Investors seem anxious, as they explore the implications stemming from the possibility of Portugal becoming another Greece. The general election culminated with the largest number of parliament seats being won by the centre-right coalition already in power, but still short of securing a majority. An emerging alternative coalition is on the cards, which may bring…
Many are those scratching their heads at the ECB, trying to understand why is there no inflation and how the central bank can act to boost the economy towards healthy growth. But while they spend too much time digging in their neighbours’ backyard (aka the global economy) they’re the only ones to blame, as the…
“So just as I want pilots on the planes that I fly, when it comes to monetary policy, I want to think that there is someone with sound judgement at the controls.” – Martin Feldstein The time when physical money will be made illegal is not that far away, as central banks have now exhausted…
Over the long term it is possible for an investor to build a portfolio with a very low risk profile while still being able to enjoy the upside potential that derives from the effects of compounding. For that goal, the Modern Portfolio Theory is of good help, stating that all an investor must do…
The other day I came across a very interesting and challenging research paper about the degree of investor sophistication and its implications on capital income inequality. While the paper attempts to explain the role of information and knowledge on investment attitudes and ultimately on capital income for varying levels of household income, it has quite…
If you believe the last summer was tough to invest in the equities market, then just wait for the rest of the year and you’ll see how bad things can get! I don’t want to be the “Dr Gloom” of Master Investor, but I’m increasingly worried about the proportions the current distortions are taking, as…
Central banks have been so fixated on fighting inflation that they have killed it completely. Now they have the reverse problem and need to find ways of generating it again. But, at a time when interest rates are already near zero, central banks need to jump into the unknown world of unconventional measures where quantitative…
Bill Gross from Janus Capital (ex:PIMCO) has heavily criticised central banks for failing to foresee the consequences of conducting a zero interest rate policy (ZIRP) for too long. They’re destroying “the savings function of capitalism, which is a necessary and in fact a synchronous component of investment”, as “accustomed to Taylor Rules and Phillips Curves,…
Is there anybody who still believes the FED will hike rates this year…? The next? With the latest developments in mind, I dare to say the FED may be closer to another round of QE or even to setting negative rates than to a rate hike. Yesterday’s FOMC meeting and policy announcement not only kept…
The last time the BoE moved its key interest rate was in March 2009, when the financial crisis was at its peak and the British economy was thirsty for liquidity. Six and a half years later, the financial crisis is over but the BoE is still afraid of touching its near-zero rate. The last MPC…
