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Peter Brimelow
Aug. 23, 2010, 3:01 a.m. EDT · Recommend (2) · Post:
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By Peter Brimelow, MarketWatch
NEW YORK (MarketWatch) -- A brave Baby Boomer bull isn't broken yet. But he's getting belligerent.
I called it "the Michael Murphy miracle" when the long-time, market-scarred veteran editor of the tech-oriented New World Investor enjoyed a recent remarkable resurrection. ( See Sept. 10, 2009, column.) Murphy doubled up by calling for a V-shaped economic recovery -- which at one point, this may be hard to remember, looked pretty prescient. ( See Jan. 8 column.)
Murphy's momentum has slowed since then, but overall it's still impressive. Over the year to date through July, New World Investor is up 1% by Hulbert Financial Digest count, compared to 0.7% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. Not great -- but not disastrous either.
And over the past 12 months, New World Investor is up an impressive 47.64%, versus 14.86% for the total return Wilshire 5000. Even better, over the past three years, the letter is up 9.45% annualized against negative 6.23% annualized for the total return Wilshire. And over the past five years, it's up an annualized 9.81%, as compared to just 0.25% annualized for the total return Wilshire 5000.
But Murphy's checkered past is evident in the longer run. Over the past 10 years, the letter was down an annualized 5.45%, compared to a (pretty lousy) 0.10% annualized gain for the total return Wilshire 5000.
I don't see much talk of a V-shaped recovery in Murphy's recent posts, and he has repeatedly grasped vainly at signs of a market rebound. But he puts his faith squarely on what looks like an extremely unpleasant inflation outlook.
He writes: "Bernanke is watching the 10-year note yield like a hawk. Bernanke has no intention of letting the economy slide into another recession. In an economy that uses a fiat currency issued by their central bank, there is never a reason to take a recession / depression / deflation other than by choice, unless the central bank has lost control in a hyperinflation first."
"Rule No. 1 of investing is: Don't Bet Against the Fed! Rule No. 2 is: Don't Forget Rule No. 1!"
Murphy also puts a lot of effort into analysis of individual tech situations. He wrote recently: "It is a great year for technology, with rapid growth in mobile, cloud computing and social networking. This is a target-rich environment for anyone to find stocks to buy, from Intel Corp. /quotes/comstock/15*!intc/quotes/nls/intc (INTC 18.68, -0.24, -1.24%) and Cisco Systems Inc. /quotes/comstock/15*!csco/quotes/nls/csco (CSCO 21.74, -0.49, -2.20%) for the giant pension funds, down to QuickLogic Corp. /quotes/comstock/15*!quik/quotes/nls/quik (QUIK 3.54, +0.03, +0.87%) and Towerstream Corp. /quotes/comstock/15*!twer/quotes/nls/twer (TWER 1.68, +0.02, +1.20%) for us. This Fourth Wave of technology growth, as I have labeled it, is happening all over the world. Asia has long since put the recession behind it and is spending tons of money on technology, with lots of it finding its way to the Intels, Ciscos and QuickLogics of the world."
Somewhat out of character, Murphy has also emerged as a China skeptic -- especially interesting to me because I've been crabbing about China throughout its great bull market. ( See Feb. 11, 2007, column.)
Murphy wrote recently about Chinese real estate: "The bubble has already burst. The fallout is going to be awesome, especially in a society that values 'face' above almost everything else. The speculators can't sell and can't pay the loan sharks. The loan sharks not only can't pay the interest they promised, but the principal is gone."
"Many Chinese borrowed against the increased value of their houses to flip the proceeds into a loan-shark pool at 30%, and have been living off the income. A schoolteacher who bought a house five years ago and was sitting on a quadruple was awfully tempted to pull out equity and put it into loan-shark pools, where it threw off an annual income three or four times a teacher's salary. But now the income is gone, their capital is gone, and they owe the bank more than their house is worth in a falling market."
"It's not missiles and nukes like Iran, but it could be a bigger deal to the world economy."
Peter Brimelow has been an editor at Barron's, Fortune and Forbes and is the author of "The Wall Street Gurus: How You Can Profit From Investment Newsletters."
The female shopper has returned, and she's ready to buy, at least judging by the latest results from AnnTaylor, writes Angela Moore.
12:19 p.m. Aug. 20, 2010 | Comments: 116
- 10bender | 7:29 a.m. Today7:29 a.m. Aug. 23, 2010
"Peter Brimelow: Baby-boomer bull gets belligerent http://on.mktw.net/aUecrT" 2:47 a.m. EDT, Aug. 23, 2010 from MKTWBrimelow
"Peter Brimelow: Rapturous gold bugs see new highs ahead http://on.mktw.net/c3YwZz" 9:47 a.m. EDT, Aug. 19, 2010 from MKTWBrimelow
"Peter Brimelow: Battered bulls still unbroken http://on.mktw.net/9ITPe6" 2:04 a.m. EDT, Aug. 16, 2010 from MKTWBrimelow
"Peter Brimelow: Crawford sticks with 'Cardinal Climax' http://on.mktw.net/9IwOSS" 2:04 a.m. EDT, Aug. 12, 2010 from MKTWBrimelow
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