Category — Banks
April 21, 2013 Comments Off
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January 25, 2013 Comments Off
If you wait until an investment has no perceived risk, then you’re buying the investment at a premium…the investment is ‘priced for perfection’.
Trouble is (and this is the paradox of investing) when an investment reaches this point, where it appears nothing can possibly go wrong, that’s when things can go wrong. And when that happens, because it’s so unexpected, it can result in big price moves…
Why CBA Shareholders Should Heed This Lesson
That’s why we offer caution to investors in Commonwealth Bank [ASX: CBA]. Two weeks ago the newspapers went bonkers at the news CBA was now valued at $100 billion.
As the Sydney Morning Herald reported:
‘The bank’s shares rose to its highest-ever value — $63.24 — at the close of trading on Thursday, as the ASX200 reached a 19-month high and the market continued to rally following the US Congress’ temporary aversion of the “fiscal cliff” crisis.’
That’s got to be good news. As the report continued: [Read more →]
January 19, 2013 Comments Off
The world’s powerful central banks are playing a very dangerous game. Trying to manage inflation expectations while pursuing downright inflationary policies has caused, and is set to cause, a great deal of volatility in the market this year.
But as I said on Monday, there’s good money to be made for those who can stay a couple of steps ahead of the central planners.
Today I want to show you how central banks will try to pull the wool over your eyes this year. And what you can do to make sure you stay ahead of them.
How Central Banks are the Puppets of PoliticiansLet’s get one thing straight from the start. Though most central banks claim to be independent, they are nothing of the sort.
When it comes down to it, the politicians call the shots. And the politicians generally favour what’s known as ‘dovish’ policy. That is low interest rates and all the easing-type stuff we’ve come to expect. [Read more →]
January 14, 2013 Comments Off
The Federal Reserve System is a government-sanctioned private enterprise that functions as a socialist tool.
It was conceived in 1910 and constructed for the benefit of the private bankers who control it. Congress blessed the scheme in 1913 with passage of the Federal Reserve Act.
These days the Fed doesn’t just backstop America’s too-big-to-fail banks. It has expanded its doctrine of socializing banking losses globally.
The Fed helped bail out private businesses, foreign big banks and central banks in Europe and Japan in the credit crisis of 2008 and is the model for the European Central Bank, as well as the ECB’s primary backstop.
To understand how the Fed gets taxpayers around the world to pay the losses its member banks routinely incur, let’s pull back the curtain on the Fed and explain how it operates. [Read more →]
December 20, 2012 Comments Off
There’s a revolution going on in the central banking world.
When the cult of independent central bankers took hold, their main enemy was inflation. They all had to keep inflation rising at a gentle pace of around 2% a year.
They didn’t care about asset price inflation. The price of a house could rocket as much as it liked. And they were quite relaxed about the soaring price of energy as long as this was offset by a drop in the price of music players, for example.
All in all, they managed to stick to the inflation target pretty well. Meanwhile the economy still overheated massively, then collapsed in on itself under the weight of all the debt everyone had taken on.
That approach clearly didn’t work. So what’s the new recipe for success?
The Federal Reserve in America has thrown caution over inflation to the winds. It is now emphasising employment over price changes. The Fed has become even more aggressive in its monetary policy, even as the US economy seems to be healthier than it has been in a long time. [Read more →]
December 19, 2012 Comments Off