2013-01-23, 04:33 | Link #121 | |
NYAAAAHAAANNNNN~
Join Date: Nov 2007
Age: 35
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Japan raises economic view as PM pushes "Abenomics"
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2013-02-02, 01:13 | Link #123 | |
Knight Errant
Join Date: Dec 2007
Location: Dublin, Ireland
Age: 35
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1. Capital investment. IE whereby your debt is going towards something that will lead to greater returns (or savings) then the cost of the interest. 2. Making large cash intensive purchases, whereby it might not be practical to provide all money up front (IE a house, or a car, though those two can count as 1, depending on your living situation). I've heard peers casually talk about going into debt in order to go on holiday, or buy clothing. Madness. A person can only be the loser in such a transaction. Debt is only "good" if it's going to something that can "grow", in which case your financier and yourself are sharing in that growth, case 1. Case 2 is to overcome pragmatic difficulties (most people, even if they're diligent savers, can't provide large quantities of cash upfront). Banking institutions that encourage consumer debt are being irresponsible, I think. They're normalizing an unhealthy practice. I think it's also a bad move long term, as people who get used to consumer debt spending, are going to eventually end up bankrupt, as eventually reach a point where they can no longer afford to pay more interest, as the debt only encourages them to unsustainably live beyond their means. It's better for banks to do due diligence and ensure the money they provide is going towards a worthwhile investment. |
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2013-02-02, 05:45 | Link #124 |
Senior Member
Join Date: Jan 2009
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The figure is misleading as it involves absolute values. (Not surprising as it basically part of an advertisement). One would have compensate for economic growth and inflation. That's why expressing debt as percentage of GDP usually provides greater insight.
Debt can also be used to effectively lower taxes on capital. Another use is to increase risk and payoffs. Debt is not inherently bad but, like any other powerful tool, can cause a lot of damage if poorly used. Last edited by Bri; 2013-02-02 at 11:24. |
2013-02-02, 06:44 | Link #125 |
(ノಠ益ಠ)ノ彡┻━┻
Moderator
Join Date: Mar 2006
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Relevant to discussion:
http://www.gmo.com/websitecontent/JG...rALL_11-12.pdf Always interesting to see what investment firms think of the future.
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2013-03-06, 10:58 | Link #126 |
NYAAAAHAAANNNNN~
Join Date: Nov 2007
Age: 35
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It seems that, regardless of how the market is trending, Wall Street always finds a way to make money.
Fear indexes on the rise on global stock markets And just one of the many strategies they have used : Letting the VIX tell us when to get out
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2013-03-06, 11:02 | Link #127 | |
Nyaaan~~
Join Date: Feb 2006
Age: 40
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Oaktree's Marks Warns Pre-Crisis Behavior is Back
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PS: I don't have the data on me, but I ran a historical analysis of U.S. recessions and the price of gold. They were actually relatively poorly correlated, but I did find some research showing that gold responds to systemic shocks. IE. Gold is a poor inflation hedge but has been a decently good "crisis" hedge.
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2013-03-06, 11:10 | Link #128 | |
NYAAAAHAAANNNNN~
Join Date: Nov 2007
Age: 35
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Dow hit 14,000 again. Not a surprise that the bulls (and their shit, excuse my sarcasm) are back. I certainly hope it will not be another Black Tuesday, though it would be great if the reinstated the Glass-Steagall Act.
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2013-03-06, 11:29 | Link #129 | |
Nyaaan~~
Join Date: Feb 2006
Age: 40
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You whipper-snapper! Check out my join date! I was just .. on hiatus ..
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2013-05-03, 10:46 | Link #131 |
Nyaaan~~
Join Date: Feb 2006
Age: 40
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So, I haven't posted in this section in a while, but in light of conversations that I've been having with many people in all aspects of "high finance" .. I'm going to put some of my thoughts down. These are just preliminary mental ramblings but it'll be good to have them in a place I can reference them.. and for people to critique and challenge me on them.
