It is one of those tenets of life that is factual and etched in the stones of our passage; everything is just fine right up until the moment when it is not. Black swans are few and far between, being bitten by a wombat is quite unlikely for most of us but financial or political surprises may be expected as a matter of course. There is a valid point here which is that “surprises” are a normal part of our lives and not something that should take us aback and not something for which we should be unprepared. If you begin to view “being surprised” as a normal part of money management and not as events that are unexpected you accomplish something new; you have changed your mind and you have changed your world and you will then manage money in a somewhat different and more accurate fashion. The unexpected should always be expected by those that wish to win at the Great Game!
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The financial world is used to bubbles. We like to speak about them, point to them, bet upon their comings and goings and wave facts and figures about them like wild men when we appear in the media. It is the way of the markets. We have had bubbles in Real Estate, dot.com, bonds, stock markets and all kinds of other singular spaces. What we are faced with now is also a bubble but one unlike we have ever seen before because all of the major central banks have acted in concert which pumped money in from everywhere while, at the same time, limited what could be done with our new found small bits of paper because they playing field was leveled by distortion en masse. I would say that the entire financial system, every market, every space is in a bubble as a result of what they central banks have done. It is a quite systemic bubble which inflated everything and anything but also cancelled out inflation as it took place across the entire playing field so relative values were hardly changed. This is also why it has not been pronounced or particularly noted to date. The normal effects of one central bank acting alone has been cancelled out by them all working together. A clever ploy no doubt and one that has worked magnificently! Really magnificently!
Major money managers, I can report with accuracy, are now beginning to get nervous about what is to come. The lowering of yields and the tremendous compression of credit to sovereigns and the giant increases in the world’s equity markets have probably run their course unless Spain, Italy or some other risk event or events enters the scene. Interestingly, neither course will be good for the equity markets but the bond markets, and your portfolios, could get severely whipsawed in the days to come. We are surely on the see-saw and it is teetering; of that much I am sure.
Zitat“There is nothing more to be said or to be done tonight, so hand me over my violin and let us try to forget for half an hour the miserable weather and the still more miserable ways of our fellowmen.”
RIGHT'S RIGHT 
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Tue Feb 05, 2013 8:43 am
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