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Gold, Canned Goods, and Firearms

  These seem to be the best investments now. Confidence in government is so weak, all that is necessary for another big rip is a blunder. Anything. A bridge collapsing, another Too-Big-To-Fail bank getting into trouble, a trade kerfuffle with China or Russia. Everybody is stressed and uncertain about the future.I spent an hour chatting with an ex-colleague from Lehman Brothers who is now in London. He speaks to a wide range of clients, and they are all uniformly terrified - terrified of losing money, terrified of losing their investment mandates if the markets rally and they miss it, and terrified of the consequences of government that is incapable of action.  The level of uncertainty within financial institutions as to job security is the lowest I have ever encountered in 20 years.Various portfolios - modeled and cash -  all confirm these sentiments. All are in cash. If they are not cash, they are short equities.  If they... Continue reading
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Living in a Renting World

I have been struck recently by an anecdotal list of big ticket items that can now be rented, and the wide disparity between the selling price, and the rent. - Richard Branson's Caribbean Island paradise. A dreamy bungalow suitable for 26 people can be rented for $350k/night. He originally wanted to live there, plowed a lot of money into it, and now leases it as a resort.- Private jets - The average cost of a 3 hour flight using a shared leased aircraft (1/8th ownership) is $125k/flight. You can take a maximum of 4 people. A first class ticket on a comparable flight is $6k. - Luxury Yacht - owners are selling their boats, and finding few takers. You can lease them for $25k-$50k/week. Crew are extra. - Luxury flats - in Beijing have risen 400% in the past 5 years, averaging $600k. However, rents are $600/month. In all these cases, the owners of these... Continue reading
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UK Broker sells Danish Stock to a Norwegian Counterparty and settles in Swedish Krona

The title of this post is not newsworthy. It happens regularly. Despite all 4 nations having their own currencies, exchanges and regulatory regimes, this trade could happen with little fanfare. Maybe a little cajoling of the settlement department, but nothing ground-breaking. Now try this: "Thai Broker sells Hong Kong Stock to a Korean counterparty and settles in Japanese Yen"This would make headlines, because it crosses rigid regulatory, currency and exchange boundaries. Asia is further from a unified capital market environment than ever, and the walls are set to be built HIGHER, not lower.This article Financeasia.com calls for Increased Regional Integration is a pipe dream. It will never happen. FundKing has nearly 5 decades of combined experience in Asia, and understands full well that these ideas will meet with an extraodinary amount of resistance. Corruption, along with typical market distortions that occur when "The Government" has a large pecuniary interest in the... Continue reading
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Monkey Markets - What Do They Mean for Investors

The latest TED video on how monkey economy participants function like their Homo Sapien cousins has made the rounds: When offered the chance to gamble on the upside, monkeys (and humans) usually pass, and take the sure thing.   When offered the chance to gamble on the downside i.e. take a sure loss or gamble to limit the loss, monkeys (and humans) usually gamble. The payoffs from these individual exchanges are identical, it is just the framing of the question - "gain" versus "loss". And that is always contextual. So how can we boil this into "market speak". How do these payoff profiles resemble options? Increased upside is the hallmark of a long call option - the participant buys a call. Monkeys and humans sell this - they sell calls on the potential economic outcome. Increased gain does not interest them. What about on the downside? Monkeys have the choice of... Continue reading
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The Monkey Economy

Laurie Santos on the Monkey Economy "Monkey Market data was indistinguishable from Human Market Data" i.e. we behave the same. Finding - like humans, monkeys will take the sure thing on the upside and gamble on the downside. This is an evolutionary bias, causing market participants to sell too early, and hang on too long to losers. Rather than tell oneself, "...I won't think that way", we need to recognize it, and implement tools and strategies to overcome this and other biases.... Continue reading
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