Extract from www.Retirerichblog.com (I love this website, have been follwing it for quite sometime now)
His firm made $20 billion between 2007 and early 2009 by betting against the housing market and big financial companies. Mr. Paulson's personal cut would amount to nearly $4 billion, or more than $10 million a day. That was more than the 2007 earnings of J.K. Rowling, Oprah Winfrey and Tiger Woods combined.
Saturday, November 28, 2009
Wednesday, November 25, 2009
Jim Rogers: My First Million
From FT.com Published: November 20 2009 18:26 Last updated: November 20 2009 18:26
Since Jim Rogers, 67, co-founded the Quantum Fund with George Soros he has worked as a guest professor of finance at Columbia University and as an economic commentator. In 1998, he founded the Rogers International Commodities Index (RICI).
He is the author of A Bull in China, Hot Commodities, Adventure Capitalist and Investment Biker. His latest book is A Gift to My Children, a father’s lessons for life and investing.
When you realised that you had made your first million were you tempted to slow down?
I can remember the exact day of my first million dollars’ net worth. It was in November 1977. I was 35. I knew I needed more than that to do what I wanted when I was 37 – the age I decided to stop working to seek adventure.
What is the secret of your success?
As I was not smarter than most people, I was willing to work harder than most. I was prepared to examine conventional wisdom. If everyone thinks one way, it is likely to be wrong. If you can figure out that it is wrong, you are likely to make a lot of money.
What has been your most spectacular gain?
The Quantum Fund. When we started the company in 1970, I had $600 in my pocket. Within 10 years, the portfolio had gained 4,200 per cent.
What is your basic investment strategy?
Buy low and sell high. I try to find something that is very cheap, where a positive change is taking place. Then I do enough homework to make sure I am right. It has got to be cheap so that, if I am wrong, I don’t lose much money. Every time I make a mistake, it is usually because I did not do enough homework.
Since Jim Rogers, 67, co-founded the Quantum Fund with George Soros he has worked as a guest professor of finance at Columbia University and as an economic commentator. In 1998, he founded the Rogers International Commodities Index (RICI).
He is the author of A Bull in China, Hot Commodities, Adventure Capitalist and Investment Biker. His latest book is A Gift to My Children, a father’s lessons for life and investing.
When you realised that you had made your first million were you tempted to slow down?
I can remember the exact day of my first million dollars’ net worth. It was in November 1977. I was 35. I knew I needed more than that to do what I wanted when I was 37 – the age I decided to stop working to seek adventure.
What is the secret of your success?
As I was not smarter than most people, I was willing to work harder than most. I was prepared to examine conventional wisdom. If everyone thinks one way, it is likely to be wrong. If you can figure out that it is wrong, you are likely to make a lot of money.
What has been your most spectacular gain?
The Quantum Fund. When we started the company in 1970, I had $600 in my pocket. Within 10 years, the portfolio had gained 4,200 per cent.
What is your basic investment strategy?
Buy low and sell high. I try to find something that is very cheap, where a positive change is taking place. Then I do enough homework to make sure I am right. It has got to be cheap so that, if I am wrong, I don’t lose much money. Every time I make a mistake, it is usually because I did not do enough homework.
Sunday, November 8, 2009
US Unemployment Rate Troubling, But …
By Prieur du Plessis on November 8, 2009 | More Posts By Prieur du Plessis | Author's Website
The US Labor Department announced Friday that the unemployment rate rose to a 26-year high of 10.2% in October, an increase of 0.4 of a percentage point, even though the labor force contracted as well.
The graph below, courtesy of Chart of the Day, illustrates the unemployment rate since 1948 and provides some perspective on the current state of the labor market. As shown, Friday’s increase above the 10% level marks only the second time such a move has occurred during the post-World War II era.
Closer analysis of the chart indicates that the unemployment rate is a lagging indicator, peaking after the end of a recession. However, in the case of the previous two recessions the rate only peaked several quarters following an improvement in real GDP.
Asha Bangalore (Northern Trust) said: “A similar case is projected for the current recovery. Our forecast is for the unemployment rate to peak in mid-2010. At the same time, real GDP should continue to advance during the final months of 2009 and all of 2010.
