Feb 172012

A recent business insider article calls 'Gold bugs' thin skinned misanthropes because Warren Buffett "..devotes a few paragraphs to gold and the fools who worship it" in his upcoming annual letter!!   Regular followers of this blog know that I had turned cautious on Gold around $1700's and bearish in September 2011 - just establishing I'm no gold bug.

In my May 2010 post, I had highlighted how such fancy theories can be quite flawed and prevent you from arriving at the best investment decisions. Now to Mr Buffett's renewed Vitiriol against gold:

1) The cube of gold will produce nothing in the next hundred years

My answer: No one makes investment decision for next hundred years

2) The cube of gold will not pay you interest or dividends, and it won't grow earnings.

My answer: So will be the case with a boat load of stocks. The S&P has gone no where in the last 13 years.

3) You can fondle the cube of gold, but it won't respond.

My answer: Yes, witty.   Hence I'll try to be funny too.   Mr Buffett should know what to fondle.   If you own lots of gold you do not need to fondle, 'they' will fondle you :D

The reason for Mr Buffett's bashing?   Well, whatever I say would purely be a guess but I would let the performance of Gold speak for itself:

Gold's return for the last 10yrs - 488.19%

BRK's return for the last 10 yrs - 67.77%

Gold continues to wallop the performance of  Berkshire Hathway by a GIGANTIC 420% over his preferred time frame of 10 years.

And if you had listened to Mr Buffett's  Annual letter of last year, you are in the elite company of those who missed the best performing asset class of 2011 - long dated bonds that returned almost 30%.

Here are the words of another  billionaire who is in the same business. "At the end of the day, your job is to buy what goes up and to sell what goes down. So really who gives a damn about PE's?" – Paul Tudor Jones

Feb 022012

The Baltic Dry Index has been dropping continuously for the last 31 sessions. The index just broke through the 2008 low and this is worst reading on this index for the last two and a half decades.

Baltic Dry Index

If you are wondering why should this be of any significance - the index is a very important measure of the health of global economy. You could either believe the commentators who are saying that we are seeing rally in equity markets because Europe is "close to being solved" (when Maths 101 tells us its impossible) or pay attention to the warning signal from this index and stay cautious and try to be safe.