Is it not obvious that investing in higher growth countries will yield higher returns? Not at all. This is one of the traps investors regularly fall into. Saturday’s FT has a timely reminder.
read more Commentary by Stuart FowlerWhen living through a period of unusual economic instability it is useful to try to unlearn most of what we have learnt as a standard framework for savings and investment, and focus instead on the essential power, unpredictability and unfairness of business. In any form of market economy, business, and only business is the source of both national and personal wealth creation and it is also the source of the sometimes massive changes in economic fortunes between generations, even when the overall trend is for increasing affluence.
read more Insights by Stuart FowlerI gather from other wealth managers that what their clients are finding hardest to bear is not the fall in asset prices but falling income. A big drop in interest income has already occurred but they are probably starting to see some dividend cuts and they fear more of the same. The recession is making clear to individuals and their agents a well-concealed truth that is right up-front in No Monkey Business thinking: income consumed is inherently no different from capital consumed. From this insight, a very different and much clearer approach to decisions about spending and saving starts to take shape naturally.
read more Commentary by Stuart FowlerOn traditional valuation measures, shares have remained quite highly valued and even after the most recent falls, taking into account lower earnings estimates, they are still not unusually cheap. We think this explains much of the weakness of equity markets, quite apart from the particular problems of financials, and also reduces the scope for sustained recovery from these levels.
read more Insights by Stuart FowlerJapan’s ‘lost decade’ of the1990s is rapidly becoming the bogeyman of stories about the future for the world economy and stock markets in the wake of the credit crisis. The same fate supposedly awaits the US (and UK too) as payday for a decade of binge banking and mass delusion by bankers and their customers about house prices. In a new position paper, wealth manager No Monkey Business examines the relevance of Japan’s dire experience of the ’90s for other countries today.
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