The US Labor Department announced Friday that the unemployment rate rose to a 26-year high of 10.2% in October, an increase of 0.4 of a percentage point, even though the labor force contracted as well.
The graph below, courtesy of Chart of the Day, illustrates the unemployment rate since 1948 and provides some perspective on the current state of the labor market. As shown, Friday’s increase above the 10% level marks only the second time such a move has occurred during the post-World War II era.
Closer analysis of the chart indicates that the unemployment rate is a lagging indicator, peaking after the end of a recession. However, in the case of the previous two recessions the rate only peaked several quarters following an improvement in real GDP.
Asha Bangalore (Northern Trust) said: “A similar case is projected for the current recovery. Our forecast is for the unemployment rate to peak in mid-2010. At the same time, real GDP should continue to advance during the final months of 2009 and all of 2010.
Saturday, November 7, 2009
Fuel Your Stock Portfolio With BHP Billiton: The Best-Run Commodities Company In The World
By Tony D’Altorio on November 6, 2009 | More Posts By Tony D’Altorio | Author's Website
Some companies just stand out - both in their own sectors and in the larger market.
Australian firm BHP Billiton (BHP: 68.15 +0.32 +0.47%) is one of them.
As the largest and most diversified commodities producer in the world, BHP has leading positions in most key, low-cost, metal and mineral deposits in the world.
And as if that weren’t enough, it also has a solid position in oil, thanks to its petroleum division, which had operating profits of $4 billion last year.
Impressively, that total only made the petroleum division BHP’s third-best performer in 2008. Its iron ore segment scooped up $6.23 billion, while base metals enjoyed a $4.62 billion operating profit.
Crucially, that sets BHP’s oil division apart from its competitors. Not only does it bring in extra revenue, it’s also not overly reliant on the commodity fuel its operations.
So what does this mean for investors?
BHP’s Big Three: Profits, Cash, Growth
Thanks to BHP’s highly disciplined management team, investors have seen consistent profitability. And with $5.6 billion in net debt, that’s significantly less than many fellow mining companies.
In addition, with BHP sitting on almost $11 billion in cash, rumors are swirling that it’s chasing acquisitions, especially in oil and potash.
However, it has no need to rush out and buy anything right away. Thanks in part to a recent $116 billion deal with Rio Tinto plc (RTP: 193.77 +3.20 +1.68%) to merge the Pilbara iron ore operations in Western Australia, BHP is already well positioned with what it has.
Including the $5.8 billion it plans to sink into the Pilbara venture, BHP has a total of $17 billion already set aside for pre-existing projects over the next 12 months, highlighting the fact that it can grow simply by developing its own rich global asset portfolio.
BHP is Perfectly Poised in Emerging Markets
Like many other companies, BHP knows the strategic importance of establishing a strong base in emerging markets.
And deals like the one with Rio Tinto build strong, long-term shareholder value and help BHP fulfill its long-term mandate of capitalizing on booming emerging market demand.
The rise in consumer purchasing power in China, India, Brazil and other emerging economies will lead to a sharp spike in electricity consumption, as wealthier consumers buy televisions, refrigerators, washing machines and other consumer electronic items.
BHP sees energy demand alone growing at an annual 8% pace in China and 7% in India… and it has positioned itself perfectly to capitalize on those trends.
Coal: This still accounts for about 40% of global energy production, which suits BHP just fine, since it’s one of the largest producers of thermal coal in the world. Even better, the company produces copious amounts of coking coal, a commodity the steel industry depends on and one that emerging economies need vast quantities of.
Nuclear: Both China and India have plans to build numerous nuclear power plants over the coming decades. And BHP is already poised to take advantage through its Olympic Dam project in Australia, the world’s largest uranium deposit.
With a strong grasp on not only the commodities market, but also the countries most likely to need them, BHP is a must-have for any investor interested in taking advantage of the commodities markets and fast-growing global economies.
Some companies just stand out - both in their own sectors and in the larger market.
