Geoff Wilson warns of another GFC event
" at a local level there was Geoff Wilson from Wilson Asset Management, one of the stockmarket's biggest investors. Speaking as the chairman at the AGM on Wednesday he warned that sharemarket investors around the world have mispriced risk. They've got it wrong, totally wrong. Indeed, they have got it so wrong that it's going to be like 2008 all over again. Back then he said the sell off was the "greatest buying opportunity in my lifetime", which turned out to be correct, and
China intends to dominate AI by 2030 - implications
A very useful article from the Financial Times. https://www.ft.com/content/67f6c6c2-cec9-11e7-9dbb-291a884dd8c6 : China openly plans to dominate artificial intelligence by 2030. Mr Trump appears too busy tweeting to have noticed. Yet China’s AI ambitions pose a greater long-term threat to US security than North Korea’s nuclear reach. “Whoever becomes the leader in [AI] will become the ruler of the world,” Russia’s president, Vladimir Putin, said recently. His observation fol
In the hunt for yield, investors are taking huge risks. Hybrids this discussion.
Summary: In the hunt for yield, investors are taking huge risks. Hybrids and Junk bonds (high yields bonds) typify this excessive risk-taking, which is currently found in many other sectors. BEWARE: In next financial crisis, very large capital losses can be expected in this space. Discussion: Hybrids are much riskier than bonds. They started out in the late 1990s as having characteristics much more like term deposits…. And we used them for our clients then. Good interest rate
In 1987, the Australian market crashed more because valuations were higher
Around the 30th anniversay of the 20th October 1987 share price crash, there was a lot of discussion of that crash, but there was litle discussion of why the Australian share crash was substantially bigger than the US share price crash in the 1987 crash. In short, Australia had a bigger crash because Australian shares were substantially more over-valued than US shares at the time. By the time the crash occurred, the cyclically adjusted price earnings ration for the All Ordin
Could Venezuelan debt default cause global "liquidity crisis" that central banks fear
This article ( http://puzzlefinancialadvice.com.au/2017/AFR/171106_AFR_Venezuela_crisis_could_get_nasty.pdf ) includes the following comments: Will the looming Venezuelan debt default – set to be the largest and most chaotic in history – finally open investors’ eyes to the reckless risks they’ve been taking in their frantic hunt for yield? Venezuelan bond prices slumped on Friday after President Nicolas Maduro signalled the cash-strapped country was looking to restructure a
Central bankers worry about "liquidity" as they start draining the cash mountain they have
During and post Global Financial Crisis central banks in USA, Europe, UK, Japan printed an unprecedented amount of cash trying to "heal" the global economic. This money printing was quaintly called quantitative easing and the magnitude of the money printing was reflected by the growth in central bank balance sheets. This article https://www.ft.com/content/bf79edee-c07c-11e7-b8a3-38a6e068f464 makes the following points: Extreme monetary easing appears to have worked. The risk
Australia has the world's riskiest superannuation system - Chris Joye. Equity exposure too high
In this article http://www.afr.com/opinion/columnists/peter-costellos-future-fund-could-revolutionise-super-20171102-gzdyo1 , Chris Joye points out: This is precisely why Australia has ended up with the world's riskiest pension system. The OECD's latest analysis finds that of the 34 developed countries it evaluates, our super funds have the second highest portfolio weight (51.1 per cent) to equities, which is more than five times larger than the median weight of 10.7 per cent
