Archive for April, 2010

Avoiding the equity trap

April 10, 2010

Americans are optimists. One I had coffee with last week felt sure equities were about to take off. I didn’t agree, arguing I didn’t know where the earnings were coming from given the prospective environment which would be starved of growth and with deleveraging reaching further down the feeding chain. Overall a dis-inflationary environment I would argue.

However, not wishing to appear rude I then turned and supported his view – because one thing is for sure: if the US (and the UK for that matter) can inflate away its massive debt overhang- it will. And that means owning real assets like houses or proxies like, yes, equities.

But hold on! That sounds like buying into a bubble -multiples not supported by earnings- and that’s at the root of our current mess.

So what may make sense?

Michel thinks owning Australian index-linked treasuries while buying an out-of-the-money option on the S&P 500 might be a sensible position to take.


From afar the UK a sad sight

April 8, 2010

Here in New York our experience is the same as in Georgetown. The streets are bustling, the carrier bags full and somehow there is a real confidence exuded as we pass along the streets. America is out of recession, the US is pulling off its renewal trick and the Government is looking to book an initial ten billion profit on bailing out the banks.
In comparison what a sad sight the UK looks especially from this side of the pond. Immigration, government jobs and and the many millions simply living on hand-outs create the absurd situation where an utterly incompetent, corrupt, surveillance-crazy, back-ward looking government led by a man who has never been elected by anyone – could actually get another five years in power.

We are the most watched county in Europe- possibly reduced in just thirteen Blair/Brown years to something rivalling the old East Germany. Blair/Brown have pushed through Parliament almost one law PER DAY over those thirteen years! At the same time Parliament has been bought-off leaving little if any scrutiny of legislation.

This is the election that really will change lives. Can our traditional values ever be restored? The Tories are the only hope. But can anyone turn back Labour’s election rigging?

On the way to Washington DC

April 3, 2010

The Cromwell clan is en route between NYC and DC. We left our Harvard friends in mid-conversation but caught the noon train with ease. Fast, comfortable, excellent wi-fi. Such a contrast with the dirty, crowded rip-off in the UK. The Cromwell’s are introducing the kids to the most political of cities. The Easter weather is wonderful (72) and the cherries are in full blossom. Great!