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5/14/2008
Anyone watching the parabolic rise in commodity prices the last six months has got to be wondering what's going on. Crude oil seems to set a record every day. The price of rice, which did nothing for two decades, more than doubled in the past year. Wheat prices are up 90 percent; soybeans 50 percent. Copper prices are up 26 percent since the start of the year as housing, a major consumer of the metal, implodes. Yes, I know. I've read the explanations about soaring demand for raw materials from countries like China and India and increased investor appetite for "real'' assets as a hedge against the falling dollar and rising inflation. (Source: Bloomberg)
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5/14/2008
In 2001, a water shortage in America's Pacific Northwest wiped out nearly a third of the U.S. aluminum industry. Low precipitation levels in the Cascade Mountains during the preceding winter robbed local reservoirs of the water needed to turn the massive turbines inside the region's main hydroelectric power plant, the Bonneville Power Administration. Electricity prices skyrocketed. Over the course of a few months, roughly a dozen aluminum plants closed. Nearly a decade later, only one has reopened. Like oil, water is an essential part of doing business in almost every industry, and unexpected shortages can trigger potentially catastrophic consequences. The trouble for investors: Companies disclose very little if any information about their exposure to water-related risks. (Source: Forbes.com)
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5/14/2008
Americans are feeling a lot more economic pain than the government's official statistics would lead you to believe, according to a growing number of experts. They argue that figures on unemployment and inflation are being understated by the government. Unemployment and inflation are typically added together to come up with a so-called "Misery Index." The "Misery Index" was often cited during periods of high unemployment and inflation, such as the mid 1970s and late 1970s to early 1980s. And some fear the economy may be approaching those levels again. The official numbers produce a current Misery Index of only 9, not far from the low of 6.1 seen in 1998. (Source: USA Today)
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book value
A company's common stock equity as it appears on a balance sheet, equal to total assets minus liabilities, preferred stock, and intangible assets such as goodwill. This is how much the company would have left over in assets if it went out of business immediately. Since companies are usually expected to grow and generate more profits in the future, market capitalization is higher than book value for ... MoreA company's common stock equity as it appears on a balance sheet, equal to total assets minus liabilities, preferred stock, and intangible assets such as goodwill. This is how much the company would have left over in assets if it went out of business immediately. Since companies are usually expected to grow and generate more profits in the future, market capitalization is higher than book value for most companies. Since book value is a more accurate measure of valuation for companies which aren't growing quickly, book value is of more interest to value investors than growth investors.
The value of an asset as it appears on a balance sheet, equal to cost minus accumulated depreciation.
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"The only thing wealth does for some people is to make them worry about losing it."
Antoine de Rivaroli
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May 14, 1913:
John D. Rockefeller makes the largest gift to date by establishing the Rockefeller Foundation with $100 million.
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