James East of Mercertus Capital on His Investment Approach

Legendary investor Jeremy Grantham, of Boston-based fund manager GMO, recently said:“The investment business has taught me — increasingly as the years have passed — that people, especially investors (and, I believe, Americans) prefer good news and wishful thinking to bad news, and that there are always vested interests to offer facile, optimistic alternatives to the bad news. The good news is, obviously, an easier sell.”

Growth or value? It’s one of the most basic questions in the investment world. Pundits debate the attractiveness of growth versus value stocks, and mutual funds neatly chop up the market into “growth” and “value” funds.

His articulate but so far painful bearish vigil continues, as Hussman Funds’ John Hussman makes his latest summary case for pessimism about the market’s prospects: “The points where investors have forgotten that markets move in cycles are the points where they have been most vulnerable.”

Noting that "the bulk of our portfolio holdings are today trading at or near fair value,” Tweedy, Browne's managing directors [VII, September 30, 2011] in this quarterly commentary describe where they're taking profits, such as in Japan, and where they're finding select opportunities, as in mining-equipment firm Joy Global and Singapore bank DBS.

Gold has a timeless allure -- especially if you worry about stock market volatility, inflation, a decay of ordinary currency or the collapse of civilization. Yet not everyone agrees that gold offers the safe haven its promoters describe. How reliable can demand be for a commodity that very few people actually need? What is the proper role for gold in an investment portfolio? Why has its price been falling?

Joining me on the program today is Dr. Marc Faber who heads up the Gloom, Boom, and Doom report. And, Marc, recently we’ve seen a precipitous fall in gold unlike anything seen in a few years

Some people have spoken of a different Great Rotation – not from bonds to equities, but from defensive to cyclical sectors within the equity market. Now, Brad Sorensen at the Schwab Center for Financial Research says they are moving to a "more cyclical stance."

The rally in the gold market over the last several years has been based on a misunderstanding of the global economy's problems and a misunderstanding of what quantitative easing is.

First, stocks hit new highs on Friday. Gold lost $22 per ounce.

Value stocks have collectively lagged growth stocks by a decent margin over the past five years, leading many to question whether value approaches still work. In a piece written for Institutional Investor, however, Joseph G. Paul and Kevin Simms of Alliance Bernstein say the discipline is alive and well.

Hedge fund guru Ray Dalio says cash and bonds are both “terrible” investments right now. Dalio tells CNBC that with interest rates kept artificially low by the Federal Reserve, investors have been reaching for return in other areas, driving asset prices up. He also says “there’s the beginning of a leveraging process” going on. Those factors are good for assets in the near term, Dalio says. “I think that assets will continue to appreciate, but there’ll also be a tightening ahead,”

First, stocks hit new highs on Friday. Gold lost $22 per ounce.

Most people in India are convinced that real estate is a great asset. More caution is in order. Real estate investment is not a guarantee of profit. It is hard to be diversified, and illiquidity hampers portfolio structuring. Most important, the outlook for supply over the medium term implies that there is no great upside.

Market signals about the relative value of available materials are paramount for widely dispersed people to make rational decisions. Such was the solution to the “knowledge problem” elaborated by F. A. Hayek. A topical example of Hayek’s theory in practice is the decade-long adjustment in the prices of oil and products refined from petroleum. Oil is generally considered to be a fungible global commodity, and one frequently hears reference to global oil prices as reflecting global supply and demand. But a combination of factors over the past decade has substantively reduced the fungibility of this once-standard product.

Is the gold rush over? Or is this just one last great buying opportunity?

The stock markets are shooting skyward and bond prices remain lofty. It’s enough to put investors in a cheery mood as we approach the summer holidays.

Fans of precious metals have been getting creamed lately. Thanks to declining volatility and a growing sense that real interest rates are on the rise, gold and silver have been getting taken to the woodshed.

With the possible exception of Warren Buffett, no investor today commands more respect than Baupost Group’s Seth Klarman. Since founding his investment partnership in 1983, Klarman has not only produced unrivaled returns (in excess of 20% per year), but he has also from time to time offered wise and timeless commentary on markets and the craft of investing.

Bill Gross did not see the S&P 500 going up 15% in 2013, never mind by the middle of May.

Every first quarter of the year, the Spanish firm Bestinver Asset Management holds its annual meeting with investors. This year, the meeting had to be postponed until 16 April (from 4 March) because of administrative problems with the venue where it was originally scheduled to be held. The event is a small-scale replica of the Berkshire Hathaway meeting, but it is large enough to fill a 3,000 seat theater in IFEMA, Madrid’s main convention center, and includes an unlimited Q&A section.

