Seeking Consensus
Contrarian Investing is an investment strategy that is characterized by purchasing and selling in contrast to the prevailing sentiment of the time.
Blog
Read more
Breaking up is (not so) hard to do
Events in Europe appear to be moving in a decidedly dangerous direction. The initial huge sympathy for the migrants has given way to concern (and in some cases alarm) amongst the local populations. From welcoming refugees unconditionally a few weeks ago, Angela Merkel has changed tack, limiting their “rights” and preventing further inflows (as far as possible). This puts them on a par with the likes of Hungary, Croatia, Slovenia and others who are actively seeking to offload the problem to others. Meanwhile the EU itself, according to the Washington Post, predicts<
From ZIRP to NIRP – The Monetary Twilight Zone
ZIRP- Another Japanese innovation, this time from the Bank of Japan, whose aim was to stimulate the Japanese economy by having a Zero Interest Rate Policy: so far (15 years and counting), it has had an extremely limited effect. NIRP- A variation on the above theme, whereby Central Banks (particularly the ECB, but not limited to them ) employ a strategy of Negative Interest Rate policy: the likely economic result will be much the same.
A Sequence of Errors?
The future depends on what you do today. – Mahatma Gandhi There has been much talk recently about “Sequence Risk” (a more detailed description of the opposing views can be found here and here ), as both sides ponder the Safe Withdrawal Rate (SWR) for retiring investors, and the effect of market returns on Retirement Pot longevity. …
Till Debt Us Do Part?
Some debts are fun when you are acquiring them, but none are fun when you set about retiring them. – Ogden Nash This week we shall focus on a number of (partially) related stories in lieu of a major theme. The common denominator is debt – how companies, states and even countries deal with the issue will shape the economic landscape for years to come.…
Is the Tide Going Out?
Only when the tide goes out do you discover who’s been swimming naked.
The End Game for the Fed…?
In the wake of the Fed’s non-decision on Interest rates last week, the markets have remained highly volatile and there are now questions being raised about the Fed itself. As Vanguard’s Chief US economist put it, “we are concerned with the Fed’s acknowledgement of recent market volatility in its decision. The Fed runs the risk of being held captive to the markets as, paradoxically, much of that volatility is due to the anticipation and uncertainty around when the Fed will move”.
Can Corbyn win, and what if he does?
[The following is NOT a forecast – according to some bookies, Corbyn has only a 14% chance of being the next Prime Minister. What follows is an unlikely potential scenario which would have a high impact on markets – a so-called Black Swan event] There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know. – Donald Rumsfeld Black Swan: An outlier event, with an extreme impact…
Risk Aversion: A Crowded Trade?
There is always an easy solution to every human problem — neat, plausible, and wrong. – H.L Mencken (writer, 1880-1956) Declines in markets over the past three months have, as usual, led to an inquest into what went “wrong”, conveniently ignoring the reality that losses go with the territory, and at around 10% is no more than a run of the mill correction. Some suspects have been hauled up in front of the court of public opinion: Hedge funds (a usual suspect if there was one), Factor investing in general (smart beta, alternative beta etc.), and risk parity in particular. Hedge funds can be (partly) absolved of this charge. Losses, whilst large in some cases, were not generalised, and they may well not have been the catalyst for the chaos, but merely caught up in it all.
The Long Term view on EM
It hasn’t been a great period for all things Emerging recently. Predictably, analysts have turned negative co-incidental with the market falls. EPS forecasts have collapsed as this chart shows. As this article points out, however, that is a bullish sign for investors. Warren Buffet is often quoted as saying, “Be fearful when others are greedy, and greedy when others are fearful”, and this may be one of those moments. Meanwhile, aggregate Developed Market Bond and Stock valuations are at their highest level of all time, according to Deutsche Bank.