Issue 11

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  • 1. Ross Naylor +48 (22) 389 65 70 (w) +48 512 275 706 (m) ul. Królewska 27 lok 411 Warszawa 00-060 Poland. Grantham Howls This is a good time to look back to early last year, when investment manager Jeremy Grantham called the bottom of the bear market. He was right then (as he has Words from the wise been on many otheroccasions), which makes his current thoughts on the "Bubbles always start with a compelling story."market pretty scary. - Dylan Grice, Société Générale.I have referred to Grantham often in the past. He is oneof the people that I turn to for insight into the likelydirection of the financial markets.His most recent thoughts occur in his quarterlynewsletter, entitled "Night of the Living Fed". In it, hesummarizes 18 key points to be aware of. I have listedthe 6 which I think are the most important below: Baltic Dry * Long-term data suggests that higher debt levels arenot correlated with higher GDP growth rates. You may remember me writing about the Baltic Dry Index a few * Lower rates, however, certainly do encourage months back (here).
  • 2. speculation in markets and produce hi gher priced andtherefore less rewarding investments, which tilt markets At the time the index had justtoward the speculative end. Sustained higher prices fallen by 50% in the space of a month.mislead consumers and budget s alike. Well, we picked up since then, * New Presidential Cycle data also shows no but that rally looks over. Todaysmeasurable economic benefits in Year 3, yet point to a level of around 2,500 is wellstriking market and speculative stock effect. This effect below the 3,000 long termgoes back to FDR, and is felt all around the world. average.[Read the rest here] In addition, the trend looks distinctly downward. Certainly not suggesting a boomingFood for thought recovery.Last week saw the IPO of the Warsaw Stock Exchange. Did you know?Its shares soared in the opening minutes. You can readmore about it here. In 1990, there were only eight emerging-market equity funds.In a related story, Warsaws first Ferrari dealership, which They had a combined $380is located in the old stock exchange building, announced million in assets, according to Morningstar.that it had sold its allocation through to 2012. GoWarsaw! Today there are 288 such funds, managing $365 billion.Heres a balanced piece from the Economist on QE2,what its achieved already and what it can do in themonths to come. Sign up for future issuesOne experienced investor things that we are approachinga market "sweet spot", largely driven by where we are in If you have been forwarded these musings by somebodythe Presidential calendar. You can read his thoughts else and wish to subscribe forhere. future issues, you can do so here.David Rosenberg (surprise, surprise) is not so optimisticabout the economy however. Watch an interview withhim here. Disclaimer The views expressed here are myThats all for today. own. They are not necessarily shared by AES International. They are subject to change at any timeApologies for the somewhat sombre tone of todays based on market and othermissive. There is good news out there, I assure you. conditions. This is not an offer orHowever, it would be remiss to ignore the numerous ri sks solicitation for the purchase or salethat also exist in the current market. of any security and should not be construed as such. References toAs always, thanks for reading. I realize that your time is specific securities are for
  • 3. precious. illustrative or informational purposes only and are notFinally, if you are interested in hearing a particular topic intended to be, and should not be interpreted as, recommendationsin future or have a specific question, please feel free to e- to purchase or sell such securities.mail me. Call me: +48 (22) 389 65 70 (w) +48 512 275 706 (m) To disallow Ross Naylor from sending you email with this service, click here.