Booms, busts and a bottom?

Boom, Bust, Repeat (NYT book review): For the past two decades, Michael Lewis, the most charming and one of the shrewdest guides to America’s raucous money culture, has displayed a knack for being at the right place at the right time. He was a young trader on the Salomon Brothers bond desk during the 1987 crash; the experience led to “Liar’s Poker.” His boss at Salomon, John Meriwether, a decade later became a central figure in the downfall of the hedge fund Long-Term Capital Management. Lewis spent a chunk of the 1990s in Silicon Valley, where he profiled the serial entrepreneur Jim Clarkin “The New New Thing” and happened on to his next great subject, the Oakland A’s (“Moneyball”). Now, just in time for the Great Credit Debacle of 2008, Lewis has curated “Panic,” a prose exhibition on the past 20 years of monetary madness.

Michael’s most recent article in Portfolio is a fantastic profile of an investor who bet on the housing bust and is traumatized by how awfully right he was. It’s quite amazing how he’s still able to milk the story of his job 20 years ago for profits.

Mobius Says Emerging Markets Are Bottoming, Will Jump (Bloomberg): Emerging-market stocks are “bottoming” and will begin a new bull market next year as interest-rate cuts spur economic growth in developing nations, investor Mark Mobius said.

Be careful with advice that is not supported with evidence. Mobius sounds confident that the low interest rates will be enough to bounce stock prices off their bottom.  Low interest rates spur BUBBLES not organic demand. There may be bargains, but this may not be the bottom. In the same article,  Arnab Dasof Dresdner Kleinwort said emerging markets may not recover next year.

“Possibly the whole year will be a very difficult year for the entire global economy, especially emerging markets,” Das, the global head of emerging-markets research at Dresdner Kleinwort.”