FED

  • 16 Jan
    Higher Inflation Could Be A Game Changer

    Higher Inflation Could Be A Game Changer

    • Inflation has finally reached the FED’s target of 2%.
    • Employment and GDP levels indicate we are in the late part of the economic cycle.
    • Will the FED lose control over its monetary policy?



    Introduction

    Global economies are all finally doing very well, or at least just well. You can’t expect economic skeletons like Europe to do very well. Nevertheless, monetary policies across developed markets are still supportive.

    Supportive policies, from the ECB still buying bonds on the open market, to the BOJ buying ETFs, and the U.S. lowering taxes, indicate that all these economies would be very different without supportive policies. More →

  • 28 Dec
    Swimming Naked?

    Swimming Naked?

    • The rising tide has really lifted all boats, but it’s extremely important to dive deeper and see who is swimming naked.
    • This will allow you to protect yourself from extreme downside and to potentially also earn something with some cheap hedges.
    • There are companies with no organic growth that have price to earnings ratios of 500…



    Introduction

    It will soon be nine years that we have been enjoying a rising economic tide. Economic policies around the world are still accommodative, and corporations really don’t have difficulties in finding financing.

    However, if you have been through economic kindergarten, you know that the only thing sure in economics is cyclicality. Therefore, it’s important to see who will be swimming naked when the tide shifts, how to be protected from such a possibility, and perhaps even how to take advantage of it. More →

  • 21 Dec
    Here’s How To Hedge For 2018

    Here’s How To Hedge For 2018

    • Everything looks good with the FED raising rates, but a look under the hood says otherwise.
    • There is a possibility that we won’t see three interest rate hikes in 2018.
    • When things look so good that they can’t get any better, it’s time to leave the party.



    Introduction

    On Monday, we discussed what the main global risks are. Today I want to dig deeper into how to start thinking about portfolio positioning around these risks.

    The FED has started with its tightening policy which creates two investing opportunities. One depends on if the FED manages to increase rates three times in 2018 as planned, inflation rises to 2%, and the economy keeps growing at current rates while unemployment remains low. In such a scenario, everything that has worked well in the last 8 years will work well in 2018. More →

  • 19 Dec
    Will The FED Protect Your Wealth?

    Will The FED Protect Your Wealth?

    • The wealth gap is growing. Invest like the rich.
    • The FED will be forced to protect stocks and real estate prices as they are the key to current economic growth.



    Introduction

    The Boston Consulting Group interviews 250 investors annually who have a combined wealth of $500 billion. The results usually aren’t shocking except for this year. 65% of those investors think the market is overvalued. More →

  • 18 Dec
    There Are Big Global Risks Out There – Here’s How To Invest For Them

    There Are Big Global Risks Out There – Here’s How To Invest For Them

    If there’s one thing that I’ve learned from my research on financial markets, it’s that you always have to expect the unexpected. Nothing is linear, everything works in cycles and what monetary policy makers say is usually wrong.

    Last week when the FED raised interest rates, Janet Yellen said: “We’re in a synchronized expansion. This is the first time in many years we’ve seen this.”



    That might be true, but the fact is that every economy today is a global economy and the global economy isn’t synchronized. At some point, it will crack somewhere as it always does. The important thing for us is to be prepared for something like that and to see how to best position our portfolios for the consequences that a financial shock might create. More →

  • 23 Nov
    The Stock Market Will Crash In 2018 – Here’s What Could Trigger It

    The Stock Market Will Crash In 2018 – Here’s What Could Trigger It

    • All indicators show a stock market crash is imminent, but what will the trigger be?
    • I’ll discuss what can happen and how bad it could get.
    • As for the timing of it, the best thing is to be prepared for anything.



    Introduction

    To see whether the stock market will crash in 2018 or not, we have to first see what makes a stock market crash and the best way to do that is to look at the 2001 and 2008 market crashes because the financial environment prior to those crashes resembles the current market environment. More →

  • 21 Nov
    Worried About The Current Financial Environment? Here’s What You Need To Know

    Worried About The Current Financial Environment? Here’s What You Need To Know

    • Today, we’ll discuss the sustainability of developed financial systems as they are now.
    • We’ll also take a look at the much talked about Chinese slowdown.
    • I’ll finish with a take on gold and what could happen.



    Introduction

    In today’s article, I’ll discuss the financial environment we are living in.

    It’s very important to see the fundamental trends and forces surrounding what looks like a stable and strong financial system. The fundamental forces are crucial because in the long term, those forces eventually prevail and have a huge impact on all financial assets. More →

  • 13 Nov
    Inflation Points To A Recession On The Horizon – Here’s What You Need To Know

    Inflation Points To A Recession On The Horizon – Here’s What You Need To Know

    • Everybody expected high inflation after 2009, but it didn’t happen. There are specific reasons for that.
    • However, higher food and energy prices are pushing inflation higher. The low unemployment rate should help too.
    • Today, I’ll discuss how to best position yourself for an inflationary environment.



    Introduction

    There is one little bell always ringing in my mind: inflation, inflation, inflation.

    From all my analysis, inflation is something that could really shock the financial world. In today’s article, I’ll first show the current inflation levels for the most important economies, and then will dig deeper into what can happen in the next few years and how could that affect your portfolio. More →

  • 08 Nov
    Is Everything Now Too Big To Fail?

    Is Everything Now Too Big To Fail?

    • Today, we’ll discuss how the “too big to fail” concept has evolved since it was first used back in 1984.
    • The U.S. stock market to pension funds relation shows that even the stock market is simply too big to fail.
    • In Europe, the situation is even worse. Everything there is too big to fail, from countries to corporations to junk bonds.



    Introduction

    “Too big to fail” is a concept that you probably recognize from the 2009 financial crisis when many corporations, particularly financial institutions, were considered too big to fail due to the negative impact their demise would have on the whole economic system.

    In order to prevent massive negative effects on the economy, and also to prevent a 1930s depression-style situation, governments intervened and bailed out the distressed assets. More →

  • 18 Oct
    On The 30th Anniversary Of 1987’s Black Monday, Today’s Market Looks Eerily Similar. Should You Prepare For A Crash?

    On The 30th Anniversary Of 1987’s Black Monday, Today’s Market Looks Eerily Similar. Should You Prepare For A Crash?

    • The data indicates that the likelihood of a crash similar to October 1987 is the same today as it was then.
    • This doesn’t mean the stock market will crash tomorrow.
    • It only means that you should know yourself extremely well and relate your investments to your risk reward appetite. Only this can prevent you from the biggest mistake investors usually make, i.e. sell at the bottom of a bear market in total panic and capitulation.



    Introduction

    On Monday October 19, 1987, the stock market crashed a whopping 22.6% in one day. Is it possible that the same could happen tomorrow? Well, let’s compare the current market and to the one back then. More →

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