I know what you mean with that.
Economy is a social science (with mathematical and statistical tools), not a exact science, because it’s based in the human beings, and they don’t act always rationally.
Like in any statistical model, there is always a very important variable, the Error (including the randomness).
Thanks some high deity, that we don’t fully understand Economy, if not, all money were made only by a few with that knowledge or we all know and we were on a Pareto equilibrium, with no one earning money.
Wondering if Buffett would still agree with what he said in the past. Last time I’ve heard him, he said “economy is gonna be driven by states in the future so look what they’re doing and do the same”. Looks like he has a new paradigm: investment not as a science nor an art but as mimicry. He might be right if we’re headed to some sort of “green new deal” - which seems to be the case (in Europe at least).
I had a good run of things lately but I’m getting more and more uncomfortable with the way things evolve. Markets - well american markets anyway - are in some sort of exponential growth mod. I know it’s not science but in science an exponential system is called unstable and ends up collapsing on itself.
Not sure how to manage my portfolio… I’ve been reducing my exposure to the US (except on clean energy and nuclear) not sure what to do next so I’m reading to find inspiration.
A few food?! I almost caught an indigestion of too much food.
It’s a very good share. It could be demanding to some people, because it needs some analytical and some economic knowledge to properly digest the information.
You miss the USD/EUR, GBP/EUR, USD/GBP, US GDP, US inflation rate, business cycles.
Chinese are clever. They’ve been slowly but surely expending, lending money to everybody, making sure to make friends all over the place while americans were bombing the shit out of half the middle east
I’m not sure lending money to countries on high interest rate loans with clauses leading to repossessions should they default is making friends? They obviously can’t settle in almost all cases this will lead to more Chinese expansion, friendships not so sure
You might be right Lenos but China has been very clever in its expansion so far. Xi Jing Ping knows he can’t stab his partners in the back if he wants to keep them on his side and avoid a western opportunism. If he starts to pressurize borrowers too much the USA will use it against him and he knows it I think.
Just finished reading your article. China is indeed playing its hand carefully. I don’t think they want to squeeze their borrowers, just develop the same kind of friendship we developed when we were in charge of the world, you know “I’m your friend, I give you money and in return you give access to your harbours and this and that…”
The “green deal” is also a way to give business opportunities to some friends.
In my country, some State friendly companies are maneuvering to get more rents and subsidies from the State. The traditional energy had stagnate, low growth revenues, so new energy forms will bring more rents from the State to energy companies.
In Portugal, the oil and electric majors are lobbying the Government to build a “green” hydrogen refinery, 2nd only to the German project. It’s major billion EUR project for a 10M people country.
I’m also a bit uncomfortable with the bubble mode in the markets, mainly in US, but Europe is also in the same path.
I already reduced my US exposure and started investing in Europe.
Research is always good, is the basis to learn.
I agree with you, we are all artists and believers, besides rationals. Because investing also have a little of faith.
They do what other net exporters to US have done in the past, Japan, Arab oil producing countries (OPEC). They received USD and bought US Treasuries and US companies with the surplus of the trade balance. Besides the shopping spree that these countries did around the world.
I’m a stocks guy. I invest only HY bonds, a very residual investment. The IG bonds and government bonds are more overvalued, mainly the EUR bonds, than stocks.
The past correlation of bonds vs. stocks went to the cuckoo nest, thanks to the unconventional monetary policies (QE) from the Central Banks since 2008 in the western hemisphere. The risk isn’t properly valued, more risk than reward.
The stocks and bonds are more correlated than ever since that. The stocks grow better with low interest rates, and guess what, so as the bonds. The monetary policies indirectly affects also the stocks, so I asked myself why invest in bonds.
Eventually when the economic and social effects of Covid pass, the CB will raise the interest rates, and it will be bad for the bonds, also for the stocks, but could damage more certain bonds. See what happen in 2013 with Taper Tantrum in US.
Last time, I had a bond fund (2019), it was one of the best in Europe, but his portfolio had a lot of Government Bonds from Southern Europe. It’s seemed as a stocks fund in performance.
Taper Tantrum in 2013, started in May 2013, with the Fed’s Ben Bernanke declarations about ending the QE3 in US:
Taper tantrum refers to the 2013 collective reactionary panic that triggered a spike in U.S. Treasury yields, after investors learned that the Federal Reserve was slowly putting the breaks on its quantitative easing (QE) program.
