how to Invest in renewables energy

In recent years, renewable energy investment has increased in popularity largely because the world is becoming increasingly aware that the current economic model is based on finite resources and this has to change. Although crude oil and other fossil fuels will last us for the foreseeable future, there will come a time when our energy consumption will have to look for alternative and renewable sources.
And here come into play renewable energy, although this sector is still relatively immature in global terms, the growth opportunities presented are huge and it is worth considering exposure to renewable energy.

How to invest in alternative energy?

Biofuels:

Biofuels are an alternative form of energy derived from carbon based organisms. There are many different options including bio-alcohols, biodiesel, green diesel, vegetable oil ... Recently, the International Energy Agency has stated that biofuels have the potential to replace 27% of transport fuels by 2050, effectively reducing emissions greenhouse gases by 2.1 million tons per year. Even some countries already have existing mandates requiring companies to blend biofuels with gasoline, giving these various fuels with high growth potential.
Some companies with which exposure to biofuels, and thereby to alternative energies are:

• Archer-Daniels-Midland Company (ADM) company dedicated to the production of different agricultural commodities and also has many of its operations based in the biofuels industry.
• Methanex Corporation (MeOH): this is a company dedicated to the production and sale of methanol, a chemical that, among other things, is a very popular agent mixed with gasoline. Methanol is also one of the key components of biodiesel. MeOH pays a dividend yield of 2.6%.

Hydropower:

Hydroelectric power has become the most powerful energy alternative at this time, but of the least popular. Hydropower generates water currents moving and exercising more on large dams and rivers.
It is presented as one of the alternative energy sectors with greatest growth opportunity.

• China Hydroelectric Corporation (CHC): This company is engaged in the acquisition, ownership and development of hydropower in China. HCC has assets of $ 77 million.
• Zhaoheng Hydropower Ltd. (ZHYLF.PK): Zhaoheng generates electricity mainly in the southern and midwestern China.

Nuclear:

After the tragedy of Fukushima has questioned the safety of many nuclear plants, and that is why Germany has completely abandoned nuclear power. But with the new facilities are much safer and more efficient nuclear plants like Fukushima, so that investors take into account this energy Fuenta its considerable growth potential.
We expose ourselves to nuclear energy by investing in ETFs or companies related to these materials:

• Market Vectors Uranium + Nuclear Energy ETF (NLR): This ETF provides direct exposure to nuclear energy because it has stakes in companies such as Exelon Corp, Uranium One, and Areva engaged in the manufacture of this alternative energy.
• Uranium ETF (URA) ETF focuses on the mining of uranium it is considered a direct exposure to nuclear energy and impact the growth of this industry.

Solar:

The solar energy sector is the fastest growing developed in recent years, and a favorite for investors. The industry is still relatively small, but has an average growth of 39% annually over the last decade and a strong predictions for the future. For now, China dominates the solar market, and most companies base their operations in emerging markets.
To be exposed to this alternative energy we can choose companies or ETFs:

• First Solar, Inc. (FSLR): This US-based company is one of the best known in the solar energy sector. Even after the death of CEO of First Solar the company's future is uncertain.
• Market Vectors Solar Energy ETF (KWT): This ETF invests in companies that, on a weighted basis, get a 90% or more of their income from the solar energy sector. The main investments of the fund are in companies like First Solar, GT Solar and MEMC Electronic Materials.

Aeolian:

Wind power is one of the most established alternative energy in the world, and many countries have chosen it as an alternative to fossil fuels. Currently, wind power amounts to just over 2% of the world's energy supply, but its growth rate is increasing, and this figure is expected alcanzace 8% in 2018. Like so many other forms of renewable energy, energy companies are hard to find in equities, but this trend will change as the industry continues to grow.

• Broadwind Energy, Inc. (BWEN) sector company wind energies, based in Chicago. Owns more than $ 44 million in assets.
• Iberdrola SA (IBE.MC): This Spanish utility company, is part of your business based on wind energy production by Iberdrola Renovables, so it is an attractive investment option.
• ISE Global Wind Energy Index Fund (FAN): a fund that focuses all his interest in the wind industry. Your participation is divided into different companies, those companies which are exclusively in the wind business receive a higher weight than those with a broader business model.

What other way to invest in renewable energy you know?

The most profitable mutual funds 2012 , Hedge funds.

I found it very interesting annual returns are able to get the big hedge funds, also known as the most profitable investment funds in the world.   We understand how big hedge funds who manage more than 1,000 million dollars. In the list we have the 100 with better performance in 2012 (from 01-01-12 to 31-10-12) and we can compare it with the result obtained in the previous year (2,011).
In the list we can see that most of Hedge Funds exceeds 1,000 million managed and some 5,000 million. The best-performing hedge funds have gained hover between 20% and 40%, which is not bad considering the vast amounts of capital managed.
In this post I put the list of the top 12, with photo of the manager and all data relating to the company, the name of the fund, the strategy used and the yields obtained. The full list of the 100 best in the big hedge funds you have it here .

