onsdag 3 augusti 2016

Lite optimism.

Bill Gross:

  1. When does our credit-based financial system sputter/break down?
    When investable assets pose too much risk for too little return. Not immediately, but at the margin, low/negative yielding credit is exchanged for figurative and sometimes literal gold or cash in a mattress. When it does, the system delevers as cash at the core, or real assets like gold at the risk exterior, become the more desirable assets. Central banks can create bank reserves, but banks are not necessarily obliged to lend it if there is too much risk for too little return. The secular fertilization of credit creation may cease to work its wonders at the zero bound, if such conditions persist.


Danielle Dimartino Booths nya bok tycks vara intressant. Hon är trots allt en av få ekonomer som man kan respektera:

"An insider's unflinching expose of the toxic culture within the Federal Reserve.

In the early 2000s, as a Wall Street escapee writing a financial column for the Dallas Morning News. Booth attracted attention for her bold criticism of the Fed's low interest rate policies and her cautionary warnings about the bubbly housing market. Nobody was more surprised than she when the folks at the Dallas Federal Reserve invited her aboard. Figuring she could have more of an impact on Fed policies from the inside, she accepted the call to duty and rose to be one of Dallas Fed president Richard Fisher's closest advisors.

To her dismay, the culture at the Fed--and its leadership--were not just ignorant of the brewing financial crisis, but indifferent to its very possibility. They interpreted their job of keeping the economy going to mean keeping Wall Street afloat at the expense of the American taxpayer. But bad Fed policy created unaffordable housing, skewed incentives, rampant corporate financial engineering, stagnant wages, an exodus from the labor force, and skyrocketing student debt. Booth observed firsthand how the Fed abdicated its responsibility to the American people both before and after the financial crisis--and how nobody within the Fed seems to have learned or changed from the experience.

Today, the Federal Reserve is still controlled by 1,000 PhD economists and run by an unelected West Coast radical with no direct business experience. The Fed continues to enable Congress to grow our nation’s ballooning debt and avoid making hard choices, despite the high psychological and monetary costs. And our addiction to the "heroin" of low interest rates is pushing our economy towards yet another collapse.

This book is Booth's clarion call for a change in the way America's most powerful financial institution is run--before it's too late."


TINA- There is no alternative

"It’s true that central bankers have explicitly cultivated the TINA mindset in order to create a ‘wealth effect.’ And I understand why investors would thus believe that surely central bankers would not now lead them astray. If the markets ever begin to weaken they reasonably expect them step in to support them. I also agree that the Fed is far more concerned with the stock market than anything else these days for this very reason.

(...) Still, history shows that the Fed has never been able to prevent the sort of bust that necessarily follows this sort of boom in financial assets unsupported by fundamentals. To expect them to be able to do so today, despite all of the historical evidence to the contrary, is merely relying on another dangerous rationalization.


Graf i nedanstående länk är även den intressant.



Utdrag från Vito Maidas Q1 rapport 2016:

"What do we advise in an environment where the long term returns from every asset class are expected to be very low and do not justify the risks? Here are some suggestions:

Entrust your assets to a TRUE value manager as it has been empirically proven that over time value investors generate performance that is better than market averages with less risk; 

For ultra-high net worth individuals and families, invest a portion of your assets in a highly concentrated portfolio of value stocks; 

Pay off debt; the after tax return on interest savings will be far greater than financial market returns and the peace of mind will be “priceless”. 

In a high risk and low return environment there aren’t many other satisfying alternatives.

There is one outcome that applies almost uniquely to you, our clients. The best scenario would be a good old fashioned bear market. While a broad based market decline would make some uncomfortable, our substantial cash position would allow us to take advantage of the situation. We would be able to purchase securities at valuations that would potentially generate substantial long term rates of return.

(...)We were quite excited earlier this year, as it appeared that investors were ready to capitulate. We were prepared to pounce! Unfortunately, markets turned quickly and sharply upwards as the Federal Reserve indicated that it was delaying interest rate increases for the foreseeable future. Sometimes we just can’t catch a break!

As you have seen in your portfolios, we have made investments in high quality businesses when their share prices have fallen dramatically. Since our inception in 2000, the realized gains on these investments have averaged more than 20% compounded per year. In order to achieve such returns we have had to be very selective. Unfortunately we have been unable to find enough of these opportunities at any one time to be fully invested. Many are surprised to learn that we have only made forty-six investments over the past sixteen years; an average of less than three per year. For us, a little more activity brought on by a substantial market decline would be very much welcomed!

(...) It is unusual for an investment manager to write a newsletter that projects low future returns and hopes for a serious market decline. But it is because of you that we can say and practice what we believe. Your confidence and trust has given our work true meaning and purpose. It is a privilege to serve all of you.

Vito Maida "

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