Read ‘Government Contracts, My Investment Process, Capital Spending’, e-mailed today to StockResearchPortal.com Subscribers.  The e-mail:

• links to an article that discusses how a reduction in U.S. Government contracts might affect the private sector;

• discusses the Investment Process I typically follow when investing in Public Companies; and,

• links to an article that discusses U.S. capital spending forecasts made by a number of economists – and suggests what questions ought to asked around those forecasts in the context of U.S. unemployment.

In part, the e-mail reads:

“Government Contracts

An article this morning titled ‘Bracing for (the U.S.) Government’s Withdrawal From the Economy’ – reading time 3 minutes – focused me on the further ramification of the U.S. (or any developed country government) simply being unable to continue funding government contracts that have supported both employment and GDP over the past many years.  Reading the article caused me to think about this issue in a way I haven’t before, and to ask the question ‘Are there statistics available on the % of U.S. GDP that is based on Government contracts and largesse – and hence in some ways circular?’  If I get an answer to my question (which I added to article), or find any statistics on this issue that I think are meaningful, I will comment further in a subsequent e-mail.  For now, I suggest you think about this issue in the context of all developed countries whose governments have issued such contracts over the years (which is pretty much all of them), and who now are saddled with large cumulative and annual deficits.

My Investment Process

From time to time people have asked me whether I have a process I follow when I invest in Junior Exploration Companies, Resource Producers, Oil & Gas Explorers, or Companies that service the Resource Industries.  Yesterday I added the Question ‘Do you have a process you follow when you are deciding whether to invest in a company?’ to StockResearchPortal.com’s Investment Education Forum , and then answered that question in respect of the process I typically follow in the ‘Question Detail’.  In part (my description of my process is quite lengthy) my ‘answer’ to the question I posed reads:

“I do (have such a process), and on the basis readers may find it helpful, here it is.  Note that I apply this same process irrespective of what industry sector (including non-resource sectors) a company I decide to ‘get serious’ about falls into.

First, I attempt to identify and do initial research on a company I think might be an interesting investment by using one or more ‘Research Websites’ and a combination ‘numeric, factual, subjective, and in the end intuitive’ screening process I have developed.  The criteria I use when ferreting out prospective Junior Gold Exploration Companies, for example, are summarized in a Post I will be making later today to this Investment Education Forum (see my answer to the Question ‘What are the main drivers I should be looking to when researching a junior gold exploration company?).

Second, if I find such a company ….. – to read more click here

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Read ‘Gold, Gold/Video, Bernanke Translated, U.S. Unemployment Benefits’, e-mailed today to StockResearchPortal.com Subscribers.  The e-mail:

• links to an article that discusses how gold performs in various economic scenarios, and links to multiple other articles that discuss gold in other contexts;

• links to a video that I think is somewhat humorous if it were not likely so realistic in the way it depicts the average investor and how they may think;

• links to an article that discusses comments made by Federal Reserve Chief Bernanke today in Frankfurt;

• discusses the U.S. Unemployment Benefit Extension that ends on November 30; and,

• overviews the ‘Today’s Filtered News’ feature offered by StockResearchPortal.com.

In part, the e-mail reads:

“Gold

Three years ago I decided to ‘study gold’.  I concluded at the time that physical gold was a good thing to own as a ‘safe-haven holding’ (note I did not say ‘investment’) in times of both inflation and deflation.  If you are interested, I summarized my thinking in an 11 blog post series that you can access by clicking here – reading time for all 11 blog posts about one hour.

An article yesterday titled ‘How Gold Performs During Periods of Deflation, Disinflation, Runaway Stagflation and Hyperinflation’ is, in my view, a ‘must read’ for anyone who owns or is contemplating owning physical gold either directly or indirectly through an ETF or a Gold Certificate – reading time 6 minutes.  This is one of the best short articles I have seen on the subject of how physical gold may, or is likely over time, to perform under different economic scenarios.

Four other articles on gold that were published yesterday are:

• ‘4 Forces Underpinning Gold Demand for the Rest of 2010’ – an article I think is somewhat simplistic, but perhaps worth you time to read – reading time under 2 minutes;

• ‘India and China Continue to Drive Gold Demand’ – a general information article from my perspective – reading time under 2 minutes;

• ‘Why Gold Is a Bad Choice for a Currency’ – an article I think makes a good point with respect to ‘mine production’, but reaches what I think is a wrong conclusion – reading time under 2 minutes; and,

• ‘Gold’s Allure Tied to Interest Rates’ – an article that I disagree with – reading time under 2 minutes.

With respect to these four articles I suggest you consider scanning them, think about their contents, and reach your own views on what each author says.

Why People Don’t Buy Gold – U-Tube Video

If you read these e-mails, you will know that I am all about ‘Investor Empowerment’ and ‘Thinking for Yourself’ in the current (and what I see as prospective) volatile macro-economy and equity (and money) markets.  A video this morning provides a 4 minute period of humour that overlays a clear summary of what I suspect is how many people think about physical gold and their investments.  I suggest you watch the video, titled ‘Why People Don’t Buy Gold’ – watching and listening time 4 ‘well spent’ minutes.  In the video two cartoon characters debate the ‘follow the herd’ or ‘lemming’ mentality and the ‘think for yourself mentality’.  A ‘must-watch, listen carefully, and think about’ video.

