Banking Bonuses

It is a sure way to climb the millionaires ladder :-) A path to riches is through the financial sector, and this has been so for many years. Recent criticism of Bonuses paid out to employees of Investment Banks / Funds have just achieved more advertising for these institutions for talented people.

At JPMorgan 1'626 staff received $1 million or more and 27 individuals walked away with a hefty 8 million bonus, at Goldman Sachs this was 21 employees. [source: Andrew Cuomo's recent report on Bank Bonus Culture]

Working at one of these organisations shifts the odds of becoming a millionaire in a lifetime considerably in your favour.

Crisis Sentiments - pretty cool!!

BBC has made a google map that maps to opinions and comments relating to the crisis kicked off by the Lehman Brother collapse (various dates are associated with the crisis start thought). It is an interesting interactive World Wide Map, location point & click & read interface, pretty neat web 2.0 idea, so make sure to check it out!!!

check out my customised adds and comments

Recession RECOVERY is here!!!

French & German GDP figures for the second quarter show it clearly - black on white, finally the economic growth substantiated. Technically this means Germany and France are out of the recession, yuppiii, yep yey, you might think.

This is not quite the case thought. It seems most of the growth was spawned by govermental rescue packages and incentives that initiated good levels of consumer spending (i.e. old car exchange incentives). Export levels in germany have indeed increased, however imports have fallen which in fact inflates the GDP figure with a certain uncertainty.

Let us hope the largest shrinking of worldwide economies is over soon, but maybe getting too excited too quickly will be a mistake.

Markets are on a big move!!

Most main markets are very highly correlated (correlation is a statistical measure, it indicates strength of relationship between data). Specifically, the big falls and rises tend to happen in tandem. DAX and CAC, or FTSE and DowJones on a daily basis on average might move by differing magnitude and direction. However, what correltion tells us is that there are some moves that tend to co-occur. A simple analysis of the indices data shows that it is the large moves that tend to co-occur most often.

Today the 6th July (Monday) is one of those days, a large and negative move throughout all main markets has pertruded world markets. Also on a larger granularity, over March, April, May FTSE market has steadily increased in value, and a negative trend is clearly emerging during June and July! Dow Jones, DAX, CAC, NYSE, etc... show all the same pattern, not surprising since mass psychology affects every market participant to a degree.

In my opinion, July will with certainty see some decrease of valuation over all major indices. Reasons??! A number of them: Macroeconomic figures, Company outlooks, political, environmental stability and most Technical Analysis points towards investors' uncertainty surrounding recent price advances.

44th US president and the Markets

Yesterday (20th January 2008) saw the Dow Jones drop by a massive 4%. The fall on the market came on the same day Barack Obama was sworn in as the 44th US president. Notice all these 4, by the way, only joking lets better not look for such patterns :-)!

As explanations and analyses for this drop began to appear in the financial media, I was just thinking to myself, this is just very, very, very bad. The media, brought forward a number of reasons for the drop;

1. the first reason - bad company reports, such as Bank of America, JP Morgan, City Group, Bank of New York Mellon (88% fall in profits) or others - just check out this bbc.finance article.
2. the second reason - apparently the speach that Obama gave at his inauguration, highlighted how bad the challenges for the US economy really are.

It is clear the bad company news are negative and the challenges highlighted by President Barack Obama might have hit a nerve with investors.

Imagine this however;

1. a young, determined president takes office and promises to adress and deal with the economical challenges directly and as swiftly as humanly possible
2. after an avalanche of negative quarterly reports, finally a positive one appears as IBM announces surprisingly good profit forecasts above analysts expectations.

So among all the bad news... especially yesterday had the chance to be a good day, but the markets decided otherwise. This shows that current market mood seems to fuel negative moves and if the mood isn't right, the whole market won't be.

A Happy New Year in the Crisis!

Hmmmm... well, well, what a start to the new year - highest unemployment numbers in the states since god knows how many years, bust businesses (Virgin's Zaavi, Woolworths,...), lowest interest rates and risks of deflationary nature, gas supply problems into significant parts of Central and Eastern Europe from Russia (via Ukraine) and like all this isn't enough we also have a flaming war in GAZA.... mhm, excuse me, I ment a Genocide and a most horrible humanitarian crisis!!

...the last year also wasn't the best one, in fact it was the worst one for the stockmarket, a truly most horrible financial debt crisis since 1929 (I highly recommend for readers to at least check out this link of Dow Jones' historical index).

Given all this, what is the prognosis for 2009, well it looks to be a very gloomy year Economically and Politically... the Middle East, UN, Economic crisis, and Financial regulation will most likely be in the forefront this year.

As every year, there are also a number of bright sides, this year should (whatever everyone says) see the bottom to the falling and battered equity markets and hence certain diversified portfolo investments (with minimised systematic risk) on the long side might be right this year as a turnaround in economic prospects is eventually invevitable.

More on this, and specific investment ideas & brainstorming, in my future posts!

A Ponzi scheme certainly doesn't help...

I woke up this Monday (15th December) to check the business news and what a nasty surprise this was!! One of the largest frauds in history that could cost around $50bn has been uncovered. A certain polite looking gentleman who used to to direct and sit in several prestige posts, such as heading the NASDAQ exchange, has been accused of transfering primary investments of some clients to simulate profits and returns for other clients. Something like this is well known as a Ponzi scheme, a simple idea that can make the organizors of such schemes super rich in super short time.

Michael Covel's blog, one of the blogs that I read had a funny link the other day. A link to an article on how the Social Security Administration really is a big Ponzi scheme. I thought a good joke and it carries some truth but then looking at the comments I found that these people are quite serrious and really believe this stuff!!??
For one the SSA certainly does not qualify as a Ponzi scheme, it certainly does not promise huge returns, we all know that it is a necessity of a social system and that will not make us rich but the idea is to help the less fortunate among us. In fact this is just criticism of a socialist policy and calling it fraud or ponzi scheme's is ridiculously far-fetched and simply - hmmm, how should I say this, well - silly!!

http://blog.mises.org/archives/009099.asp

New Wave of Government Intervention

Wednesday & Tuesday have seen positive market action since that huge 10% rise in Western Europe Markets. The current consolidation seems to have some momentum!!!

New Wave of interventions have been anounced this week:

• Monday, the UK anounced it will cut VAT to 15% from 1st Dec. 2008
• European Union anounced a $200bn euro recovery plan http://news.bbc.co.uk/1/hi/business/7749382.stm
• Barack Obama began detailing his rescue plans for the economy, http://biz.yahoo.com/cbsm-top/081126/210d57da98961961a24ddd903b6b0cec.html
• China Slashes interest rates by 1.08% (biggest decrease in 11 years) http://biz.yahoo.com/ap/081126/as_china_economy.html

However the crisis is on, and untill any help propagates through the system many months will pass.

Jobless claims remain at recessionary levels, Americans cut back on their spending by the largest amount since the 2001 terrorist attacks, orders to U.S. factories plummeted and homes sales fell to the lowest level in nearly 18 years. [source: http://biz.yahoo.com/ap/081126/financial_meltdown.html]

Big price rises!!

Hehe, no chance... what we are seing in the market for past 2 days (28th-29th October) is overvalued madness. Apparently the 10% up on the US markets was beeing credited to planned US interest rate cuts expected later today, however financial commentators lacked enough factual explanation to justify current market behaviour. Recession is underway with a lot of bad quarterly reports and it is pretty clear that whatever interest rate cuts will be, tomorrow (very latest by friday) we will see more strong drops on markets!