Investment Office

Selecting relevant market observations

Investment Thoughts
Macro Observations
Capital Markets
Markets in History
Beyond Finance
Quotes on the Fly
Chart Gallery
Coffee Chronicles
Asset Management
Pension Funds
Family Offices
Wealth Managers
Asset Managers
Privacy Policy
Cookie Policy

   Investment Thoughts - Archives



2013 Observations





The Worst Bear Market in History
Which country has the dubious distinction of suffering the worst bear market in history?
Global Financial Data, Dr Bryan Taylor, March 2013


Inside Indian Taper Terror
When the Fed kept quantitative easing (QE) in place last week, US investors weren’t the only ones (wrongly) breathing a sigh of relief. Taper terror is fully global!
MarketMinder, Fisher Investments, Elisabeth Dellinge, November 8th 2013




on the Fly



Addicted to the Apocalypse

"Once upon a time, walking around shouting “The end is nigh” got you labeled a kook, someone not to be taken seriously. These days, however, all the best people go around warning of looming disaster. In fact, you more or less have to subscribe to fantasies of fiscal apocalypse to be considered respectable." Paul Krugman, New York Times, October 24, 2013



Be Like Water: The Philosophy and Origin of Bruce Lee’s Famous Metaphor for Resilience

"If you put water into a cup, it becomes the cup. You put water into a bottle and it becomes the bottle. You put it in a teapot, it becomes the teapot. Now, water can flow or it can crash. Be water, my friend." Brainpickings, by Maria Popova, May 2013


The Land Co. of Florida and the Florida Real Estate Bubble
The Florida Land Bubble of the 1920s has been hailed as a precursor both to the Stock Market Bubble of the late 1920s and the real estate bubble of the 2000s.
Global Financial Data, Bryan Taylor, 22th October 2013


1995 Government Shutdown
"Back in November and December of 1995, President Bill Clinton and Speaker Newt Gingrich faced off and shut down the government twice."
Bespoke Investment Group, September 30th, 2013




The Bank War

After the First  Bank of the United States recharter was defeated, the United States suffered defeat in the War of 1812, and suffered from a lack of fiscal order and an unregulated currency. As industrial and commercial interests expanded after the War of 1812, politicians advocated for the creation of a second Bank of the United States to promote the economy.
Global Financial Data, Bryan Taylor, September 26th 2013.




Did Bernanke Study The First Bank of the United States?
"The bank was part of Alexander Hamilton’s plan for stabilizing and improving the nation’s credit by establishing a central bank, a mint, and introducing excise taxes."
Global Financial Data, Bryan Taylor, September 20th 2013


Do (Some) University Endowments Earn Alpha?
Financial Analysts Journal, Brad M. Barber and Guojun Wang, September/October 2013


71 reasons to be bearish from 1934 to 2005
Daily Speculations, Steve Ellison, August 2013



on the Fly


"Some have come to expect the Fed to keep the markets levitating indefinitely. This distorts the pricing of financial assets, encourages lazy analysis and can set the groundwork for serious misallocation of capital." Federal Reserve Bank of Dallas, Richard W. Fisher, August 5, 2013


Red flag!
The curious case of (NYSE) Margin Debt
Deutsche Bank, August 2013


Cotton Candy Economics

Sugar, a staple commodity, has taken on a growing share of our diet over the past century. But it wasn’t always like that. There was a time, around the first half of the 19th century, when sugar was considered more of a “precious” commodity, in the same league as gold.

Lobnek Wealth Management, Altug Ulkumen, August 2013


Summer of Love

If the pattern in the stock market mirroring 1967 that has unfolded so far this year holds in the second half, we may see a volatile market with a slower pace of gains — but more record highs ahead.
LPL Financial, Jeffrey Kleintop, August 5 2013


The exception “à la française” of bond yields
The French government has enjoyed low financing yields since the onset of the global financial crisis. Yet it appears to us that fiscal fundamentals do not justify such a narrow yield spread with German Bunds.
Lombard Odier, August 5, 2013


What drives international equity and bond holdings? An empirical study
Applied Financial Economics,  Lieven De Moor & Rosanne Vanpée, May 2013




on the Fly


Fears of "lost decade"

"In fact, we've had non-stop "new normal" headlines for four years. Except new normal didn't happen". Interactive Investor, Ken Fisher, July 25th 2013


Easing’s Quantitative Analytics
Data show current Fed policy is contractionary for the economy, and in our view, its eventual end should be bullish for stocks.
Fisher Investments, July 12, 2013


The Fed's Bind: Tapering, Timetable and Turmoil
"I see striking parallels between the dramatic recent sell-off in U.S. Treasuries and the Great Bond Crash of 1994."

