Ben Stein on gold

I don't recommend the small individual investor buy individual commodities at all. I've been a pessimist on gold, and I still don't think gold deserves to be at the price it's at. I just don't see why it is considered so valuable. It earns no interest. It's just a passive, inert metal. It's like an obsession, it's like a mania, to have it. And I don't see what the value is

~Ben Stein, author, actor, investor, "Q&A with Ben Stein", Associated Press, May 1, 2011

Ben Stein is not a fan of hedge funds

These simulacra of hedge funds are going to completely change that world. That is the wave of the future. If you’re getting the same results as you get if you’re paying 2 and 20, why not go with the $5,000 minimum investment and the fee of $100?

Financial theory tells you that you cannot beat the large indexes unless you are getting inside information, and I don’t want to be part of anything that involves inside information.

~Ben Stein, actor, investor, financial markets observer, Bloomberg Brief, April 26, 2011

Ben Stein says monetary stimulus is generating a recovery, housing is next

I wouldn't say [the recovery] has come from federal stimulus, I would say it's come from incredibly accomodative monetary policy. The next natural driver will be the consumer recovering and the consumer feeling more confident, it's already happening in autos. If someone had predicted, a year and a half ago, that the auto-business would be whirring, no one would've believed him. But, because of very accomodative credit terms at the car dealerships, the car dealership business, the car selling and making business, is booming!

I think the next stage is, if somehow the Federal Reserve can convince the banks to be accomodative about lending for housing, housing will recover. I mean, there's no reason that the banks can not get back into housing. They don't have to be as wild and crazy as they were in the late '90s and early 2000s, but they should get back into lending. And when they do, then that will recover, too, and that will be another leg of the recovery.

~Ben Stein, actor, author and economist, WSJ's Markets Hub, April 19, 2011

Ben Stein says it's bad out there, but the forecasting accuracy of S&P is questionable

I think what we're seeing is the chickens coming home to roost. We had excessively large tax cuts in the Bush-era, I don't blame them for cutting taxes in the early stages of his administration, but once the economy recovered fully, he should've raised taxes again. We've had wild overspending under Mr. Obama without any clear results from it. So, the combination of too low taxes, too much spending, has just been a disaster and the disaster is getting worse.

We have a hundred percent ratio, roughly a hundred percent, of the debt to the GDP. That has not happened since 1945. After that, we got rid of that enormous ratio by inflation and by the economy growing and the deficit stopped. The deficits are stretching out as far as the eye can see. There's no end to them in sight. So, it is a worrisome situation.

On the other hand, to strike a little lighter note, in terms of the accuracy of the S&P's predictions, they're also the ones who said there were no problems with the mortgage-backed securities. So, we don't know whether there as good at forecasting these things as they say.

~Ben Stein, actor, author and economist, WSJ's Markets Hub, April 19, 2011

Ben Stein says the recovery is in full swing, but market 'scarily' buoyant

This is still a very good place to invest. People realize that we're still in the early stages of a recovery, the recovery will probably strengthen. But still, the market is very, very buoyant. I must say that as a long-time watcher of the stock market I would consider this market a little, 'scarily' buoyant.

~Ben Stein, actor, author and economist, WSJ's Markets Hub, April 19, 2011

Ben Stein apologizes to Peter Schiff

Next, here’s a lesson I learned in a 12-step program and should have learned better: avoid contempt prior to investigation. When the financial stock meltdown started, I was on a television show with Peter Schiff of Euro Pacific Capital, who warned that Merrill Lynch could be in very bad shape. I glibly said that I thought that its problems were limited and that the stock was a buy. Mr. Schiff was completely right and I was wrong. I had no idea that Mother Merrill, where I have been a happy stockholder for years, had been turned into a such a wild house of high-stakes gambling. I apologize to Mr. Schiff for my dismissal of his views, which turned out to be far superior to mine in this area. (I could do without his acolytes sending me endless hate mail, though.)

~ Ben Stein, "Lessons From the Pits of Travel and Investment," The New York Times, December 9, 2008

Ben Stein: "Subprime mortgage market is a tiny blip"

When the markets go nuts and traders sell short and trigger sell programs, they don't ever just say, "Hey, we're doing this to make a fast buck and profit from fear." They always have some supposedly legitimate, "statesmanlike" reason.

Today, the reason is supposedly terror in the subprime mortgage market. To put this as frankly as possible, this is just nonsense.

