"Tidal wave of central bank liquidity" ... has "bid up asset prices to unprecedented levels." Chris Joye, Coolibah Capital
February 10, 2020
"Despite a range of existential risks, markets are riding a wave of central bank liquidity to bid up assets to new highs."
" Actually, it would be more accurate to state that central banks have been blowing bubbles left, right and centre by buying assets themselves, crowding out private agents, while debasing the cost of capital (and hence hurdle rates) to the lowest levels we have seen. "
"While all asset classes look dear, yield-hungry investors are being forced to chase ever more risk."
"I am regularly asked by asset allocators what they should do. In response, I have a few suggestions. First, if you have to take more risk, try to mitigate it by holding assets that have liquidity. Because when the music eventually stops, you want to be first through the exit, not last, in what could be a savage correction."
Chris Joye, AFR Correspondent, portfolio manager for Coolibah Capital