Asset Management Switzerland 2015
NOW in PDF Version!
What to make of markets that are no longer on speaking terms with their fundamentals.
Guggenheim Partners, Scott Minerd, May 15, 2015
The Fed Isn’t Fueling This Typical Bull Market
“Quite high.” That is how Fed chair Janet Yellen described stock valuations last week. Cue the usual Fed rate hike speculation. One camp thinks a hike is overdue—that the Fed has been too accommodating, inflating asset bubbles across the land. Others fret a hike and argue the US economy needs continued “Fed support.” So who is right?
By Fisher Investments Editorial Staff, 15/05/2015
"...practically and analytically, a credit theory of money is possibly preferable to a monetary theory of credit."
Joseph Schumpeter, History of Economic Analysis
The Economic Cycle Is Maturing but Still Has Room to Run
The current economic expansion, now over 70 months old, is entering its mature phase, having already exceeded the average length of prior cycles of 57 months. However,
Guggenheim Partners, Scott Minerd, May 08, 2015
The New Physics of Leverage
"Since 2008 the predictions of doom by the goldistas have all been wrong. There has been no hyperinflation among any of the countries whose currencies can be cleared in large amounts through the central banks of the world. Gold has proven to be no more reliable a "store of value" than any other investment".
Stefan Jovanovich, Daily Speculations, 04/05/2015
Who trades with whom? Individuals, institutions, and returns
Journal of Financial Markets, Noah Stoffman, November 2014
As Goes Switzerland…?
Here is a question worth weighing these days: If a strong currency is so devastating to stocks and economies—as many allege—why did stocks in a tiny, export-heavy economy not succumb to a nearly 20% shock appreciation?
By Fisher Investments Editorial Staff, 17/04/2015
The Coffee Chronicles
“I guess that everyone was offered The Godfather,” he recalls. “The only reason I got to do it was that I was cheap, I was young, I was Italian and I was a screenwriter. It was a total stroke of luck. I had no business having such an important movie. I was always on the verge of getting fired. They didn’t like my ideas.”
Breakfast with the FT: Francis Ford Coppola, February 13, 2015
"What you need to understand is that all the usual rules of economic policy changed when financial crisis struck in 2008; we entered a looking-glass world, and we still haven’t emerged. In many cases, economic virtues became vices: Willingness to save became a drag on investment, fiscal probity a route to stagnation. And in the case of the Swiss, having a reputation for safe banks and sound money became a major liability."
Paul Krugman, The New York Times, January 2015
Everything from 1991 Radio Shack ad I now do with my phone
"There are 15 electronic gimzo type items on this page, being sold from America's Technology Store. 13 of the 15 you now always have in your pocket."
Trending Buffalo, Steve Cichon, January 14, 2014
The World’s First Bear Market
"By our count, there have been 25 bear markets in the United States since 1792 and 28 bear markets in the United Kingdom since 1692."
Global Financial Data, Dr. Bryan Taylor, October 2014
The House of Nomura
"Perhaps more interesting is the glimpse into the business world of Meiji, Taisho, and Showa before WWII. What's clear is that Japan had Prussian institutions but an Anglo approach to corporate governance."
Daily Speculations, Weston Minami, October 21, 2014
Did Eonia just end the ECB's Recovery Fiction?
"Despite nearly all outward appearances, Japan and Europe have far more in common than differences, at least where it counts."
Alhambra Investment Partners, August 29, 2014
"In early 2009 the financial press was dumping praise on any mutual fund manager who had evaded a bulk of the stock market decline."
Bason Asset Management, James Osborne, August 28, 2014
The Career Paths of Mutual Fund Managers: The Role of Merit
Financial Analysts Journal, July/August 2014
"Let me cut to the chase: I am increasingly concerned about the risks of our current monetary policy. (...) Our duty as the nation's central bank is not to engineer a "put" to the markets."
Federal Reserve Bank of Dallas, Richard W. Fisher, July 16, 2014
Exchange rate adjustment, monetary policy and fiscal stimulus in Japan's escape from the Great Depression
Explorations in Economic History, July 2014
August 1914: When Global Stock Markets Closed
Only after the fall of Communism did stock markets become as globally integrated as they had been before 1914.
