Capital protected investments are getting more and more popular in these economically uncertain times. There are quite a few varieties of capital protected products and on the surface many of them look very attractive however most come with a few hidden traps. This article doesn’t explain all of the traps but a few of the …
Category Archive: Uncategorized
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Apr 07
Government Bonds and interest rate movement
The above government bond yield curve shows how the yields have changed across the different terms from early February to today (before the RBA’s decision). The 1 year yield is still around 2.60% indicating the market expects the RBA to drop rates to around 2.5% by July 2009 but the interesting part is how the …
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Apr 07
Interesting fact
Apparently the month of March provided the best monthly return for the S&P500 since the Great Depression. I don’t know what this means but I’d be surprised if it happens again in a hurry. Send article as PDF
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Apr 05
Deflation…how to invest?
Source: IMF The above chart shows the IMF’s global inflation forecasts and they don’t look pretty. They are forecasting that advanced economies might by in a position of deflation similar to what Japan experienced in the 1990s. Many would argue that deflation is just as or almost as bad as high inflation. Deflation is simply …
Mar 10
Economic Outlook
The global financial crisis continues to make front page news as governments around the world continue to announce stimulus packages and companies continue to retrench workers and show large losses or declines in profit results. During the first week of March in the USA the largest ever quarterly loss was announced by AIG at almost …
Mar 10
Hedge Funds…struggling
Back on January 20 in this blog I predicted that one of the trends of 2009 will be the demise of the hedge fund… http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=a8uLPVL9X8yY …I might be right. The hedge fund used to thrive in tough times…not this time. Send article as PDF
Mar 10
Capital Protected Products…nothing but an expensive put option
Capital protected products are in vogue at the moment thanks to the massive losses experienced and the scary economic times we face. Capital protection appears to come in all shapes and sizes…there are Constant Proportion Portfolio Insurance (CPPI) methods, sometimes called dynamic threshold management; futures and derivatives trading methods; Zero Coupon Bond and Call Option …
Mar 03
So much for market predictions!
So the RBA didn’t change rates and the yield curve was no where predicting it this tie around. As a result of the no change the yield on the September 09 Government bond has promptly increased by around 10bps to 2.71%. Looks like a rate cut next month??? Send article as PDF
Mar 02
Maybe I need to change my mind…
After a disastrous Wall Street, thanks to a record loss posted by AIG (-US$62billion for 1 quarter…Yikes!), and Wayne Swan’s warning about the slowing Australian economy a couple of days before the latest GDP results, Australian Government Bond Yields have dropped signficantly and the September 2009 Bond is now trading on a yield of 2.61%. …
Mar 02
RBA Cash Prediction
Its the day before the RBA announces its latest cash rate so I thought I’d come in with a late prediction. Its pretty simple really…September 09 Government Bonds are trading at a yield of 2.82% today so the market is expecting one of two rough possibilities… the Reserve Bank drops the cash rate by 50bps …