Posts Tagged ‘Investments’

11.03
2011

Do the Greeks know which side their (pita) bread is buttered?

It was clear to us that there were always likely to be further hiccups following last week’s Euro Debt Agreement. If the naivety of asking the Chinese to contribute after having effectively announced that Europe would be dependent upon them to do so wasn’t enough to cause jitters, the Greek PM has clearly caught everyone (including Merkel & Sarkozy) by surprise with his decision to seek a referendum. The markets reacted badly to the uncertainty (as they always do) and there is a very real possibility of the debt deal falling apart. The fact that there is open talk of the Greeks leaving the Euro tells you the severity of the situation.

From an investment perspective, it is always important to look beyond the hyperbole, and of course making sure we are not making knee-jerk reactions that are in any case one day too late! Our assessment this morning draws on one telling piece on the news last night; four Greek citizens were interviewed and asked if they were in agreement with last week’s debt deal and they were all vehemently against it, and the austerity measures, and would definitely vote against them in a referendum. When the same people were then asked if they wanted to leave the Euro, they all equally strongly stated ‘no’.

Whether the referendum goes ahead or not, we do not know, but if it does we suspect by then the question will be whether the people wish to remain in the Euro or not. This being the case, we think the Greeks on the street understand which side their (pita) bread is buttered.

Posted by Ian on 11.03.2011

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01.06
2011

Play for Now, Plan for the Future

We have recently started working with a number of professional sports people, helping them to maximise their current earnings and successfully plan for the future. This post outlines exactly how we are helping them. If you find yourself in a similar situation, or need advice, please get in touch.

Source: flickr Tim Goodill

Whether you favour the round or oval ball, a pair of whites or indeed a whip, a professional sports career is an exciting one where dreams can come true and fortunes made. You may already be on your way to being the next Wayne, Jonny, Freddie or Frankie, but more realistically you are likely to enjoy a 10-15 year career in or around the top flight of your sport. 

Either route will realise some financial truths;

1)      You will be earning significant sums of money, in excess of your daily living needs

2)      Your extreme earning potential will last for a relatively short period of time

3)      Unless you develop other skills, you will be retired for 50 years!

In simple terms, how much should you save now to secure your financial future once you stop playing? Do you have a financial plan? Many of your predecessors did not, and frittered away money in the good days and/or over-estimated their ability to earn decent money in their second career.

The term “break a leg” may be a good luck message for aspiring actors, but for professional sportsmen it can be a nightmare scenario. Forget even being a journeyman professional, a bad injury can easily end your career prematurely – next week, next year, in 5 years’ time? Of course no one wants to contemplate such a scenario, but it is our job to help you plan for every eventuality.

Let’s be frank; it need not be a career threatening injury. You may be invincible at the moment but a loss of form, a new manager, an influx of foreign talent, or just the next generation of whiz kids, can mean you no longer making the 1st team or not getting the top rides. Such a scenario happens all the time unfortunately, and will also have an adverse impact on your earning potential.

Good quality financial advice is not about ‘selling’ you high risk investments for big commissions. We believe you take enough risk in your day job. We wish to develop long term relationships to help you secure your financial future – imagine the peace of mind knowing that you have a plan that will provide sufficient income for you and your family for life.

Please contact us for a ‘no cost, no obligation’ initial meeting.

Posted by Clifford on 01.06.2011

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11.01
2010

All That Glitters?

With so much talk of potential devaluation of major currencies through Quantitative Easing (QE), we need to find alternative investments that cannot be devalued by fiscal policies, and so have asked our new recruit to the Fish Investment Analyst Team for his views; Dean Morris is a Certified Financial Planner based in South Africa and we refer to him as our “Walking Encyclopaedia”; he admits to having read over 150 books on economics, tax, psychology, history, energy and geopolitics!

Q: Do you think Gold is undervalued, fair value, or overvalued ? 

