gonzo book on stock market return projections called Probable Outcomes. This section is entitled Game Changer, and it is that and more. (Again thanks to Ed for letting us read his work!)

    Game Changer is a thought-provoking, somewhat detailed, analysis with two major surprises.  The first is that GDP growth was well-below average last decade (a trend that could continue this decade)…and second, slowing growth has a substantial negative effect on valuations (P/E).  This ties well into my own Endgame and provides "implications" about slower growth, etc.  (which is what I project from work of my own). Slower growth drives lower P/Es (even without higher inflation or deflation) and could drop the market by a third or so relative to "normal" cycles.

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  • The Cognitive Dissonance of It All

    I get a lot of client letters from various managers and funds, as you might imagine. I read more than I should. But one that shows up every quarter or so makes me stop what I am doing and sit down and read. It is the quarterly letter from Hayman Advisors, based here in Dallas. They are macro guys (which I guess is part of the magnetic attraction for me), and they really put some thought into their craft and have some of the best sources anywhere. So today we take a look at their latest letter, where they cover a wide variety of topics, with cutting-edge analysis and sharp insight. I really like these guys, and suggest you take the time to read the entire letter.

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  • The Complexity of Persian Gulf Unrest

    While the world's attention was (and still is) on the fighting in Libya, George Friedman—founder of a global intelligence company called STRATFOR—told his employees to watch the tiny island of Bahrain. Libya's protests are more violent, but the unrest in Bahrain, he said, will have much stronger strategic implications.

    It's easy to look at the news event that makes the most noise (and makes for good television). It's much more critical to pay attention to the event that, depending on its outcome, could disrupt the world economy. If unrest in Bahrain gets out of hand, Saudi Arabia's Shiite minority could follow suit with protests of their own, and the Iranian-Saudi balance in the Persian Gulf could teeter heavily toward Iran. Imagine if Iran fully controlled the area through which 40% of the world's seaborne oil must pass daily. Does Bahrain have your attention now?

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