Even if subprime delinquencies and defaults are up, they're a tiny portion of total mortgages. Suppose 13 percent of subprime mortgages are in default. Subprime itself is less than 15 percent of total mortgage debt, so that means that roughly 2 percent of mortgage debt is delinquent or in default.

Yes, that's more than it used to be, and is a disaster for the subprime mortgage companies.
But when a mortgage defaults, the lender takes back the house or condo, sells it, and usually recovers about 75 percent of the loan value or more. That means the real loss would be about 25 percent of 2 percent, or 1/2 of 1 percent.

In the context of a market as huge as the nation's mortgage market, that's not a lot. A few companies will go bankrupt, and someone will make a killing buying their bonds and portfolios at a huge discount as they turn out to be worth a lot more than people thought in March 2007. But it won't mean a lot to a roughly $14 trillion economy, of which the subprime mortgage market is a tiny blip.

~ Ben Stein, "The Long and the Short of Down-Market Investing," Yahoo! Finance, March 16, 2007

Ben Stein: Subprime "tiny in the context of the economy"

I'm not at all worried about the stock market despite the recurrent panic about subprime mortgage problems and resistance to some loans by lenders in private equity deals (which used to be called, appropriately, leveraged buyouts, or LBOs).

Subprime is a small sector of the mortgage market, as I've said before. It might be 15 percent at most. The defaults and delinquencies in this sector might be roughly 15 percent, which makes for a total problem rate of about 2.25 percent of the whole mortgage market.

If all this goes into foreclosure (which is unlikely), it will realize about 60 percent upon liquidation at the very least. That means the real loss might be about .9 percent, or less than 1 percent. That's a large number, but tiny in the context of the economy.

~ Ben Stein, "A View of the Economy from Abroad," Yahoo! Finance, July 5, 2007

Ben Stein: Housing fears overblown

Yes, the housing market has slowed from a spectacular bubble level to a simply pretty good level. Housing sales and starts are now about what they were in 2002, and no one thought we were in a housing depression then.

In any event, housing is only about 5 percent of the economy. If it falls by 15 percent, that would represent a fall-off of about .75 percent. That's not trivial, but it's also not the stuff of which recessions are made.

The fact is that there is no recession. The economy is suffering from a labor shortage, not a surplus of unemployment. The Fed is worried about excess demand, not slack demand.
Corporate profits set new records every day. Whatever's happening in residential sales and building is simply not slowing down the economy. Why should a Boeing or a Merck or a Pfizer have any reaction to housing at all? Because the speculators sell everything they can when nervousness sets in -- and for no other reason.

~ Ben Stein, "How Speculators Exploit Market Fears," Yahoo! Finance, August 2, 2007

Ben Stein: "This is a good time to buy stocks"

To put this as plainly as possible, this is a good time to buy stocks. The evidence is overwhelming and consistent that if you buy when stocks' P/E is below its 15-year moving average, you'll make far more money than you would if you bought at the economic peak, when P/E's are high. So, unless you're out of money to buy with during the recession, you buy. You don't go on margin to buy, and you don't re-mortgage your home to buy. But if you're employed and have money to invest, you buy.

Recessions in the post-World War II world are generally short; they end after about two quarters. Within about 15 months, stocks have moved from their last peak to their next peak. This is an average -- each case varies, but in every case the very long-term investor is better off if he or she keeps on buying through the recession.

~ Ben Stein, "Recession-Proof Your Investment Strategy," Yahoo! Finance, September 13, 2007

Ben Stein: "Now is the time to buy"

As I write this, the markets are in turmoil. Stocks have fallen considerably since their recent highs. There's growing gloom on Wall Street, and the newspapers are filled with scare stories. The upshot: Now is the time to buy. Not for tomorrow, not for next month, maybe not for next year. But for the long term, it's absolutely time to buy.

I don't see a recession brewing. Or, if one is brewing, it doesn't strike me as a long, strong one.

Given that, if the market is pricing stocks as if there'll be a major recession, and pricing financials as if there'll be a collapse in New York, you might do well to buy broad indexes of stocks and indexes of financials.

The road ahead will be bumpy. Fine -- "mama, that's where the fun is," as Bruce Springsteen sang long ago. But if times are better than Wall Street is betting, you may want to bet against Wall Street. They're in it for a day or an hour -- you're in it for life. And you have an immense advantage: You can take advantage of their panic.

They take plenty of advantage of you, so now it's your turn. Buy and hold.

~ Ben Stein, "No Nightmare on Wall Street," Yahoo! Finance, October 29, 2007