Readings: Arnott ‘The Bear’, Oil.com, Water next?
- Business Week: The World According to ‘The Bear’
“For the long-term investor, stocks will offer single-digit returns over the next 10 to 20 years, though individual years could be far better or worse, . . . he likes U.S. Treasury Inflation-Protected Securities (TIPS) and local currency emerging markets debt.
Now he and his wife, Marina, are living in a beachfront property—but he rents it. His skepticism about equities, it turns out, is paired with a weak forecast for real estate. His says it makes more sense to rent a $5 million house for $8,000 a month than to be saddled with a huge mortgage and high property taxes.
. . . he’s passionate about: fundamental indexing. It’s a way of weighting indexes on metrics such as sales, cash flow, and dividends rather than by market capitalization.
- Economic Times: Oil surge bigger than dotcom stock boom
Crude rose 697% since trading at $17.45 a barrel on the New York Mercantile Exchange in November 2001, and reached 28 record highs this year. The last time a similar pattern was seen in equities was eight years ago, when internet-related stocks sent the Nasdaq Composite Index up 640% to its highest level ever.
Burton Malkiel, a Princeton University economics professor and author of ‘A Random Walk Down Wall Street’, says the rise in oil may be justified because supplies are limited and demand in developing economies is increasing. That distinguishes oil from the market for technology stocks in the 1990s, where supply “could be expanded infinitely” and new stock issues helped push down prices, he said.
- Business Week: There Will Be Water
Pickens owns more water than any other individual in the U.S. and is looking to control even more. He hopes to sell the water he already has, some 65 billion gallons a year, to Dallas, transporting it over 250 miles, 11 counties, and about 650 tracts of private property.
“Whiskey’s for drinking. Water’s for fighting.”
In all, Pickens, CRMWA, and Amarillo have spent about $150 million to buy up nearly 80% of the water rights in Roberts County, undermining and outbidding one another along the way. One unsurprising effect of their competition is that the price of an acre of water has in some places doubled, to $600. Mesa expects to acquire the land it needs in the next 18 months and pay about $30 million for it; Pickens wants to begin construction on the $1.2 billion pipeline right afterward.
Fascinating stuff - the next commodity bull is already getting under way.
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