NABE Silicon Valley RoundTable

NABE Silicon Valley RoundTable

How Global Economic Analysis Can Aid in Predicting the Right Investments

Speaker(s):  Bud Conrad
Summary:  Mr. Conrad is a well-known and favorite speaker among the South Bay investment groups. Bud thoroughly researches the market areas, and looks beyond stocks for investment opportunities. A provocative and outspoken speaker, Bud Conrad answers questions fully, and brings a wealth of charts to explain economic projections.

In this time of World Geopolitical confrontation, where the US has occupied Iraq, the implications for investment have become more political than ever. Our National election is very controversial, and the results will be as important as they have been since the Vietnam War. We must be concerned about the world situation because we are more globalized and so dependent on the international actions than ever. Oil has been a base of our growth economy, and is both a driver and a result of our political actions. World usage continues to increase, with the US using 30% of world supply, while China's growth in use last year was 30%. Oil is fundamentally limited: the US owns only 2% of the reserves, while the Middle East has 65%.

The War has been very costly, driving deficits up, the dollar down, and interest rates up. Higher oil price makes the trade deficit worse, adding to the above dollar weakness. The expectation is that we will extend spending for the war in Iraq and on Terrorism for a long time. The Trade Deficit at $500B per year means that the US borrows that amount. Foreigners have been lending this amount to us, but there is question if they will continue as the dollar weakens, destroying their holdings. An important link is the value of the dollar. Central banks are changing how they handle our trade deficits. Predicting the future includes understanding how the twin deficits affect the Fed and interest rates. The collection of these observations is to realize that the current situation is repeating some of the aspects of the 1970s, where physical assets performed better than stocks, while inflation and interest rates soared. Successful investing in the decade ahead will require looking beyond traditional stocks and bonds.

Bud Conrad has been a futures investor for 25 years, and close to full-time investor for a decade. He teaches graduate courses in investing at Golden Gate University.  He worked for a number of computer companies including IBM, CDC, Amdahl and Tandem, so uses engineering concepts like feedback in his market analysis. He holds a bachelor of engineering from Yale and an MBA from Harvard.

Date:  December 15, 2004
Announcement:  mtg20041215.pdf
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