Category: Your Money

The August Pundit Buzz Report

Bullish Luck at The 58th Yasuda Kinen(Jpn)

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Boy were they bullish in August!

StockViz did a survey of the buzz on twitter and chalked up the following stats:

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On a month when the Nifty lost more than 10%, this is one optimistic bunch with 3x more buys’ than sells’. And the stats pretty much maintain the same proportion toward the end of the month as well.

The most buzzed about were: SBIN, JSWSTEEL, DLF and RELIANCE, all of which are currently sporting bearish trends.

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Knowing the right question

Mission:Explore London Launch 16

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A recent study asked: How do you want to live in retirement? Where do you want to live? What activities you want to engage in?

And based on how much it would cost to lead that lifestyle, people would actually need 135% of their final income to live that way.

 

We have an industry that asks one question it’s giving the answer to, and a second question that assumes that people can accurately describe their risk attitude (which they can’t). This saddens me because, while I think that financial advisors are overpaid for the service they provide, in principle they could contribute much more, and they could even deserve their salary. But only if they start offering a more useful service, one that they are in the perfect position to provide. Money, it turns out, is incredibly hard to reason about in a systematic and rational way (even for highly educated individuals). Risk is even harder.

Read more here.

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Nice trade!

June 26, 2008:

Angelo Mozilo: “Bank of America will reap the benefits of what we have sowed.”

August 31, 2011:

Bank of America paid $2.5 billion to buy Countrywide, but writedowns and legal costs have pushed the estimated cost of that purchase to more than $30 billion.

Banks still hung-over

Small line of customers (presumably anxious in...

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Battered by a weak economy, the nation’s biggest banks are cutting jobs, consolidating businesses and scrambling for new sources of income in anticipation of a fundamentally altered financial landscape requiring leaner operations.

Bank executives and analysts had expected a temporary drop in profits in the aftermath of the 2008 financial crisis. But a deeper jolt did not materialize as trillions of dollars in federal aid helped prop up the banks and revive the industry.

ABN Amro, Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, HSBC, Lloyds, State Street and Wells Fargo have in recent months all announced plans to cut jobs — tens of thousands all told. Even as they cut payrolls, banks are exploring ways to generate revenue that could translate to higher costs for consumers. Among the possibilities are new fees for automatic deductions from checking accounts that pay utility and cable bills, according to people involved in the discussions.

SunTrust Banks, a major lender in the Southeast, is already charging a $5 monthly fee to its “everyday checking” customers who use a debit card for purchases or recurring charges.

Lending, the prime driver of revenue, has been depressed for several years and is not expected to pick up anytime soon, even with historically low interest rates favourable to borrowers. Consumers are spurning debt after a 20-year binge, while businesses are so uncertain about the economy that they are hunkering down, rather than financing expansion plans.

Source.

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Gold bulls and bubble dynamics

The last bull market in gold began in 1971 with US president Richard Nixon’s closing of the “gold window” and ended in a euphoric blow-out 10 years later. Buying gold in its last parabolic surge proved to be a disastrous decision as the yellow metal then entered a 20-year bear market in which its real price fell 80 per cent. A house can be lived in. Corporate stocks generate dividends. Gold generates nothing and therefore cannot be valued in its own right, only as a measure of revulsion towards other assets. Rather than being a store of value, it is doomed to obey bubble dynamics. When bubbles burst, they usually return to pre-bubble valuations. In 2001, gold was no higher in real terms than in 1972.

Source.

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