The world is rather tumultuary: The Tunisian government was overthrown just a few weeks ago. Now Egypt is in deep turmoil and I bet the Egyptian President Mubarak may not survive the upheaval after 30 years in power. What's the reason? They have one main cause: a huge inflation which has caused substantial increases of the food price. Don't ignore this important phenomenon in the world: the world is going to face serious shortage of foods in the next decades. What is happening now is just a beginning and it will become more and more serious and more countries will be brought into this kind of pandemonium, soon or later. Let's face it: the world population is increasing much faster than what the agriculture production can supply and the ever deepening inflation will only make the situation even worse. That's why the greatest commodity investor, James Rogers, said if you want to make money, you have to become a farmer.
I think this is a multi-decade trend to invest in the agriculture sector. The easiest way to invest in Ag is to buy the EFT fund, called PowerShares DB Agriculture Fund (symbol DBA). DBA has appreciated quite a lot in the past year and I'm not sure at this price of around $34, it is a good buy in the short term. It may tumble as well if the overall market is correcting, which I think is looming. But if it dose come down, I think it would be a good idea to put some money in it to get along with the long term trend.
Sunday, January 30, 2011
Sunday, January 23, 2011
Save your money in RMB here in US
I'm extremely busy these days and have no time to write. Actually not much to write anyway as there is nothing really significantly changed. I'm still short the market although the market becomes even more stubborn with its more extreme complacence; I'm still short Euro although the Euro is fighting back strongly. Have I changed my mind? Not a chance. To me it just becomes even a better time to add more short positions for Euro. We will see who will smile at the end! While overall I'm just observing and waiting for my themes to come to fruition, there may be a new opportunity brewing right now regarding municipal bonds. I will try to write a bit more on this topic soon.
I just wanted to pass on an interesting idea to you. As all of you may know, the Chinese Yuan (RMB) has probably only one way to go, that is, to go up in its value against the US$. If you do believe so, it would be logically a good idea to save some of your hard earned US$ money in RMB. This has been impossible till now as no bank can open a RMB account for you here in the US. But I just saw this interesting WSJ report, in which it is said that the Bank of China is going to make it possible for residents here to save money in RMB in its US branches in New York and Los Angeles. If you want to reserve the value of your savings, I suggest you think about this seriously and make part of your savings in RMB. This may be the lowest risk way to invest and almost guaranteed to win in the long run.
I just wanted to pass on an interesting idea to you. As all of you may know, the Chinese Yuan (RMB) has probably only one way to go, that is, to go up in its value against the US$. If you do believe so, it would be logically a good idea to save some of your hard earned US$ money in RMB. This has been impossible till now as no bank can open a RMB account for you here in the US. But I just saw this interesting WSJ report, in which it is said that the Bank of China is going to make it possible for residents here to save money in RMB in its US branches in New York and Los Angeles. If you want to reserve the value of your savings, I suggest you think about this seriously and make part of your savings in RMB. This may be the lowest risk way to invest and almost guaranteed to win in the long run.
Thursday, January 6, 2011
The only stock I may consider at the moment, if I haven't already........
Happy New Year to all the friends. We were safely back from Lisbon, Portugal, although unexpectedly delayed by 3 days. Also got bad cold for a couple of days. So a bit down in energy right now.
First, just a couple of follow-ups based on my readings on what I have blogged. If you have bought EUO to be short Euro, please hold on. Please see this. John Taylor is the CEO of the biggest currency hedge fund in the world. While I don't need anyone else to convince me of the fate of Euro, I'm glad I'm in line with the world real expert on currency. Euro is heading much lower, probably below parity with US$ not far from now.
Another update is about VIX. In the investing world, you should follow the smart money, those who can change the direction of the market, so-called professional investors. Finally they are also seeing what I have seen for a few months by now. Of course I'm a bit earlier but I stick to what I believe.
Now back to the topic of today. If I hadn't already invested in this stock for many years, I'd have put some money to work by buying this stock now. Why? Because this stock is fundamentally not related to the stock market but to the Fed rate. As long as the Fed rate remains low, it will make money and distribute dividends in a huge amount. The basic idea is that this company, call Annaly (NLY), borrows money at the Fed rate via real estate related investment securities almost all guaranteed by the US government and makes loans to others at a higher market interest rate. The difference (spread) between the 2 interest rates is where they earn their money from. The larger the spread is, the bigger profit it would be. Since almost all their mortgages they hold are those guaranteed by the government, there is virtually no credit risk for the company. Hope you know and believe that there is no chance the Fed will increase the interest rate which is around 0% any time soon, Annaly is positioned to make huge profit at least for the next 2 years I believe. Before investing, something you have to understand though: at this price level, we are not talking about investing in this stock expecting a substantial share price increase. This time is gone. What you should expect is the huge dividend payment, which is around 14.5% as long as you hold the stocks. I started to invest in it in 2008 at around $12-13, more after Mar 2009 (the market crash), and further more when it briefly came down to below $16 in May 2010. Ideally I'd buy NLY at the price around $15 or below but I'm afraid it may not come anymore. So if you have some cash and wanted to invest in something, NLY is a good bet right now, which may be safer than the money you have in the bank if you factor in the actual inflation. The NLY price has dropped to below $18 in the past few days, which was relatively substantial. I don't think NLY's price will really stay low for long, as long as the Fed rate is kept low. So any drop of its price is a good buying opportunity.
First, just a couple of follow-ups based on my readings on what I have blogged. If you have bought EUO to be short Euro, please hold on. Please see this. John Taylor is the CEO of the biggest currency hedge fund in the world. While I don't need anyone else to convince me of the fate of Euro, I'm glad I'm in line with the world real expert on currency. Euro is heading much lower, probably below parity with US$ not far from now.
Another update is about VIX. In the investing world, you should follow the smart money, those who can change the direction of the market, so-called professional investors. Finally they are also seeing what I have seen for a few months by now. Of course I'm a bit earlier but I stick to what I believe.
Now back to the topic of today. If I hadn't already invested in this stock for many years, I'd have put some money to work by buying this stock now. Why? Because this stock is fundamentally not related to the stock market but to the Fed rate. As long as the Fed rate remains low, it will make money and distribute dividends in a huge amount. The basic idea is that this company, call Annaly (NLY), borrows money at the Fed rate via real estate related investment securities almost all guaranteed by the US government and makes loans to others at a higher market interest rate. The difference (spread) between the 2 interest rates is where they earn their money from. The larger the spread is, the bigger profit it would be. Since almost all their mortgages they hold are those guaranteed by the government, there is virtually no credit risk for the company. Hope you know and believe that there is no chance the Fed will increase the interest rate which is around 0% any time soon, Annaly is positioned to make huge profit at least for the next 2 years I believe. Before investing, something you have to understand though: at this price level, we are not talking about investing in this stock expecting a substantial share price increase. This time is gone. What you should expect is the huge dividend payment, which is around 14.5% as long as you hold the stocks. I started to invest in it in 2008 at around $12-13, more after Mar 2009 (the market crash), and further more when it briefly came down to below $16 in May 2010. Ideally I'd buy NLY at the price around $15 or below but I'm afraid it may not come anymore. So if you have some cash and wanted to invest in something, NLY is a good bet right now, which may be safer than the money you have in the bank if you factor in the actual inflation. The NLY price has dropped to below $18 in the past few days, which was relatively substantial. I don't think NLY's price will really stay low for long, as long as the Fed rate is kept low. So any drop of its price is a good buying opportunity.
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