Industrial Insight

King copper

December 21, 2010
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The Buzz

Copper prices up. China stocks down.

If you want to find a metal that’s actually rising on hopes of a healthy worldwide economic recovery, the decidedly less sexy copper is your bet.

“Copper prices are strongly correlated with global manufacturing activity,” said Ben Ross, portfolio manager for GE Asset Management’s Commodities strategy team in Stamford, Conn.

But here’s the strange thing about copper. The metal is up nearly 30% this year even though there are growing fears about the economic health of the world’s largest consumer of copper: China.

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Commodity prices trend down over time but require spikes to spur required production investment

December 20, 2010
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Why commodities may not be a good bet

Posted by Jennifer Thompson on Dec 20 14:20.

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The education bubble …

December 17, 2010
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The Great Relearning

The Coming College Education Bubble

Jerry Bowyer, 12.16.10, 03:15 PM EST

Students are foregoing six years of full-time income for their six years of full-time education. Let’s say an average of $10 per hour (something like $8/hour right out of high school, trending toward $12/hour after six years’ work), which comes out to $20,000 dollars per year, which is $120,000 over six years. Add that opportunity cost to our hard cost and we get $270,000 to $170,000. Let’s just make it an even $200,000 and keep the numbers round and the nitpickers mollified. That’s the P.

Let’s generously and roundly assign the initial E from college a value of $2,000.

Voilá, our P/E is 100. Is that a good deal? Not really. Even if one argues that the difference, the College E, grows over time, so what? So do stock earnings. If you think that the E grows quickly over time, then you can think of a degree as a growth stock and compare a 100 P/E to that. It still doesn’t look very attractive.

And let’s keep something very important in mind: A college education contains a risk factor that no stock or bond does: zero liquidity. For good or for ill, you’re stuck with it.

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Big debt….

December 16, 2010
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Political Calculations
December 14, 2010
Visualizing the U.S. National Debt: 1791-2010

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Credit collapse….

December 15, 2010
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Weekender: The Von Mises Prophecy Explained

2:55 pm – December 12, 2010

In that respect, there is something I think of as β€œthe Von Mises prophecy,” which is a sort of one paragraph summation of Austrian thought β€” anchored to a prediction β€” as put forth by Ludwig Von Mises himself:

There is no means of avoiding the final collapse of a boom expansion brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

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Not a good time to be invested in stocks.

December 14, 2010
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December 13, 2010 Warning – An Updated Who’s Who of Awful Times to Invest

John P. Hussman, Ph.D.

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You can see we are spending too much, way too much!

December 12, 2010
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Political Calculations
December 6, 2010
The Zero Deficit Line

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About author

I'm the executive vice president for a steel casting trade association, the Steel Founders' Society of America. I've got a crazy wife, five crazy children, three crazy people that married into the family, and two crazy fun little grandsons.