A Tale of Two Economies – Japan

This blog post is about how economies and the performance of equity markets are related with particular reference to Japan. The Link Between Economies and Stockmarkets It is often thought there is a close correlation between how well an economy is doing with the performance of its stockmarket; so if the former does well the latter will as well. A …

What’s Up Doc?

So what’s up with the markets? Sharp falls globally, the FTSE 100 pulling back from over 6,800 on a charge towards the highest ever close of 6,930 in December 1999 and the Japanese market falling 10%, that’s technically called a correction. I love the euphemism. As to causes the two best explanations I have read are firstly mixed signals from the US about QE. …

Favoured Investment Opportunities

Recently in advice to a client on investment of cash I briefly surveyed a variety of my current favoured ideas and other options. I thought my comments would form the basis for a blog post, so here goes.   1. Cash   This can be retained for risk reduction purposes. Cash is suitable for very cautious investors who are more interested …

Prospects for the US Economy

We are all aware of the importance of the US economy, still the world’s largest albeit with China catching up quickly. The rally in equities in the first quarter of 2012 was in large part been due to clear signs of recovery in the US – corporate earnings are good and cash balances high (some of this is being returned …

Medlee of Comments

I am awaiting something inspiring to write about; nothing has fired my imagination in recent weeks. So in the meantime here are some random thoughts on investment issues.   Markets have been weighed recently by fears over Spain’s economy, after a poor government bond auction and rising bond yields. Spanish stocks also fell on Thursday whilst other markets rallied. Spain has …

Expectation of Future Investment Returns

In the same week I have seen polar opposite opinions on expectations for future returns from equities. According to Citigroup the FTSE 100 index will double in value in the next 10 years. That takes some faith given the index is still trading at around 1,000 below its December 1999 peak of 6,930. The drivers will be earnings growth, strong …

When is a default not a default?

When it is a Greek debt restructuring deal! This is the largest bond swap in history with the majority of private investors such as banks and pension “voluntarily” accepting up to 74% haircuts worth around £90 billion in total. This slashes the Greek debt burden and triggers a further £110 billion in loans from the so called Troika (IMF, EU and ECB). The question …

Equity Markets Rally

You will have noticed that equity markets have rallied in recent weeks. This is due in part to the European Central Bank (ECB) firing its “big bazooka” at the end of December, with unprecedented buying of government bonds and injecting liquidity into the financial system. The result has been a very large reduction in sovereign bond yields, notably in Italy …