Definitely undervalued. None of the major currencies have an intrinsic value as they once did when they were linked to a gold standard. As a result their ‘store of value’ is questionable because the supply of these currencies is adaptable to the needs of the monetary authorities. We are used to the hyper-inflation/devaluation stories of third world countries but the recent QE experiments in the US and UK demonstrates the flexibility and risks of printing presses.

I believe all “fiat” currencies, as they are called, are vastly overvalued compared to gold, and the investing public will be clamouring to get in to gold. Remember also that there are now 3 billion people in Asia who now have access to funds (unlike in the 1970s gold bull run) and these people don’t share the predominant western view that gold is an old relic. 

Source: flickr- Rodrigo Marin

Q: Do you prefer physical gold or a basket of gold mining stocks ?

Both. They are very different animals. Bullion itself will provide you with relatively safe storage of value (relative to ALL fiat currencies). The gold price can move 30% in a short space of time, so those investing in gold must be aware of such moves; individuals must be emotionally prepared to deal with that kind of volatility. Exchange Traded Funds (ETFs) are the most practical way to obtain exposure to physical gold but care must be taken to understand the different types of ETFs.

Gold stocks represent a proxy multiplier to gold. The largest input cost into a gold mine is energy, so when the gold price moves up and settles on a new average price, the additional revenue can far outrun the increase in input costs. However, they are stocks and subject to the same risks as other stocks.

Gold stocks chosen on an individual basis can lead to major loss of capital. Thus, unless you have both the time and inclination to investigate the fundamentals of individual stocks, a gold mining focused mutual fund is probably the safest option.

 
Q: How long do you think this bull market will go on for?

Another 5 years, minimum. Looking at the history of bull markets, they usually last for 17 to 25 years. This gold bull market started in 2000, so as of now (2010) we’re probably at or just over the halfway mark in time, and much lower in terms of returns. I believe the exponential stage of price rises still lies ahead.

 
Q: What price target would you place on gold and why ?

Higher, much higher, compared to all currencies. I’d say conservatively, US$4000/oz. Too much more Quantitative Easing along with the public becoming aware of the declining value of their ‘money’ and it could be multiples of where it is today.

Posted by Fish on 11.01.2010

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05.26
2010

Europe Papering Over The Cracks As Debt Crisis Spreads?

The outcome of the General Election here in the UK was widely expected to have major ramifications for the UK markets. In reality, it was completely overshadowed, for the time being at least, by the widening sovereign debt problems in southern Europe. The Greek debt crisis has served to highlight a number of burning issues that just won’t go away.

The issues:

1. There is the question of “Moral Hazard”. If governments know that there will always be a bailout, where is the incentive to behave responsibly?

2. Will the indebted countries take their medicine? The so called PIGS (Portugal, Italy, Greece & Spain) need to tighten fiscal policy significantly; with interest-rate cuts and devaluation ruled out by euro membership, that implies wage cuts and massive unemployment.

3. Will Germany be able to pass the legislation to permit such bailouts? For how long will their responsible populace be prepared to write a blank cheque?

4. Are the bailouts affordable anyway? All the AAA-rated nations in Europe already have public debt-to-GDP ratios of 70%-80%. So we cannot be confident that countries will be able to raise the amount required.

Is it just a giant sticking plaster?

The most recent €750bn initiative by the EU and IMF to provide loans or guarantees to individual Eurozone governments is in reality just a ‘giant sticking plaster’ rather than a solution to the sovereign debt crisis. It may provide some comfort to the lenders that there is some guarantee from France and Germany behind their IOUs however bad debt just doesn’t disappear. Most of the PIGS cannot afford to service their debt let alone pay it back. Europe’s leaders have merely passed the debt along to a broader audience. Now, the ghost of Greek, Portuguese, and Spanish debt haunts the whole continent.

What all of this really serves to do is highlight the yawn engulfing competitiveness between northern and southern Europe and the problems and contradictions within the Eurozone that were easy to ignore during the boom times. Greece and the others have been “keeping up with the Jones’s” and the problem is that they have become used to the lifestyle.

These problems are being reflected throughout European stock markets and on the Euro, and we expect to see this continue through the summer.

Posted by Clifford on 05.26.2010

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