May 2014

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Thoughts After Client Discussions

Recent talks with people that have an academic background surprised me when it came to misconceptions or errors of judgement regarding investing: 1. After a crisis it’s good to hold on to cash because if it happens again, they’ll be prepared. We’re seing record cash levels at the moment held by clients in banks, that should there really be another large hit to sentiment, global growth the tools to counter…


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Global Investing Through Swiss Listed Companies

In a recent post about Barry Callebaut (and in particular Stollwerck) I pointed out that investing in Swiss companies means investing in the global economy. Here’s another example: CPH Group (Ticker: CPHN) expanding in China where they will invest CHF 10-15 million in a new plant. This is a way to play the double-digit growth rates in Asian blister film demand. CPH Group expanding to China Perlen Packaging, the packaging division of…


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Commodities Cartel & Central Banks – The Real Market Sharks?

Just to remind the interested reader what a cartel is; this is what wikipedia says: A cartel is a formal, explicit agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production.[1] Cartels usually occur in an oligopolistic industry, where the number of sellers is small (usually because barriers to entry, most notably startup costs, are high) and the products being traded are usually commodities….


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Conduct Problems in Advertising Structured Products in Switzerland

In connection with my recent series of posts highlighting ads by Credit Suisse (Ad 1, Ad 2), Vontobel (Ad 3), Deutsche Bank, Notenstein (Raiffeisen) (Ad 4) pushing structured products such as barrier reverse convertibles, bonus certificates, it was interesting to read this comment from the UK’s Financial Conduct Authority: Clive Adamson, director of supervision at the regulator, said: “It is particularly important in this sector that advertisements for financial products…


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Bonus Certificate CH0239961847 – Advertising on Swiss Newspaper Websites

The latest in the Credit Suisse series of ads for structured products (complex products). The two screenshots below are what you would see just above the headlines on the newspaper website: Who are bonus certificates for? Market Expectation Underlying moving sideways or rising Underlying will not breach barrier during product lifetime 23996184_termsheet_EN   If no Barrier Event has occurred, a cash amount equal to the Denomination multiplied by the greater of (a)…


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Non-Ethical Behaviour in Advertising Structured Products

I came across this ad (see below) in the Frankfurter Allgemeine Zeitung today. Vontobel pushing equity linked bonds aka reverse convertible bonds (Aktienanleihen) with coupons of 7% to 8.5%. Most people, who have no advisor protecting their interests, will base their investment decision on the information given in this ad. In this case there is no visual or written information regarding the risk (except the general risk of loss if the…


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Example of Globalisation, Cross Border Risk and Potential of Equities

Some people think they need to diversify across countries by buying equities in different markets (usually at a higher cost than their local market due to exchange rates spread, higher transaction and custody fees). It is however possible to create an extremely well diversified “global” equity risk portfolio while investing in the companies listed in a very open economy such as Switzerland.   Example Barry Callebaut: Barry Callebaut, a SIX…


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Efficient Market Hypothesis – Counter Arguments – Series

This headline on Marketwatch.com just now reminded me of the theory you learn in Finance; Efficient Market Hypothesis. Additional pent up supply not on the radar of all investors suddenly coming to the market, or just the possibility of it coming to market can lead to big moves; see below   “Our large early investors, as well as of some of our key insiders … don’t intend to sell immediately…


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Credit Suisse – Barrier Reverse Convertibles

Advertising on the website of NZZ.ch for the Barrier Reverse Convertibles of Credit suisse on Danone, L’Oréal and Sanofi in EURO: Further information taken from website of Credit Suisse (the flash banner, of which I took screenshots, above linked to it) This is my graphical way of showing this product:   “If the value of the Underlyings decreases, the Final Redemption Amount may be substantially lower than the Issue Price….


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US – Ukraine Arms Deals Pipeline

The US Motto: Let me wet my beak I suppose if you’re interested in selling lots of expensive military equipment to the Ukraine (well at least the west of the Ukraine) to defend against a Russian Aggressor in the future, then you should start preparing the terrain by drawing up a list of people they don’t like and try and in turn make their life more difficult. Maybe the new…