Interest Rates

  • 26 Jul
    Central Banks Have Made The Rich Richer. Here’s How To Take Advantage.

    Central Banks Have Made The Rich Richer. Here’s How To Take Advantage.

    • Central banks have intentionally inflated asset prices that benefit those who own assets, while wages and real prices have remained equal.
    • There’s no case for being a saver. The risks are too high for miserable returns.
    • I’ll discuss three options to protect yourself and take advantage of the next quantitative easing rounds.

    Introduction

    In the last 10 years, the financial environment has changed significantly. You might not see it in your everyday life, but the 2007 environment and the environment today are hugely different. The wealth effect hasn’t really worked as Central Banks had planned and has significantly skewed asset values compared to fundamentals.

    In today’s article, I’ll describe what happened, compare it to what the previous situation was, show who benefited from the significant monetary policy market intrusions, and who will keep benefiting in the future to find ways to take advantage of the situation. More →

  • 24 Jul
    It’s Feeling A Lot Like 2007 – Are You Prepared For The Next Crash?

    It’s Feeling A Lot Like 2007 – Are You Prepared For The Next Crash?

    • There’s nothing to worry about. Everything looks exactly the same as it did in July 2007 when no one was worried because the S&P 500 was breaking new highs.
    • Even the statements from the FED’s 2007 chair and the chair of it today look alike.
    • This doesn’t mean there will be a crisis in 2018, but it sure means you have to be prepared for anything.

    Introduction

    Last week I published an article describing how strong the trend is that is pushing the S&P 500 higher. There is plenty of liquidity, corporations are doing big buybacks, and most investors are putting their money into passively managed investment vehicles. More →

  • 17 Jul
    How The Economic Machine Works & Why You Need To Prepare Your Portfolio For It

    How The Economic Machine Works & Why You Need To Prepare Your Portfolio For It

    • Productivity growth is the long-term key, make sure your portfolio follows it.
    • The global distribution of wealth is shifting very quickly.
    • Preparing your portfolio for what’s going to happen doesn’t even cost that much. On the contrary, it is even more profitable.

    Introduction

    Ray Dalio is famous for many things. One of them is his explanation of how the economic machine works where he describes how productivity growth, the long-term debt cycle, and the short-term debt cycle affect an economy.

    Today, I’ll briefly summarize his findings as they are reported in a 300-page document and, most importantly, see how Dalio’s economic philosophy can affect our investing strategies. More →

  • 10 Jul
    The FED & ECB Meeting Minutes Explained

    The FED & ECB Meeting Minutes Explained

    • Financial markets are very dependent on Central Bank activity.
    • The FED is slowly tightening, but the activity is more a façade than actual tightening. Europe is still easing.
    • The fact is that things will eventually change. When? Nobody knows. The only thing a savvy investor can do is protect themselves and take advantage of everything.

    Introduction

    Many don’t see that the current market is highly influenced by Central Banks.

    In the past 8 years, Central Banks have been continually putting money into the system. The FED has recently stopped doing so, but the ECB is still buying bonds, even corporate bonds, while the Bank of Japan has bought almost everything they can buy. So, it’s clear that high current asset prices are a direct result of Central Bank actions as the fundamentals haven’t really improved as much as asset prices have increased.

    The long-term picture is relatively easy to understand, but I must say, I was surprised by the short-term correlations between Central Bank activity and stock prices. More →

  • 26 Jun
    Don’t Follow The Herd: Why The Majority Of Investors Always Get It Wrong

    Don’t Follow The Herd: Why The Majority Of Investors Always Get It Wrong

    • Consider this, the question always remains the same: “What will my return on investment be?” But the answer changes all the time.
    • Thinking costs energy and humans prefer to let others do the thinking for them. Are you like that?
    • It’s important to know when to use history as a teacher.

    Introduction

    “Whenever you find yourself on the side of the majority, it is time to pause and reflect.” 

