What have David Rosenberg and Seth Klarman got in common? Diddly squat as far as I know, except they wrote the best two things I’ve read in the last few days.

It’s three months since I last posted the performance of the S&P/ASX 200 Sectors, so time for an update. The major change over the last three months is Financials have come from behind to take a convincing lead. They’re followed by a reasonably predictable list, if you subscribe to sector rotation theory; industrials, consumer discretionary, information technology, materials and energy.
S&P/ASX 200 Sector Performance [Click to Enlarge]
I posted the sector vs market cycle here and this recovery continues to play out roughly as predicted. The issue most investors have with these types of …

Mining and Energy
Fresh data from the Australian Bureau of Agricultural and Resource Economics (ABARE) shows exploration in the mining and energy sector reached record highs in the 2007-08 financial year.
The figures show $5.5 billion was spent scouting for new projects, with petroleum and iron ore the favourite commodities because of high global prices. read more
And hence why cycles exist. As prices and returns increase more capital floods reducing future profits. Couple that with decreasing demand and more falls are possible for mining and energy.
Still the master wave rider, Warren Buffett, …

There are always underlying fundamental reasons for asset bubbles. If you ever find yourself thinking it is different this time then you should be very afraid.

After the tech bubble I remember seeing T-shirts and hearing the catch cry. “Just one more bubble please”. We’ve had another bubble or two since then, but I’d bet a penny to a pound that the same people wearing the T-shirts back then are wearing them again now.

Cycles will never end. Get used to it. Figure out to to profit from it and more importantly figure out how not to loose your shirt.

Despite predicting (or at least assimilating, reiterating and believing) the recession , the Chinese stock implosion, the fall of oil, the fall of commodities and the credit bust I have not profited from those predictions coming true.

On Friday I embarked on buying the Ultra Bull Fund ULPIX via dollar cost averaging. If I discover information that points me to a particular sector I may invest some of my averaging into that.
[Update: The Ultra Funds are only good for short term trades. They are appalling bad over the long term and should not be used for for long term positions]

My current beliefs

This quarter reports will be bad, especially amongst discretionary companies like retailers. Next quarter will be even worse. Every retailer I know says that business …

A month ago I was not checking the VIX daily. The Volatility Index hit a new high of 59.06 during Wednesdays sixth straight fall for US markets.
For the Dow and the S&P 500, Wednesday capped their biggest six-day point loss ever. It was a session of wild swings, with no clear direction determined until the final minutes…
In the last hour of trading, U.S. Treasury Secretary Henry Paulson warned that the turmoil “will not end quickly.”
In possibly unrelated news. Last night I decided to re-read The Book of Investing Wisdom, …

As I mentioned with The Way of the Turtle, on Fridays I get 20 minutes of kid free time to speed read a book in Borders. This week I choose If It’s Raining in Brazil, Buy Starbucks By Peter Navarro.
This book is a foil to those financial gurus who eschew top down investing. As it says on the cover this is “The Investor’s Guide to Profiting from Market-Moving Events”. Peter Navarro embraces the big picture macrowaves and he has some heavy hitters in support. The book leads off with the …