Investors are advised to take precautions in 2012. The stage is set for the occurrence of extreme results for investors that go far beyond the normal levels of unpredictability, according to PIMCO’s Mohamed A. El-Erian (See “Investing in a ‘Fat Tail’ World”).
MF Global’s exposure to European sovereign debt was not done through straightforward purchases of bonds. Instead, CEO Jon Corzine used a transaction known as repurchase-to-maturity (RTM). The RTMs allowed MF Global to, in essence, buy the bonds on margin, yet classify the purchase as a sale, with the bond and the repurchase liability removed from […]
Criminal acts did not play an important role in causing the mortgage crisis, according to an opinion piece in the Wall Street Journal written by Gordon Crovitz, a former publisher of the Journal. In Crovitz’s view, critically flawed policies and rules in the U.S. and abroad did so, and set the stage for the global […]
U.S. household net worth fell 4 percent to $57.4 trillion, the sharpest drop in over two years, and Americans’ stock portfolios fell 5.2 percent in the third quarter. About 50 percent of Americans own stocks or stock mutual funds. (“Wealth in U.S. takes big hit,” Atlanta Journal Constitution).
For the seventh straight month, equity mutual funds reported net outflows (investor withdrawals). For the week ended November 30, equity mutual funds’ net outflows consisted of $6.67 billion from domestic equity funds and $2.96 billion from foreign equity funds, according to the Investment Company Institute, the national association of U.S. investment companies (i.e., mutual funds). […]
A report issued by the McKinsey Global Institute forecasts that investor allocation to equities worldwide will drop from 28 percent in 2010 to 22 percent in 2020. (“Equities Losing Appeal in Global Financial System,” InvestmentNews).
Noted professor of economics, Nouriel Roubini, predicts the U.S. economy will slide into recession in 2012 primarily because of the failure to deal with fiscal problems as a result of political gridlock in Washington. Last week, Roubini tweeted: “Super-Committee: Super-Failure, Super-Pathetic, Super-Gridlock, Super-GOP-Lunacy on Taxes, Super-Fiscal Drag in 2012 that ensures double dip.”
Fitch Ratings issued a report on November 16 on the U.S. banking sector saying that “the risks of a negative shock are rising” if the effects of European debt crisis keep spreading. (“Fitch’s Warning Spooks Investors, ” Wall Street Journal).
It’s getting rough and rowdy as Occupy Wall Street protesters attempt to shut Wall Street down and police try to clear them out. Protesters marched from their former home in Zuccotti Park and blocked intersections near the New York Stock Exchange. Police hit and shoved some of them, and reporters saw one woman pinned to […]
JP Morgan Chase and Goldman Sachs have sold credit default swaps that put them on the hook for $5 trillion of debt ? but they won’t say whose debt they are on the hook for. That leaves investors worried that it may be debt issued by Greece, Italy, Ireland, Portugal and/or Spain. Greece and Italy […]