    – Mark Twain

    When Albert Einstein was teaching at Oxford University, he gave his senior physics students exactly the same exam he had given them the year before. His assistant was disturbed by such a mistake, but before intervening he asked Einstein whether he actually made a mistake. Einstein replied that the exam was exactly the same. The assistant was even more concerned and asked why he would do such a thing. Einstein replied, “Well, the questions are still the same, but the answers have changed.” More →

  • 21 Jun
    Diversification vs. Concentration

    Diversification vs. Concentration

    • Index funds and diversification have worked extremely well in the past 35 years, however their success can be thanked to geography, as we hear only about the success in the U.S., and to declining interest rates.
    • If the S&P 500 had the same earnings yield as when the Vanguard fund gained traction, it would be at 557 points, yes 77% below current levels.
    • It’s better to wait in cash than buy a diversified index fund now.

    Introduction

    Some investment gurus advocate spreading your portfolio across various asset classes in order to limit your risks for the same return. On the other hand, others say diversification is for idiots and for those who don’t know what they’re doing. I’ll analyze their arguments and see what the best option is for you. More →

  • 16 Jun
    Back From The Future – An Article From June 16, 2020

    Back From The Future – An Article From June 16, 2020

    • Central banks didn’t manage to tighten at all up to 2020 and this led to high inflation and economic stagnation.
    • Developed countries’ currencies significantly depreciated while emerging markets gained in strength due to their high productivity levels.
    • In 2020, financial markets became rational again as eventually, fundamentals have to come first.

    Introduction

    I somehow managed to go to the future to the 16th of June 2020. However, I was only there for a few seconds and only managed to check on Investiv Daily.

    I found an article that explains with perfect 20/20 hindsight what has happened in this decade and how everybody was blind to what was going on. I’ve copied the article here in order to give you a look at how the next few years will play out. More →

  • 09 Jun
    Want To Know About The Current State Of The Market? Read This.

    Want To Know About The Current State Of The Market? Read This.

    • A quick look at the economy points out a few risks, but there are also some positives.
    • Unfortunately, savers have gotten the short end in this environment, but average investors haven’t done much better either.
    • It’s important to understand what’s going on and how will it affect your long-term returns. If you only think about the short term, your returns will be below average, thus below 2.3% per year.

    Introduction

    J.P.Morgan (NYSE: JPM) recently released its Q2 2017 Guide To The Markets. As this report is very long, with a total of 71 slides and a lot of correlation charts, I’ll take out the most important things an investor should know about the current state of the markets and the economy. More →

  • 05 Jun
    Why You Should Be Careful When You’re Told To Have A Defensive Portfolio

    Why You Should Be Careful When You’re Told To Have A Defensive Portfolio

    • Defensive investments are usually promoted to those in retirement or close to it. However, we should all always be defensive investors.
    • Neither bonds nor general stocks are defensive investments, no matter the diversification or quality of the bonds.
    • Cash is the only defensive investment in this market. Other options are positive asymmetric risk reward investments.

    Introduction

    Many will say that a portfolio owned by an investor who is about to retire or is retired should be a defensive one. However, I find focusing on age isn’t smart because no matter our age, we have to always protect our portfolio and try to maximize returns. After all, isn’t the first rule of investing to never lose money while the second rule of investing tells us to read rule number one again? More →

  • 30 May
    Why You Want Gold Miners In Your Portfolio Now

    Why You Want Gold Miners In Your Portfolio Now

    • Investing 5% of your portfolio in gold miners offers you the potential for a twenty-fold upside while the downside is just the invested 5%.
    • A macroeconomic analysis shows that there is a high chance that the FED won’t be able to significantly increase interest rates or trim its balance sheet.
    • More quantitative easing—similar to what is still going on in Europe and Japan—would easily bring gold above $2,000 per ounce. In that case, I wouldn’t exclude 1,000% jumps for miners.

    Introduction

    Lately I’ve been mentioning in a few articles how gold, especially gold miners, are a good hedge for a portfolio. My idea is that if you own gold miners with 5% of your portfolio, you are relatively well protected against whatever surprises we might see coming from the economy. More →

1 2 3 4 5 7