The US market is not quite as strong as the indices would suggest because CNBC said the other day, 90 percent of the S&P gain since December 2014 came from Facebook, Google, Amazon, Netflix. There has been a lot of selling in the emerging economies stocks since 2011. This year most emerging economies have outperformed the US.
I think that in 2017 my recommendation would be to overweight emerging economies, and I would also overweight Europe, partly because I think that the sentiment about the U.S. dollar is far too optimistic. I think the dollar is terribly overbought and overvalued, so I wouldn't get into the U.S. dollar at this time.
Watch the video below for full interview
Wednesday, November 30, 2016
Monday, November 14, 2016
Under Trump, TPP is off the table
The obvious trade with a Trump victory is to own Russian and Kazakhstan assets — bonds and equities. That is the obvious trade for the simple reason that Mr. Trump has a more benign view of the world and respects the perspective of foreign leaders.
In the U.S. we have a fully priced stock market ... the large bargain you can find is in emerging markets in my opinion.
Monday, November 7, 2016
Evils of government are directly proportional to the tolerance of the people
Our friend Sydney Williams states that, “Across the globe, men and women have begun to stand up against elites who control government, unions, banks and large businesses. People have grown weary of the lies, the corruption and the self-dealing. Brexit in England was manifestation of this unrest, as was the Republican nomination of Donald Trump in the United States.”
Peggy Noonan writes in the Wall Street Journal that, “Those in power see people at the bottom as aliens whose bizarre emotions they must try to manage” and that, “This is about distance, and detachment, and a kind of historic decoupling between the top and the bottom in the West that did not, in more moderate recent times, exist.”
For several years now, I have been reading my friend Jawad Mian’s Stray Reflections. This is not to say that I agree with everything he says, but over the years I enjoyed his views on markets (frequently very contrarian) and his thoughts on life. In The Forgotten Man, Jawad addresses the same concerns Williams and Noonan brought up, but from an economic and financial perspective.
I wish all my readers a wonderful festive season. I also wish that my American readers vote wisely because as Plato observed that, “The price of apathy towards public affairs is to be ruled by evil men” and as Frank Kent opined that, “The evils of government are directly proportional to the tolerance of the people.”
Peggy Noonan writes in the Wall Street Journal that, “Those in power see people at the bottom as aliens whose bizarre emotions they must try to manage” and that, “This is about distance, and detachment, and a kind of historic decoupling between the top and the bottom in the West that did not, in more moderate recent times, exist.”
For several years now, I have been reading my friend Jawad Mian’s Stray Reflections. This is not to say that I agree with everything he says, but over the years I enjoyed his views on markets (frequently very contrarian) and his thoughts on life. In The Forgotten Man, Jawad addresses the same concerns Williams and Noonan brought up, but from an economic and financial perspective.
I wish all my readers a wonderful festive season. I also wish that my American readers vote wisely because as Plato observed that, “The price of apathy towards public affairs is to be ruled by evil men” and as Frank Kent opined that, “The evils of government are directly proportional to the tolerance of the people.”
Thursday, November 3, 2016
A recession in the West would not be such a bad thing
It's not politically correct to say it, but for the social system of the Western world and for capitalism a serious recession would be desirable, because the financial sector as a percentage of the economy is still too big.
In 1973 when I came to Asia everybody said that if the US sneezes, then Asia catches a cold, because all Asia's exports went to the US.
In 1973 when I came to Asia everybody said that if the US sneezes, then Asia catches a cold, because all Asia's exports went to the US.
Wednesday, November 2, 2016
Dont get investing advice at cocktail parties
Most individual investors have the tendency to commit financial suicide. In other words, if they see the NASDAQ going up they may resist buying expensive stocks for a long time but in the end, they go to cocktail parties and all their neighbors say, “Today I made so much money buying this stock.” Of course at cocktail parties you have a group of people, they own different shares, all of
them go down but one goes up. They’ll talk about the one that goes up. They never talk about the ones that go down.
In the end, they also buy those NASDAQ stocks and the whole thing collapses. “Then they go again to cocktail parties and then they see the neighbor’s house appreciating by 20% per annum. Finally, they can’t resist. They buy homes in 2005, 2006 but since they lost their money on NASDAQ they have to borrow 100% on the homes.
The Feds tell them that home prices will never go down and don’t forget Ms. Janet Yellen, she was the president of the San Francisco Fed from 2005 to 2010. The San Francisco Fed is responsible for Arizona, Nevada and California, the three biggest housing bubbles in the whole country. Thank you very much Ms. Yellen. You’re now in charge of the whole US. You can create other bubbles.
them go down but one goes up. They’ll talk about the one that goes up. They never talk about the ones that go down.
In the end, they also buy those NASDAQ stocks and the whole thing collapses. “Then they go again to cocktail parties and then they see the neighbor’s house appreciating by 20% per annum. Finally, they can’t resist. They buy homes in 2005, 2006 but since they lost their money on NASDAQ they have to borrow 100% on the homes.
The Feds tell them that home prices will never go down and don’t forget Ms. Janet Yellen, she was the president of the San Francisco Fed from 2005 to 2010. The San Francisco Fed is responsible for Arizona, Nevada and California, the three biggest housing bubbles in the whole country. Thank you very much Ms. Yellen. You’re now in charge of the whole US. You can create other bubbles.
Tuesday, November 1, 2016
We are all DOOMED
It’s basically gloom, boom and we’re all doomed. The question is: when? I believe the central banks in this world have embarked on an experiment whose consequences will be very bad eventually.
It will end either by the government defaulting or by massive money printing, and by doing that, you essentially lower the purchasing power of paper money. There will be a default regardless either through money printing or a straight default.
It’s only a question of time, but default will also occur in various other ways. Pensioners or Social Security recipients would either get their incomes cut massively, or they will get their income in money that isn’t worth anything. In other words, today they can buy a basket of goods with their pension, but in the future they may only be able to buy a loaf of bread, if anything.
What should the average investor do
My advice would be diversification and I don’t believe you can trust paper money anymore. It has to function to be a store of value. The purchasing power of money has gone down a lot. By “a lot” I really mean by a lot.
It will end either by the government defaulting or by massive money printing, and by doing that, you essentially lower the purchasing power of paper money. There will be a default regardless either through money printing or a straight default.
It’s only a question of time, but default will also occur in various other ways. Pensioners or Social Security recipients would either get their incomes cut massively, or they will get their income in money that isn’t worth anything. In other words, today they can buy a basket of goods with their pension, but in the future they may only be able to buy a loaf of bread, if anything.
What should the average investor do
My advice would be diversification and I don’t believe you can trust paper money anymore. It has to function to be a store of value. The purchasing power of money has gone down a lot. By “a lot” I really mean by a lot.