Global Financial Data, Bryan Taylor, July 30, 2014
The Fed Wants to Be Behind the Curve
Federal Reserve, Yield Curve, Macro, Early Warning Indicator
Quote, Bianco Research, James Bianco on Bloomberg, July 24, 2014
Average Stock Market Returns Aren’t Average
The average investor in the stock market will earn less than the average stock market return–this is true even without taking into account any behavioral biases.
MarginalRevolution, Alex Tabarrok, July 11, 2014
Remarks in Honor of Korekiyo Takahashi, Governor of the Bank of Japan, Finance Minister, and Prime Minister in the 1930s
"The key to the Takahashi Economic Policy's success was a shift in economic policymaking from the deflationary regime of Inoue to the reflationary one of Takahashi."
Bank of Japan, Kikuo Iwata, October 2013
Like A Stealth Bomber
"What if inflation is actually surging and the traditional methods of measuring it are just not capable of capturing the rise".
Lobnek Wealth Management, Altug Ulkumen, July 2014
Nasdaq Getting Closer and Closer
"After the dot-com bubble burst, many investors thought the Nasdaq may never get back to its all-time highs from March 2000."
Bespoke Investment Group, July 3, 2014
Central Banks Chart a Course for Overheating
When bull markets mature, investors fear a coming crisis. Today there are plenty of candidates from Europe to China to Thailand. But bull markets climb a wall of worry and there are reasons now not to expect a looming crisis.
Guggenheim Partners, Market Perspectives, Scott Minerd, June 2014
International Overview: Some Struggle, Some Stabilize, Some Move Ahead
U.S., Global Economy, Central Banks, Unemployment, Recession, Monetary Policy
Quote, Wells Fargo Securities, Monthly Outlook, June 11, 2014
“With patient investors in short supply, we have always felt that we face less competition when making longer term commitments.(...) Prices are often more inefficient where crowds are small."
Tweedy, Browne Annual Report, 31.03.2014
Higher Yet and Perhaps Faster
Equity, Bonds, Valuations, Treasury Yield, Dividend Yield, Valuations
Excerpts, Daily Speculations, Gary Phillips, May 31, 2014
Asset Allocation: Risk Models for Alternative Investments
Financial Analyst Journal, May/June 2014
U.S., Volatility, Misperception
Quote , BespokeInvest, May 30, 2014
The Mythical Third Arrow
Japan, Fiscal Policy, Negative View
Take, Fisher Investments Editorial, May 28, 2014
“Profit margins in the US have hit modern-day record levels, and this has been used to help justify high equity valuations.“
Chart, Excerpt, U.S., Equity, Negative View , Variant Perception, May 22 2014
Strength in Aggregate Demand: Virtuous Cycle
Asset Allocation, Macro, U.S., Positive Outlook
Excerpts, Wells Fargo Securities, Monthly Outlook, May 7th 2014
Focus Germany, So far, so good
Germany, Credit Cycle, Early Warning Indicator
Excerpts, Deutsche Bank Research, Current Issues, May 2 2014
A Disappearing act: impact of tighter financial conditions
Bonds, Equity, Global, Market Timing, Volatility, Early Warning Indicator
Excerpts, BlackRock Investment Institute, May 2014
Labor strikes in China: shifting demographics & economic rebalancing
China, Macro, Negative View
Excerpts, Loomis Sayles, May 2014
Emerging markets: time to differentiate
Excerpts, Lombard Odier, Investment Strategy Bulletin, May 2014
The Benefits of Periodic Cash in Equity Portfolios
Cash, Market Timing, Cautious Outlook
Quote, Southeastern Asset Management, April 2014
“GDP has increased by just $2.2 trillion since 2008, despite a $7.3 trillion increase in U.S. government debt since 2008, part of which funded a more than $3 trillion increase in the Fed’s balance sheet. This poor return on investment isn't new; it's just getting worse." Steven Romick, Nedgroup Investments, April 2014
Elections and directions in emerging markets. An entry point amid election concerns?
Emerging Markets, Macro, Contrarian, Positive View
Take, Loomis Sayles, April 2014
Germany: A land of milk and honey?
Germany, Food for Thought, Early Warning Indicator
Quote, Deutsche Bank Research, Talking point, April 30, 2014
Why is no one cheering the falling deficit?
U.S., Budget Deficit, Misperception
CNBC, Ron Insana, April 16, 2014
The Worst Bear Market in History
Which country has the dubious distinction of suffering the worst bear market in history?
