Well, first the good news. You can still earn a 8.96 per cent yield in the bond market by investing in US High Yield CCC or Below rated bonds. Nice, isn't it.
Yes, you've guessed the bad news. You can lose at of money by investing in junk bonds.
Disclaimer: Not really needed, I believe. No one knows when a significant correction or a prolonged bear market comes.
Economists keep asking why developing countries don't develop and why emerging markets rarely emerge out of mediocrity:
Source: Daniel J. Mitchell, Federal Reserve Bank of St. Louis
This is what The Devil's Dictionary of Economics & Finance writes about the topic:
The reason why Latin America has always remained the continent of future (and will likely remain so for an uncertain period of time) is quite simple, in fact. Bad governance, corruption, bureaucracy, limited economic freedom. Factors that rarely appear in macroeconomic calculations, yet are vital for prosperity.
Democracy is such a novelty. Britain achieved universal equal male suffrage only in 1948. France allowed women to vote only in 1945, Switzerland even in 1971. In no developed country more than 1/4 of population voted by 1900.
Democracy may be dangerous in the hands of inexperienced voters. They may be easily manipulated to vote for strange politicians promising bizarre things.
Democracy is still a relatively new mechanism that may entail unexpected results. Still, would you change it for a despocy? I wouldn't.
This is a fascinating piece of economic analysis: the sum of total tax burden paid by businesses in the EU countries.
The taxes include:
There is no random coincidence that France, Italy and Spain have had persistent problems with growth and unemployment. The burden is obviously too heavy for their companies to bear. I'm rather surprised with Croatia. Admittedly, I don't know much about the Croatian economy. Maybe it's time to ask questions.
In any case, do read the whole thing at IREF. Well worth the effort.
This is what inflation is all about: growing money supply keeps pushing prices up. This is a Norwegian example.
Source: Statistisk sentralbyrå (SSB), author's own calculations
Property prices are prone to inflation because housing is not subject to international competition. You cannot import millions of cheap homes from China or India. However, you can import most of other items, which is one of the reasons why the Consumer Price Index hasn't grown much in developed countries since the 1990's:
A really serious credit deflation—such as this--
—may have serious consequences, such as this:
... or this:
There's no substitute for a protracted credit deflation if you wish to wreak havoc on the construction industry and the property market.
Why has Japanese economy stagnated since the early 1990's? The answer is surprisingly clear: demography is destiny. A decline of the number of working persons has caused the Japanese economy to stagnate.
However, we've seen a surge in Japanese stock indices over the last couple of years. What is the engine behind the growth? Forget GDP. It's as simple as monetary expansion:
After years of monetary stagnation, expansive monetary policy has caused the money supply to swell. This, consequently, has made stock markets growing again.
As simple as that.
Meet the Equity Yardstick, my favourite stock market indicator. I call it 'Equity Yardstick' for the lack of a more scientifically sounding term. Nevertheless, the name is not important. It works, which is the only important thing.
I discevered the Equity Yardstick randomly in June 2009. Most traditional indicators (such as P/E) failed miserably then. So did a majority of gurus and pundits. I was trying to find a more reliable indicator of market valuation then, and I found it.
In June 2009, the Dow was undervalued by 40 per cent against the Equity Yardstick. It has remained undervalued until the present day, albeit by 6 per cent only.
The Equity Yardstick is extremely easy to calculate. It's much easier than Shiller's CAPE, which has infamously failed over the past couple of years, wrongly indicating an overvalued market. (This may be one of the reasons why actively managed funds largely underperformed their benchmarks.)
Disclaimer: I never give any investment advices via internet. Do not consider this article to be a recommendation to buy or sell any securities. Forget any attempts to sue me if anything goes wrong.
The most recent Parliament elections in Israel:
The most recent Parliament elections in what is called 'Palestine' (yes, it was in 2006):
The difference is stark and obvious.
In the eurozone, there is inflation and deflation at the same time.
While money supply has been galloping at 11.5 per cent per annum, the Harmonised Index of Consumer Prices shows a mild deflation. Of course, the ECB is obsessed with the price index only, which is why it's so adamant about QE. However, the monetary inflation is more important, as it is obvious from this chart:
An extended period of double-digit monetary inflation may cause monetary bubbles being blown up. We've seen that from 2000 to 2006. The rest of the story is well known. Then, like today, the ECB paid no attention to monetary aggregates. A big mistake.
A white male with some professional experience in finance and investing.