hurricane insurance as a precaution against the possible impact of climate change. and more march maddness

March 7 ,2006

Hello,
Warren buffet has joined the long list of investors who upon underperforming the stack market has looked towards the heavens or Mother Nature to pass the blame for his failings. In this case with a modern twist,”that global warming” is hurting profits of his insurance companies. I am not really sure climate change explains the underperformance of his Berkshire Hathaway stock my bet would be that the law of large numbers has kicked in meaning it is simple too big and has too much money to out perform the market, well there is always indexing but it is nice to see perceived investment guru’s join us mere mortals in passing the buck for poor investment performance.

So what’s up with this market, it appears that after a good start to the year the market has lost its way? It is looking to me like we are getting over whelmed by four main issues; first it’s the economy stupid! If it grows to fast that implies an interest rate raise which is very bad for the stock market, but if the economy is perceived that it is slowing down to some that may be signaling recession. 2) There are fears that the productivity boom of the last 6 years may be coming to an end, which on one hand will lift employment but the down side is significant inflation risk. 3) It has become apparent to the mainstream that running a huge internet business ie… Google, Yahoo or Ebay take enormous capital infusion’s in Technology and marketing (well gee wiz) to stay competitive and 4) the continued unrest in places like the Gaza Strip or Nigeria and the continued increase in hostilities egged on by Iran and Syria between the west and the Islamic world, and the continued instability of places like North Korea and the discovery of these risks by the main stream (welcome to the party) may be undermining confidence in equities and raising energy prices. All of which is negative for the stock market and implies more than ever that for the prudent investor this has become the energy decade .
James Foytlin

www.jamesfoytlin.com

http://onesmallvoice.blogspot.com/