Cheaper isn't necessarily "better"
Our local pharmacy in London is run by an incredibly helpful Indian family, who seem to go above and beyond our expectations every time we need anything. Since having our first child, this reliability has been a source of great comfort. As my wife and I were leaving the pharmacy with our son on Saturday morning, we both passed comments to the effect that it seems rare to have your expectations consistently exceeded - in effect that simple tasks are kept simple by helpful and knowledgeable people.
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Don’t lose the bigger picture…
It's been a tough few days for Goldman Sachs. A fraud case that identifies one of the ways in which it was helping itself by betting against its own clients has caused its stock price to fall considerably and a series of knock-on claims coming from state owned banks around the world. Boo-hoo, might be the expected view given the comments I've passed previously about the organisation. This week, however, I actually have a mild sense of sympathy for them. A very mild sense of sympathy.
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Don't Push It…
In the years running up to Lehman Brother's collapse in September 2008 the bank was one the most profitable institutions not just within the industry, but in all industry. Lehman's share price had been as low as $9.66 after the Russian crisis in 1998 and had risen to the equivalent of almost $170 per share in early 2007 ($85 per share considering the 2006 stock split). Every quarter for nine years it had beaten analyst earnings estimates and seemed invincible.
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Better the devil you know…
Last Tuesday Ireland's finance minister, Brian Lenihan, announced the details of the terms on which Irish banks would transfer loans from their balance sheets into the NAMA "bad bank" plan. The numbers were quite brutal, with an average transfer price of 47% for the initial loans transferred.
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A change of direction: Optimism
Over the past few weeks (and months/ years) I have been peddling some fairly bearish commentary on the economic conditions prevailing around the world, and with it my typically dim views of the policy responses to these challenges. Generally speaking, the main gripe seems to be that the world is forever locked in considering nothing other than the short-term, because it's right in front of us, and because we've lost the incentive to do anything different.
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Goldilocks and the bearish blogger
The world's financial markets appear to continue to believe in the continuation of the so-called Goldilocks economy - one that is neither too hot nor too cold, sustaining solid economic growth and low inflation allowing for market friendly low interest rates.
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The Snowball
Warren Buffett, the 3rd richest man in the world, is known as "the Snowball" because his amazing increase in net worth year over year has been akin to a snowball rolling down a very large snow covered hill. As the ball (his fund) rolls down the hill its size increases exponentially; the bigger it gets the bigger the incremental size of the expansion. Compound interest is Warren Buffett's friend.
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It's only a bargain if you need it…
In the past week the situation in Greece has calmed down a tad after the Greek Treasury managed to flog 5 billion Euros worth of 10 year bonds to the world's investment community. Not only that, the deal was several times oversubscribed with an order book apparently in excess of 15 billion Euros.
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Doing a Rothschild…
During the Napoleanic Wars, the Rothschild brothers had the fastest communication system in Europe: a pigeon post. In 1815 everyone working in the City of London was aware that Nathan Rothschild would be the first to know how the Battle of Waterloo had ended. He would know even faster than the British government - in fact he was charged with the responsibility for relaying the news to them.
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The road less travelled…
The famous Robert Frost poem "The Road Not Taken" describes a man arriving at two divergent but similar roads in a wood. He scans in both directions to grasp the merits of either course and can only establish one difference between his options; one of the paths appears to be less worn, less "traveled" in Frosts description. He decides to take this route consoling himself briefly with the notion that he can always return to "the first for another day".
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