A Different Perspective
Asking the Right Questions
Central bank policy has its limits
Central bank policy remains the predominant theme in financial markets, hence when the leaders of these institutions speak everyone listens. Last week, ECB President Mario Draghi gave a speech entitled “The International Dimension of Monetary Policy”, in which he subtly warned of the risk of “destabilising spillovers” from monetary policy, and the need for other areas of policy – e.g. fiscal policy – to share the burden of boosting economic growth and inflation. In essence, monetary policy is not the silver bullet that can alone solve the world’s economic problems. Read More
The importance of critical thinking
It is not often I share links from the Daily Mail but I have to share this article from Jamie Carragher – “English players are weak… we think we are making them men but we’re creating babies” – an excellent piece on the failure of the English national team. In particular, this quote stood out for me: Read More
Weekly Market Update: June 28th 2016
Financial market participants endured another volatile week, from the Monday exuberance that saw the major European equity indices rally more than 3% as markets priced little chance of BREXIT, to the all-out panic on Friday after the surprise news broke that Britain had voted to exit the European Union. It will be a week to remember for Europe, and Britain. Read More
BREXIT – The certainty of forecasts
I found it interesting to hear former Governor of the Bank of England, Mervyn King, be so critical of the British Government and the Treasury for their “scaremongering tactics”. In an interview with the BBC (see clip), he urged calm after what he called ‘the most dispiriting campaign of his lifetime’.
On the tactics of the ‘remain’ campaign, he summed up the attitude of the people: “If you say to someone: ‘You are an idiot if you don’t agree with me’, you are not likely to bring them in your direction.“ Read More
Thoughts on BREXIT, breaking up with Europe
Sacré bleu! Hearts are breaking across Europe, as the European establishment has been jolted by the surprise result that Britain has voted to leave. As one might expect the initial reaction has been an emotional one, the innate fight-or-flight response of market participants has been activated, with a sense of panic pervading markets this morning.
In a speech on June 17th in Vienna, entitled “Unity in Diversity: The Case for Europe”, IMF Director Christine Lagarde said “It has been said that ‘it takes great courage to see the world in all its tainted glory, and still to love it’. So I wish bon courage to our fellow Europeans from the United Kingdom!”. I remember reading the speech thinking that, if anything, it would strengthen support for the leave campaign. It is the type of patronising rhetoric from the establishment that the average individual has had enough of. Not quite ‘let them eat cake’ but I am sure those Britons who have seen little improvement in their personal circumstances over the last seven years don’t care to be reminded about how Europe has transformed Britain for the better. Read More
Weekly Market Update: June 20th 2016
Market Recap
Global equity markets endured a volatile week as the British referendum on whether to remain or exit the European Union dominated investor’s minds. A rally across risk assets on Friday provided a small amount of relief, but overall the major equity indices were sharply lower for the week. Read More
Weekly Market Update: June 7th 2016
Market Recap
Global equity markets ended the week on a sour note as market participants were caught off guard by much weaker than expected monthly US jobs data from the Bureau of Labour Statistics. The sharp response across equity, bond and currency markets on the back of one report is a reminder of the lack of conviction among market participants on the true state of the fundamentals underpinning the global economy. Most of the major equity indices ended the week lower (China bucked the trend), government bond yields fell and the Euro strengthened as markets moved to risk-off mode. The German government 10-year bond yield closed the week down 7bps at 0.07%. Read More
Words of Wisdom from Muhammad Ali
Muhammad Ali once said that “It’s not bragging if you can back it up”.
As the world reflects on the passing of a legend, and his 74 years on this planet, it is fair to say that Ali lived up to his claim “I am the Greatest”, not only with his achievements in the ring, but also in the way he stood up for what he believed in, how he fought back against racial discrimination and white power in the pursuit of freedom and equality, and also the unbridled spirit he showed in his longest fight of all, his battle against Parkinson’s disease. Ali never hid. His fists were always up, a true fighter!
The planet Earth is just a speck in the cosmos, a planet that is potentially 4.5 billion years old in a universe that is estimated to be 13.7 billion years old! As individuals, we are all just only passing through, but some more than others leave an unforgettable mark. Muhammad Ali is one of those people. There may not be life after death, but Ali will live on through everyone he has inspired. He will be forever remembered.
As everyone knows, Muhammad Ali was as quick with his words as he was with his feet. Reflecting on the many videos and montages of Ali over the weekend, below are some of my favourite quotes: Read More
Why are humans so intelligent? Helpless babies.
Relative to every other life form on earth, humans have an unrivalled intelligence. Why? This article from the Economist – “Human evolution: Of bairns and brains” – discusses an interesting theory from Steven Piantadosi and Celeste Kidd who suggest that “humans may have become so clever thanks to another evolutionarily odd characteristic: namely that their babies are so helpless”. A thought provoking idea, the article is well worth a read.
Of course, looking at the state of the world, we may not be as intelligent as we think. A more advanced life form might peer down from another planet or universe in disgust at the way humans treat each other and the planet.
Thoughts from the London Value Investor Conference
On Thursday of last week I attended the annual “London Value Investor Conference”. This is the fifth year for the conference since it was established in 2012, of what can only be described as an investment marathon of a day with fourteen investment managers speaking. I found it to be extremely interesting, and so I have provided a summary of the key points from each of the presentations in the appendix of this blog.
If you are not familiar with value investing, it is considered a religion in the world of investments. While Benjamin Graham – author of the Intelligent Investor – is seen as the founding father of value investing, it is his protégé Warren Buffett who has taken it to the next level through his unrivalled success with Berkshire Hathaway (with much help from Charlie Munger). It became a running joke at the conference how many times Buffet was quoted or paraphrased. In the end it was somewhere in the 30’s.
You could be forgiven for thinking that surely all investing is about value? Why would you invest if you didn’t see value in the investment? However, the investment industry tends to delineate between “value” and “growth”, two categories of active investing, i.e. picking securities to outperform the market.
Value investors focus on buying companies with an “intrinsic value” less than the current market value, while growth investors are more willing to buy companies that might look expensive by traditional value metrics on the basis of expectations of faster growth in the future. In essence, growth investors are more willing to pay higher valuations for potential, what legendary investor Howard Marks called “buying dreams”. Read More
