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May 22, 2006
Joe Rosenberg in Barron’s
Joe Rosenberg in Barron’s
Barron’s Interviewed Joe Rosenberg over the weekend and three paragraphs stood out.
“There's an estimated $120 billion to $140 billion invested in commodity funds by institutions, including $40 billion at hedge funds. This compares to $6 billion in 1999. One of the Street firms did a study that showed a record 35% price spread between commodities that had a listed futures contract and therefore were investable by hedge funds and commodities that didn't have a readily investable product. So in other words, much of the rise in the commodities that you see around the world today is a result of speculation on paper. “
“China will keep the cost of goods low, because they've got a great money machine going and they have a need to employ people. As long as they have to employ people, they are not going to worry about how they are losing money by owning U.S. government securities. China and Hong Kong together own almost a $1 trillion of U.S. government securities and people keep telling me, "Aren't the Chinese worried that they are going to lose money in their holdings of Treasuries?" My answer is that they are worried, but there is nothing they are going to do about it because they have a much more important problem, which is to keep people in China employed.”
“We now have a situation where some of the largest companies, that were overvalued six years ago but have continued to grow earnings at 10% to 15% a year, are completely unloved on Wall Street. These companies are all household names. I never in a million years thought that I would be recommending stocks like Microsoft, Pfizer, Johnson & Johnson [JNJ] or Wal-Mart. These are some of the best values anywhere in the world. “
Posted by Arthur B. Hill at May 22, 2006 10:31 AM