Thursday, October 21, 2010

Getting Real About Real Estate

In 1990, following the real estate debacle of the 1980s, Andy Miller co-founded SevoMiller, Inc. The company provided workout services for major financial institutions throughout the country and also began buying and developing apartments, retail and office properties. From its founding to the present, the company’s acquisitions totaled over 30,000 apartment units, several million square feet of retail space, and numerous office projects throughout the country, including the states of Colorado, Arizona, California, Nevada, Illinois, Texas, Louisiana, Indiana, Oklahoma, Georgia, and Florida.

Employing over 500 people, SevoMiller also built, managed, marketed, leased, and sold commercial real estate for many institutions and third-party owners across the country. Clients included General Electric Credit, SunAmerica, and Huntington Bank, as well as many defunct banks, savings and loans, and private equity groups. (more)

Lithium Demand May Triple by 2020 on Demand for Batteries, Orocobre Says

Lithium demand may triple in the next decade as consumers buy more portable electronics and battery-powered vehicles, said James D. Calaway, chairman of lithium miner Orocobre Ltd.

Global lithium demand of about 110,000 metric tons may double by 2020 solely from existing applications such as mobile phones and glass making, Calaway said yesterday in an interview at Bloomberg headquarters in New York. Sales to electric-vehicle battery makers will add 10,000 tons by 2015 before increasing more rapidly, he said.

“You could very easily see by 2020 the need to triple production or even more just to accommodate the auto sector,” Calaway said.

Orocobre will begin producing lithium in 2012 at its first project, Salar de Olaroz, atop salt flats in Argentina’s Jujuy province, he said. The company should become profitable the next year when output reaches 15,000 tons of lithium and 36,000 tons of potash fertilizer, he said. The Brisbane, Australia-based company may start pumping lithium-rich water from a second mine in Argentina in 2014, said Calaway, 53. (more)

McAlvany Weekly Commentary

Nullification: An Interview With Thomas Woods

Thomas Woods is the New York Times bestselling author of ten books, including The Politically Incorrect Guide to American History, Who Killed the Constitution?, Meltdown: A Free-Market Look at Why the Stock Market Collapsed, The Economy Tanked, and Government Bailouts Will Make Things Worse. A senior fellow of the Ludwig von Mises Institute, Woods holds a bachelor’s degree in history from Harvard and his master’s and Ph.D. from Columbia University. His latest book is Nullification: How to Resist Federal Tyranny in the 21st Century.

Thomas Woods will be speaking in Phoenix, October 20th at 7:00 PM at Grand Canyon University in the North Gym. For more information, Click Here

16 Dividend Stocks That Aren't Just a Passing Fad

It seems nowadays that every investing article ends with the same conclusion – you should be buying dividend stocks. They are all quoting studies citing the performance edge that dividends have enjoyed over the long-term and the value of a semi-fixed return generated from periodic dividend payments. However, you should beware of some of the information provided. Beyond the simple concepts, some of the writers are making really bad recommendations and cross-breeding dividend investing with their preferred form of investing.

Dividend growth investing is not about exit points, momentum swings, relative strength, sector rotation; instead it is about studying fundamentals, selecting superior stocks and building a portfolio with a long-term horizon. When we buy a dividend stock, we hope to hold it forever. What makes a good dividend stock? Here are some of the things I look for:

Good Business Model

Sell things that people want or need, and do it in such a way that it is difficult or impossible for others to duplicate. There is a reason that pharmaceutical companies, such as Abbott Laboratories (ABT), are so profitable. With effective drugs under patent that sustain or enhance people’s life these companies have a deep moat. Consumer goods companies like Procter & Gamble Co. (PG) and Kimberly-Clark Corporation (KMB) manufacture products such as soap, detergent and toilet paper that we just can’t do without. Sure, there may be generic substitutes, but over the years many of these products have endeared themselves to consumers who are willing to pay a few cents more for the name brand. (more)

Matt Taibbi With Don Imus On 'The FED's Magic Money Printing Machine'

1 out of 7 Americans receiving food assistance at an average of $133 per person.

The U.S. government is now spending roughly $5.6 billion per month on food assistance helping out 41,836,000 Americans. How bad is it for the lower economic strata of families in our economy? In January of 2007 we had 26,000,000 Americans on food assistance. The economic crisis has added 15,800,000 Americans onto the food assistance program now known as SNAP. These numbers are incredible and demonstrate how deep the recession has gotten. Even though on paper the recession ended in the summer of 2009 these numbers show a very different economic climate. Where did these 15 million people come from? Many have fallen off the middle class treadmill and have been sucked into the ever growing invisible class of people in the U.S. (more)

Jim Sinclair - Brief Period of Victory for Bubble Callers

With the move down in the gold market today, King World News interviewed the legendary Jim Sinclair to get his thoughts on where things stand. Many investors are badly shaken by a day like today, but Jim and I spent large chunks of our conversation laughing today as we swapped market war stories. Here is what was left that was suitable for print from that interview...