As a preface, I sound very cold and emotionless in this analysis, and I am .. but do not take that as me viewing emotions as being irrelevant to this topic. Emotions .. consumer and corporate confidence in the future whether it be job security, social safety nets, economic activity .. it is this sentiment that drives the ebb and flow, the waves if you will, of the economic cycles. Rates & Liquidity / QE(Infinity) & Abenomics Spoiler for Wall O Text:
Anyways, this is my first "thought dump" on this and other varied economic topics. I'm pretty sure I don't have everything down yet. A simple summary is that it's not a case of "the worst is yet to come" but more of a "things got really bad, haven't really gotten better, and what severity and in what form will the pain take" I'm in the process of rebalancing my own personal portfolio. I'll talk about that more when I get to my next topic re: treasuries, corporate yields and equity markets. Relevant Recent Readings: http://blogs.marketwatch.com/thetell...ney-investing/ https://www.gmo.com/America/CMSAttac...j9wkBRE6RIiPGQ http://money.cnn.com/2013/04/23/news...ics/index.html http://www.forbes.com/sites/realspin...-currency-war/ http://worthwhile.typepad.com/worthw..._source=feedly http://worthwhile.typepad.com/worthw..._source=feedly http://www.calculatedriskblog.com/20...alculated+Risk)
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2013-05-03, 13:48 | Link #132 | |
Senior Member
Join Date: Jun 2007
Location: 28° 37', North ; 77° 13', East
Age: 33
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AFAIK (or can remember): As for the government programs, Japan is a bit of an anomaly. The governments stimulus is based on Keynesian thinking, that by pumping money in, and reducing interest rates they can stir investment. The average Japanese consumer however.. just doesn't seem to happy to budge. Apparently its a real liquidity trap, but I wonder if they were trapped from the start due to the odd Japanese consumer behavior. I suppose people were still saving because they didn't have faith in investments after the crash of the early 1990's. I don't think the Japanese people have much faith in their government ( and I can't say I blame them). An interesting thing about Japanese debt to take note of is that most of it is owned by the citizens. I'm rusty but for those of you who want to get the basic idea behind the monetary stimulus should look up the Mundell-Fleming Model. http://en.wikipedia.org/wiki/Mundell...3Fleming_model (IS-LM-BP). Its not tough to get through and will be a breeze if you've done any keynesian macro before. I'm not sure I agree with you about deflation showing a breakdown of the economy, in isolation both inflation and deflation can be harmful or beneficial. The constant rate of increase of money supply, (once again, AFAI remember) is backed by keynesian economics. When I say Keynesian economics, I mean that suppliers dont react immediately to price changes, so increasing money supply gives the illusion that people have more money a), and that real prices will increase in the next time period b). The logic says: If prices are increasing, I should buy something today since its going to be more expensive tomorrow, since my wage contract is binding for the period and cannot adjust immediately--> this is the kicker. They might have less, they might have more, they might have the exact same amount. As far as deflation goes, deflation is often symptomatic of extremely high sustained growth and development, just look at the Japanese currency rate in the 60's to the 80's. If overall production becomes more efficient, you will have higher supply for every given good at a nominal price resulting in deflation. The same trend was observed in the late 1900's in the U.S too AFAIK. In any case, theres quite a lot of literature that points towards monetary policy being totally ineffective --> which is why I hate macro.. no one can agree on anything (don't have a link for this at the moment, but shouldn't be a problem to verify if need be) Inflation and deflation are often symptomatic of something else, for example like the concept of NAIRU (non-accelerating inflation rate of unemployment) http://en.wikipedia.org/wiki/NAIRU (which states that trying to reduce unemployment below a certain level will cause accelerating rates of inflation, you can see this graphically in the Phillips curve http://en.wikipedia.org/wiki/Phillips_curve . So you can have artificially high inflation but still have very high unemployment if your NAIRU is shifted due to a shock in Aggregate demand. In any case its extremely important to figure out whats causing the inflation or deflation, perhaps for a layman the relationship of inflation > deflation is true, but it doesn't hold true under scrutiny. Last edited by oompa loompa; 2013-05-03 at 15:13. |
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2013-05-09, 02:37 | Link #134 |
Senior Member
Join Date: Sep 2010
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A day of reckoning is coming for the global commodities glut
The best investment idea at Ira Sohn 2013 could be all about shorting everything that’s associated with the voracious Chinese demand for commodities, a symptom of policies that attempted to quell–but really just put on hold–the effects of the financial crisis.
Stanley Druckenmiller, former managing director of Soros Fund Management, said commodity producers were fooled in 2008, when the Chinese government injected 4 trillion yuan (at the time, $586 billion) in stimulus into the Chinese economy. That created a false demand for goods and for the raw materials to make them. ....... http://qz.com/82728/trading-idea-a-d...modities-glut/ |
2013-10-22, 13:31 | Link #135 |
Nyaaan~~
Join Date: Feb 2006
Age: 40
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Oops .. I never came back to do the second "thought dump" that I said I was going to do.. Ha! Well, since it's been a while, here we go:
Treasuries, Corporate yields and Equity markets: Spoiler for Wall of Text:
Now having jotted all of that damn in a mad stream of consciousness .. I feel like I jumped a bit ahead of myself without expanding on topics such as the difference between debt and equity, let alone other things that may seem obvious to me but perhaps would be interesting to others .. Additional Reading: http://business.financialpost.com/20...-not-dead-yet/ http://www.investopedia.com/terms/m/...oliotheory.asp http://en.wikipedia.org/wiki/Investm...licy_Statement http://successfulportfolios.com/wp-c.../07/SA_v15.pdf http://en.wikipedia.org/wiki/Alternative_investment
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2013-10-22, 21:15 | Link #136 |
Le fou, c'est moi
Join Date: Dec 2007
Location: Las Vegas, NV, USA
Age: 34
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^Just an amateur's opinion but, aren't you pretty high on the fixed income and cash side? Is the Canadian bond market less wtflol than the US one, not as under the mercy of the US Feds? Or is it your choice and personal risk assessment?
