Category — General

In today’s Money Morning, we’ll show a chart that could give you a sneak peek into the future.

When we showed it to our old pal, Sound Money. Sound Investments editor, Greg Canavan, he said, ‘That’s what outright deflation looks like. Savers’ purchasing power grows in terms of financial assets.’

In other words, the value of money rises as asset prices fall.

That’s deflation: The friend of prudent savers. The foe of over-leveraged borrowers…and banks.

In short, when deflation hits, make sure you’re a saver, not an over-leveraged borrower. [Read more →]

As the Eurozone continues to show weakness, events in Athens may accelerate the situation. The downward movement in oil prices in both London and on the NYMEX testifies to the rising concern.

The aftermath of the Greek elections propelled the new radical left party SYRIZA into the limelight as the second strongest party in the country. Given the adamant refusal by SYRIZA leadership to accept bailout reforms, the party’s new brokering position means the crisis will continue.

Bitter austerity measures await the formation of a coalition government, since no party received a majority of the seats in parliament from the vote. The coalition is supported by both the New Democracy and socialist PASOK parties, which have taken turns ruling Greece for nearly four decades.

But the surprise showing of SYRIZA has thrown the possibility of an accord into disarray.

At best, this means a further delay and likely a new election. [Read more →]

Investors need to accept the fact that ‘the game as we have all known it appears to be over’, says US investor Bill Gross. The co-founder of the world’s biggest bond fund, PIMCO, reckons that investors need to change their strategies in the wake of the financial crisis.

To understand how different things are now we have to look at the history of leveraging, before the financial crisis, says Gross. Since the early stages of the 20th century ‘the trend towards financial leverage has been ever upward’. Politicians set the rules, by relaxing regulation and freeing paper currency from real world constraints like gold.

Meanwhile ‘the private sector was more than willing to play the game, inventing new forms of credit, loosely known as derivatives’. The ever-expanding credit had a profound effect on investing attitudes, says Gross.  ‘“Stocks for the long run” was the almost universally accepted mantra, but… for most of the last half century [it was] “financial assets for the long run” – and your house was included by the way in that category of financial assets even though it was just a pile of sticks and stones.’ [Read more →]

What I call the New Space Race is about to “take off” in a big way.

And front and centre is asteroid mining.

Yes, I mean literally digging into asteroids to extract ores and other materials

Not long ago, this was the stuff of sci-fi. (It smacks of the 1998 movie Armageddon, in which a team of roughnecks lands on an asteroid on a collision course with Earth in order to blow it out of the sky.)

Today, it’s a reality, thanks to advances in three fields – low-cost computing, cheaper rockets, and advanced robotics. [Read more →]

In a week where commodity prices have hit the skids, it seems crazy to ask if a commodity is safer than cash.

In just over a week…

Oil has fallen 8%.

Copper is down 5.6%.

And gold priced in US dollars is down 3.9%.

Yet those falls are nothing compared to the 10.5% cut many savers have suffered over the past six months. And odds are that, if you’re not careful, the news is about to get worse… [Read more →]

In Tuesday’s Daily Reckoning we left off with the idea that a cashless society promotes tyranny. That might seem like an odd subject to begin with today, given the show-stopping 50 basis point cut in the cash rate by the Reserve Bank of Australia (RBA) yesterday. But our job is to be forward thinking. So let’s move forward and think about the future of money.

The future begins now. Actually, it began in 2010 when buses in Sweden stopped taking cash to pay fares. To catch a ride today you have to use your mobile phone. With new payment technologies, mobile phones are also becoming wallets. Sweden is now talking about going completely cashless.

In fact, 97% of all retail transactions in the country are already done electronically. That’s something, when you consider Sweden was the first country in Europe to issue banknotes back in 1661. In the US, electronic transactions account for about 93% of retail sales. We were unable to find the figure for Australia. [Read more →]

In order to talk about cycles, and how they can help your understanding of world markets, brings me to an idea I want to share with you. It’s also an idea that describes and predicts great change in the world.

The idea is that the world’s financial markets might be subject to the same kind of polarity reversal our own planet has periodically experienced. This reversal amounts to an enormous change in asset allocation models and even the way people think about risk. And according to PIMCO’s Ramin Toloui, the way to start preparing for this rebalancing of growth is to buy more government bonds in emerging markets.

A rebalancing of the world’s available pool of investable cash, based on a fundamental shift in attitudes toward risk, is basically the end of the world for the US dollar standard. PIMCO doesn’t say that. But it’s telling investors to plan for it and to profit from it. [Read more →]

If you were wondering why Australian Investment Review Articles haven’t been published this week, the reason is because they are  currently in the process of updating their AIR website with exciting new features and easier access to their research articles.  They have currently suspended their daily emails and weekly emails as they re-vamp their services.

Asxnewbie thanks you for your patience and your continuous support and stay tuned for updates shortly on their progress..

Most days we like to give you something actionable, or something useful.

An idea you can take away and – hopefully – use to make yourself a few bucks on the stock market.

But sometimes we get an idea that won’t give you the chance to make a buck. We had such an idea over a year ago.

We didn’t make any money from it. And we don’t think you made any money from it either…well, not yet anyway.

Yet we told you because we thought it was important that you know about it.
And even though you may not have made a buck from it, we’re certain it could have saved you a few bucks. Or at the very least, saved you the stress of investing in a volatile market. [Read more →]

My weekend was going well – calm and peaceful, I was sifting through the weekend papers whilst sipping my morning coffee. Then I read an article that nearly made me spit my coffee right out again. The Times really made my blood boil and has been simmering ever since. It takes a lot to rile me, but this article really vexed me.

What utter, utter rubbish

The Times tackled the matter of DIY investing. ‘Is it worth a shot?’ it asks.
DIY investing means investing directly into shares and making your own choices. To help answer its question The Times called upon some financial advisers. Here is what they said.

‘Direct investment‘, says one, ‘is for people who can afford to lose most of their initial investment.’

‘We very much see the element of a client’s portfolio in individual stocks as that part of their portfolio which they manage themselves for enjoyment… and that any potential losses will have a negligible impact on their overall finances.’ [Read more →]