Have you ever been to a Californian beach? If you have, you may have noticed the hoards of “searching”, elderly people. They would usually be holding a metal rod that beeps, looking for valuables that no-one else has found. And sometimes somebody finds a lost golden watch on the beach. But most of the time the things that turn up are only worthless beer caps.
Austria celebrates the 300th birthday of Maria Theresa. She was born on 13 May 1717 in Vienna. It was her who founded the Vienna stock exchange in 1771 on the basis of an imperial patent (see image), after an earlier, failed attempt in 1761. Even though a lot has changed politically, economically, and technically since then, the eventful history of the Vienna stock exchange is still very instructive for every investor.
Football has two strategies. Some prefer focusing on the defensive so as not to concede a goal – i.e. they try to maintain the status quo. Other teams favour the offensive and actively engage in a fight for victory – i.e. they take risks. The strategies on the bond markets are similar. Credit-safe government bonds are preferably used to protect one’s wealth, whereas risky corporate bonds are chosen to produce surplus gains.
The interest rates, or coupons, that bonds pay differ due to a variety of parameters. If bond A pays a higher interest rate than bond B, this premium is referred to as spread.
“SELL IN MAY AND GO AWAY (BUT REMEMBER TO COME BACK IN SEPTEMBER)”
Who has not heard of the old stock exchange rule “Sell in May and go away” – sometimes complemented by “but remember to come back in September”. We had a closer look at this adage and have analysed the performance on the global stock exchanges over the past 48 years. To this end, we looked at an index that measures exactly that: the company MSCI launched its MSCI World index on 1 January 1970, This is also the start date of our analysis.
Investing for the long or the short term? This is the question bond investors ask. In this blog, we will have a look at German government bonds with a remaining time to maturity of two years (2Y; short) and ten years (10Y; long). More specifically, we are interested in the yield differential between the long- and the short-term interest rates. The technical term here is the “slope of the yield curve”.
USA, the land of unlimited possibilities, the Grand Canyon, and the Big Mac. Here, everything is bigger, better, and higher. But is this also true for interest rates?
Have you ever been to the Monte Carlo F! Grand Prix? If so, you may have witnessed the problem of turning into a curve too late. The race car hits the crasher barrier faster than the driver can react, and a lot of money has to be thrown at the repair job.
“Don’t put all your eggs into one basket” – who has not heard this old stock market adage. With Easter approaching, we are having a closer look at the background of this saying.
If you thought “quarterly” was a simple adverb characterizing a regularly recurring activity, you may need to reconsider. A new term is making the rounds: “quarterly capitalism” – and in this context, “quarterly” stands for “short-term, myopic, greedy and dysfunctional”. In fact, the term was already invented four years ago by Dominic Barton of McKinsey and was swiftly embraced by, among others, Al Gore and Prince Charles to call for a major overhaul of current business practices of listed companies and fund managers. Recently the term has reached a new level of prominence after presidential candidate Hillary Clinton, in a series of appearances, complained that the “tyranny of the next earnings report” resulted in companies’ paying “too little attention on the sources of long-term growth: research and development, physical capital and talent”. Unsurprisingly, Mrs. Clinton’s proposed remedy consists of a mixture of higher taxes and more regulation.