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Is Capitalism moral?

Is Capitalism moral?

Evidence Based Investing   |  

The grotesque juxtaposition of the deadliest mass shooting in US history and another 150 point surge in the Dow, following on from the seeming indifference to the prospect of nuclear war in the Korean peninsula has prompted me to wonder if capitalism (or at least it’s current version) is in any way moral. It is often said that capital itself is amoral-it merely goes to where it is treated best, but participants can (or should) be. The excesses of executive pay of recent years and the Equifax stock sales by Executives prior to the disclosure of a major data leak, however, suggests otherwise. It is of course the case that without capitalism, we would all be living i…

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Needle in a Haystack...

Needle in a Haystack…

Evidence Based Investing   |  

It is becoming a bit of chore to keep up with the doom-laden predictions emanating from the twitter-sphere about the fate of markets, (though I am doing my best). The causes are variously, low volatility, passive investors, Central Bankers or market valuations or a combination thereof. The latest panic-du-jour concerns “market breadth”, which measures the number of shares advancing compared to those declining; the theory is that if too few shares are rising relative to those falling, the market is due for a tumble. On the face of it, it seems intuitive, but the problem with using market breadth to foretell market moves is that it is hugely unreliable; consider these two articles (from the same source), dated December 2015 and

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Are We at the Point of No Return?

Are We at the Point of No Return?

Evidence Based Investing   |  

‘Please, sir, I want some more.’- Oliver Twist (Charles Dickens) That we are living in a low return world is now so widely accepted as to be bordering on a cliche- but HOW low will long term returns likely be? With the caveat that no one really knows, it is possible to come up with a reasonable set of assumptions that can provide us with a range of potential outcomes. We looked at this issue around a year ago, so now might be a good idea to revisit the prospects from a slightly different angle, as there are many ways to arrive at a conclusion, some of which will be similar.

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Dumping the Dollar

Dumping the Dollar

Market Commentary   |  

“The strength of the dollar has historically been tied to the strength of the U.S. economy and the faith that investors have in doing business in America” – Steve Mnuchin (US Secretary of the Treasury). The Dollar is currently about as popular as a rattlesnake in a lucky dip; earlier this week the US Dollar Index hit lows not seen since December 2014, and is down nearly 12% since the start of the year. Speculative positioning in the US Dollar has also reversed sharply, with Hedge funds etc. now net short for the first time since 2013 (note the confluence of short positions with major market lows!). Since the Dollar is the world’s reserve currency, it is an important indicator of risk appetite across the globe. We wrote about Dollar negativity in October last year and it seems to have returned.

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It's looking Grim up North

It’s looking Grim up North

Market Commentary   |  

“The Americans will always do the right thing… after they’ve exhausted all the alternatives” . (attributed to Churchill, though there is doubt as to its veracity). The row between the US and North Korea has been escalating, with increasingly angry words and threats (whose intensity is mirrored 5000 km away on the Indo-Chinese border) being exchanged. After studiously ignoring the rise in the diplomatic temperature for nearly a month, last week it suddenly exploded into life with markets, especially Asian markets, understandably taking fright. Buying resumed this week as nuclear Armageddon didn’t occur over the weekend, (though one must wonder who these “investors” think they will be able to sell to in the event of a holocaust), but the situation remains tense as both sides contemplate their next moves.

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