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In Conversation with Russell Napier – A Cerno Capital Webcast

By |2020-06-21T09:44:22+00:00June 10th, 2020|Cerno Capital, Cerno Capital Posts, General Investment, Other Posts, US|

We summarise below the Q&A section of our recent webcast with Russell Napier. The listener submitted live Q&A that ranged over a wide variety of market and investing topics. We think it is particularly pertinent to consider Russell’s views on the changing landscape for inflation. Previously an ardent deflationist, Russell now thinks an inflation is likely. What period in financial history does the current economic situation remind you of? The best playbook probably comes from 1966-1982. Inflation was over 200% for the period. Equities were highly priced going into the period, and it is a good reminder that “price is what you pay, but value is what you get.” Interest rates went higher, but profit margins did not keep pace. Gold outperformed and did significantly better than gold shares, and surprisingly oil failed to make a real return. Few sectors in the equity market generated a real return. Systems without debt problems didn’t have a need to pursue financial repression to inflate away World War II debts (e.g Switzerland, Hong Kong). Why do you think people in finance do not pay more attention to financial history? To quote Charlie Munger: “Show me the incentive, and I will show you the [...]

Global Financial Assets and the Trump Presidency

By |2016-11-09T10:47:05+00:00November 9th, 2016|Asset Class Returns, Cerno Capital Posts, General Investment, Other Posts, US|

Financial markets will struggle to adjust to what was a very possible, however largely unexpected and definitely undesired result. Between today and his inauguration on the 20th January, they will pay rapt attention to every utterance of President elect Trump. Already, we see a gulf between the rhetoric of the campaign and his acceptance speech which, for the large part, hit the usual magnanimous marks. This though was written by others and it was all too obvious where he extemporised: “it will be a beautiful thing”. It is not difficult to locate why this has happened in political historical terms. America is about to become a minority white country and many resent this. Nor were all ready for the Obama presidency. Real wages for all but the top echelons have stagnated since the early ‘80s, fostering disappointment over a generation. A large majority of the country is pessimistic about the prospects for their children and 69% of the population is either “angry” or “disappointed” with their politicians and political processes. In broad portfolio terms, looking beyond the snap reactions, the key question is whether this introduces a change of direction for the world economy and its financial asset classes. From [...]