Bernanke Translated

An interesting article posted this morning on the Wall Street Journal’s ‘Real Time Economics’ blog is titled ‘Bernanke Translated’.  The article is formatted such that comments made by Mr. Bernanke in Frankfurt this morning are quoted, and are then commented on.  Topics covered (1) ‘The Two Speed Recovery’ (emerging markets versus advanced economies), (2) Unemployment & Inflation, (3) U.S. Fiscal Policy, (4) the U.S. dollar, (5) Capital Flows to ….. – to read more click here

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Read ‘Infrastructure, Suburbia, Mish’, e-mailed today to StockResearchPortal.com Subscribers.  The e-mail:

• discusses problems that arise when infrastructure breaks down, and suggests infrastructure may be something to take ‘less for granted;

• links to a very interesting article on Suburbia, and what might happen to Suburbia going forward;

• links to an article that discusses views of Mike Shedlock, a widely read blog commentator, on the U.S. economy and deflation; and,

• overviews the ‘Country Economic/Political Commentary’ feature offered by StockResearchPortal.com.

In part, the e-mail reads:

“Infrastructure

Today’s e-mail is shorter than many, and I can hear my friends who receive it saying ‘thank goodness’.  The reason is that Tuesday morning my telephone service ‘went down’, which meant my internet service likewise wasn’t available.  It turned out construction workers on an adjoining property inadvertently cut our telephone line in half, and service was restored only last evening.  In any event, as I sat reading a novel, unable to access the Internet and work on the StockResearchPortal.com website, I reflected once again on how dependent as a society we are on the infrastructure we each day take for granted and don’t think about.  It took far longer (24 hours versus 2 hours) than the last time we needed telephone repairs for the telephone repairmen to arrive, and I asked one of them whether there were less service personnel in their company today than there were a year ago.  His answer, “10 today in our area now versus 18 last year”.  Assuming that reduction is a direct function of the declining U.S. economy (I am in the U.S. as I write this) it may be time to start taking our infrastructure and infrastructure needs ‘less for granted’.  The serviceman I spoke with suggested that if Internet access was important to me that I might consider organizing a second ‘back-up’ provider that I could switch to if one of the then two systems failed.  A ‘sign of the times’?  Something for us all to think about.

Suburbia

A recent article titled ‘Rescuing Suburbia’ is one that I suggest you read and think about carefully – a real ‘food for thought’ and ‘think for yourself’ article in my view – reading time 10 minutes.  It covers (with pictures) the following sequential topics: (1) Suburbia Happened, (2) Can We Abandon ….. – to read more click here

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Read ‘ABC News/China, Investment Advice’, e-mailed Tuesday to StockResearchPortal.com Subscribers.  The e-mail:

• discusses coverage on last evening’s ABC News (continuing tonight) on economic, business and education differences between China and the United States;

• provides a list of 16 questions (with answers) that you might want to consider asking your investment adviser; and,

• overviews the ‘My Watched Stocks Portfolio’ feature offered by StockResearchPortal.com.

In part, the e-mail reads:

“ABC News/China

Last evening’s 6:30 p.m. (ET) ABC News was in devoted in large part to reporting from and on China.  The principle topics/refrain in the coverage were the economic and business differences between China and the U.S., with a segment on comparative education beginning from early childhood.  I found the reports highly interesting, not from the point of view that they reported anything I didn’t know in either specific or broad-brush terms, but from the perspective that this news coverage actually happened – and that there will more of the same on tonight’s ABC news, same time, same TV station.  I consider this coverage extremely important as an ‘educator’ for the American audience that China is becoming dominant in many economic and other areas – and that it is doing it very, very quickly.  I think the better the U.S. populace is educated as to what is happening in the world and how that is influencing their day to day lives, the better they will be in a position to think about and deal with their elected representatives and current economic difficulties.  I say ‘good for ABC News’, and I hope we will see much more of ‘the same’ on all the U.S. Television networks, as I see Television as being a primary educational media for Main Street America.

Investment Advice

A recent article titled ‘Are you taking a ‘No Brainer’ or ‘Head in the Sand’ Approach to Investing in Gold and Silver’ suggests, in summary, that Investors and Traders ought to be quite cynical in these equity markets and economic environment with respect to the information forthcoming from the Investment Banks and hence Investment Advisors.  After reading the referenced article – reading time 3 minutes – and thinking about the equity markets generally, you may feel you have a ‘need to know’ (if you don’t already) the depth of knowledge your Investment Advisor has with respect to matters that I think influence equity and debt markets over time.  If you think that, here are 16 questions you might consider asking him/her:

• what is the current U.S. cumulative National Debt, and what was the U.S. cumulative National Debt at the end of 2000? (answers, about U.S.$13 trillion and U.S.$6 trillion respectively;

• what is the current targeted U.S. Federal Reserve inflation rate? (answer, 2%);

• what is the current U.S. monthly net trade deficit? (answer, it varies from month to month but currently runs about U.S.$40 billion/month);

• what is the current cumulative U.S. net trade deficit? (answer, just under U.S.$8 trillion);

what % of the cumulative U.S. net trade deficit has been accumulated after 1999? (answer ….. – to read more click here

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