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Wednesday, July 7, 2010

Tracking The Bull

The following graph compares the current bull market in gold, now 9.5 years in duration, against two previous bull markets:

The Nasdaq (1988-2000) and Gold (1968 to 1980)

Both markets followed the historic pattern of secular bull markets moving slowly during the skepticism phase, then entering the optimism phase, followed by the mania phase where prices move upward in a parabolic manner.

Gold entered the optimism phase when it crossed $1,000 and will enter the mania phase sometime around 2012 if it follows the same timeline.


Tuesday, July 6, 2010

Niall Ferguson

Niall Ferguson discussing the approaching United States default.

Bounce

Hope everyone had a great 4th of July weekend!

I had the opportunity to do some traveling this weekend.  I spent Saturday at Lake Anna with some old friends at an incredible lake house.  Sunday I spent the day with some college friends in DC, and on Monday I got to see my cousin who is living in Raleigh.

The weekend was a great time, and I also did a ton of driving.  During the drive I had the chance to listen to a book that I have been looking forward to: "Bounce; Mozart, Federer, Picasso, Beckam, and the Science of Success" by Matthew Syed.

The book was phenomenal and anyone who read and enjoyed Malcolm Gladwell's "Outliers; The Story of Success", you will love Bounce.

It takes some of the main concepts from Outliers, such as the 10,000 hour rule (my favorite chapter) and expands on the topics while adding additional insight, ideas, and real life examples.

It is a study of successful people in all types of fields (athletics, chess, business, etc) and how they are created both by their physical efforts as well as how they think; their mental toughness or beliefs.

I strongly recommend it for summer reading, and I will add it to the recommended reading list below.

Friday, July 2, 2010

July Jobs Report

We received the July Jobs Report this morning, which comes out the first Friday of every month, and it is merely an extension of what I discussed earlier this week in The ADP and Beyond.

We lost a total of 125,000 jobs, which was a majority of census workers leaving the workforce.  The unemployment rate was lowered to 9.5% from the 9.7% it was at last month.

The reduction in the unemployment rate is due to the size of the labor force participation shrinking by 652,000 people.  This means people have been unemployed for so long that they are giving up looking for a job.  When people have given up, the government no longer counts them as being part of the work force.

We also received 147,000 "jobs" from the birth/death model.  The government assumes that 147,000 jobs were being created by new small businesses being born and hiring. (Birth/Death)  They make this number up.  The reality, of course, is that small businesses are closing their doors and firing employees at a rapid clip.

But at least it keeps the hopes alive for a little longer.

The following chart shows where we currently stand in our employment recovery compared to previous recessions. (Red line)  Keep in mind that this is with trillions of dollars of stimulus money:

(Click on image for larger view)