Stiff Competition
“It is nice to have valid competition; it pushes you to do better” – Gianni Versace.
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In Praise of Diversity
“You will always hate something in your portfolio. Really, really hate it”. James Osbourne (Bason Asset Management) October 2014. We often get communications from advisors telling us that they have clients who have concerns with regard to one (or more) of their holdings in EBI Portfolios, which for whatever reason are doing badly at that point. What follows is an attempt to explain why the portfolio is diversified and how (and why) this methodology works.Looking at the One Year chart for EBI 100 (Home Bias) it is not hard to spot the outlier; Global Property has lagged badly in the last year (and indeed over two years as well).
Unbalanced Behaviour
This is an up-date to a post I wrote a while ago. “The investor’s chief problem – and even his worst enemy – is likely to be himself.” – Benjamin Graham. It is late on a Friday evening, and my local pub is evincing a, ahem, somewhat liberal interpretation of the UK Licensing laws. So, I get two more drinks and settle back down into the corner of the bar to find my friend, (John) returning to his favoured topic, that of his investments and how well he has done since we last met. J: Well, I have had a good run in recent months, despite all the market twists and turns of late. Only last month, I bought into Anglo American shares and made 10% in two weeks! Its gone down since, so I am feeling quite pleased with my efforts.Me: Really? I remember that you also bought Barclays shares a while ago, how is that one going?
Trading Places
“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer” – Adam Smith (the Wealth of Nations).
Testing One’s Commitment
Ricky Gervais on intelligence: “Some of you are really smart. You know who you are. Some of you are really thick. Unfortunately, you don’t know who you are.” Every week at the close of US markets on a Friday, the Chicago Commodity Futures Trading Commission releases its Commitments of Traders Report, where it details the Open Interest in Futures and Options in various assets and commodities markets. This data, current to the previous Tuesday, details where and to what extent traders, investors (and individual investors) are positioned and is keenly watched by many to try to ascertain what other investors are doing with their capital.
The god that failed?
When you see that in order to produce, you need to obtain permission from men who produce nothing—when you see that money is flowing to those who deal, not in goods, but in favours—when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you—when you see corruption being rewarded and honesty becoming a self-sacrifice—you may know that your society is doomed. – Ayn Rand; Atlas Shrugged, 1957 The title of this post is a reference to a book published in 2001 that reflects on the experiences of 6 writers of the 20th Century, who became adherents of and ultimately disillusioned with, Communism. It is ironic that much the same can now be said of Capitalism; at the very least it appears to be having a mid-life crisis.
Births, Deaths and Marriages…
“Some calamities – the 1929 stock market crash, Pearl Harbor, 9/11 – have come like summer lightning, as bolts from the blue. The looming crisis of….. the demographics of an aging population, its causes, timing and scope are known”. George Will – Political Commentator for the Washington Post, NBC et al. Over the next decade or so, the Developed World faces the prospect of their populations shrinking at an increasingly fast rate, whilst at the same time the Developing World is seeing continued strong rises in fertility. This fascinating website shows it all in real time, (well not exactly in real time but you get the drift).
Is Inflation Back?
Following on from the famous quote that Helen of Troy’s was the face that “launched a thousand ships”, Isaac Asimov, the science fiction writer claimed to have invented a new measurement unit, the millihelen, which corresponds to the beauty required to launch one ship. The Times newspaper this week pointed out that, as per a letter to the New Scientist as far back as 1959, the inverse also applies; -1 millihelen would be enough to sink one. There has been much market angst recently over the rise of inflation, as bond prices have fallen, raising yields which in turn has put equities on edge. But would a rise in interest rates actually be the -1 millihelen necessary to sink the economy?
The Housing Bubble goes Global
If one turns on the TV almost any time of day, one will see a litany of property related programmes, “Homes Under the Hammer”, “Location, location, location “and countless others adorn our screens in an almost non-stop barrage of lifestyle envy. As of February 2016, Channel 4 had no less than 12 property shows on its screens and this is almost certainly below where we are now. The property market has gone mainstream and has gone Global.
We are Experiencing Some Turbulence…
On the day of Jerome Powell’s inauguration as Fed Chairman (and before he had time to find out where the cafeteria is!), markets have greeted him with a big bang. There are precedents for this “bad luck”. Alan Greenspan started his role as the Chairman in August 1987, 3 months before the Big One in October 1987 and Ben Bernanke also assumed the job in 2006, as the Financial Crisis was just unfolding. So, it is not a unique situation, but it must make him wonder whether the market gods are out to get him. I imagine, ever so quietly, Janet Yellen is having a chuckle…