Global Financial Data, Dr Bryan Taylor, March 2013
Inside Indian Taper Terror
When the Fed kept quantitative easing (QE) in place last week, US investors weren’t the only ones (wrongly) breathing a sigh of relief. Taper terror is fully global!
MarketMinder, Fisher Investments, Elisabeth Dellinge, November 8th 2013
Addicted to the Apocalypse
"Once upon a time, walking around shouting “The end is nigh” got you labeled a kook, someone not to be taken seriously. These days, however, all the best people go around warning of looming disaster. In fact, you more or less have to subscribe to fantasies of fiscal apocalypse to be considered respectable." Paul Krugman, New York Times, October 24, 2013
"If you put water into a cup, it becomes the cup. You put water into a bottle and it becomes the bottle. You put it in a teapot, it becomes the teapot. Now, water can flow or it can crash. Be water, my friend." Brainpickings, by Maria Popova, May 2013
The Land Co. of Florida and the Florida Real Estate Bubble
The Florida Land Bubble of the 1920s has been hailed as a precursor both to the Stock Market Bubble of the late 1920s and the real estate bubble of the 2000s.
Global Financial Data, Bryan Taylor, 22th October 2013
1995 Government Shutdown
"Back in November and December of 1995, President Bill Clinton and Speaker Newt Gingrich faced off and shut down the government twice."
Bespoke Investment Group, September 30th, 2013
After the First Bank of the United States recharter was defeated, the United States suffered defeat in the War of 1812, and suffered from a lack of fiscal order and an unregulated currency. As industrial and commercial interests expanded after the War of 1812, politicians advocated for the creation of a second Bank of the United States to promote the economy.
Global Financial Data, Bryan Taylor, September 26th 2013.
Did Bernanke Study The First Bank of the United States?
"The bank was part of Alexander Hamilton’s plan for stabilizing and improving the nation’s credit by establishing a central bank, a mint, and introducing excise taxes."
Global Financial Data, Bryan Taylor, September 20th 2013
Do (Some) University Endowments Earn Alpha?
Financial Analysts Journal, Brad M. Barber and Guojun Wang, September/October 2013
71 reasons to be bearish from 1934 to 2005
Daily Speculations, Steve Ellison, August 2013
"Some have come to expect the Fed to keep the markets levitating indefinitely. This distorts the pricing of financial assets, encourages lazy analysis and can set the groundwork for serious misallocation of capital." Federal Reserve Bank of Dallas, Richard W. Fisher, August 5, 2013
The curious case of (NYSE) Margin Debt
Deutsche Bank, August 2013
Sugar, a staple commodity, has taken on a growing share of our diet over the past century. But it wasn’t always like that. There was a time, around the first half of the 19th century, when sugar was considered more of a “precious” commodity, in the same league as gold.
Lobnek Wealth Management, Altug Ulkumen, August 2013
If the pattern in the stock market mirroring 1967 that has unfolded so far this year holds in the second half, we may see a volatile market with a slower pace of gains — but more record highs ahead.
LPL Financial, Jeffrey Kleintop, August 5 2013
The exception “à la française” of bond yields
The French government has enjoyed low financing yields since the onset of the global financial crisis. Yet it appears to us that fiscal fundamentals do not justify such a narrow yield spread with German Bunds.
Lombard Odier, August 5, 2013
What drives international equity and bond holdings? An empirical study
Applied Financial Economics, Lieven De Moor & Rosanne Vanpée, May 2013
Fears of "lost decade"
"In fact, we've had non-stop "new normal" headlines for four years. Except new normal didn't happen". Interactive Investor, Ken Fisher, July 25th 2013
Easing’s Quantitative Analytics
Data show current Fed policy is contractionary for the economy, and in our view, its eventual end should be bullish for stocks.
Fisher Investments, July 12, 2013
The Fed's Bind: Tapering, Timetable and Turmoil
"I see striking parallels between the dramatic recent sell-off in U.S. Treasuries and the Great Bond Crash of 1994."
Guggenheim Investments, Scott Minerd, July 2013
A selection of observations from the great Austrian economist. In stark contrast to the neo-classical school Hayek reminded us that a good economist is also a student of history, philosophy, psychology, sociology and even of biology.
