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  • Is Our Nation's Largest Creditor Telling The Truth?

    In This Issue:

    Our Monthly Performance Update
    China: The Economic Elephant in the Room?
    Chinese Fool's Gold
    Smoke and Mirrors
    Superbubbling Over?
    Trade Earnings of the Impossible Kind?
    A Drop in the Bucket
    Interesting Reading
    Portfolio Performance Analysis
    Why Pigeons Walk Instead of Fly in Boise Idaho

    Was the flash crash a market related fluke, or could it be telling us something about our future?  When most investor's think back to the most recent bear market, many remember Bear Stearns, Lehman Brothers, and the gut grinding months of September, October, and November.  The event was so traumatic that it is easy to forget how it all got started. 

    The first shot across our bow was in August of 2007.  As it turned out, most of the larger quantitative based market neutral long/short hedge funds had become correlated with their positions and didn't know it.  Each thought they had developed some super secret alpha generating model, but actually these funds had developed similar models that were making the same trades.  Everyone's super secret computer model had found the same edge in the data. 

    In August of 2007, the perfect storm hit causing these funds to unwind their trades at the same time causing huge losses for their clients.  When there is no one to take the other side of your trade, it is painful.  The losses were so large that it caused many hedge funds to close their doors.  Even Goldman Sachs had to close down some of their billion dollar funds, so it must have been completely unexpected.  Genius failed again.

    What happened in August of 2007 and the flash crash in May of 2010 seems eerily similar.  Do you recall what happened next?

  • Squeezed Between A Budget Rock And A Fiscal Hard Place

    In This Issue:

    Our Monthly Performance Update
    The Golden Rule - Does It Still Apply?
    Gold vs. Treasury Bills
    Treasury International Capital Flows Jump
    Real Estate Update
    Who Pays the Taxes?
    No Recovery in Tax Receipts
    Portfolio Performance Analysis
    My Boise State Broncos

    Is the real economy truly turning up or are recent upward ticks in the data caused mostly by government stimulus programs?  One thing for sure is that betting against the American consumer has historically been a very bad idea.  Are gross amounts of government spending trying to make this a better trade?