A few months ago when it was clear that the economic growth was starting to slow down, the gurus of this world, banks and brokers started telling people that the fall in share prices will bye contained!
One of the most important rules in investment is never believe what the banker or broker is saying because their interests are always diametrically opposed to yours.
How else will they keep their bonuses?
Now a few months down the line, after big falls in share prices and increases in interest rates, these same people are saying: “This was an expected correction” or “This was an unexpected large correction” or “This was due to uncertainty caused by Trump and Italy”, or “We see that companies cannot maintain the same level of profits going forward….”
Every time they speak you should note the three common factors :
- They are all men wearing suits, shiny black shoes, white shirts and nice red or blue silk ties,
- They all work for banks or investment funds and have “no skin in the game” – meaning that they make very big salaries no matter if the markets go up or down. They are just brokers, salesmen, or big bosses with ready made scripts…
- Not one of them have any idea if and when prices go up or down – if they did they would be super rich. All they do is dutifully repeat what they have read that morning in the Financial Times or Bloomberg.
… and Italy does stink, and we can soon expect that our Finance Minister will be called on the phone by the French and German Finance Ministers to support poor old Italy whose pensioners can retire at 60 years and whose government can freely waste money on inefficiencies and corruption.
If we are lucky he will say no, but do not expect the French and the Germans to give up asking because their banks have already too much exposure to Italy. One thing is certain, Italy will end up being another Greece if thy carry on like this.
… and Trump will continue his harangues and tricks to “Make America Great Again” at our expense…
… and nobody will deal with Climate Change because we are all too busy worrying about share prices, Italy and Tump.
Photo: World Economic Forum / Wikipedia… 2018