Financial Sense Newshour

In this week’s edition Jim and Cathlyn discuss the function of bonds in a portfolio, and how to evaluate them. They go over bond basics such as maturity date, coupon yield and current yield, as well as identifying the main bond risks. Jim explains the primary functions of a bond in a portfolio allocation, as well as how to assess the performance of bonds within a portfolio. They also reiterate the important difference between a bond and a bond fund. The guest this week is Tom Collett, Senior Attorney at Standard Retirement Services, Inc. in Cincinnati, Ohio. Tom will discuss tax-efficient business planning.

This week on the Big Picture Jim looks at two important topics, the Dow and Gold. In the first topic, Jim puts this week’s record highs in the Dow Jones index in context and offers his analysis on current stock valuations. In the next topic, Jim discusses if this week’s washout in gold is the final “Maalox Moment”. He also looks closely at gold leasing as one of the key culprits behind the severe selling pressure. Jim’s characterization of the gold leasing market can be summarized in the following question: “It’s 12 O’clock- Do you know where your gold is?”

Jim is pleased to welcome back Grant Williams, Portfolio & Strategy Advisor at Vulpes Investment Management in Singapore, and author of the popular investment letter, “Things That Make You Go Hmmm…”. Grant discusses the recent policy change in Japan, which is now printing massive amounts of Yen to raise inflation and weaken the currency. Grant notes that it didn’t work in the 1930’s for Japan, and it won’t work this time. He does see a coming Asian currency war in response however. Grant also speaks in some detail about gold and gold equities. He believes the world is struggling with accepting gold as a currency. But Grant notes that at some point deficits matter and excessive money printing will eventually drive the price of gold significantly higher.

Jim welcomes back Barry Ritholtz, CEO and Director of Equity Research at Fusion IQ, an online quantitative research firm. Barry discusses how the many economic “crises” today are overblown and essentially driven by the media and Washington. Barry sees the vast majority of “news” today as simply gossip. As to stocks, Barry believes they are not as cheap as 3 years ago, but still reasonably priced. He much prefers the dividend theme to stock buy-backs by corporations. Barry also discussed a long term secular trend in demographic changes that will be a negative for employment longer term, as increasingly more productive companies need fewer workers to stay profitable.