Sovestor's blog

We continue to be cautiously positive on the US households' ability and resiliency to withstand the current size and level of their debts. Here is why...

Source: CNN

Consumer confidence and investor confidence are key indicators to watch. Both have been increasing for the past few months. This trend can cause positive feed-back loop cycle that is beneficial to the markets. No wonder, the markets have been increasing for the past few months. There are no strong reasons why this bullish mode cannot continue. And more importantly, even after multi-months increase, the level of consumer confidence is still low and has plenty of upside. The recovery surely will not be a smooth ride, but it is clearly in-progress. Read more...

 

Are there such rules? Although we don't believe in academic formula of measuring risks, we do believe in practicing sound investment principles.

Recently, in April 2009, McKinsey interviewed Robert Sutton, management expert from the Stanford Graduate School of Engineering, noted author and specialist on management and organizations. He shares lessons on how to be a good boss in today's difficult climate and on handling layoffs and teams in crisis.


We are generally in agreement with his insights; however, we believe the following leadership actions are even more critical during economic downturn...read more.

Will Credit Card Debt Crush American Households? The chart of American credit card debt is not pretty.
However, we disagree with negative tone of many market pundits on the increasing amount of American credit card debt. In our view, increasing credit debt level is not as worrisome as long as the total household debt as % of total net-worth of US households is still small and manageable. It appears to be the case as of end of 2008...

Recently, there have been plenty of news regarding the potential credit rating downgrade on United States. Is this potential downgrade worrisome? Yes. Is this going to end the current bullish trend? Not too much in our view (case point: one can just check Berkshire Hathaway stock movement after Moody downgraded Berkshire last time --- the stock did not go down that much). Here is why...

Jeremy Grantham, who oversees $85 billion for Boston-based institutional money-management firm GMO, is now more bullish on the US economy and markets. We are generally in agreement with Jeremy Grantham' recent bullish view on stock markets. However, our view is more cautious than optimistic...

What is American Dream really? Is it ownership of a house (or two, three, etc....) at any cost (read: using significant leverage that one's can not pay/afford) or increasing one's net worth (by living below one's means)? Millions of people are in the deep holes right now trying save their homes (a.k.a. American dream) from foreclosures. There is a real-life article in New York Times: "My Personal Credit Crisis" by Edmund L. Andrews that portrays his own mortgage & credit crisis. His own crisis reflect situation of many sufferring homeowners. Past and current mistakes and problems lie the groundwork for current and future generations:...read more.

Marc Faber, recently said on CNBC that "the way communism collapsed, capitalism will collapse," and "The US government for sure will go bust. That I guarantee you. Not tomorrow, but it will go bust,"  We highly disagree. Here is why...