Last chance to get 50% off ArabianMoney’s guide to beating the coming credit supernovaPosted on 07 February 2013 with 1 comment from readers
Next week we have to end the 50 per cent discount offer for the ArabianMoney investment newsletter which gives you the concrete investment tips that you will not find on this free information website (subscribe here).
Constructing an investment portfolio that will survive what Pimco boss Bill Gross describes as a ‘credit supernova’ with a bond market crash and debt implosion is our number one priority. It’s incredible to hear the manager of one of the world’s biggest investment funds say this, and with $1.9 trillion under his management Bill Gross speaks with some authority.
ArabianMoney is of course primarily a specialist investment newsletter covering opportunites in the Arabian Gulf. But we do also take a Mount Olympus view of global investment strategy. Get the big picture right and the smaller details do tend to take care of themselves.
The February issue ranges from macro prospects for Australian investors to Dubai property after the mortgage debacle and how and when to invest in silver as well as a review of the 16 per cent surge in the Dubai Financial Market last month. There is no other independent publication offering this type of analysis in the Middle East.
We have been warning about the dangers of bond markets for over a year now, so the ‘credit supernova’ is not news to us or our readers. Bonds are in a very dangerous bubble. It could be every bit as dangerous as the subprime crisis that brought on the Great Recession of 2008-9.
You are talking about the biggest asset class in the world. What will happen when interest rates go up, as they surely must at some stage, and bond markets come down (as they automatically do when yields go up)?
Well bond holders are instant losers. Banks hold lots of bonds so their balance sheets will be shot to pieces again as in the subprime loan crisis. That makes the credit event of higher interest rates even more painful as money will become harder to get at any price.
It’s also going to deflate stock markets, at least to begin with. The idea of a smooth rotation from bonds to stocks is a nonsense. Share prices will have to fall so that share dividends can rise to compete with the higher bond yields. It could be that equities then readjust to higher price-to-earnings ratios but it would not be the instant effect. Besides higher interest rates will scare the hell out of investors anyhow.
What Mr. Gross can’t tell us is exactly when this will happen, only that it will and that we should all be prepared for it… Subscribe today for the ArabianMoney investment newsletter and we will send you the current edition with our compliments.