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US Equity Market

Equity closed-end funds more popular

The equity market is evolving

Between December 2003 and December 2005, assets of closed-end funds increased 29%.

In 2003, assets of equity funds made up only 24% of the assets of closed-end funds.

This increased to 32% in 2004 and 38% in 2005.

January 2006

Trade deficit continues to support bonds

More imports than exports creates a trade deficit

The excess of imports over exports means that cash is flowing into the US capital market from abroad, which should continue to prop up long bond prices. The January trade deficit, annualized, represents a 13% increase over the trade deficit of 2005.

Since the trade deficit increased 18.3% in 2004 and 15.1% in 2005, the current rate of increase seems to indicate slower growth in the trade imbalance.

Stock buybacks 2005

Executives shun equities in their portfolios

Will there be alot of homes for sale in the Hamptons?

A careful examination of the flow of fund accounts for 2005 suggests that probably not more than ten to twenty percent of proceeds from the exercise of stock options were channeled back into the stock market. In order for ordinary investors to benefit from the buyback option programs, they would have to sell 3.5% of their indirect holdings in equities and put the money elsewhere.

Without doubt, such sudden ‘rational behavior’ would crash the stock market.

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Featured articles on inside pages

Stock buybacks

Stock buybacks and dividend equivalency

Corporations have argued that stock buybacks are equivalent to dividends. This article explains why this is not true and why suggesting buyback-dividend equivalency may constitute fraud.
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Unfortunately for society, Jeff Skilling of Enron told the truth according to tenets of moral relativism learned at the Harvard Business School and with McKinsey and Company, when, on being sentenced to decades in prison, he said, "That's the way the game is played. You win some, you lose some."
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US Politics

President Obama's Lincoln moment

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Do stocks offer protection against inflation?

There is a common belief that a managed, diversified portfolio of US common stocks provides protection against inflation. However, there is reason to question whether this protection currently exists.
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US Bonds

Bond demand exceeds supply for a decade

Over the decade, 1995-2004, the demand for US bonds of all types has surpassed new bond issues in eight of the last ten years. This is the reason that bond prices have held firm, even in 2003, when net new issues reached almost $1.8 trillion. More ...

World Economy

What Is ‘International Liquidity’?

It used to be that the term 'international liquidity' meant the relative amount of resources available to a nation's monetary authorities that could be used to settle a balance of payments deficit. In the days of the gold standard, this would mean access to gold that could be used to redeem a nation's currency held by foreigners. More ...

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2010-11-12 16:03