Investments Office, July 2013
“As the Federal Reserve prepares to wind-down unconventional monetary policies (yes, we did see the chairman’s latest “clarification") the emerging markets have been reminded that they are price takers in the global capital markets…” GaveKal Research, July 2013
"The defining feature of the present market and economic environment is incompatibility, juxtaposing weakness in emerging markets, materials, and inflation-protected securities with strength in equities and the U.S. dollar, a spike in interest rates, and an unusually steep yield curve in Treasury securities."
Hussman Funds, John P. Hussman, July 8, 2013
S&P 500 Drawdowns since 2010
Summer corrections are nothing new since the equity rally began in 2009.
Investments Office, June 2013
Central Bank Asset Purchases and Financial Markets
Interesting comments and charts from an external member of the Bank of England's Monetary Policy Committee.
Bank of England, David Miles, June 2013
"Designed in California, Assembled in China"
Apple vs. Foxconn stock price since 2004
Investments Office, June 2013
The Canary in the Coal Mine
"The recent string of surprise downside moves in markets may be the canary in the coal mine for global investors."
Guggenheim Partners, Scott Minerd, June 2013
Germany vs. Spain
....in a few simple charts.
Bank of England, Charlie Bean, May 2013
Present and Emerging Risks to the Gold Trade
The notion of gold as a hedge against systemic risks is flawed. We believe that the concept of gold’s role as an insurance policy needs to be narrowed significantly.
GMO, Amit Bhartia and Matt Seto, April 2013
The Crowd: a Study of the Popular Mind
An influential book from 1895 on the social psychology of crowds. For investors there are interesting parallels to be drawn with financial markets as well as with the current political and social mood.
Gustave Le Bon (1841 – 1931)
What style-timing skills do mutual fund “stars” possess?
Journal of Empirical Finance, Li-Wen Chen, Andrew Adams, Richard Taffler, March 2013
Risk Shift from West to East
“While stronger growth is prompting the Fed to consider a tapering of easing, growth indications in China continue to point lower. As economic risks shift from the West to the East, and with China also rebalancing its economy away from the manufacturing sector (…)”. Morgan Stanley, May 2013
Day and Night When Taking out the Keynes
This chart plots compounded return for SPY day and night (open-close, close-open) for the prior bull market of 3/03-10/07.
Daily Speculations, Kim Zussman, May 8, 2013
Tricky (Central) Bank Predicaments
Wednesday, Fed Chairman Ben Bernanke announced the central bank would maintain its pace of quantitative easing (QE) in light of moderate improvement in US economic activity. However, as we’ve detailed many times before, we view the Fed’s QE policy moves as grossly counterproductive to its stated aims.
By Fisher Investments Editorial Staff, May 3, 2013
Reinhart and Rogoff Were Wrong Even Without the 'Spreadsheet Error'
"When governments spend with abandon (deficits just a form of finance) there's a smaller capital base for the productive to access, so when it comes to government spending the tragedy is not whether it occurs in deficit or surplus, but the Microsofts and Intels, the cancer cures, and the transportation innovations that never materialize thanks to politicians consuming so much capital."
RealClearMarkets, John Tamny, April 2013
Financial Market Volatility: Assessing Risk
Volatility is often cited but seldom quantified for many economic series. Over the years, we have sought to provide a perspective on this concept in many investment decisions. One primary lesson we have learned is that when we provide a context for the concept of volatility, decision making is improved.
Wells Fargo Securities, Economics Group, John E. Silvia, April 23, 2013
The Great Recession? Crisis? How About Relearning?
"Despite a high level of drama in nearly every corner of the economic globe, we have yet to settle on a catchy description for this particular period in history."
Alhambra Investment Partners, Jeffrey Snider, April 2013
"The old market adage 'Don't Fight the Fed' lately has a global ring: don't fight the Fed, the Bank of Japan, the ECB, the Peoples' Bank of China, the Bank of England, or particularly the strong US dollar, the World's major funding currency. Policymakers are getting their way."
Michael Howell, Crossborder Capital, April 2013
"Most see the prospect of America reindustrialising as bullish. In my view, that depends on whether you are an economist or whether you are an investor."
Morgan Stanley, Gerard Minack, April 2013
France Is On The Brink of A Secondary Depression
"...having reached the logical limits of its decades long experiment in state-run welfare-capitalism France is far more exposed than even its struggling neighbors."