Guggenheim Investments, Scott Minerd, July 2013




Food for the Mind from Friedrich A. von Hayek

A selection of observations from the great Austrian economist. In stark contrast to the neo-classical school Hayek reminded us that a good economist is also a student of history, philosophy, psychology, sociology and even of biology.
Investments Office, July 2013




on the Fly


“As the Federal Reserve prepares to wind-down unconventional monetary policies (yes, we did see the chairman’s latest “clarification") the emerging markets have been reminded that they are price takers in the global capital markets…” GaveKal Research, July 2013


Deflationary Boom?
"The defining feature of the present market and economic environment is incompatibility, juxtaposing weakness in emerging markets, materials, and inflation-protected securities with strength in equities and the U.S. dollar, a spike in interest rates, and an unusually steep yield curve in Treasury securities."
Hussman Funds, John P. Hussman, July 8, 2013


S&P 500 Drawdowns since 2010
Summer corrections are nothing new since the equity rally began in 2009.
Investments Office, June 2013

Central Bank Asset Purchases and Financial Markets
Interesting comments and charts from an external member of the Bank of England's Monetary Policy Committee.
Bank of England, David Miles, June 2013


"Designed in California, Assembled in China"
Apple vs. Foxconn stock price since 2004
Investments Office, June 2013


The Canary in the Coal Mine

"The recent string of surprise downside moves in markets may be the canary in the coal mine for global investors."
Guggenheim Partners, Scott Minerd, June 2013


Germany vs. Spain a few simple charts.
Bank of England, Charlie Bean, May 2013


Present and Emerging Risks to the Gold Trade
The notion of gold as a hedge against systemic risks is flawed. We believe that the concept of gold’s role as an insurance policy needs to be narrowed significantly.
GMO, Amit Bhartia and Matt Seto, April 2013




The Crowd: a Study of the Popular Mind

An influential book from 1895 on the social psychology of crowds. For investors there are interesting parallels to be drawn with financial markets as well as with the current political and social mood.
Gustave Le Bon (1841 – 1931)


What style-timing skills do mutual fund “stars” possess?
Journal of Empirical Finance, Li-Wen Chen, Andrew Adams, Richard Taffler, March 2013





on the Fly

Risk Shift from West to East
“While stronger growth is prompting the Fed to consider a tapering of easing, growth indications in China continue to point lower. As economic risks shift from the West to the East, and with China also rebalancing its economy away from the manufacturing sector (…)”. Morgan Stanley, May 2013





Day and Night When Taking out the Keynes

This chart plots compounded return for SPY day and night (open-close, close-open) for the prior bull market of 3/03-10/07. 

Daily Speculations, Kim Zussman, May 8, 2013



Tricky (Central) Bank Predicaments
Wednesday, Fed Chairman Ben Bernanke announced the central bank would maintain its pace of quantitative easing (QE) in light of moderate improvement in US economic activity. However, as we’ve detailed many times before, we view the Fed’s QE policy moves as grossly counterproductive to its stated aims.
By Fisher Investments Editorial Staff, May 3, 2013


Reinhart and Rogoff Were Wrong Even Without the 'Spreadsheet Error'
"When governments spend with abandon (deficits just a form of finance) there's a smaller capital base for the productive to access, so when it comes to government spending the tragedy is not whether it occurs in deficit or surplus, but the Microsofts and Intels, the cancer cures, and the transportation innovations that never materialize thanks to politicians consuming so much capital."
RealClearMarkets, John Tamny, April 2013


Financial Market Volatility: Assessing Risk
Volatility is often cited but seldom quantified for many economic series. Over the years, we have sought to provide a perspective on this concept in many investment decisions. One primary lesson we have learned is that when we provide a context for the concept of volatility, decision making is improved.
Wells Fargo Securities, Economics Group, John E. Silvia, April 23, 2013


The Great Recession? Crisis? How About Relearning? 
"Despite a high level of drama in nearly every corner of the economic globe, we have yet to settle on a catchy description for this particular period in history."
Alhambra Investment Partners, Jeffrey Snider, April 2013





on the Fly

"The old market adage 'Don't Fight the Fed' lately has a global ring: don't fight the Fed, the Bank of Japan, the ECB, the Peoples' Bank of China, the Bank of England, or particularly the strong US dollar, the World's major funding currency. Policymakers are getting their way."

