Puzzle Financial Advice

I am observing that a range of "wise investors" are starting to see ~2019 as crunch time. Charlie Aitken, fund manager, former "guru" at Bell Potter. https://www.puzzlefinancialadvice.com/single-post/2018/02/27/Charlie-Aitken-joins-chorus-warning-of-expensive-defensives Louis-Vincent Gave CEO of highly regarded Gavekal Research using very similar logic to Charlie Aitken. https://www.puzzlefinancialadvice.com/single-post/2017/10/18/Recession-risk-warning-for-2019 Elmer Funke

https://www.livewiremarkets.com/wires/the-danger-in-expensive-defensives : 'the simple fact is the direction of the “risk-free rate”, and the rate of change of the risk-free rate is crucial to overall equity market pricing and stock and sector selection.' ' I have been warning on long bonds and bond-like equities for 12 months. We believe long bonds and bond-like equities are real return free capital risk. ' 'I believe we are going from Central Bank quantitative easing (QE)

On many levels, China is changing the global rules to its own benefit: Extending its soft power influence throughout particularly the developing world. Eg paying for infrastructure in African countries in return for mineral rights - but also in doing this, it gains influence over/with African countries. This is also happening in the Pacific and elsewhere. Even in Europe, where a Chinese company purchased a controlling stake in the Athen's port Pireaus when Greece was on its k

Chris Joye, AFR 17/2/2018 writes: February's dramatic 10 per cent sell-off in shares was the first big correction since the global financial crisis that has been fuelled by economic strength, not weakness. It offered a timely reminder that fixed-rate bonds (or "interest rate duration") can be a horrific hedge against losses in shares when the economy is firming. This was a lesson old heads learnt back in 1994 when equities and government bonds simultaneously slumped as a re

AFR 17/2/18 Reserve Bank of Australia governor Philip Lowe has slammed as "very problematic" the inflationary forces being unleashed by Donald Trump's unprecedented borrowing surge to fund company tax cuts, saying they are landing on a US economy already running at full tilt. Dr Lowe warned that financial markets "can turn against you" fast if governments overreach in borrowing to fund tax cuts, warning the Coalition government against blowing its planned return to surplus by

Elmer Funke Kupper, past CEO of the ASX says: This view says that we can expect much more material volatility and falls in equity markets towards the end of 2018 or in 2019. Here is why. First, even after recent falls, US equity markets are expensive by historical standards. The S&P 500 price-to-earnings ratio, price-to-sales ratio and dividend yield are all still outside historical levels. Some excellent work done by John Hussman of Hussman Funds suggests that at the current

Investing at times can be a strange "game". Or to be more precise, investors at times can behave strangely. Take Exhibit 2 below. More US fund managers think US shares are overvalued than at any other time over the last 20 years - including the peak of the 2000 dot com bubble and the peak in August 2007. And yet, reports James Montier, the same people who did this survey (see Exhibit 2), "showed fund managers to still be overweight in equities" - as you can see in Exhibit 3.

A very insightful article in today's AFR provides some very useful insight into the market correction over the last week. Here are some sections: Analysts say the biggest US equity reversal since 2011 was deepened by a bevy of exchange-traded products that allowed investors to wager on the Vix index, a measure of stock market volatility sometimes dubbed Wall Street's "Fear Index". However, these ETPs are just one corner of a complex and expanding "volatility ecosystem" that h

International investors are being urged to steer clear of banks in Australia, Canada and Sweden by a leading investment consultancy, which has sounded the warning about the risk they may pose to the entire financial system if interest rates rise and the Chinese economy slows. "High house prices, a build-up of household debt post-GFC, and – for Canada, Sweden and Australia – banking sectors that are more than 20 per cent of local market cap and 13 per cent of 'global banks', m

In this article, highly regarded US hedge fund manager says "I expect the S&P 500 to lose approximately two-thirds of its value over the completion of this market cycle." Mind you: from these sort of levels using Shiller's straight cyclically adjusted P/Es, US shares fell 89% from they 1929 peak, 67% in real terms from their 1968 peak, 60% after the 2000 dot com bubble before the US Fed pumped the bubble up again to the 2007 peak from which it fell 53% (making the fall in re