It’s that time of the year. On a still day, you can actually hear the corn grow. Lots of money will be wagered as to the size of the crop and what will happen to prices. If you are of a mind to play CORN, it’s worth keeping in mind that the folks on the other side include locals in the pits, the big agribusiness concerns, and lots of guys watching their futures terminals who can stick their head out the window to listen to the corn. (Here’s where they are.) Just before the 2008 top, I wrote about the combination of factors that led to the “parabolic dreams” of corn traders back then; when they went away one by one, the price of corn returned to the relatively narrow channel that it has been in for most of the last five years. (Source: Bloomberg terminal.)
Josh Brown (The Reformed Broker) wrote recently about “alternative yield” and the age-old chase that occurs when nominal yields are low. Clients are looking for yield, grasping for yield, willing to reach out over a canyon of doom in order to snatch whatever looks like yield. And financial providers, always willing to come up with things that sell, are happy to oblige. Very often, stated yields are misleading, and buyers are misled. Let’s hope that we don’t see a big jump in interest rates anytime soon, or this will be another epic market saga. Do your friends and relatives a favor and get them to understand the difference between yield and return, between historical return and prospective return, and between vehicles where principal fluctuates and those where it doesn’t. If it takes smiley faces and frowny faces to illustrate that bond math can work against them, start there.
Since I will from time to time provide links to and comments on academic papers in finance and other disciplines of interest, I might as well start with a posting that talks about the debate as to whether there is too much academic research. In the opinion of the author, Peter Klein, “There are simply too many universities and institutes, too many research faculty, too many granting agencies, too much research money.” One could make a similar-sounding complaint about investment research. There’s so much of it around, and finding the items of value can be a chore. Hopefully you’ll find that research puzzle pix will provide connections to items from the Street to the ivory tower that help you to make decisions.
If you want a daily update of the latest hot topics in the econoblogosphere, Abnormal Returns, the best market linkfest, is the place to go. In addition to the “classic” site, AR Now provides updates with links throughout the day, and there is an ever-expanding array of themed newsletters, screencasts, and other items under the AR umbrella. Plus, Tadas Viskanta has been increasing his output of thoughtful original postings.
I actually thought that this was something from the Onion when I saw it. John Paulson endows a chair in Greenspan’s name after making billions on the unwinding of the Maestro’s philosophy (and reputation)? Was the card signed, “Thank you for the opportunity”? (Hat tip: The Big Picture.)
“A flexible viewpoint is the professional investor’s greatest need, and will be increasingly needed in the future.” — John Templeton, quoted in John Train’s landmark 1980 book, The Money Masters.