From the monthly archives: September 2017
We are pleased to present below all posts archived in 'September 2017'. If you still can't find what you are looking for, try using the search box.
Volatility has collapsed over the summer months with the standard deviation of returns on the S&P 500 running at well below half the normal level. This is not to say nothing has happened. Brexit negotiations are proceeding painfully slowly. This is scarcely a surprise but political commentators and insiders are becoming disheartened by the calibre of many of those in the Cabinet. Such are the complexities of the task at hand, it would tax the very ablest. Worryingly, many of the current crop of British politicians are firmly from the second division.
Events in the Korean peninsula are serious but we should not forget that North Korea has been a nuclear nation for almost a decade. However unpleasant, the world needs to learn to live with this threat. If America had any good means to deter North Korea from pursuing its nuclear programme, it would have surely used them already. The biggest risk we face is from an overreaction, but as I wrote here
, even ratcheting up the war of words is counterproductive. The DKK has an agenda and this clearly does not involve thermonuclear war. Even an impetuous set of sanctions could do far more to damage international trade than this tin pot country warrants. Let us not forget that Kim Jong Un spends less on feeding his people than Americans lavish on their pets.
Continue reading »
It is often said that the most dangerous words in investment are that 'this time it's different'. The phrase resonates through stockmarket history as experts pontificated that old rules of valuation no longer apply and the current crisis/situation bears little similarity with what occurred in the past. The words were widely echoed during the 1990s tech boom, as they were during the depths of the bear market of 2008. Since the days when it was first formally identified by Graham & Dodd, the value philosophy has proved its worth and presented investors with one of the few reliable ways to earn super normal returns, since valuation levels typically revert to the mean. Indeed such is our respect for its power, it plays a principal role in Square Mile's tactical asset allocation process.
Reasoning that things are different this time is typically an expensive mistake. So, I almost fell off my chair the other day when I read
that no less an authority than Jeremy Grantham was postulating that valuations may be reaching a new, higher plateau and that "it can be very dangerous indeed to assume that things are never different".
Continue reading »