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The Best of What They Said and I Read week ending 2/19/2017

Short excerpts from articles I found interesting.

I may not agree with the author and the following material is not intended as investment advice.

 

Barron’s – Memo to Investors:  What Goes Up Must Come Down – February 18, 2017 by Kopin Tan

  • “Last week, the Dow Industrials and the Standard & Poor’s 500 both snagged their 9th record close. Can inflation be far behind?  …Last week alone, the Dow Jones Industrial Average and the Standard & Poor’s 500 index both snagged their 9th record close of 2017, the Nasdaq Composite its 18th, and the Russell 2000 index its fourth. Even B-list benchmarks like the Dow Jones Transportation Average and the Dow Jones U.S. Total Stock Market Index, and global ones like the MSCI World index, all made record highs. The S&P 500 has gone 89 sessions without a 1% decline.”
  • “This time last year, deflation fears pummeled stocks, and yields on nearly a third of Earth’s government bonds were about to plumb fresh hell below zero. Since then, however, crude oil has more than doubled, and copper has rebounded some 40%. Financial stocks have gained 53%; Goldman Sachs Group shares are up 79%, Apple, 50%.”
  • “…The Nasdaq’s 18 record closes have already surpassed 2016’s total and are its most since 1999’s 61 record closes. But like elevators and hemline fads, what goes up in the stock market must eventually come down, and some traders say they’re starting to take some profits and wait for better buying opportunities.”

 U.S. Global Investors – Investor Alert – February 17, 2017 – by Frank Holmes

  • “…These were among some of the topics addressed by former Fed Chair Alan Greenspan, who spoke with the World Gold Council (WGC) for the winter edition of its “Gold Investor.” Significant increases in inflation will ultimately increase the price of gold,” Greenspan said. “Investment in gold now is insurance. It’s not for short-term gain, but for long-term protection.”
  • “He also reiterated his view, which I share, that gold is much more than just a metal but a currency:  I view gold as the primary global currency. It is the only currency, along with silver, that does not require a counterparty signature. Gold, however, has always been far more valuable per ounce than silver. No one refuses gold as payment to discharge an obligation. Credit instruments and fiat currency depend on the credit worthiness of a counterparty. Gold, along with silver, is one of the only currencies that has an intrinsic value. It has always been that way. No one questions its value, and it has always been a valuable commodity, first coined in Asia Minor in 600 BC.”

 The Kiplinger Letter – Forecasts for Executives and Investors – February 17, 2017

  • “Pot – A new president means new worries for the legal marijuana industry, which has mushroomed in recent years as about 30 states decriminalized pot or OK’d it for medicinal uses.  The Obama administration didn’t challenge states that loosened their laws on pot, even though Uncle Sam classifies it as an illegal drug.”
  • “New Attorney General Jeff Sessions has been an outspoken critic of legal pot.  But odds are the Trump administration won’t crack down on selling weed.  The president backs pot for medicinal use, and Sessions is unlikely to buck the boss, who wants to encourage U.S. businesses of all sorts.  And legal weed is big business.  Annual sales are likely to triple by 2020 from $7 billion now.  Rising incomes for growers and sellers will spur job growth and boost many states’ tax revenues.”
  • “One stubborn challenge for marijuana businesses:  Tapping banking services.  As long as federal law bans pot, lenders will be leery of lending to growers and sellers or of holding deposits of pot-related money, even if the relevant states have legalized it.  So far, only 3% of U.S. banks and credit unions serve firms in the marijuana business.  The industry will remain heavily cash-based until Congress legalizes week nationwide.”

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