http://economist.com/daily/columns/marketview/displaystory.cfm?story_id=10415523
"In retrospect, it seems clear that banks were playing a sophisticated game but they ended up being “too clever by three quarters”, as was once said of Harold Wilson, a former British prime minister. They earned fees for managing and distributing complex securities, and took them off their balance sheets, freeing up precious capital. But the buyers of these securities were often dependent on finance from the banks. And as those buyers have struggled, then the banks (HSBC and Citigroup among them) have been forced to take the securities back"
American elections ; stock amrkets perform well but are we at the juncture of an epochal change ? This is creating a bull market in pessimism. The likes of Bill O'Reilly and Lou Dobbs have transformed themselves into cable stars by ranting about cultural decay and “broken borders”. Patrick Buchanan's latest book is called “Day of Reckoning: How Hubris, Ideology and Greed are Tearing America Apart”. “We are on a path to national suicide,” he says. America is not just “coming apart”, but also “decomposing”.....In fact, Americans have always had a vigorous tradition of pessimism, in counterpoint to the optimistic one....but ... Much of today's pessimism may prove as unfounded
and what about forecasters? The venerable Abby Joseph Cohen of Goldman Sachs asserts, with remarkable precision, that profits will grow by 5.6% and that the S&P 500 index will end the year, not at 1,670 or 1,680, but at 1,675. The one forecast Buttonwood can safely make for 2008 is that the consensus will prove to be wrong. In one of the defining phrases of 2007, the author and investor Nassim Taleb has called these occurrences “black swans”—unexpected events that have enormous consequences. These are, by definition, very hard to forecast. One approach is to make several wild guesses in the hope that one will prove right;the writer goes on explaining that the major risk lies in a real estate crisis in the uk, ireland , spain and eastern europe.
against this background why not considering an investment in africa and the middle east ?
Up to $1bn is set to flow into North African and Middle Eastern stock markets in the coming months as several heavyweight firms launch funds focusing on the region, confirming its status as the next investing hot spot.
BlackRock, the US-based investment manager, on December 1 launched a Middle East North Africa Opportunities hedge fund....It is believed that it began trading with about $12m, and hopes to raise $250m by the second quarter of 2008......
Permal, the hedge fund of funds group, will shortly begin marketing a new one, called Silk Road, which will invest in North Africa, the Middle East and the neighbouring countries leading to Asia........T Rowe Price, the US-based mutual fund group, three months ago launched an Africa & Middle East fund, which has attracted more than $140m in investors' money. The strong start for the fund, which has had little marketing, indicates that US retail investors have an appetite for the region. It is believed to be the only such fund available to US investors, although there are some – New Star launched one last month – available to European investors.The T Rowe Price fund will have a relatively concentrated portfolio of 40 stocks and initially invest in 11 of the more developed markets in the region - such as Nigeria and Egpyt - and then expand to others, such as Botswana and Tunisia.Several other money managers around the world have similar plans. Mizuho Bank in Japan has launched a North Africa/Middle East mutual fund. Emerging markets mutual funds have historically had little or no investments in Africa and the Middle East, but have begun to lift their holdings there. Some of the African stock markets have been among the best performing in recent years.
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