We had a big drop in sentiment in gold today. What’s funny Jim is that the sentiment today is the same as it was $400 or $500 dollars ago. You have investors and traders in gold that are still very afraid, and at the slightest hiccup in the market their fear escalates. Because of that would you say we have a little more work to do on the downside in gold?

“Yeah, whenever you make a technical hit in a technical world, you’ve created a weakness that needs to be gone through. So yes, the market breaking $40, it’s got to become a show me market before the bull takes off again. The bubble callers are celebrating a very brief period of false victory.” (more)

The economic crisis was an 'inside job'

If you haven't been humming tunes from "Les Misérables," you haven't seen "Inside Job," the new documentary about how our economic crisis evolved.

The most forgiving American will want to seize a pitchfork and march on Wall Street. Or Harvard Square. Or in front of the White House. There are so many despicable parties, it's hard to pick a favorite. Is it time to reconsider the Axis of Evil?

The film, written and directed by Charles Ferguson (and narrated by Matt Damon), will be opening in select cities this week. Although much of the story is familiar, Ferguson manages to weave together decades of bits and pieces into a dramatic narrative that plays like a whodunit. Names have faces, and storytelling combined with graphic illustrations helps explain the complex series of events that led to the global meltdown. Here are a few takeaways:

One, trying to assign blame to either Democrats or Republicans is pointless. Everyone is culpable. From the early 1980s, when Ronald Reagan deregulated banks, through the two Bushes, Bill Clinton and now Barack Obama, each administration has endorsed -- and each Congress has helped tweak -- laws and rules that made systemic abuses and the meltdown not only possible but, looking back, inevitable. (more)

Currency Wars: A Race to the Bottom of the Inflationary Barrel

Ron Paul
October 20, 2010

Inflation fears are heating up this week as Fed Chairman Ben Bernanke gave a speech in Boston on Friday, causing further frantic flight into gold by those fearful of the coming “quantitative easing” the Fed is set to deliver in November. Others who view gold as a short term investment engaged in immediate profit-taking after Bernanke’s speech.

Gold is more correctly viewed as insurance against bad monetary policy decisions that erode the value of savings. Those bad decisions keep coming at an ever faster clip these days and we hear more and more talk of currency wars especially between the dollar, the Chinese yuan, the Japanese yen, the Australian dollar, and the Euro. As the economies of the world continue to stagnate or contract, monetary policy decisions become more relevant to people who once thought this topic arcane. We have several examples this week of major fumbles on the part of the US Central Bank: (more)

Jim Rogers: Trade Wars Will Collapse Economy

Investment icon Jim Rogers says the trade wars looming on the economic horizon could spell disaster for the global economy.

"The word is on a very dangerous precipice, and if we do continue with trade wars, that's going to be the end of the world economy … we’ve seen many countries putting on capital controls already," Rogers, chairman of Rogers Holdings, told CNBC.

"If we don't solve this problem, it's finished, it’s all over.”

If governments print a lot of money, Rogers observes, the Dow Jones Industrial Average “could go to 50,000, and we could all be losing huge amounts of money because the money will be worthless.”

Rogers is skeptical that the U.S. economy is improving. “The central bank is making things worse,” he says. “The reason I don’t have a lot of shorts is that I’m afraid banks are going to print a lot of money and everything will go up.”

Rogers has begun shorting long U.S. Treasuries and most of his emerging markets holdings. (more)

China hides rampant inflation in money binge

Money, money everywhere. At least that's what it feels like at the moment in China. Awash in luxury cars, condos and expensive jewellery, the Chinese are enjoying what looks to be an unstoppable boom.

Inflation figures due today should give pause to those who assume China's economy is on sound footing. To an extent few appreciate, China's astonishing growth rates these past two years have been fuelled by an even more astonishing expansion of its money supply, by more than 50 per cent. Until now, the inflationary consequences have been largely camouflaged in the form of rising asset prices.

High-end property prices in dozens of Chinese cities doubled during the global financial crisis. Sales of gold bars have done the same this year. Fine pieces of jade are selling at US$3,000 ($3,950) an ounce, up 50 per cent in the past couple of months, while packets of certain types of Da Hong Pao tea are going for US$30,000 a kilogramme. Art and wine auctions in China are pulling in record prices, while the Shanghai stock market surged 8.5 per cent last week to the highest level in almost six months.

Now there are signs that inflation is spilling over into consumer prices. China's CPI has been climbing steadily all year and Chinese officials are making noises about raising their CPI target to 4 per cent or even higher. Food prices gained 7.5 per cent in August, from a year earlier. Economists estimate wages are rising about 8 per cent. The HSBC Holdings Purchasing Manager Index survey for August reported a marked increase in input cost being passed along in higher output prices.

As inflation comes out from hiding, the authorities may be forced to sharply rein in liquidity, turning China's cash-fuelled boom into a bust. (more)