Australian firm BHP Billiton (BHP: 68.15 +0.32 +0.47%) is one of them.
As the largest and most diversified commodities producer in the world, BHP has leading positions in most key, low-cost, metal and mineral deposits in the world.
And as if that weren’t enough, it also has a solid position in oil, thanks to its petroleum division, which had operating profits of $4 billion last year.
Impressively, that total only made the petroleum division BHP’s third-best performer in 2008. Its iron ore segment scooped up $6.23 billion, while base metals enjoyed a $4.62 billion operating profit.
Crucially, that sets BHP’s oil division apart from its competitors. Not only does it bring in extra revenue, it’s also not overly reliant on the commodity fuel its operations.
So what does this mean for investors?
BHP’s Big Three: Profits, Cash, Growth
Thanks to BHP’s highly disciplined management team, investors have seen consistent profitability. And with $5.6 billion in net debt, that’s significantly less than many fellow mining companies.
In addition, with BHP sitting on almost $11 billion in cash, rumors are swirling that it’s chasing acquisitions, especially in oil and potash.
However, it has no need to rush out and buy anything right away. Thanks in part to a recent $116 billion deal with Rio Tinto plc (RTP: 193.77 +3.20 +1.68%) to merge the Pilbara iron ore operations in Western Australia, BHP is already well positioned with what it has.
Including the $5.8 billion it plans to sink into the Pilbara venture, BHP has a total of $17 billion already set aside for pre-existing projects over the next 12 months, highlighting the fact that it can grow simply by developing its own rich global asset portfolio.
BHP is Perfectly Poised in Emerging Markets
Like many other companies, BHP knows the strategic importance of establishing a strong base in emerging markets.
And deals like the one with Rio Tinto build strong, long-term shareholder value and help BHP fulfill its long-term mandate of capitalizing on booming emerging market demand.
The rise in consumer purchasing power in China, India, Brazil and other emerging economies will lead to a sharp spike in electricity consumption, as wealthier consumers buy televisions, refrigerators, washing machines and other consumer electronic items.
BHP sees energy demand alone growing at an annual 8% pace in China and 7% in India… and it has positioned itself perfectly to capitalize on those trends.
Coal: This still accounts for about 40% of global energy production, which suits BHP just fine, since it’s one of the largest producers of thermal coal in the world. Even better, the company produces copious amounts of coking coal, a commodity the steel industry depends on and one that emerging economies need vast quantities of.
Nuclear: Both China and India have plans to build numerous nuclear power plants over the coming decades. And BHP is already poised to take advantage through its Olympic Dam project in Australia, the world’s largest uranium deposit.
With a strong grasp on not only the commodities market, but also the countries most likely to need them, BHP is a must-have for any investor interested in taking advantage of the commodities markets and fast-growing global economies.
Sunday, November 1, 2009
Be Prepared for the Worst
Ron Paul, 10.29.09, 09:20 AM EDT Forbes Magazine dated November 16, 2009
The large-scale government intervention in the economy is going to end badly.
Any number of pundits claim that we have now passed the worst of the recession. Green shoots of recovery are supposedly popping up all around the country, and the economy is expected to resume growing soon at an annual rate of 3% to 4%. Many of these are the same people who insisted that the economy would continue growing last year, even while it was clear that we were already in the beginning stages of a recession.
A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.
Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate. We have seen the results of Alan Greenspan's excessively low interest rates: the housing bubble, the explosion of subprime loans and the subsequent collapse of the bubble, which took down numerous financial institutions. Rather than allow the market to correct itself and clear away the worst excesses of the boom period, the Federal Reserve and the U.S. Treasury colluded to put taxpayers on the hook for trillions of dollars. Those banks and financial institutions that took on the largest risks and performed worst were rewarded with billions in taxpayer dollars, allowing them to survive and compete with their better-managed peers.
This is nothing less than the creation of another bubble. By attempting to cushion the economy from the worst shocks of the housing bubble's collapse, the Federal Reserve has ensured that the ultimate correction of its flawed economic policies will be more severe than it otherwise would have been. Even with the massive interventions, unemployment is near 10% and likely to increase, foreigners are cutting back on purchases of Treasury debt and the Federal Reserve's balance sheet remains bloated at an unprecedented $2 trillion. Can anyone realistically argue that a few small upticks in a handful of economic indicators are a sign that the recession is over?