I met Josh the first time in 2006, at the value investment seminar I attend each year in Italy. In that year Josh was finishing up his MBA at Columbia University specialising in value investing.

Predicting the direction of the major indexes on a day-to-day basis is an impossible feat. Attempting to play the market’s movements by the hour or minute will cause you to go insane (and lose all of your money in the process).

Mason Hawkins and Staley Cates of Southeastern Asset Management [VII, August 31, 2012] in their latest fund quarterly report describe their approach to activism – on display recently with respect to Dell and Chesapeake Energy – and describe how their fund holdings have evolved as “stock prices increased faster than values” in recent months.

Warren Buffett in this Fortune essay explains why he believes women are key to America’s ongoing prosperity.

I wrote last week about the many ways in which traditional long only fund managers are institutionally prevented from performing as well as they should – given their above-average intelligence and ample resources.

As Europe’s financial crisis goes from acute to chronic, the dispute over who will bear the costs of resolving it is fueling the emergence of a new generation of political movements. In the so-called periphery, political upstarts promise citizens an alternative to austerity. In the eurozone’s “core” countries, they purport to protect taxpayers from relentless demands for debtor-country relief. How Europe’s leaders respond to these new political challengers will determine whether the monetary union stabilizes or fractures.

The California summit between US President Barack Obama and Chinese President Xi Jinping on June 7-8 comes at a time of heightened tension between the world’s two preeminent powers. But divisive issues – from computer hacking to America’s “pivot to Asia” – must not claim all of the attention. If Obama and Xi lift their heads above the parapets and begin charting a jointly agreed course through the coming decade, they may find that they have much in common.

It is tempting to see the investment trust industry as archaic. The names of the trusts hark back to a belt-and-braces City era, while board members and chairman all shot grouse together. But viewing the sector as a relic is to miss some of the important innovation that has happened in the sector of late. Investment trusts are pulling themselves into the modern era writes Cherry Reynard.

“When you work regularly, inspiration strikes regularly.”

Slazinger claims to have learned from history that most people cannot open their minds to new ideas unless a mind-opening team with a peculiar membership goes to work on them. Otherwise, life will go on exactly as before, no matter how painful, unrealistic, unjust, ludicrous, or downright dumb that life may be.

Our poet […] was of middle height, and after he had reached mature years he walked with somewhat of a stoop; his gait was grave and sedate; and he was ever clothed in most seemly garments, his dress being suited to the ripeness of his years. His face was long, his nose aquiline, his eyes rather large than small, his jaws heavy, with the under lip projecting beyond the upper.

“Cheating is especially easy to justify when you frame situations to cast yourself as a victim of some kind of unfairness,” said Dr. Anjan Chatterjee, a neurologist at the University of Pennsylvania who has studied the use of prescription drugs to improve intellectual performance. “Then it becomes a matter of evening the score; you’re not cheating, you’re restoring fairness.”

For most of us, a pickle is a pickle. It is something that rests snugly beside a sandwich, or floats in a jar on a deli counter. It is rarely something that occasions cryptographic analysis. A number of years ago, though, Howard Moskowitz, a Harvard-trained psychophysicist and food industry consultant, was asked by Vlasic Pickles to crack “the pickle code.” Losing market share to Claussen, the Vlasic executives wanted to take a hard look at a question that was, surprisingly, rarely asked: What kind of pickles did people really want?

We all know people who are highly intelligent but not very smart. These people get good grades in school, ace a lot of tests, and often succeed professionally. But they nevertheless hold irrational beliefs and do a lot of foolish things. Such people almost certainly have high IQs, but IQ scores do not reflect their particular form of cognitive deficit. Indeed, these people seem to be unable to think and act rationally despite their high intelligence.

I heard it again from this year’s commencement speaker: the common mistake of thinking economics is just about business and making money. I know I’m not the only economics teacher who every year has to disabuse his students (and many of his own colleagues from other disciplines) of that same error.

While the world's economies jockey one another for the lead in the currency devaluation derby, it's worth considering the value of the prize they are seeking. They believe a weak currency opens the door to trade dominance, by allowing manufacturers to undercut foreign rivals, and to economic growth, by fighting deflation.

Government, an aggressive and complex multicellular organism, can be found in nearly every region and climate of the planet, including those such as North America where the natural habitat is often inhospitable. In order to thrive in such climates, government has evolved a variety of sophisticated survival strategies. These have enabled it to co-exist with, and often out-compete, other species.

