And people still give banks their money

UBS, Citigroup, JPMorgan, HSBC and Barclays have been fined a collective $3.3 billion for rigging the FX market.

This is not the first of such reprimands.

After nearly a decade of impropriety, investors still employ various banks to look after their money.

Help you to help yourself. Godspeed!

Being bearish seems wrong

I’m not going to write too much trying to convince or prove things in this post, but just summarise what I think.

With all the bad news around ISIS, Ukraine/Russia and assumptions about the Fed reversing its interest rate stance, to how oil, gold and currencies are reacting, equity markets should be tanking, but they are not. Instead, it looks very bullish.

Ebola and any other reason was behind markets falling 10-12% recently but alas they rebounded soon after, and to new highs. Geez, it looks bullish.

Bears were recently rejoicing again with many still calling for bubbles and crashes but got caught being short again. Yep, it still looks bullish.

But, don’t back up the truck as any rise in these equity markets won’t be rooted from a base of cheap valuations but it’ll be based on capital flows, momentum and on those who have missed out and need to catch up.

This market could rise sharply for a couple more years and the S&P 500 may not get close to testing 1,800 in that period.

So there!

My Current Take On The Market

I am often asked, “Whaddya think of the market?”

It’s a question that irks me somewhat, because its an short & easy question for someone to ask, but the answer can be long and complicated. “The market” is a large beast and answering this question can be challenging.

But here I go;

What I think of the market is……

The party started at 7pm (at 2009’s index low). Many of us (including myself) didn’t arrive until 8.30pm, as we didn’t want to get there too early, not knowing whether others would arrive, so until then we kept our cash in the bank.

Into the evening, more people turned up to the party and we’re having fun, as the wine is tasting good (we’re making some from our investments) and we are starting to see a few more of our friends show up.

Currently, the clock is near midnight. Many of the desirable girls & boys have already been asked for a dance (the cheap stocks have been bought) but we’re still feeling more confident about our chances and abilities (as we reflect on having a couple years of good returns) and we’re getting a little tipsy.

The party hasn’t finished but we are not sure if it’s going to last until 1am, 3am or 4am.

At this stage, due to overconfidence (feeling drunk), desperation (to get involved in the festivities) or a desire to simply show-off, is when crazy things can happen.

Displaying some of these traits may involve doing cartwheels or handstands, ambitious dance moves, courting the wrong person or inappropriate behaviour.

We think equities remains the best asset class to invest in, when comparing them to real estate, bonds & cash.

But from here on, the actions of markets, securities and many people, is less likely to be based on fundamental sensibility and logic.

It can become euphoric, so just be careful how much you expose yourself.

A Dozen Things I’ve Learned from Peter Thiel

Mark Cuban blog post “pressed”

An extract from a Mark Cuban blog dated August 2010.

I have focused on the part about the cost and scarcity of capital rather than the bit about the stock market being for idiots.

“Capital found its way to where people/funds thought they were smarter than the rest. Some people thought they understood the tech markets better than others. Some thought they understood retail better, etc.  The belief that an individual/fund had an advantage  drove where capital was allocated.  People posted good performance or identified macro opportunities and put their own and others money to work.  Others saw the success and followed.  Like the saying goes “first there were the innovators, then the imitators, then the idiots”.    Fortunately for market participants over much of the history of the stock market, if you were  the innovator that was  smarter and faster than the other guys, you could make money on the long and / or short side of the market before the imitators and then the idiots flooded the market.

The door was open to opportunity in the past simply because capital was relatively expensive. It was expensive to raise, it was expensive to borrow.  High cost of capital creates scarcity of capital.  The more expensive the scarcer. The scarcer the capital, the more untapped opportunities just waiting for innovators to exploit and the longer it took the imitators and idiots to chase the same opportunities and close them. Which is why you found funds and smart people posting great returns over a long period of time.”

Full blog post is found on the link below

The Stock Market is still for Suckers and why you should put your money in the bank.