1st. Background: Metacapital Mortgage Opportunities . Manager: Deepak Narula. Location: USA.
Company: Metacapital Management. Strategy: Mortgage-backed arbitrage
Managed capital: 1,500 million
Performance in the year 2012 (from 01-01-12 to 31-10-12): 37.8%
Performance in the year 2011: 23.6%

2nd. Background: Pine River Fixed Income. Manager: Steve Kuhn. Location: USA.
Company: Pine River Capital Management. Strategy: Mortgage-backed arbitrage
Managed capital: 3.600 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 32.9%
Performance in the year 2011: 4.8%

3rd. Background: CQS Directional Opportunities. manager Michael Hintze
Company: CQS. Location: UK Strategy: Multistrategy
Managed capital: 1.500 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 28.9%
Performance in the year 2011: -10.4%

4th. Background: Pine River Liquid Mortgage . Manager: Steve Kuhn. Location: USA
Company: Chen Jiayi Pine River Capital Management. Strategy: Mortgage-backed arbitrage
Managed capital: 1.100 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 28.0%
Performance in the year 2011: 7.2%

5th. Background: Omega Overseas Partners . Manager: Leon Cooperman
Company: Omega Advisors. Location: USA. Strategy: Long / short
Managed capital: 1.400 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 21.7%
Performance in the year 2011: -1.4%

6th. Fund: European Odey. manager: Crispin Odey. Location: UK
Company: Odey Asset Management. Strategy: Macro
Managed capital: 1.800 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 24.1%
Performance in the year 2011: -20.3%

7th. Background: Marathon Securitized Credit . Managers: Bruce Richards, Louis Hanover
Company: Marathon Asset Management. Location: USA. Strategy: Asset backed
Managed capital: 1.200 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 24.0%
Performance in the year 2011: - 4.2%

8th. Background: Palomino . Manager: David Tepper
Company: Appaloosa Management. Location: USA. Strategy: Multistrategy
Managed capital: 4.900 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 24.0%
Performance in the year 2011: -3.5%

9th. Background: BTG Pactual GEMM. Managers: Team managed (Andre Esteves)
Company: BTG Pactual Global Asset Management. Location: USA. Strategy: Macro
Managed capital: 3.600 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 23.1%
Performance in the year 2011: 3.4%

10 °. Fund: Third Point Ultra . Manager: Daniel Loeb
Company: Third Point. Location: USA. Strategy: Multistrategy
Managed capital: 1.300 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 22.1%
Performance in the year 2011: -2.3%

11 º. Background: Seer Capital Partners. Manager: Philip Weingord
Company: Seer Capital Management. Location: USA. Strategy: Asset backed
Managed capital: 1.200 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 21.6%
Performance in the year 2011: 2.1%

12 º. Background: Tiger Global . Managers: Feroz Dewan, Chase Coleman
Company: Tiger Global Management. Location: USA. Strategy: Long / short
Managed capital: 6.000 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 21.0%
Performance in the year 2011: 45.0%

The Compound Interest (part II)

In the previous article we discussed that with compound interest was not very difficult to arrive at a figure of, say, € 300,000.

Well, needless to say, despite not be complicated requiring high doses of patience and discipline. Highly difficult thing when you have a considerable amount of money in hand, the temptation to eat uncontrollably or buying a luxury item, see a car, a house etc. exponentially increase.

A major plus point is the age at which you start, it is clear that the longer devote the most amount of compound interest can gather during a given period of time. So begin no later than age 30 would be ideal.

The first is to score a goal. Then decide how we figure that we will be around for a few years head.

Suppose we do not want risks and we're moving from, for example, 3-4% will give us a bank deposit and give us 5-7% by acquiring quality corporate debt. We mark a savings rate X which in monthly maturities of our investments go humble adding interest.

 

 

At the end of each year will add to the annual CPI rate of savings we had last year so we make sure we do not lose purchasing power over the years and inflation were not gaining ground.

An example. Monthly savings rate € 500, in a year together € 6,000. The next year we will have € 6,000 in an investment for example at 4.5% APR so that at the end of the second year we will have € 6,000 the first year, plus interest of € 6000 to 4.5% (213 euros after tax ( 21%)), but the 6000 euros (plus CPI should have risen to the saving rate) in the second year. A total of 12,213 euros in two years just.

Do you get the idea right? The third year we invested 12,213 euros, for example, the 4.5% that we will generate € 434 after tax, but the 6000 (plus annual CPI) for the third year, in total € 18,647.

In three years we will have € 18,647 without having updated the saving rate not to complicate the explanation. I think it's pretty clear the concept.

It is clear that more and more savings rate interest we reached the goal faster. But the same does not increase the interest savings. If you double the interest rate at which you are making your money work the result will not bend but is multiplied by 3'5. So imagine that can happen maximizing the savings rate and get a higher annual interest average. Spectacular.

