S&P 1871 to Present

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Reflation Investing - Which Currencies Benefit?

Not surprisingly, gold has been a main beneficiary of the trends we see. Because industrial activity is likely to lag in this "recovery," gold being a precious metal with low industrial use, is a barometer of the money being printed. As reflationary efforts take hold, the money is likely to flow to other commodities - we see trends of that already - before possibly reaching corporate earnings. The Australian dollar is highly correlated with the price of gold; we like the Australian dollar as a reflation play because the Australian economy is highly sensitive to the price of commodities; Australia is also a large exporter of commodities to China, the one country that can afford its stimulus plan. Australia is fiscally in much better shape than the U.S., although it also has a high current account deficit. That current account deficit worked against the Australian dollar when commodity prices imploded, but may cause the Australian dollar to have a more pronounced upward move as the world reflates. We like Australia's smaller neighbor New Zealand, especially because the government there has had much more of a hands off approach to the global crisis; as a result, similar to Australia, the New Zealand dollar was harder hit during the downturn, but may benefit at an above average rate in a reflationary phase.

Safe Haven | Reflation Investing - Which Currencies Benefit?

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2 Months Rallies

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PE vs Returns ( 100 Years )

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Bear Market Recoveries Since 1950

dshort.com: Bear Market Recoveries Since 1950

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Unemployment-SP-Composite-since-1948

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Bear-markets-comparison

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The Final Currency To Top Out

When the rest of the world gets fewer dollars from a shrinking trade deficit, the value of the Dollar strengthens. The US now is embarking on a path to an astronomically high budget deficit that will have the complete opposite effect. Instead of foreigners being flush with Dollars to re-invest in the United States, they are lacking Dollars at the very time that we need their Dollars the most - to fund the US government's deficit. This can only have one effect on the Dollar - that is for it to FALL.The US Dollar should have been falling during the last 18 months as interest rates were slashed and our fundamentals were the worst in the world. Common sense always prevails, and anyone still expecting the Dollar to remain strong and deflation to be headline news is going to be shocked.

Safe Haven | The Final Currency To Top Out

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Chris Martenson | chapters - The Crash Course

The Crash CourseReady to learn everything you need to know about the economy in the shortest amount of time?The Crash Course is a condensed online version of Chris Martenson's "End of Money" seminar.What is it?The Crash Course seeks to provide you with a baseline understanding of the economy so that you can better appreciate the risks that we all face. The Intro below is separated from the rest of the sections because you'll only need to see it once...it tells you about how the Crash Course came to be.How long will it take?

Chris Martenson | chapters - The Crash Course - chapters, Crash Course, Economy, Energy, environment, Peak Oil, videos

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Warren Buffett Interpreation Of Financial Statement.

Income Statement

• Gross profit should be more than 50%.Avoid less than 20%.
• SGA , must consistant % of gross profit.Avoid consistently high SGA expenses co.
• R&D, high R&D have an inherent flaw in competitive advantage.
• Depreciation,very real expense and should always be included in any calculation of earning.Look for low depreciation.. e.g P&G only 7%.
• Interest expenses, look for less than 15% of operation income. Lower % in the industrial, better competitive advantage.
• Income before tax,using pre-tax income for analysis.
• Income taxes paid, US in 2008 about 35% of income, use this to counter check,e.g pre-tax income*35% compare to income tax paid.
• Net earning, looking for uptrend, look for % of revenue in up trend.E.g KO earn 21%, look for more than 20%, except bank, high % high risk.

Balance Sheet

• Shareholders' Equity ( Net worth,book value) , is all the assets substrate all the liability.
• Current Assest(Working Assest) , look for cash generate from ongoing business., no debt.
• Inventory, look for inventory and net earning corresponding rise.
• Prepaid Expenses e.g Insurance.
• Current ration : Current asset/current liability. Look for greater than 1.Some good earning power co, e.g KO has ratio of 0.95.
• Goodwill, buying amount over the book value.
• Long term investment, value of long term investment that more than a year,e.g stock. bond,real estate, invest in co subsidiaries.State at cost of market price whichever lower.
• Short term debt, when borrow short term and invest long term, problem occure when shorten interest increase higher than long term invest return.When invest in bank , look for less than 60% of short term debt over long term debt.
• Long term debt, look for min long term debt, yearly earning able to pay off all of it long term debt with 3 to 4 years.
• Minority interest, represents it value of buy over co that the co did not won.
• Debt to shareholders' equity ration is total liabilities/shareholder equity.Look for less than 0.8 unless is back about 10.
  
• Prefer and common stock carried in balance as par value, any money in excess of apr that was paid when company sold the stock is "paid in capital".Look for absence of preferred stock.
• Retained earning,accumulate no,look for growth, or it invest wisely.
• Treasury stock, share that buy back by the co.Good indicator.
• Return on shareholders' equity, is net earning/SE,higher the better, history of strong earning with negative SE, ok.

Cash Flow Statement

• Total cash from operating , is net income + depreciation + Amortization.
• Net change is cash is Total cash from OA +IA +FA.
• Capital Expenditure, look for low #, e.g KO only 19% of total earning, less than 50% of annual net earning.

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