What is more likely happening is a repeat of the Great Depression. We might have up to a year or so of an economy growing just slightly above stagnation, followed by a drop in growth worse than anything we have seen in the past two years. As the housing market fails to return to any sense of normalcy, commercial real estate begins to collapse and manufacturers produce goods that cannot be purchased by debt-strapped consumers, the economy will falter. That will go on until we come to our senses and end this wasteful government spending.
Government intervention cannot lead to economic growth. Where does the money come from for Tarp (Treasury's program to buy bad bank paper), the stimulus handouts and the cash for clunkers? It can come only from taxpayers, from sales of Treasury debt or through the printing of new money. Paying for these programs out of tax revenues is pure redistribution; it takes money out of one person's pocket and gives it to someone else without creating any new wealth. Besides, tax revenues have fallen drastically as unemployment has risen, yet government spending continues to increase. As for Treasury debt, the Chinese and other foreign investors are more and more reluctant to buy it, denominated as it is in depreciating dollars.
The only remaining option is to have the Fed create new money out of thin air. This is inflation. Higher prices lead to a devalued dollar and a lower standard of living for Americans. The Fed has already overseen a 95% loss in the dollar's purchasing power since 1913. If we do not stop this profligate spending soon, we risk hyperinflation and seeing a 95% devaluation every year.
Ron Paul is a Republican congressman from Texas.
The large-scale government intervention in the economy is going to end badly.
A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.
Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate. We have seen the results of Alan Greenspan's excessively low interest rates: the housing bubble, the explosion of subprime loans and the subsequent collapse of the bubble, which took down numerous financial institutions. Rather than allow the market to correct itself and clear away the worst excesses of the boom period, the Federal Reserve and the U.S. Treasury colluded to put taxpayers on the hook for trillions of dollars. Those banks and financial institutions that took on the largest risks and performed worst were rewarded with billions in taxpayer dollars, allowing them to survive and compete with their better-managed peers.
This is nothing less than the creation of another bubble. By attempting to cushion the economy from the worst shocks of the housing bubble's collapse, the Federal Reserve has ensured that the ultimate correction of its flawed economic policies will be more severe than it otherwise would have been. Even with the massive interventions, unemployment is near 10% and likely to increase, foreigners are cutting back on purchases of Treasury debt and the Federal Reserve's balance sheet remains bloated at an unprecedented $2 trillion. Can anyone realistically argue that a few small upticks in a handful of economic indicators are a sign that the recession is over?
What is more likely happening is a repeat of the Great Depression. We might have up to a year or so of an economy growing just slightly above stagnation, followed by a drop in growth worse than anything we have seen in the past two years. As the housing market fails to return to any sense of normalcy, commercial real estate begins to collapse and manufacturers produce goods that cannot be purchased by debt-strapped consumers, the economy will falter. That will go on until we come to our senses and end this wasteful government spending.
Government intervention cannot lead to economic growth. Where does the money come from for Tarp (Treasury's program to buy bad bank paper), the stimulus handouts and the cash for clunkers? It can come only from taxpayers, from sales of Treasury debt or through the printing of new money. Paying for these programs out of tax revenues is pure redistribution; it takes money out of one person's pocket and gives it to someone else without creating any new wealth. Besides, tax revenues have fallen drastically as unemployment has risen, yet government spending continues to increase. As for Treasury debt, the Chinese and other foreign investors are more and more reluctant to buy it, denominated as it is in depreciating dollars.
The only remaining option is to have the Fed create new money out of thin air. This is inflation. Higher prices lead to a devalued dollar and a lower standard of living for Americans. The Fed has already overseen a 95% loss in the dollar's purchasing power since 1913. If we do not stop this profligate spending soon, we risk hyperinflation and seeing a 95% devaluation every year.
Ron Paul is a Republican congressman from Texas.
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