GaveKal, Charles Gave, April 2013
US Federal Debt in kilotonnes of Gold
...from 1900 to 2013
pricedingold.com, April 2013
Only in Japan
""No tip please, it's my job", somebody told me at my hotel today."
Luxeat, Aiste Miseviciute, April 2013
Cash Is Dead! Long Live Cash!
“What explains the rapid rise in currency holdings at the same time that other methods of payment are displacing the greenback?”
Federal Reserve Bank of San Francisco 2012 Annual Report, John C. Williams
The price of rice has increased by roughly 28,500% over three years, meanwhile the North Korean Won is in a free fall. Sounds familiar?
Investments Office, April 2013
A Londoner during the first era of globalization
"But, most important of all, he regarded this state of affairs as normal, certain, and permanent...".
The Economic Consequences of the Peace , John Maynard Keynes, 1919
Missing/Avoiding the Best & Worst Days of S&P500 from 1993 to 2010
Pension Partners, LLC, Michael A. Gayed, September 2010
Investing in What You Know: The Case of Individual Investors and Local Stocks
Journal of Investment Management, First Quarter 2013
Would the real Peter and Paul please stand up?
"Aware that we worry too much in a world growing more wary and distrustful, it is here we place an increasing premium, here that we seek refuge from financial folly and here that we expect the next bull market."
Edelweiss Journal, Issue 12, 11 March 2013, by Dylan Grice
Dispelling the myth of a great rotation
A popular current financial theme (witness Baron’s recent cover piece) is the so-called “great rotation” out of expensive US bonds and into comparatively cheap US equities. We are wary of a simplistic and massive rotation thesis. Why?
Lombard Odier Private Banking, Investment Strategy Bulletin, March 2013
"Hyperinflation is not purely a monetary phenomenon. To claim that is to miss the root causes that underlie these extraordinary periods. It takes something much worse than simply printing money."
GMO, White Paper, February 2013 , James Montier
"...in the 1960s the US dollar accounted for roughly 50% of World economic and financial transactions, whereas today the figure is likely as high as 70%.
The Dance of the Dollar, Crossborder Capital, March 2013
U.S. Manufacturing and the Importance of International Trade:
It’s Not What You Think
Federal Reserve Bank of St. Louis Review,, Kevin L. Kliesen and John A. Tatom, January/February 2013
The Effect of Language on Economic Behavior:
Evidence from Savings Rates, Health Behaviors, and Retirement Assets
Yale University, School of Management and Cowles Foundation, December, 2012 , M. Keith Chen
The "Big Five"
"...Lehman was a small player compared with any of the Big Five. If Lehman Brothers was too big for a private-sector solution while still a going concern, what can we infer about the Big Five...?"
Ending 'Too Big to Fail': A Proposal for Reform Before It's Too Late, Richard W. Fisher, President and Chief Executive Officer, Federal Reserve Bank of Dallas January 16, 2013
Currency Wars Or Just Approaching Dollar Strength?
The recent jump in forex volatility is understandable. A similar theme coloured the mid-to-late 1930s.
Crossborder Capital, Michael J. Howell, 20 February 2013
The Foolproof Way To Fight Deflation or the Road to Ruin?
The Euro is making headlines again, this time not due to its possible imminent disappearance as a currency but rather as a result of what many regard as its undue strength.
Variant Perception, February 12, 2013
Shall We Dance?
"But I remain convinced that investors are accepting historically elevated risks here, and that it is misguided to reach for speculative returns in an overextended market, simply out of repugnance for zero interest rates."
Hussman Funds, John P. Hussman, Ph.D., February 11, 2013
Are We Like Sweden? Recovery in the Labor Market
More than 20 years ago Sweden suffered a severe financial crisis that brought unemployment to an all-time high. To this day the unemployment rate has not returned to where it was before the crisis.
Federal Reserve Bank of Cleveland, Emre Ergungor, February 7, 2013
The illustrations capture both the era’s characteristic biases and the naiveté of an overly simplistic view of the market economy.
Brain Pickings, Maria Popova, December 2012
The Control Engineers And The Notion Of Risk
"Volatility no longer measures the risks involved in holding certain assets but instead measures the amount of the manipulation that the poor prices are enduring."
GaveKal Research, Ideas, December 14, 2012 , Charles Gave