Opinion

James Saft

Don’t ‘war game’ your portfolio

Aug 28, 2013 20:51 UTC

By James Saft

(Reuters) – Investors fearing the impact of an attack on Syria ought to start worrying instead about things they can predict and control.

In other words – and with apologies to Nathan Rothschild, whose advocacy of buying during times of war is probably apocryphal anyway – don’t “buy when there is blood in the streets,” hold.

Global markets have been roiled in recent days by a rising conviction that the United States will lead military strikes against the Syrian government in reprisal for its alleged use of chemical weapons on its own people. Emerging market assets were hit hard again on Wednesday, while Brent crude oil hit a six-month high of $117 a barrel. Gold also rose, and U.S. stocks, which had fallen on the theme on Monday, recovered a bit of ground.

The news from Syria, wracked by a civil war, is and likely will continue to be tragic, but for the vast majority of investors by far the smartest thing to do is nothing.

Strikes on Syria very likely will happen, and very likely will have mild to moderate impacts on a variety of asset markets, but you, dear reader, are highly unlikely to get rich trying to figure out how or why.

Taper talk meets data reality: James Saft

Aug 27, 2013 05:04 UTC

By James Saft

(Reuters) – Looked at in isolation, the economic data in the United States does not argue for the Federal Reserve to cut back on its bond purchases starting in September.

Yet markets and economists continue, in the main, to expect the so-called taper, a process where the Fed begins to reduce the $85 billion per month it buys in bonds, to be announced at its September meeting.

On the face of it, that expectation should have been dealt two massive blows by data about new home sales and the purchase of big-ticket durable goods released on Friday and Monday.

The Jackson Hole policy void: James Saft

Aug 22, 2013 22:22 UTC

Aug 22 (Reuters) – The risk in all transitions is a
destabilizing void, and at this year’s Jackson Hole Federal
Reserve conference a policy void is leading the agenda.

Despite this being the eve of what may be the most important
rollback of monetary policy ever, Ben Bernanke has passed on the
chance to make a valedictory address. This marks first time a
sitting Federal Reserve chairman has missed the event since
1987, when Alan Greenspan stayed home just days after being
confirmed by Congress for the job.

The event, organized annually by the Kansas City Fed at the
mountain resort in Wyoming, has long been not just a place to
exchange ideas but the backdrop for preparing the markets and
investors for important changes in policy.

HOLD DR The Jackson Hole policy void: James Saft

Aug 22, 2013 21:18 UTC

Aug 22 (Reuters) – The risk in all transitions is a
destabilizing void, and at this year’s Jackson Hole Federal
Reserve conference a policy void is leading the agenda.

Despite this being the eve of what may be the most important
rollback of monetary policy ever, Ben Bernanke has passed on the
chance to make a valedictory address. This marks first time a
sitting Federal Reserve chairman has missed the event since
1987, when Alan Greenspan stayed home just days after being
confirmed by Congress for the job.

The event, organized annually by the Kansas City Fed at the
mountain resort in Wyoming, has long been not just a place to
exchange ideas but the backdrop for preparing the markets and
investors for important changes in policy.

Saft on Wealth: Warren Buffett’s bubble cash-out strategy

Aug 21, 2013 20:28 UTC

By James Saft

(Reuters) – Here is Warren Buffett’s pension fund management advice in a nutshell: Be patient, buy only a few things, ignore the stock market until it becomes irrationally optimistic, at which point sell.

A recently released 1975 letter from Buffett to Washington Post owner Katharine Graham on the subject offers new insight into how early Buffett was to grasp both the difficulties of pension fund management and the inability of Wall Street to provide adequate solutions.

Perhaps even more valuable is the way the letter throws light on Buffett’s approach to value investing. Buffett tries to act not like a typical fund manager but like a company owner thinking about buying another company. The crucial ingredients: patience, to get a good purchase price; courage, to stick with your investment if the business is doing well but the market doesn’t agree; and a willingness to sell into a bubble when, as so often happens, one comes along.

Warren Buffett’s bubble cash-out strategy

Aug 21, 2013 20:25 UTC

Aug 21 (Reuters) – Here is Warren Buffett’s pension fund
management advice in a nutshell: Be patient, buy only a few
things, ignore the stock market until it becomes irrationally
optimistic, at which point sell.

A recently released 1975 letter from Buffett to Washington
Post owner Katharine Graham on the subject offers new insight
into how early Buffett was to grasp both the difficulties of
pension fund management and the inability of Wall Street to
provide adequate solutions.

Perhaps even more valuable is the way the letter throws
light on Buffett’s approach to value investing. Buffett tries to
act not like a typical fund manager but like a company owner
thinking about buying another company. The crucial ingredients:
patience, to get a good purchase price; courage, to stick with
your investment if the business is doing well but the market
doesn’t agree; and a willingness to sell into a bubble when, as
so often happens, one comes along.

India, the taper and capital controls: James Saft

Aug 20, 2013 05:07 UTC

(The author is a Reuters columnist. The opinions expressed are his / her own.)

By James Saft

(Reuters) – India’s imposition of capital controls shows how the prospect of a rollback of U.S. monetary policy is already starting a global war for capital.

India has rolled out a series of capital controls to help support the partially convertible rupee, which has been hammered 13 percent lower so far this year and stands at an all-time low against the dollar. Besides limits on the amounts Indian individuals and business can shift out of the country, India on Monday banned the duty-free import of flat-screen televisions by airline passengers, a move that has the feel of clutching at straws.

Financial markets have been unimpressed by the moves, which started earlier this year, accelerating a shift in the wrong direction as investors weigh the possibility of further capital controls, perhaps even the capturing of foreign money.

Long bull market in Fed faith faces taper: James Saft

Aug 15, 2013 20:37 UTC

Aug 15 (Reuters) – For the first time in more than three
decades we may be entering a period of declining faith in the
Federal Reserve.

If the Fed does begin to taper in coming months, slowing its
bond purchases as many expect, it will mark a tacit
acknowledgment of the limits of the power of monetary policy. By
extension, it would also mark a decrease in the power or
willingness of the Fed to control the prices of financial
assets.

This realization – that the Fed can’t always play Santa
Claus and FOMC day isn’t a sort of secular Christmas – will hit
investors hard.

In praise of activist investment

Aug 14, 2013 20:34 UTC

By James Saft

(Reuters) – Here is a sentence I never thought I’d write: Hedge funds, activists to be specific, are a very good thing.

There has been a boomlet of activist investing headlines, good and bad. Bill Ackman quit the board of his money-losing project JC Penney after a battle over leadership on Tuesday, the same day BeaconLight Capital tore into management of Jos. A. Bank and Carl Icahn announced on Twitter that he had taken a position in Apple and was seeking a bigger share buyback program.

A mixed bag, to be sure, with plenty of ammunition for activists and also for their critics, who often accuse them of coming in for a short-term pop in shares and then leaving behind weakened companies.

Companies not playing along with Abenomics: James Saft

Aug 13, 2013 18:59 UTC

Aug 13 (Reuters) – Abenomics has a critical weakness:
Japan’s companies are not playing along and it’s hard to blame
them.

Japan’s economy, struggling to end decades of deflation and
recession, grew at a disappointing 2.6 percent annualized clip
in the second quarter, according to figures released on
Monday, a full percentage point below forecasts and a marked
slowing from the first three months of the year.

While the poor showing immediately focused minds on whether
the economy could withstand a planned hike in sales tax, the
real puzzle lies in the story behind yet another fall in
investment by companies.

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