Michael Howell, Crossborder Capital, April 2013



Reindustrialisation Risk
"Most see the prospect of America reindustrialising as bullish. In my view, that depends on whether you are an economist or whether you are an investor."
Morgan Stanley, Gerard Minack, April 2013




France Is On The Brink of A Secondary Depression


"...having reached the logical limits of its decades long experiment in state-run welfare-capitalism France is far more exposed than even its struggling neighbors."


GaveKal, Charles Gave, April 2013 


US Federal Debt in kilotonnes of Gold
...from 1900 to 2013, April 2013




on the Fly

 Only in Japan

""No tip please, it's my job", somebody told me at my hotel today."

 Luxeat, Aiste Miseviciute, April 2013


Cash Is Dead! Long Live Cash!
“What explains the rapid rise in currency holdings at the same time that other methods of payment are displacing the greenback?”
Federal Reserve Bank of San Francisco 2012 Annual Report, John C. Williams




Financial Repression in North Korea 

The price of rice has increased by roughly 28,500% over three years, meanwhile the North Korean Won is in a free fall. Sounds familiar?

Investments Office, April 2013 



A Londoner during the first era of globalization
"But, most important of all, he regarded this state of affairs as normal, certain, and permanent...".
The Economic Consequences of the Peace , John Maynard Keynes, 1919


Missing/Avoiding the Best & Worst Days of S&P500 from 1993 to 2010
Pension Partners, LLC, Michael A. Gayed, September 2010

Investing in What You Know: The Case of Individual Investors and Local Stocks
Journal of Investment Management, First Quarter 2013



Would the real Peter and Paul please stand up?
"Aware that we worry too much in a world growing more wary and distrustful, it is here we place an increasing premium, here that we seek refuge from financial folly and here that we expect the next bull market."
Edelweiss Journal, Issue 12, 11 March 2013, by Dylan Grice


Dispelling the myth of a great rotation
A popular current financial theme (witness Baron’s recent cover piece) is the so-called “great rotation” out of expensive US bonds and into comparatively cheap US equities. We are wary of a simplistic and massive rotation thesis. Why?
Lombard Odier Private Banking, Investment Strategy Bulletin, March 2013



Hyperinflations, Hysteria, and False Memories

"Hyperinflation is not purely a monetary phenomenon. To claim that is to miss the root causes that underlie these extraordinary periods. It takes something much worse than simply printing money."

GMO, White Paper, February 2013 , James Montier




on the Fly

" the 1960s the US dollar accounted for roughly 50% of World economic and financial transactions, whereas today the figure is likely as high as 70%.
The Dance of the Dollar, Crossborder Capital, March 2013


U.S. Manufacturing and the Importance of International Trade:
It’s Not What You Think
Federal Reserve Bank of St. Louis Review,, Kevin L. Kliesen and John A. Tatom, January/February 2013

The Effect of Language on Economic Behavior:
Evidence from Savings Rates, Health Behaviors, and Retirement Assets
Yale University, School of Management and Cowles Foundation, December, 2012 , M. Keith Chen

The "Big Five"
"...Lehman was a small player compared with any of the Big Five. If Lehman Brothers was too big for a private-sector solution while still a going concern, what can we infer about the Big Five...?"
Ending 'Too Big to Fail': A Proposal for Reform Before It's Too Late, Richard W. Fisher, President and Chief Executive Officer, Federal Reserve Bank of Dallas January 16, 2013


Currency Wars Or Just Approaching Dollar Strength?
The recent jump in forex volatility is understandable. A similar theme coloured the mid-to-late 1930s.
Crossborder Capital, Michael J. Howell, 20 February 2013

The Foolproof Way To Fight Deflation or the Road to Ruin?
The Euro is making headlines again, this time not due to its possible imminent disappearance as a currency but rather as a result of what many regard as its undue strength.
Variant Perception, February 12, 2013


Shall We Dance?
"But I remain convinced that investors are accepting historically elevated risks here, and that it is misguided to reach for speculative returns in an overextended market, simply out of repugnance for zero interest rates."
Hussman Funds, John P. Hussman, Ph.D., February 11, 2013

Are We Like Sweden? Recovery in the Labor Market
More than 20 years ago Sweden suffered a severe financial crisis that brought unemployment to an all-time high. To this day the unemployment rate has not returned to where it was before the crisis.

Federal Reserve Bank of Cleveland, Emre Ergungor, February 7, 2013





Archives 2017



Archives 2016



Archives 2015



Archives 2014



Archives 2013



Archives 2012