Archive for December, 2009
End Of The Year Update
2009 end of the year update
2009 has been a year of recovery, first in share markets & then in global economic activity. Patient investors have seen some recovery in their wealth after the losses of 2008.
The perception of risk is still out of balance. While government bonds are expensive and there is still a lot of money in cash, equities and corporate bonds are no longer cheap.
Outlook for 2010
2010 is likely to see the economic recovery continue and become self-sustaining. Interest rates likely to be kept low by the US and the Europe.
A ‘U’-shaped recovery is most likely, which in some ways is the best outcome for investors. A ‘U’-shaped recovery presents investors a chance to enter the market when asset prices remain low. Global GDP growth in 2010 is at 3.6%-3.8% according to consensus.
Share markets are likely to rise further thanks to the combination of improving economic and profit growth, low inflation and still low interest rates at time when there is still plenty of cash on the sideline.
However, with uncertainties about the strength of the recovery and key central banks moving towards rising interest rates in the year ahead, share markets will be more volatile and gains more constrained than has been the case since March. A well-diversified portfolio should help to smooth performance.
I Want the Old Goldman Sachs Back!
By Morgan House
December 1, 2009
Over the past year, it’s been Us vs. Goldman Sachs. Conspiracy theories have multiplied aplenty. Loathing hasn’t been shy. Heads have been called for. That much is certain.
But what would a sensible Goldman Sachs look like? One that we could put up with, without being the butt of every egg-throwing anti-Wall Street protest imaginable? To answer that question, we might want to go back and look at the Goldman Sachs of years past, when it commanded respect.
Goldman Sachs went public in 1999. Before that, it was a private partnership, structured the same way many law firms and accounting firms are. Partners were senior employees who, after years of devastatingly long hours, were selected into a small fraternity of owners.
These partners owned the entire firm. All of the capital was theirs. They literally supplied it out of their own earned income. As Charles Ellis writes in his book, The Partnership: “Goldman Sachs retained most of each partner’s yearly earned income. As a result, anyone who became a partner in Goldman Sachs usually experienced a drop in spendable income.”
