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The Investment U E-Letter
Tuesday, June 03, 2003
* * * * * * * One Smart Guy
Notes From an Independent Thinker… And How to Profit From Them
By Dr. Steve Sjuggerud
President, Investment U
Outstanding independent research is hard to come by.
The problem is, Wall Street research is even worse. For example, I recently showed how Goldman Sachs analysts were some of the worst-performing analysts out there (see IU E-Letter #238). When you find good independent research, it's golden, in terms of boosting your profit potential. But there are only a few firms that qualify. And BCA Research is one of them. I read all of BCA's outstanding research religiously years ago (when the global mutual fund that I was Vice President of was paying the big bucks for it). They made the right investment calls more often than any other of the hundreds of analysis reports we went through weekly. The top dog of BCA, Martin Barnes, was interviewed in Barron's over the weekend. Martin has been with BCA for over 15 years. While his presence is striking (he's probably 6'6" with a Scottish accent), his analysis has always been cool and levelheaded. Here's what he had to say…
On housing…
"Prices are high relative to incomes, but at this level of interest rates, housing is very affordable."
On consumer debt…
"I don't agonize over consumer debt the way some people do… People have been worried about consumer debt for 40 years… At any point you could have agonized that it is at a new peak… You would expect to see rising loan-delinquency rates, and, in fact, they are falling."
On deflation…
"Not many people have noticed, but China's inflation rate has turned positive… By the middle of next year, deflation fears will be shifting to worries about inflation and concerns about the Fed raising rates."
On bonds…
"In our view, there is a bit of a bubble in the bond market."
On his favorite asset class…
"Emerging markets offer the best value… They are cheaper than they ever have been."
On the dollar…
"…It is no more than halfway through its adjustment."
Barnes echoes many of the things I've been talking about. I've been saying real estate is not expensive, and have been recommending homebuilders like DHI (see IU E-Letter #224), which have just soared, and are still inexpensive. I haven't been worried about consumer debt (see IU E-Letter #230 "Some GOOD News About Personal Debt"). Nor deflation. Recently I've been advising my newsletter readers about a potential bond bubble, and my latest newsletter recommendation was in emerging markets. I haven't been a reader of Martin's in probably seven years. But it's nice to see that an analyst I respect for his clear, unemotional analysis has come to the same conclusions I have Good Investing, Steve |
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