Development activist Deborah Doane said yesterday on comment is free that Goldman Sachs should admit it drives food prices up through speculation. She excoriates the finance giant for what she sees as its role in 44m across the world being in food poverty, suggesting its charitable efforts amount to little given its speculative activities. She assembles an array of sources purportedly supporting her case.

The New York Times examines a somewhat unexpected investing category attracting increased venture capital interest: food. Says one observer: “Part of the reason you're seeing all these VCs get interested in the food industry is not only is it massive, but like the energy industry, it is terribly broken in terms of its impact on the environment, health and animals.”

Japan is recovering from far more than the tsunami, the Fukushima nuclear disaster and the global financial crisis: It is also attempting to bounce back from two decades of economic lethargy. The country faced a similar period in the 1920s and early 1930s, leading Japan's then-finance minister to loosen monetary policy, drive down the yen and increase spending. The economy quickly reversed course. Today, Prime Minister Shinzo Abe is taking similar steps. This special report examines the implications of Abe's new economic policies and analyzes two problem areas -- finance and higher education.

Whether you are a shelf stocker at Walmart, a second year associate at a consulting company or an equity analyst at an investment bank, you may feel that you are not adequately compensated for the work you do -- in other words, you are underpaid. But underpaid relative to what? How do employers determine compensation levels, and what consequences can these decisions have for the organization?

Six years after the onset of the global financial crisis, economists and policymakers continue to fight bitterly over how to tackle the world's economic woes. Is fiscal stimulus the best medicine -- or is fiscal austerity what's needed?

Consumers of news media want the truth -- but not always the truth alone: They are looking, to some degree, for news that confirms -- or, at least, acknowledges -- their beliefs.

Bruce Bartlett recently lamented in The New York Times that given the current state of economic affairs we need more Keynesian medicine to fix the US economy. According to Bartlett, the core insight of Keynesian economics is that there are very special economic circumstances in which the general rules of economics don’t apply and are in fact counterproductive.

The Warren Buffett quote that comes to mind: "We don't have to be smarter than the rest. We have to be more disciplined than the rest."

In an age of economic policy activism, including widespread quantitative easing and associated purchases of bonds and other assets, it is perhaps easy to forget that foreign exchange intervention has always been and remains an important economic policy tool.

“The trick to creativity, if there is a single useful thing to say about it, is to identify your own peculiar talent and then to settle down to work with it for a good long time.”

Why instilling admiration for hard work rather than raw talent is the key to fostering a well-adjusted mind.

Here is a curated list of multi-disciplinary books that can help fill your brain and a few that might even help you unwind.

When we asked Bill Gates to curate a list of his favorite talks, his first response was, “There are too many to pick, really.” Here, he's whittled it down to 13 essentials.

It’s not a well-kept secret, either. Just a simple string of characters—maybe six of them if you’re careless, 16 if you’re cautious—that can reveal everything about you.

Microsoft aims to upgrade the software more frequently, about once a year, rather than every two or three years as it’s done in the past, said the people, who asked not to be identified because the product plans are private. The company plans to unveil the first of these updates in 2013, one of the people said.

For the first time, scientists have confirmed that the planet Mercury holds at least 100 billion tons of water ice as well as organic material in permanently shadowed craters at its north pole.

Ed Boyden, an engineer turned neuroscientist, makes tools for brain hackers. In his lab at MIT, he's built a robot that can capture individual neurons and uses light potentially to control major diseases -- all in his quest to 'solve the brain'.

In 1870, German chemist Erich von Wolf analyzed the iron content of green vegetables and accidentally misplaced a decimal point when transcribing data from his notebook.

The United Nations Environment Program warns that global emissions of greenhouse gases are opening up a widening gap between reality and climate change goals

Thanks to gravitational lensing by a cluster of galaxies, the light emitted by a small galaxy 13.3 billion years ago has reached Earth. John Matson reports

In energy matters, what goes around, comes around—but perhaps should go away

An ambitious plan to provide 15% of Europe's power needs from solar plants in North Africa has run into trouble. The Desertec initiative hoped to deliver electricity from a network of renewable energy sources to Europe via cables under the sea.

Bill Gates in His Own Words readers get a glimpse of the visionary Microsoft co-founder and philanthropist's philosophy on business, technology and life via some of his most memorable quotes

A pioneering European space telescope that discovered the first rocky extrasolar planet is on its last legs, Nature has learned.

A cascade of misfolded proteins may trigger Alzheimer's By Carrie Arnold Researchers have untangled some of the neurological events that may ultimately lead to Alzheimer's disease. Two new studies show that a protein implicated in this form of dementia can infect other neurons to spread disease across the brain. These problematic proteins clump together, which can lead to cognitive problems.

