UBS Outlook as of January 2020

Outlook (OSI*) Stimulus measures and easing of monetary policy (A) by central banks (1) contributed to a strong performance in financial markets in the fourth quarter and are likely to prevail. A favorable credit environment (2) and a partial resolution of trade disputes (3) should mitigate slowing global economic growth (4). (OSI*) While the macroeconomic and geopolitical situation remains uncertain, (Bullshit) for the first quarter we expect more typical seasonality…

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Value investing vs speculation – from Margin of Safety book by Seth Klarman – relevant for buyers of Bitcoins, Ripple and any other highly speculative offerings which are based on circular reasoning

In the book “Margin of Safety” the following paragraphs can be found: The greedy tendency to want to own anything that has recently been rising in price lures many people into purchasing speculations. Stocks and bonds go up and down in price, as do Monets and Mickey MantIe rookie cards, but there should be no confusion as to which are the true investments. Collectibles, such as art, antiques, rare coins,…

SMI PR Index 10-year and 30-year chart – Outlook 2019 and Considerations

To help me gage where the stock market in Switzerland is currently standing I find it useful to look at the price action over the last decade, and the last three decades for context. Trade & Geopolitical Newsflow In the last days many bearish articles have been published on websites like, and the mood generally is one of great caution ahead of possible geopolitical risks like Brexit (EU-UK),…

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Credit Suisse business model flaws – high interest costs

Outstanding capital insturments of Credit Suisse according to this presentation. According to my calculations (see table below) Credit Suisse pays over CHF 1 bn per year in interest rate costs alone. The coupon they need to pay is high. High risks demand high coupon. So much profit has to be generated to just cover fixed costs. At the same time more and more peer-to-peer lending business models are springing up, robo-advisors,…

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How safe is Credit Suisse?

According to the above presentation for fixed income investors of Credit Suisse the bank is less dependent on counterparty funding. Instead it has core customer deposits and long-term debt making up a larger proportion of balance sheet. I don’t like this statement of the Credit Suisse CEO today (Interview with NZZ): He’s asked are customer deposits (so crucial according to the above graph) leaving Credit Suisse in last days, weeks….

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Deja Vu with Brexit – Standard Life Fund Freeze – Pre Bear Stearns Moment – the Lehman Moment can still come

If you like working through the worst case scenario it would probably be sensible to consider the Brexit Vote the beginning of problems to come.   (Telegraph Group Business Editor James Quinn is doing a great job of reporting effects of Brexit!) Trading in a £2.9bn commercial property portfolio managed by Standard Life Investments has been halted after a flood of withdrawals exhausted the fund’s cash reserves. Standard Life said…

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Why Value Investing is a Good Choice for Your Nerves

The chart above illustrates very well, why value investing is a superior way of investing long term. For example the Global Value Fund (Tweedy, Browne) has been able to outperform in down and normal markets (left, center) and only underperformed in strong markets (right). When M&A gets heated you’ll be feeling pain, potentially, with a value investing portfolio or fund. But when the rainy days do come, you’ll have the…

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Publica (CHF37bn Pension Fund) vs SMI Total Return, vs SMI Price Return, vs my clients, my mandates

Yesterday I was talking to a prospective client, who during the discussion become my customer. We were talking about investing, why it doesn’t make sense to hold cash if the money held is suppose to be for retirement. To better explain to him what he should do with his money, we needed to look at how pension funds (money destined for members retirement), especially really well managed pension funds like…

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Central Banks In The Driver Seat

The Reserve Bank of Australia always has interesting comments ; “Low interest rates are acting to support borrowing and spending, and credit is recording moderate growth overall, with stronger lending to businesses of late. Growth in lending to the housing market has been steady over recent months. Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities. The Bank is…

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Giovanni de Francisci Gets It – Wisdom coupled with good grasp of History and Psychology

That is what I thought when I watched the youtube clip ( of Giovanni de Francisci talking about hedge fund managers. What he said is also just as correct for simple independent asset managers. I have just come through an education programme to become a Certified International Investment Analyst (CIIA) and the amount of modern portfolio theory (MPT) and diversification talk can make people blind to the most interesting investments….