The pool of one sort of “traditional” assets – the stocks of publicly listed U.S.-based companies – is shrinking. Companies that once would have gone public are staying private. According to a recent report by Morgan Stanley Asset
Management, Public to Private Equity in the United States: A
Long-Term Look, young companies have a less voracious appetite for public capital than they used to, and the capital-raising needs they do have can be satisfied privately, so they elect to “stay private longer than did the companies of prior generations.”

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Gold spiked to new all-time highs of US$2070 and Euro 1740 last week and is currently trading about US$1940 and Euro 1640 after a sharp correction in the past two days. That correction has modestly muted our more cautious view we had heading into this week. Forecasting gold is always dangerous because one can’t predict the future. We recall reading about a gold trader who lost his job after heavily shorting gold in December 1979 at around $500 after the price about doubled in the prior six months. Then the Soviets invaded Afghanistan and gold quickly went to over $800.

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