A species of giant tortoises from the Galapagos Islands could be brought back from extinction despite the death earlier this year of the famed "Lonesome George," a tourist magnet and conservation icon who was the last of his kind.

On the heels of a Russian drilling effort that reached Lake Vostok, British and American teams also aim to penetrate ancient subglacial lakes By Quirin Schiermeier and Nature magazine

The report comes by way of the rover’s principal investigator, geologist John Grotzinger of Caltech, who said that Curiosity has uncovered exciting new results from a sample of Martian soil recently scooped up and placed in the Sample Analysis at Mars (SAM) instrument.

The system uses a NeuroSky MindWave Mobile EEG headset to record brainwave data, which is then sent to software on either a tablet/smartphone or on a specially designed pyramid-shaped base. The software converts the brainwave data to flight commands, which control the flight of the spherical helicopter,

In a rare direct photo of a world beyond Earth, astronomers have spotted a planet 13 times more massive than Jupiter, the largest planet in our own solar system.

Human Shares ove 90 % of their DNA with their primate cousins. The expression or activity patterns of genes differ across species in ways that help explain each species' distinct biolgy and behavior.

The random motion of a hydrogen molecule can drive the oscillation of a much larger structure By John Matson

Halloween is a time for sharing ghost stories and watching spooky movies. But have you ever thought about the science behind some of these uncanny experiences? Haunted houses, for example, take advantage of the way your brain uses sensory information.

Rising seas and severe storms are the most talked-about threats of climate change. But here's another: no more coffee. Because rising temperatures may cripple wild populations of Arabica coffee—the most cultivated species in the world.

The notoriously brittle building material may yet stretch instead of breaking

A specialized parasite fungus can control ants' behavior. But that fungus also faces its own deadly, specialized parasites

For every one unit of energy that is converted into electricity in power plants today, two units of energy are thrown away. This wasted energy is primarily in the form of heat – or thermal energy – and, there is technology available today that can turn this waste into a usable energy stream.

Cheap imports are said to threaten jobs

Third-generation (3G) mobile-phone networks face a new rival: so-called 4G. And, astonishingly, the new networks may even be profitable

Though the world's governments have signed a pledge to try to stub out smoking, there has been more good news than bad in recent days for the tobacco industry

Is Big Pharma the next target for attack?

Arguments between insurers and reinsurers over the payment of claims are becoming increasingly acrimonious

The rise of Linux is dividing the computer industry into winners and losers

The news is bad for newspapers. Consolidation, anyone?

Unilever and P&G are challenging L'Oréal

Oil majors are less keen on a war in Iraq than might be expected

The record industry is desperately seeking a way out of its problems

The country's scrappy industry is making big Western outfits sweat

Faced with a glut at home, its drugmakers are looking overseas for growth, and the effect could be like China's impact on electronics prices

The advertising market is showing signs of recovery. Whether it takes hold will depend very much on events in Iraq

Marketing drugs to doctors is turning into a tricky business

Pharmaceutical firms would like to create the drugs needed in the war against terrorism. But governments have yet to make it worth their while.

Harder times are reminding the industry of the critical importance of creating good content. But that means managing the tensions between artists and suits.

Lots of players, from online-only Amazon to bricks-and-mortar Wal-Mart are now showing they know how to work the web.

Media companies around the world are alarmed by a high-court ruling in Australia.

The advertising industry is at long last showing definite signs of life. But the outlook remains challenging.

Two questions nag America's energy policy. First, when will America move from fossil fuels? Second, what is the next source of BTUs? No one knows the answers - but knowledgeable people agree the shift won't come soon. Aside from temporary shortages caused by political disruptions, the world is awash in cheap oil and will be for a long time. Supplies of coal are even cheaper and far more abundant.

The current scandals pale in comparison to the energy industry’s biggest problem: massive debt it can’t repay.

Can new money create a world-class film industry in India?

The latest round of talks about a global tobacco-control treaty have just ended. But a gulf remains between negotiators from the rich world, who mostly want to see the draft treaty's provisions diluted, and those from poor countries, who want them strengthened.

Doomsayers persist in the belief that the book world has been overrun by philistinism. They are wrong. Publishers can rejoice in unprecedented levels of both quality and quantity. We are living in a golden age of the book

For most of the past century, factories offered a path upward for Americans short on education. But millions of "good" manufacturing jobs have fallen victim to automation and global competition, leaving many low and semi-skilled workers to turn to a 21st century replacement: the telephone call center. What are the advantages of call centers, how can the technology best be used and what is the outlook for call-center employment in the next decade?

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