One of the most puzzling questions central bankers have been asking themselves during the last few years is: why is inflation so low when the money supply has expanded so much? At the same time, and after realising it, then comes a second question: with inflation being so low, why isn’t growth much higher at…
Featured in this month’s Master Investor Magazine. “The contrary investor is every human when he resigns momentarily from the herd and thinks for himself.” – Archibald MacLeish The Last Bear Standing “Remember the film The Matrix? Morpheus offered Neo the choice of two pills – blue, to forget about the Matrix and continue to live…
One of the most boring realities observed in the financial world is the tendency for reversion. When the price of an asset explodes, it later tends to shrink; when central banks cut their key interest rates, they later tend to hike them; when banks advance too much credit, they later tend to shrink it. The…
With the British economy now growing at an unspectacular but still decent pace, it is time to finally let it stand on its own. The support given by the Bank of England with near zero interest rates and asset purchases totalling £375 billion should be near an end, as the central bank is walking an…
In 2008 Warren Buffet made a big bet against hedge funds. He claimed that an investor would be better off following a passive investment strategy by dumping his savings into a low cost index tracker than by handing them to a hedge fund that would actively manage the money for an expensive “two and twenty”…
In my blog Don’t Fight The Fed, Fight The ECB, published last week, I said that investors face an epic opportunity to short bonds, as the risks of doing so are very narrow while the upside potential is huge. Buying an asset just because you believe someone else will buy it from you at a…
An Opinion Worth Millions Whoever thought Ben Bernanke’s golden age was terminated on 1st February, 2014, with the end of his tenure as chairman of the US Federal Reserve, was just plain wrong. The ex-chairman has been on a tight and busy schedule for the past year, travelling from town to town, disseminating his wisdom…
The Election Day Is Nearing… Five years have passed since the last General Election and the UK is preparing for a new one. All parties involved are now aggressively marketing their political plans with each of them greatly amplifying its strengths while trying to cloak its weaknesses. The fight will be fierce and eventually extend…
While central bankers look tranquil and trustworthy on their television appearances, giving investors reassurances that a brighter future is just around the corner and praising their timely and bold policy actions, there is a growing number of other professionals that still raise questions about the real effectiveness of such action and that are not at…
The problem with central banks is that they initially wanted to be independent from us but now they want us to be dependent on them. Many years ago, there was a time when economic policy was part of a government’s list of affairs, with both fiscal and monetary policy being part of it. But, for…
