Author name: adminalison

Recently, estimates of American stock market valuations reached their most extreme in US financial history.

The Wilshire 5000-to-GDP ratio sits at around 200% — higher than the ratio preceding the 1929 stock market mania, the 2000 dot-com bubble as well as the 2007-2009 Global Financial Crisis. At the same time, American households are loaded up on stocks. In fact, equities account for 40% of US households’ total allocation of financial assets, which is more than at previous market peaks.

Read the Autumn 2024 Advisor

If following the typical financial bubble we get the usual bust, what might follow an epic bubble?

Generally, three asset classes account for most wealth – bonds, property and equities (leaving aside more esoteric assets) – and for most bubbles. What funds bubbles is credit expansion.
Nothing in the markets is ever certain, especially analysing “bubbles”. Nevertheless, we shall attempt a brief assessment of the current situation.

Read the Summer 2024 Advisor

Since time immemorial, the exchange of knowledge and innovations have been disruptive to civilisations. These exchanges allow for cultural evolution to become cumulative and for intelligence to become collective. They also foster new industries and advance a civilisation’s wealth.

The most talked about innovation of the past year is Artificial Intelligence. AI has the potential to transform our lives. AI will almost certainly displace some jobs, but it could also empower people with new productivity enhancing tools. It’s already creating person-alised tutors that help turn children into accomplished students. It’s developing lifesaving drugs incredibly quickly. AI could also create trillions of dollars in wealth for companies and investors. The world is still in early days of the AI era.

Read the Spring 2024 Advisor

These quarterly missives often concern journeys into the future. The way is always uncertain, the destination opaque. What may help guide us for-ward is an awareness of where we have been. With driving, the rearview mirror is incredibly useful for manoeuvring a vehicle – but to rely on it solely for steering is dangerous and stupid.

Since the financial crisis of 2007 – 2009, investors have dealt with the distortions created by Zero Interest Rate Policy (ZIRP) and Quantitative Easing (QE) separating the financial markets from economic fundamentals. Today’s markets are not moved by economic fundamentals but are driven by liquidity, momentum and short-term emotions. For the last fifteen years, investors have become inured to this environment and expect, after the steepest rise in interest rates in decades, a return to “normal”.

Read the Winter 2023 Advisor