Mind, I understand not committing heavily into US equities at this point, even blue chip ones, and if you are bearish on Europe/Asia I can see you'll have problems finding alternative asset classes. The S&P is at such a high that, while the US economy has sound fundamentals -- in the short term, and barring another political murder-suicide attempt -- it is not going to grow nearly as fast as the S&P and that means bubble. Bubble bad. |
2013-10-23, 15:14 | Link #137 | |
Nyaaan~~
Join Date: Feb 2006
Age: 40
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2) My view on "alternative investments" and the like might be very different than other peoples. For example, I work with colleagues who have connections to individuals that may require 2nd mortgages on their family home at 65-80% LTVs but are willing to pay >10% rates on that debt. They may need that money to renovate another home, put it into their business or other opportunities. Sometimes there's other things like multi-unit residential where they are levering the same amounts off base value but putting all the additional into renovations. We do our diligence, review the opportunity and put money into that. At other times .. I sometimes develop short-medium term personal trading strategies (ie. bull-call spreads, bear-put spreads, bear put-forward spreads multi-leg short delta/theta). My most recent one was the aforementioned option strategy crafted to cover a large chunk of a stock's "downside" portion of it's cumulative probability distribution. I put money into that too (and have also lost money at times too). Or sometimes I just do selective individual high variability stocks bets. These are probably my least quantitative investments and are based on "I think this segment, this company or this industry" is in for gains or a correction. Personal employee stock loan bets.. etc. I classify all of these things as "alternative" .. Near-term, I view economic fundamentals in the U.S. are more positive, but my longer-term view is that the country is still in for a significant shock as grow will be much slower due to continuing consumer deleveraging. That's my thesis anyway.
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2013-10-23, 21:44 | Link #138 |
Ava courtesy of patchy
Join Date: Jan 2009
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Personally, I'm bearish on USD denominated fixed income currently. Due to QE these past years, sooner or later, the US treasury rate is going to be increased to curb inflation. When that happens, current yield on fixed income won't be good enough and price will go down. Sure, there is still some potential for low yield decrease in the short term, but for me the risk is too big for such a small reward so I rather put it elsewhere. This is just amateur's view though XD.
Just out of curiousity, any reason why you don't put any weight in Emerging Market Equity/fixed income market? Those tends to give higher yield/return, although also with higher risk.
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2013-10-23, 22:24 | Link #139 | ||
NYAAAAHAAANNNNN~
Join Date: Nov 2007
Age: 35
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Inflation would keep blowing out until someone is unable to tolerate the pain anymore and raises rates. Quote:
As for Emerging Market Equity, I suspect the problem to be Emerging Market Debts. Considering the fact that emerging markets often have a patron currency used in its investment, the rates of bonds have failed to inspire confidence in the major investor currencies (USD, CNY for starters), therefore the invested extract less value from the investment funds to produce for the investors. There is an opinion written on Reuters 2 months ago which joked about the BRICs as a Bloody Ridiculous Investment Concept that is worth reading; although the ideas are hardly agreeable, due to its lack of data as compared to this, it shares some ideas what the market MIGHT be actually doing behind our backs. Though like any other writing about investments and trading, it is a good idea to do some research into the ideas before taking a stand. Still, there might be people putting money into the bank or dropping them on really long term investments, so the general direction might be into those sooner or later. This addiction to cheap money will kill us all. P.S : I am a bear most of the time, so most good news seem like bull to me.
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2013-10-24, 14:31 | Link #140 | |
Nyaaan~~
Join Date: Feb 2006
Age: 40
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I personally am underweight or otherwise avoid Asia right now primarily because, frankly, I don't know it as well as I should. What I do know and am aware of -- between Abenomics, China, India -- does not make me feel bullish.. Albeit looking at how the SSE Composite has moved over the last 1-2 years is at first blush worth doing some more homework on. I'd have to figure out what the currency-swapped real-return in C$ looks like for me though so it's not trouble free. Here's a quick snapshot on comparative worldwide benchmark bonds:
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