Thursday, 15 October 2009

October Fund Managers Survey

The latest Bank of America Merrill Lynch fund managers survey, published Wednesday (Oct 14th), saw a move away from cash [currently net 7 percent of respondents underweight from net 10 percent overweight in September] into equity markets [currently net 38 percent overweight, from net 27 percent].

Eurozone equities were liked, UK equities were not, and Japan was least liked for the year ahead.

Wednesday, 14 October 2009



(Part of Daily Telegraph article of 11th October 2009)

America is not going to bleed its wealth importing fuel. Russia's grip on Europe's gas will weaken. Improvident Britain may avoid paralysing blackouts by mid-decade after all.

The World Gas Conference in Buenos Aires last week was one of those events that shatter assumptions. Advances in technology for extracting gas from shale and methane beds have quickened dramatically, altering the global balance of energy faster than almost anybody expected.

Tony Hayward, BP's chief executive, said proven natural gas reserves around the world have risen to 1.2 trillion barrels of oil equivalent, enough for 60 years' supply – and rising fast.

"There has been a revolution in the gas fields of North America. Reserve estimates are rising sharply as technology unlocks unconventional resources," he said.

This is almost unknown to the public, despite the efforts of Nick Grealy at "No Hot Air" who has been arguing for some time that Britain's shale reserves could replace declining North Sea output.

ON THE OTHER HAND - as quoted in a Daily Telegraph article of 8th October -

Neil Woodford, the star fund manager, believes BP and Royal Dutch Shell may be forced to cut their dividends next year and has sold all his stake in the companies.

Monday, 12 October 2009

Keep On Learning #1

Barbara Walters, of 20/20, did a story on gender roles in Kabul, Afghanistan, several years before the Afghan conflict.

She noted that women customarily walked five paces behind their husbands.

She recently returned to Kabul and observed that women still walk behind their husbands. Despite the overthrow of the oppressive Taliban regime, the women now seem to, and are happy to, maintain the old custom.

Ms. Walters approached one of the Afghan women and asked, 'Why do you now seem happy with an old custom that you once tried so desperately to change?'

The woman looked Ms. Walters straight in the eyes, and without hesitation said, 'Land Mines.'

I've found a new guru ...

This is part of an interview (in June 2009) with Niall Ferguson, by Jonathan Derbyshire in The New Statesman

You emphasise the fundamental instability of financial systems and the extent to which they are subject to the vicissitudes of human behaviour. Can we detect the influence of behavioural economics on your analysis?
Yes. The importing of behavioural psychology into the economic mainstream has been one of the major benefits of the crisis. The great thing about behavioural psychology and economics is that they help us to see that there are actually pretty good reasons why human beings swing from greed to fear, and why we’re not really calculating machines or utility-maximisers. We are, in fact, rather clueless gamblers.

Is this crisis a definitive refutation of the efficient markets hypothesis, therefore?
Yes. What’s so seductive about the efficient markets hypothesis is that it applies nine years out of ten. A lot of the time it works. But when it stops working, you blow up. Much of the time it looks like you’re in the Bell Curve, and then something happens that your model tells you will happen only once in a million years, but which history tells you happens about once every 50 years.

Interview by Jonathan Derbyshire
Niall Ferguson is Laurence A Tisch Professor
of History at Harvard University and William Ziegler Professor at Harvard Business School.