Market Turbulence

Market falls never feel pleasant, but for those with long-term investment horizons there is no need to panic. Fluctuations, sometimes significant ones, are to be expected during the course of investing; and for those requiring the assurance of no fall in capital the only asset class that can be considered is cash. This is the … Continue reading “Market Turbulence”

How to survive a zombie company apocalypse

Zombie companies do exist but are not staffed by people that behave like extras in the “Walking Dead”. Actually, a zombie company is a technical term for a business which, if it is not yet numbered among the undead, is only earning just enough cash to pay the interest on its borrowings. It does not … Continue reading “How to survive a zombie company apocalypse”

Panic not: earnings season matters more than the current rout

Once again, markets are roiling. As with so many sell-offs, this is a story of pressure building steadily until it must vent. Volatile markets are here to stay, but the next few weeks will tell us whether this episode is a sign of something more ominous to come or just another bump in the road. … Continue reading “Panic not: earnings season matters more than the current rout”

Trade wars step up, more to come

The US has announced tariffs on another $200 billion of imports from China, citing ongoing concerns over the theft of technology and forced transfer of intellectual property. The tariffs take effect next week and are initially set at 10% rising to 25% from 1 January next year. China has yet to respond, but the White … Continue reading “Trade wars step up, more to come”

The Only Game in Town

The US stockmarkets were the only game in town in August. US stockmarkets provided the only positives in August posting another month of strong gains due to robust economic news-flow.  However, all other major global regions showed negative returns, with geopolitical issues and trade war concerns weighing on investor sentiment. The overall result was a … Continue reading “The Only Game in Town”

Hubris and Nemesis: insights into the financial crisis

Ten years ago, the demise of Lehman Brothers marked the height of the financial crisis. At the time, I was an economist at one of the UK’s largest financial institutions. Working there gave me abundant insights into the psychological biases at play, both in that institution and in the companies that it supported. Many of … Continue reading “Hubris and Nemesis: insights into the financial crisis”

Doom Loop

The most likely candidate for the next ‘Lehman moment’ is in Europe. In some ways the regulatory response that followed in the years after the collapse of Lehman Brothers has been a success. The days of racy balance sheets chasing outsized profits on wafer thin capital are largely over; replaced by a mantra of prudence … Continue reading “Doom Loop”

Cyber-risk: how investors can prepare for the unpredictable

Cyber crime continues to create significant costs for companies globally, but understanding the risk means going beyond a formulaic assessment of policies.  Digital data has grown exponentially in recent years, spurred by increased penetration of mobile devices and consumption of online services. The rapid expansion in the volume of data companies store, many of which … Continue reading “Cyber-risk: how investors can prepare for the unpredictable”

What can we learn from the shape of the yield curve?

Surveys of investors show a distinct degree of nervousness this summer. One reason may be President Trump’s propensity for off-the-cuff Twitter activity, taking aim at Turkey, NATO, and Iran, the global trading system or any of his other enemies. Another explanation is rather more technical – prosaic, even. But it also illustrates how caution about … Continue reading “What can we learn from the shape of the yield curve?”

The potential income shock awaiting pension savers

A global study of investor attitudes finds that those close to retirement expect to replace 74% of their salary when they give up work. The reality for those already retired is very different. After a lifetime of saving, investors may be in for a shock when they come to retire, the results of a global … Continue reading “The potential income shock awaiting pension savers”

The IMF and World Bank must evolve to remain relevant

It is hard to square a US President bent on protectionism with two institutions that have been a bulwark for free trade for over 70 years. The Bretton Woods institutions, as the World Bank and International Monetary Fund (IMF) are known collectively, were created during the Second World War to support the post-war economic and … Continue reading “The IMF and World Bank must evolve to remain relevant”

Millennials will reshape the investment landscape

Millennials are the largest generation that have ever existed. They are expected to make up 75% of the global workforce by 2025 and the way they spend their money will define the world over the course of the next few decades. With half of the world’s population currently under the age of 30, the values … Continue reading “Millennials will reshape the investment landscape”

What causes recessions, and can we predict them?

The US economic expansion has just become the second longest on record. If it continues beyond mid-2019, it will be number one. Its longevity is probably due to a mixture of circumstances, judgement and luck. The severity of the recession following the global financial crisis (GFC), coupled with the slowness of the subsequent recovery, has … Continue reading “What causes recessions, and can we predict them?”

Trade deficits and tariff wars

President Trump believes that if you are running a large deficit it should be easy to “win” a trade war. The problem with this argument is the EU and China may decide to engage. In 2016 the US ran a deficit of $505bn on trade in goods and services, according to the World Bank. Germany … Continue reading “Trade deficits and tariff wars”

Trump’s tariffs

Last week, the White House announced tariffs on imported steel and aluminum of 25% and 10% respectively – a move that sparked global indignation and threats of a trade war. But tariffs are more common than you may imagine. Almost every US president since Ronald Reagan has announced a tariff of one kind or another. … Continue reading “Trump’s tariffs”