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150 Years of Boom and Bust – What Drives Mineral Commodity Prices?

150 Years of Boom and Bust – What Drives Mineral Commodity Prices?

Martin Stürmer University of Bonn

February 1, 2013
German Development Institute Paper No. 5/2013

Abstract: 
This paper examines the dynamic effects of demand and supply shocks on mineral commodity prices. It provides empirical insights by using annual data for the copper, lead, tin, and zinc markets from 1840 to 2010. I identify structural shocks by using long-run restrictions and compare these shocks to narrative historical evidence about the respective markets. Long-term price fluctuations are mainly driven by persistent demand shocks. Supply shocks exhibit some importance in the tin and copper markets due to oligopolistic market structures. World output- driven demand shocks have persistent, positive effects on mineral production. Long-term linear trends are statistically insignificant or significantly negative for the examined commodity prices. My results suggest that the current price boom is temporary but not permanent. Commodity exporting countries should prepare for a downswing of prices, while commodity importing countries should not fear for the security of supply of these widely used mineral commodities.

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Size is a Drag: How Hedge Fund Growth May Be Affecting Returns

Size is a Drag: How Hedge Fund Growth May Be Affecting Returns

Ian Hunt EDHEC Risk Institute

March 31, 2013

Abstract: 
The hedge fund industry has grown massively. Most of the growth appears to be from inward capital cash flows, rather than retained investment returns. But it is difficult to gauge hedge fund cash flows and returns exactly – no available data set straightforwardly represents the industry as a whole, and each data set is incomplete and possibly biased. Despite various data constraints, I reveal a salient negative relationship between the hedge fund industry’s size and its percentage returns. This relationship is economically and statistically significant. And it is not sensitive to the choice of data set.

Tech-savvy Vietnam coffee farmers brew global takeover; Most Vietnamese coffee farmers can tell you the price of the beans, the second most traded commodity in the world after oil, in their sleep

Tech-savvy Vietnam coffee farmers brew global takeover

Most Vietnamese coffee farmers can tell you the price of the beans in their sleep. -AFP

Wed, Apr 17, 2013
AFP

Buon Ma Thuot, Vietnam – Most Vietnamese coffee farmers have never heard of a double tall skinny latte, but they could tell you the price of the beans that go into one in their sleep.

From high-tech Israeli irrigation systems to text message updates of global prices for the commodity, coffee farming in Vietnam’s Central Highlands has come a long way since the French first introduced the bean over a century ago.

“I used to carry my coffee to market by bicycle,” said 44-year-old farmer Ama Diem. “Now I check the bean price on my mobile phones” before making the trip.

By texting “CA” to the number 8288 from any Vietnamese mobile phone, farmers almost instantly receive a message with the London prices of Robusta coffee beans and the New York price of Arabica beans from a data supply firm. Read more of this post

The Cypriot government plans to sell part of its gold reserves within the next months, Finance Minister Haris Georgiades said

Cyprus Central Bank Must Approve Gold Sale, Finance Chief Says

The Cypriot government plans to sell part of its gold reserves within the next months, a decision that needs to be approved by the country’s central bank, Finance Minister Haris Georgiadessaid.

“The exact details of it will be formulated in due course primarily by the board of the central bank,” Georgiades, 41, told Bloomberg TV’s Ryan Chilcote in an interview in Nicosia. “Obviously it’s a big decision.”

Cypriot President Nicos Anastasiades is trying to unlock 10 billion euros ($13.2 billion) of loans from the euro area and the International Monetary Fund. To do so, he must come up with a further 11 billion euros through measures including a tax on bank deposits of more than 100,000 euros at the country’s two biggest banks and the sale of assets and gold.

An April 9 debt assessment by the European Commission said Cyprus had committed to selling about 400 million euros of “excess” gold reserves, prompting gold futures to fall the most in five months. In response to the disclosure, the Central Bank of Cyprus said it wasn’t considering a sale. Read more of this post

Berkshire Gains as Buffett’s Coca-Cola Stake Rallies

Berkshire Gains as Buffett’s Coca-Cola Stake Rallies

Warren Buffett’s Berkshire Hathaway Inc., the largest investor in Coca-Cola Co. (KO), jumped the most since January in New York trading on gains in the value of its stake in the soft-drink maker. Berkshire Class A shares rallied $4,000, or 2.6 percent, to $161,000, a record closing price. Atlanta-based Coca-Cola surged 5.7 percent after posting first-quarter profit that beat analysts’ estimates and announcing a deal to sell some bottling distribution rights in North America. Buffett’s firm has 400 million Coca-Cola shares, making it one of the four largest holdings at Omaha, Nebraska-based Berkshire, along with investments in Wells Fargo & Co., American Express Co., and International Business Machines Corp. Berkshire’s stakes in the companies may increase in the future as the firms buy back shares, Buffett said in a letter to investors last month. “The four companies possess marvelous businesses and are run by managers who are both talented and shareholder- oriented,” Buffett said in the letter. “Too much of good thing can be wonderful.”

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net

Updated April 16, 2013, 7:59 p.m. ET

New Coke: Bottlers Are Back

Beverage Company Expanding Delivery Territories for Five of Its Independent Bottling Companies

By MIKE ESTERL And PAUL ZIOBRO

Coca-Cola Co. KO +5.69% likes to have its cake and eat it too.

That is why it sold its bottlers and then bought them back again. That is why it is now going back to the franchise model for distribution. Read more of this post

The Fresh Start Effect: Breaking Points in Life Motivate Virtuous Behavior

The Fresh Start Effect: Breaking Points in Life Motivate Virtuous Behavior

Hengchen Dai University of Pennsylvania – The Wharton School

Katherine L. Milkman University of Pennsylvania – The Wharton School

Jason Riis Harvard Business School

January 20, 2013
The Wharton School Research Paper No. 51

Abstract: 
Many view the commencement of each New Year as an opportunity for a fresh start, which motivates them to pursue virtuous goals. We demonstrate that this well-known uptick in virtuous behavior following New Year’s is just one example of a broader phenomenon, which we refer to as the ‘fresh start effect.’ Specifically, special (and mundane) occasions in our lives and calendar events demarcate the passage of time (e.g., a promotion, a birthday, the beginning of a new week/month), creating many breaking points in each year. We show that these breaking points generate fresh start feelings, which are stronger at meaningful discontinuities and motivate subsequent virtuous behavior such as exercise and dieting. We propose and show that the fresh start feelings associated with breaking points originate from a psychological disassociation from our past self and belief that we are more like our ideal selves at the beginning of a new period.

The Art of Thinking Clearly

The Art of Thinking Clearly [Hardcover]

Rolf Dobelli (Author)

16248196

Release date: May 14, 2013

The Art of Thinking Clearly by world-class thinker and entrepreneur Rolf Dobelli is an eye-opening look at human psychology and reasoning — essential reading for anyone who wants to avoid “cognitive errors” and make better choices in all aspects of their lives.

Have you ever: Invested time in something that, with hindsight, just wasn’t worth it? Or continued doing something you knew was bad for you? These are examples of cognitive biases, simple errors we all make in our day-to-day thinking. But by knowing what they are and how to spot them, we can avoid them and make better decisions.

Simple, clear, and always surprising, this indispensable book will change the way you think and transform your decision-making—work, at home, every day. It reveals, in 99 short chapters, the most common errors of judgment, and how to avoid them. Read more of this post

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