Ned W Schmidt CFA's Contributions

We have a request for the politicians in Greece. Please go bankrupt, as soon as possible! Let us have the pain done with. To the Euro zone: Throw them out. The world needs a good example of just how bad Keynesian induced poverty can be.

In the short-term, dollar appreciation is negative for Gold, and Silver. Additionally, the ramifications of Dodd-Frank in the U.S. will be increasingly felt as many of the restrictions on bank trading related activities takes place by the end of July and Basel III is to be implemented by year end.

Alternatives to the common sources of edible oils simply do not exist in abundance. Support for soybean prices is also coming from growing inadequacies of supplies of alternative oil producing grains. One of those alternatives is canola.

With the calendar moving into the second third of the year, some of the popular delusions of the crowd seem increasingly remote possibilities. Have we been waiting a year for QE-3? But like a broken clock, those forecasting QE-3 to be imminent still have a shot at being correct. At the same time, some are chopping down the AAPL tree.

Markets are intriguing due to their constantly changing character. New leadership constantly evolves. In equity markets, that tendency is always pushed to an extreme. A maker of electronic toys is today considered the most valuable company. Nonsensical forecasts of a $1,000 share price have even appeared.

The topic of hot oil probably conjures up fantasies that are beyond the boundaries for this public discussions And no, neither are we referring to the oil made into gasoline, though the price of that oil has been hot lately.

The question we are pondering today is whether or not investors learn from their prior mistakes. Small children learn lessons, such as not to touch the hot stove again. They remember that lesson all of their lives. Humans spend a considerable part of their lives learning and remembering such lessons.

Last we visited a topic of discussion was broiler prices, or the prices for table chicken. At that time broiler prices had thus far in 2012 experienced the largest price increase of the major Agri-Commodities we follow. As the chart below portrays, from the lows of last Fall broiler prices are up more than 50%. Some chickens in the back yard would have provided a nice return.

While having not read any research into the time devoted by people to fantasizing, we suspect that activity represents a significant portion of the day for many. Morning coffee for men involves the exchange of fantasies surrounding sporting events.

An important trend for many years has been the rising preference of consumers for chicken. Apparently those boneless, skinless, tasteless, chicken breasts are quite popular. In the U.S., production of broilers, table chicken, exceeds by ~50% the production of either pork or beef, when measured by weight. And those “clucks” are now costing more bucks.

Over the past five years, barley, of the eighteen commodities we follow, was the top performer. Rising by 180+% it bested Gold, +170%, and Silver, +150%. But why quibble? Nearly all commodity prices have done than paper equities. And perhaps they should, as real assets require real work to produce and are essential to the real world.

Some may have considered a planter of herbs on the patio for that taste only freshly picked gives. Many of us have a garden for fresh vegetables in the back yard. In the city that is about all that most can do. For in the city, no chickens are allowed.

Debt constrains one’s enjoyment of life. Without debt to repay, we could use our incomes solely for the pursuit of the good life. You get to define of what that consists, be it food and wine, debauchery or charitable deeds. With debt, life is miserable. Greece has learned that lesson. Spain and Portugal now know that.

What if we found a product to which consumers have an uncontrollable physical craving? What if consumers bought more of this addictive product as their incomes rose? What if as their incomes rose they demanded higher quality, more expensive to produce versions of this product?

Success of a nation can be measured in many ways. GDP is one method, but has been long recognized as an incomplete metric. Literacy and level of education are, for example, important national goals, but are not in GDP.

Norway has a crisis, plenty of oil but apparently little butter. From “Norway butter shortage threatens Christmas treats” by Sapa-AFP via timeslive.co.za, 12 December, “An acute butter shortage in Norway, one of the world's richest countries, has left people worrying how to bake their Christmas goodies with store shelves emptied and prices through the roof.

Imagine most are anxious to put 2011 into the history book. Many of the hopes and dreams of a year ago certainly fizzled as time passed. A raging bull was converted to a bear in nearly all financial markets. So, we do hope for change in the new year, in the markets and especially in November.

With 2011 about to be history, investor should be thinking about two matters. How did various market sectors perform during the year, and why did they do so? That task is part of the learning process. It allows us to refine our thinking, and shed thoughts that will not be productive in the future.

First rule in writing about investment strategy is to only write about markets where money might be made. About five years ago we realized that something different was happening in the world of Agri-Food. The era of bountiful and inexpensive food that had existed for almost 200 years, starting in the early 1800s, was coming to end. Plentiful food, in all of mankind’s history, was the aberration, not the norm.

Rarely does one live through great events. Mostly we read about them in history books. But, we are today witnessing the bursting of the greatest bubble of all time. This is the big one. More than 70 years in the making, it was inevitable.