Stuff about finance & investing

These two charts tell you pretty much all you need to know about the state of the US economy.  They also, unfortunately, provide some clues as to how this movie will end.

First, from John Mauldin, the state of the U.S. government's finances.  The red line is spending.  The blue line is tax revenue.

Can you imagine if that was your household?

Second, from Ned Davis, the state of our country's debts, as measured by debt as a percentage of GDP.  The little peak to the left was the debt mountain we accumulated during the Great Depression, which took a decade to work off.  The, um, bigger peak to the right, is the one we've accumulated now.

In the investment world, BRIC has become synonymous with growth and newly emerged markets. I restrict most of our investing to BIC, Brazil, India and China. We mostly leave Russia out. Political uncertainty, an economy with a high dependency on oil and old cold war bruises that are not entirely healed are just some of the reasons. I only once dipped the toe of our portfolio strategy into Russian waters in 2009. It is a fairly consistent winner in the mobile arena.

InPharm.com, a publication owned by John Wiley & Sons Ltd, has highlighted opportunities for large multinational pharmas in Russia. Seeking new markets in fast growing emerging markets is a specific attribute I seek in our investments.

Since the collapse of the Soviet Union in 1991, Russia’s population decline has declined by seven million.  Smoking, drinking and unhealthy diets and lifestyles are behind very high levels of cardiovascular diseases, cancers and respiratory disease are all major contributors to this. The level of HIV/AIDS infection is also high, with treatment levels low.

This all adds up to a very high death rate of 15 deaths per 1000 people per year, and a UN forecast says Russia’s population could decline by a further 11 million by 2025 unless radical measures are taken.

Global investors worldwide are starting to pay more attention to what is unfolding in Greece. Yet most still think of Greece as an isolated case, just as they did for Dubai a few months ago.

With time, they will see Greece as part of a much larger investment theme that is a direct outcome of the global financial crisis: The 2008–2009 ballooning of sovereign balance sheets in advanced economies is consequential and is becoming an important influence on valuations in many markets around the world.

Where does all this leave us? 

Over the next few days, we are likely to get some combination of Greek and European donor announcements aimed at calming markets, reducing volatility and reducing contagion risk. But the impact on markets is unlikely to be sustained as both sides face multi-round, protracted challenges which contain all the elements of complex game dynamics.

No matter how you view it, markets in Greece will remain volatile and more global investors will be paying attention. In the process, this will accelerate the more general recognition that sovereign balance sheets in many advanced economies are now in play when it comes to broad portfolio positioning considerations.

But: everyone I spoke to in the press room was raving first and foremost about the speed. None of us could shut up about it. It feels impossibly fast. (And our next thought: What happens if Apple has figured out a way to make a CPU like A4 that fits in an iPhone? If they pull that off for this year’s new iPhone, look out.)

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Apple now owns and controls their own mobile CPUs. There aren’t many companies in the world that can say that. And from what I saw today, Apple doesn’t just own and control a mobile CPU, they own and control the hands-down best mobile CPU in the world. Software aside (which is a huge thing to put aside), it may well be that no other company could make a device today matching the price, size, and performance of the iPad. They’re not getting into the CPU business for kicks, they’re getting into it to kick ass.

“Isn’t it funny when you walk into a investment firm, and you see all of the financial advisors watching CNBC — that gives me the same feeling of confidence I would have if I walked into the Mayo-clinic or Sloan Kettering and all the medical doctors were watching General Hospital…”

-Senior portfolio manager, UBS

hehe