from The Great Debate UK:
Peering into a murky crystal ball for 2010
-Jeremy Batstone-Carr is director of private client research at Charles Stanley. The opinions expressed are his own.-
It’s that time of year again! The time of year in which the writer’s desk, never a pretty sight at the best of times, becomes clogged with the product of the investment community’s crystal ball gazing.
Needless to say the vast majority is effusive in its enthusiasm for risk assets (turkeys don’t vote for Christmas) and makes an aggressive and fairly convincing case as to why equity markets will never go down again…ever!
However, for the Bob Cratchits of this world (well, our office Christmas party was cancelled) life just isn’t like that. Most investors have learned the hard way that trees don’t grow up to the sky and share prices can go down as well as up.
Market forecast
According to consensus expectations, UK corporate profits are expected to increase by about 34 percent over 2010 and by 16 percent in 2011. In part, this profit surge is down to many UK quoted companies’ exposure to the still-fast growing Asian and, selectively, emerging market economies. The earnings improvement is likely to be influenced by cost cutting and further working capital improvements.
from The Great Debate UK:
The EU and Hedge Funds: silencing the dog that didn’t bark
- Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of "Verdict on the Crash" published by the Institute of Economic Affairs. The opinions expressed are his own. -
We could see it coming, couldn't we? Those gigantic over-leveraged hedge funds were bound to come crashing down, as their massive bets turned sour, forcing them to default on their bank loans and bringing the banking system to its knees.
Except that it never happened. Instead, the system was destroyed by the greed and incompetence of the insiders, including some of the most blue-blooded investment and commercial banks in the world. Highly regulated as they were said to be, they were allowed in every country except Spain simply to move their riskiest investments off balance sheet, where they were free to bet the bank on investments in the notoriously toxic mortgage-backed securities.
Note the absence of hedge funds and private equity - Alternative Investment Funds or AIF’s - from this story.
Nonetheless, with proposals to impose new reporting requirements and controls on management, the EU is concentrating its regulatory fire on the dog that didn’t bark, with the clear intention of reducing the competitiveness of AIF’s and tying the hands of their managers (with a side swipe at the offshore financial centres where many are legally domiciled).
Since the only investors in this type of fund are high net worth individuals and institutions like pension funds, insurance companies and mutual funds who ought to be capable of looking after their own interests, official concern can only be justified if there is a potential threat to the banking system – something which you might have thought would have been best left to the banks to monitor. The fact that the EU feels the need to make these proposals amounts to a vote of no confidence in bank managements.
Active funds, more high-paid value destroyers
– James Saft is a Reuters columnist. The opinions expressed are his own –
While they have avoided the opprobrium heaped on bankers during the bear market, traditional active fund managers have quietly been proving that they too are often highly paid destroyers of value.
Active managers have few bushes left to hide behind, and the release of a new report from Standard & Poor’s uproots one of the few left: that somehow they provide protection during down markets, being able to go into cash and defensive stocks.
Your article reminds me of when the Congress eliminated the depletion allowance which meant that their investors were left with the movie studios; who Art Buchwald, after his successful lawsuit, would have told you are the world champions of creative accounting. At least, the oilmen would take you out for drink and a good steak and regale you of stories of in the Patch.
