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Alan Schram

Entries by Alan Schram

Debt Ceiling Worries Are Way Overdone

(86) Comments | Posted July 17, 2011 | 3:26 PM

People seem to be despondent over the lack of political compromise on the federal debt limit. I do not share that concern. Incidentally, neither does the bond market.

To be clear, the United States is both financially and morally required to meet its obligations. Not doing so would expose an...

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Why Gold Is Rising

(50) Comments | Posted May 30, 2011 | 11:36 PM

Gold prices have been rising, and many experts cite demand from the growing economies of China and India as the reason.

But that's wrong. Gold is trading higher because of loose monetary policy and the purposeful devaluation of the US dollar.

Since gold generates no cash flows, and in...

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Investing in the Wake of Japan's Crisis

(0) Comments | Posted March 21, 2011 | 11:33 AM

Japan is an incredible civilization in many ways. It was reduced to rubble after WWII, yet became an extraordinarily rich country and the second largest economy within only a generation.

Today, however, it is hard to feel optimistic about their prospects. Despite what some Keynesian economists still believe, destruction is...

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Thoughts on Berkshire's Annual Letter

(3) Comments | Posted February 28, 2011 | 12:04 PM

My thoughts on Berkshire's annual letter and some actionable investments emanating from it:

Most obvious: Warren Buffett's optimism about the U.S. If you didn't already know the U.S. economy was going in the right direction, Buffett's enthusiasm is unmistakable. He is reiterating his previously stated view that...

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Are Emerging Markets Uninvestible?

(10) Comments | Posted February 1, 2011 | 11:28 PM

When Ben Bernanke launched the now infamous Quantitative Easing, his goal was to return liquidity to global financial markets. He was successful, and got the Dow to 12,000 to show for it. But he also got side effects in the form of escalating food prices, which are inevitable when you...

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Good News for Real Estate: The Probable Scenario

(9) Comments | Posted January 12, 2011 | 8:59 AM

A raging debate has been taking place concerning the health of real estate, and how long it will take to absorb the excess supply. Here is a probable scenario (data thanks to Century Management):

In September 2010, there were 3,585,000 homes listed for sale. At the current average rate of...

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Municipal Bond Mess

(23) Comments | Posted November 15, 2010 | 7:05 PM

Yields on top rated 10-year U.S. municipal debt rose steeply today, as investors were dumping municipal bonds and a flood of states and municipalities were seeking to raise money. California alone is planning $14 billion of debt sales before Thanksgiving.

Historically, the US experienced very few municipal defaults -- around...

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Let China Manipulate its Currency---They Are Doing Us a Favor

(127) Comments | Posted October 17, 2010 | 11:54 PM

Exchange rates dominated the agenda at the IMF's annual meeting recently. Officials blamed exchange rate imbalances on everything from China's undervaluation of the Yuan to unilateral currency intervention by Japan. Currencies will likely dominate the agenda again when G-20 leaders meet in November.

But the key question has been ignored...

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Thoughts on Inflation, Deflation and Interest Rates

(23) Comments | Posted October 4, 2010 | 1:05 AM

We are now at the crest of a decades-long cycle of declining interest rates. Chairman Bernanke fears a Japanese scenario, where the strong Yen has been pushing the Nikkei lower and exacerbating Japan's deflationary woes with a 15-year high against the US dollar.

So the Federal Reserve has been keeping...

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Thoughts on the Business Cycle

(2) Comments | Posted July 25, 2010 | 11:38 PM

Lately, almost everyone seems melancholy about the prospects of the economy. So I thought I might share some anecdotal data points that suggest otherwise:

• The yield curve is still steep, which induces credit creation. Historically, a steep yield curve has been an excellent predictor of economic...

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The Next Thing to Go Wrong

(3) Comments | Posted June 21, 2010 | 12:50 AM

Gold prices just hit a new all time (nominal) high of $1,257 an ounce. The Dollar lost more than 70% of its gold value since the beginning of the decade (an ounce of gold was $273 in January 2001).

Because most people take note of the dollar...

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Contrasting Greece and America

(19) Comments | Posted May 16, 2010 | 9:39 PM

The markets have been jittery, as many people worry the US and Europe could be headed in the same direction as Greece.

After all, the US is running a budget deficit and large debts. Greece's deficit is 14% of GDP with a debt load of about 124% of GDP. The...

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Goldman Was Wrong, Despite the Excuses

(24) Comments | Posted May 9, 2010 | 11:28 PM

Berkshire Hathaway Chairman Warren Buffett and his Vice Chairman Charlie Munger defend Goldman Sachs by saying the hapless Goldman clients have only themselves to blame.

I still think Goldman Sachs' conduct was revolting.

Yes, every synthetic derivative transaction by definition must have a buyer and a seller. It can't be...

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Notes from Berkshire Hathaway Annual Shareholder Meeting

(5) Comments | Posted May 2, 2010 | 12:08 AM

Close to 40,000 enthusiastic shareholders made the pilgrimage to Omaha this year, coming from all over the world to attend "Woodstock for capitalists."

Following are the highlights of comments made by Warren Buffett and his vice chairman Charlie Munger, covering a broad range of issues, and picking a sample from...

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The Robins Are Blooming

(7) Comments | Posted April 18, 2010 | 1:30 PM

In October 2008, Warren Buffett wrote that "if you wait for the robins, spring will be over." In other words, by the time the economy will look healthy again, stock prices will no longer be cheap.

Despite the pessimism, which is trendy these days, there are already plenty of robins...

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Where Did Inflation Go?

(36) Comments | Posted March 28, 2010 | 9:57 PM

For those concerned about incipient inflation resulting from the gargantuan monetary expansion we had over the past 18 months and the budget deficits we are still running, the lack of inflation is confounding.

One explanation is that the Consumer Price Index is inaccurate and misleading. For example, a third...

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Winds of Trade Wars

(22) Comments | Posted March 7, 2010 | 11:21 PM

President Obama argues that the Chinese Yuan is undervalued, contributing to the large trade deficit with China and depriving Americans of jobs. Further, he argues this creates a dangerous imbalance and that the government should intervene to fix the situation, possibly by engaging in trade war.


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Buffett's Shareholder Letter Synopsis

(0) Comments | Posted February 27, 2010 | 11:27 AM

Warren Buffett's eagerly anticipated annual letter to shareholders was released this morning. Here are the highlights:

Book value increased 19.8% last year, gaining $21.8 billion in net worth, and is at $84,487 per share. In the last 45 years, Berkshire never had a five-year period during which its book value...

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Public Finance Crisis

(1) Comments | Posted February 21, 2010 | 11:03 PM

The Wall Street Journal recently wrote that more and more municipalities are so strapped for cash, they are considering a Chapter 9 filing. Chapter 9 is a seldom-used part of U.S. bankruptcy law that gives municipalities protection from creditors (the largest Chapter 9 case was filed in 1994, when Orange...

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Is Gold a Good Inflation Hedge?

(6) Comments | Posted January 31, 2010 | 11:37 PM

In light of the large amount of fiscal stimulus, monetary easing, and credit creation in the form of new dollars that have all taken place recently in the United States, many are concerned about the dollar, its buying power and the inevitable higher interest rates that will be necessary to...

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