So, what is the alphabet shape guide to economic recoveries? It is a question worth pondering, bearing in mind that we could be in the final half of the COVID-19 pandemic, undoubtedly the worst health crisis of the century. The current state of play, regarding the pandemic, is leading me to be cautiously optimistic, bearing in mind that pharmaceutical companies are developing vaccines, health experts are gaining a better understanding...
Read More
Unorthodox investing strategies during these extraordinary times could be one way of achieving alpha, which is to outperform the benchmark index. The so-called “new normal” is anything but normal. Central bank liquidity is at an all-time high, US federal debt in the pandemic economy has spiked from 77% of GDP to 108% of GDP by this time next year. Nevertheless, despite this level of economic distress and uncertainty stocks are...
Read More
Investing in a zero rates environment is particularly problematic for the traditional 60-40 retirement portfolio of stocks and bonds. If fact, investing in a zero rates environment has meant that the traditional retirement portfolio of stocks and bonds is down by 20% for the fourth time since WWII. The 60% stocks and 40% bonds portfolio lost value during the energy crisis recession of the 70s in 1974 and in September 2002. The...
Read More
Has value investing died in this new normal as the fundamentals meltdown and risk asset prices melt-up where all that counts is the central bank’s willingness to keep stocks propped up with massive amounts of liquidity. Not even a deep earnings recession, a coronavirus-induced collapse in profits where earnings have been tipped to fall by 60% in the quarter has dampened the recent bull run in stocks. So the financially...
Read More
A deep earnings recession made worse by a coronavirus-induced collapse in profits could be the final straw that dashes all hopes of a swift V-shaped recovery. Before the coronavirus hit the mainstream corporates were already in an earnings recession. In a piece entitled, “Earnings Recession” dated November 2019, I wrote, “the overall three straight quarters of year-over-year earnings declines suggest that companies are deep into an...
Read More
The transition to a new monetary policy regime, known as MP3 state capitalism is in play according to Bridgewater’s CIO Prince. MP3 state capitalism puts the government at the epicenter of capital distribution and it is likely to have a profound impact on investment portfolios going forward. So how did we get to MP3 state capitalism, which is likely to be radically different from previous cycles? The idea of state capitalism...
Read More
Recent Comments