It looks bad for retirees, especially if you are a banker.
Well, I am not here to discuss about vanities or egos.
Some stuff I have been reading from great minds on investing is making my hair stand a little.
Of course great minds, like all great minds, are always ahead of their times and the frustrations of Beethoven and Van Gogh killed them in the end.
Bill Gross wrote his take, There Will Be Haircuts, last week and how its better not to play in an uneven playing field and call it quits. That is a powerful take from someone who has seen quite abit more than most of us.
Only Warren Buffet is single handedly shoring up the markets, well not exactly all markets. He declined to buy the Apple I-bonds point blank.
Mohd El Erian, Pimco’s number 2, had a comment that succinctly wraps up the entire situation. Watch for the end of the video.
Yes. Markets are up there but valuations are down there. Markets are up there because of central banks experimental economics.
However, my mind was thinking how come it is ok to call Bernanke the Wizard of Potemkin but not ok if Niall Ferguson insinuates that Keynes was gay ?
Seth Klarman, founder of Baupost Group LLC, says “investing, when it looks the easiest, is at its hardest”, because “When just about everyone is heavily invested is doing well, it is hard for others to resist jumping in.”
“Holding significant, low or even zero-yielding cash can seem ridiculous until you are one of the few with buying power amidst a sudden downdraft. Avoiding leverage may seem overly conservative until it becomes the only sane course.” Source : Zerohedge
Now if you are not familiar with Baupost (like I admit, I am not), maybe Apollo Management’s Leon Black will ring a bell.
“We think it’s a fabulous environment to be selling,” Black said today during a panel discussion at the Milken Institute conference in Los Angeles, adding that Apollo has sold about $13 billion in assets in the last 15 months. “We’re selling everything that’s not nailed down, and if we’re not selling, we’re refinancing.””Source : Bloomberg
They have done their homework. Yes. NYSE Margin Debt is near all time high (as off the last update).
Elliot Wave’s Pretcher and Richard Russell are still calling for correction, but not yet.
Marc Faber comes out to say he is wrong … for now. He is calling for a crash in August !
Just as the CLSA Fengshui Annual says ! Not now because we have some major IPOs in HongKong coming up – Sinopec and Galaxy Securities.
Someone just posted the news headlines on the NY Times the day before the great crash of 1929. It reads “‘All Well’ is View of Business Chiefs (October 26th edition of The New York Times).
The St Louis Fed just published that the 15 year fixed rate mortgage is at an all time low of 2.56%.
That is bad news for retirees ! Your investment returns are not going up anytime soon and the bar has been lowered again as the 30 year mortgage falls for the 5th week in a row to 3.35%.
Like I said, great minds are often too great for themselves and the rest of the world. Yet it does not take a moron to know that they will be right. It is just like deer caught in the headlights of an on coming car, or train, or bus, I think more than half the world is caught up in the investing momentum and not thinking about the valuations behind them.
That is my 2 cents worth. Do not be overinvested in this climate.
Leaving you with Bill Gross’s quote.
“In the investing business, risk is guaranteed, return is not.”
“Central banks can only dampen volatility & raise asset prices if policies eventually produce real growth. So far, no good.”