Global Investing

The S&P 500 index is approaching 1,000, Nasdaq is nearing 2,000, the Nikkei is above 10,000 and Dow could surpass 10,000 soon.

Welcome to the world of milestone mania, where investors give emphasis on nice round numbers.

U.S.-based wealth management firm Fisher Investments give a few thoughts on the milestones and the danger of having blind faith in them.

In ancient Rome, Emperor Augustus placed a pillar in the centre of the Forum, marking the starting point for a system of roads. The roads were marked every mile, or the distance covered in 1,000 paces (mille is Latin for 1,000), by a stone. These milestones became important markers to travellers, helping them sense the distance between two points and determine how far they travelled in relation to Rome.

“In investing, however, milestones are simply misleading. What do markets know of milestones—of beginnings, distance, and endpoints? Nothing—numerical milestones are meaningless to markets and have no historical forecasting power whatsoever,” Fisher says.
“If markets start creeping toward those higher, round numbers, don’t be surprised if technical analysis enthusiasts appear out of the woodwork, attributing vital significance to those levels—claiming reaching or not reaching those markers will show how markets will do going forward. This is faulty reasoning—ignore.”

The old adage – there is no better time to go back to school than during a recession – seems to ring true for real estate investments as well.******With recession-wary workers and rising international interest driving up university applications, student home operators in the UK are enjoying near 100 percent occupancies, with rents predicted to go up 10 percent this year.******In contrast, other property classes in the UK such as offices, shopping malls and factories have seen values plunge a startling 45 percent since mid-2007. And the recession means rents are forecast to fall as much as 15 percent this year as landlords face the rising threat of tenant defaults.******As I wrote earlier, investors such as pension funds that were burnt by traditional commercial assets are now turning to the student accommodation market for the projected growth and steady returns other parts of the market aren’t delivering.******

Students pack up their dorm room after graduating from university in the city of Xian, Shaanxi Province July 3, 2004. REUTERS/China Photos WC/FA******Student homes specialists King Sturge estimates that average rents jumped 7 to 10 percent annually in the last five years and can go up 10 percent this year, although it sees the yearly increase moderating to 5-7 percent for the next few years with new entrants to the market.******Branded student housing can be very pricey and the best stuff are a far cry from crowded, slum-like dorms that some of the world’s students have to put up with: high-end versions in London that offer en-suite bathrooms, flat-screen TVs and laundry services cost up to 300 pounds a week.******With the belt-tightening that comes with a recession, parents may groan about the higher costs of student housing for their university-bound offspring.******But operators expect there will be those who are still willing stump up the cash, if only to ensure their children make it for classes.******”First year students usually can’t find housemates to rent with, and there is no guarantee the flat will be near to school,” says Gabriel Behr of the University Partnerships Programme, a student homes operator owned by funds under Barclays Private Equity, which is developing over 700 new rooms for King’s College London.******”Are parents willing to stick their kids somewhere five miles away from class?” he asked me.

Got a company to set up? Better go for a simpler name.

That is what psychologists at Princeton University found in a  survey when they studied data from two major U.S. stock exchanges on initial public offerings.

They found that people are more likely to purchase newly offered stocks that have easily pronounced names than those that do not. After the IPO, investing $1,000 in companies that have easy-to-pronounce names generated $333 more than investing in the 10 hardest to pronounce companies.

In one case, an initial investment of $1,000 yielded a profit of $112 more after one day of trading for a basket of fluently named shares than for a basket of “disfluently” named shares.

By Barani Krishnan

A decade ago, Malaysia's former deputy prime minister Anwar Ibrahim was on trial for sodomy and corruption in a trial that exposed the seamy side of Malaysian justice and the anxieties of a young country grappling with a crushing financial crisis and civil unrest.

Anwar is Malaysia's best known political figure, courted in the U.S. and Europe and probably the only man who can topple the government that has led this Southeast Asian country for the past 51 years. Photo: Anwar Ibrahim, with a bruised eye, at court on Sept 30, 1998 during his his first trial. REUTERS/David Loh Now the leader of the opposition, will go on trial next week again charged with sodomising a 23-year old male aide. The trial once again looks likely to provide gory evidence and bringing some unwanted attention from the world's media on this Southeast Asian country of 27 million people. It could also embarrass the government and draw international criticism.

Anwar vowed in a recent interview to fight what he says are trumped up charges.

After a 40-percent gain, the rally in world stocks might be losing momentum.

For permabears who live on doom and gloom to make money this is just a blip which is going to end in tears.

David Tice, a 20-year veteran short seller who manages Federated Investors’ $1 billion short fund, says we are in for a secular bear market which is going to last for 10 years.

“I’ve never more been convinced than anything in my life that this is a suckers rally,” Tice says.

More than a “nice to have,” investor sentiment is running heavily on the side of environment, social and governance (ESG) factors, according to the latest Thomson Reuters Perception Snapshot.

Feedback from 25 global buy-side investors found that 84 percent evaluate ESG criteria to some degree when making an investment decision.

The remaining 16 percent say ESG issues are not considered until a company’s ability to generate high returns is hindered by these factors.

About a year ago investors hotly debated what would be the shape of a world economic recovery — would it be a steep V? Or could it be moderate U, stagnating L or double-dipping W?

Now ratings agency Moody’s is introducing the new scenario of “hook-shaped” recovery.

This has the steep downturn signalled by the U-shaped scenario, but neither the steep but delayed rebound of the U scenario, nor the flat stagnation of the L-shaped scenario. Instead, the agency says, it has an upward tilt that lies somewhere in between, implying a gradual and painful economic recovery.

“We cannot rule out that the hook-shaped scenario will evolve into an L-shaped scenario — and there is a real risk of this materializing – but it is too early to adopt the latter as our central scenario. This is because the full effect of government stimulus policies has yet to be seen,” Moody’s says.

Anyone expecting investors to start galloping back into riskier assets in a rush might have something of a wait, according to Kathleen Hughes, who runs money funds for JPMorgan Asset Management in Europe. They are more likely to wander back in.

“Risk appetite returns in stages. It leaves on a horse but comes back on foot,”  she rather neatly told a Reuters funds summit being held in Luxembourg.

There are nonetheless some signs around that show leather is getting some wear. Fund trackers EPFR Global says that although overall fund flows fell during the second week of March, there were some signs of growing risk appetite. Commodities, technology and energy sector funds as well as global emerging market equity and non-Japan Asia funds all saw net inflows.

Just how much have world stocks suffered in the past year or so? Try this. According to the World Federation of Exchanges, the market capitalisation of global stock markets has halved. It was $63 trillion in October 2007. At the end of January this year it was only $31 trillion.

It has all been more furious than most people can recall as well. When the internet-stock bubble burst at the beginning of this decade, MSCI’s all-country world stock index lost around 51 percent of its value from peak to trough. In the latest drop, the index fell 58 percent from an all-time high in November 2007 to a new cycle low yesterday.

And it has been fast. The internet-stock bubble decline took slightly more than 30 months. The current fall has taken only 16 months.

The yen's fall against the dollar the past few weeks has been remarkably fast, and calculated from where it is now around 97.70 yen, the dollar has jumped nearly 9 percent this month, on track for its biggest such gain since August 1995.

The yen surged last year as the worsening financial crisis forced investors to unwind risky carry trades - meaning they had to buy lots of yen - under the belief that Japan's economy and banks were holding up through the storm.

Only last month, the yen hit an over-13-year high of 87.10 per dollar. So why has the Japanese currency fallen so fast?