It happens snowball effect, the principle is much start but once we have run for anyone.

To give more examples and see how it affects a slight increase projected interest rate over time.

Starting with 0 and with a savings rate of 610 € monthly, 3% compound interest capitalized through in 20 years we will have about 200,000 euros, in fact rather more in the calculation because we have not updated the CPI savings rate.

Just changing the 3% to 5% and we almost € 250,000. Can we imagine if we get over it?

If for whatever reason we can start from a number other than 0 that we have gained in time.

Let everyone do their calculations, charts and projections and let your imagination run wild. On the net there are plenty of calculators and compound interest tables .

Anyone is more motivated? You just have to want it.

Waiting for the big-market bond rotation

The OECD issued its latest revision on global economic growth prospects, in the first of his two appointments or annual reviews. The overall impression is of slow growth and downward adjustments in earlier projections.

In USA GDP will expand even more slowly, at rates of 1.9% this year and 2.8% in 2014.

In Europe much more pessimistic, expecting a contraction of 0.36% of GDP this year and moderate growth of 1.1% in 2014. The main problem remains the debt.

For Asia disparate and curious vision, the two largest economies China and Japan grow although downgrades the first, to 7.8% and the second upward to 1.6%. Curious because if China grows below 7.8% will be a warning sign of weakness and would alert the government while if Japan grows by 1.6% all happy ... not the Nikkei has left a 5.15% on the session.

U.S. bond markets nervous, considering that the expected growth without being robust, it could be enough to affect the asset purchase program by the Fed.

Furthermore bonds approaching resistance area (in profitability or price support, as you look) interesting from a technical perspective, the 10 years in 2.4%, which if exceeded invite managers to modify some strategies.

The technical aspect of fixed income USA invites caution for months, as I come through the graphic exposing long stretch following:

Bonds "high Yied" are also suffering falling sales and prices in line with the sovereign. You can read at this link an interesting article about the risks of rising rates, derived from the tendency to convexity hedging.

A reference to the debt market USA is the ETF (AGG) designed to track the performance of all U.S. debt, Total U.S. Bond Market ETF (37% Treasuries, 28% MBS and the rest in corporate and agencies) capitalization of $ 15,600 million is also falling in price and this will be five weeks straight and falling sales.

Generally, when the bonds fall weak moves financial markets assembly and intermediate trends ruptures tend to bring major changes in the outlook and portfolio adjustment, feeding additional losses in assets.

This time, before such change in the mindset presumed investor and as turbulent markets, handled all markets fall? Unison or there will be a mass migration of Fixed Income Funds Equity?.

Uncertainty about the Great Rotation is debated and concern among fund managers and selectors will depend largely on market confidence about staying "apuntaladora" Bernanke and real economic opportunities.

In view of the behavior of the Fed, it could be argued that the Great Rotation want to further enhance asset reflation and get the expected wealth effect that can finally bring down the pernicious tendency of the money multiplier.

Specific corrections in stock prices are necessary and "healthy" for the strength of trends, there should be an adjustment at any time, perhaps coinciding with breaks bearish on bonds.

After an eventual correction will attract capital bags different sources, one of them raised liquidity proceed with the settings fixed income portfolio and if the helicopter flies over satin, as the FED-BAG correlation is 85%.

True, stock valuations discounted cash flow worsen with rising interest rates and subtract bag. However, the bag can also grow through multiples expansion as we tested several times.

The music continues to play and as said the CEO of City before the debacle, must keep on dancing ... but unlike Mr. Charles Prince also closely monitoring the situation to avoid being caught in an artificial rise will end in tears, as the rest.

Redemption Mortgage or leave the money on deposit?

This question always comes up in every discussion forums and in all conversations. In this blog will have generated enough comments like: 'I lack to pay 130,000 euros of mortgage and I have 40,000 in a deposit. What do I do with the savings? Amortized mortgage or leave it in the tank I might be giving interests?

The response itself is quite simple but you have to consider several factors. Not everything is to achieve maximum profitability.

If the 40,000 we have them in a tank get 4.5% APR 1422 after tax per year in interest.

If amortize mortgage until 9040 the maximum possible for us desgravamos holder a maximum of 15%, ie 1356 per year. But if the ownership of the mortgage there are two people you can deduct twice, 18.080 euros. With 15% return we will get 2712 euros hacienda.

 

 

The tariff includes fee, interest and principal. Therefore, if we pay a mortgage of 500 euros a month is 6000 a year and we should (in case of sole holder of the mortgage) repay to the maximum of 9040, ie add 3040 euros extra. Looking at it another way, we will have a deposit of 15% per year 9040.

If our mortgage fee is 850 euros per month 10,200 annual pay, therefore you should not write off anything because you spend the maximum in 1160, and in this case if you should leave the deposit at 4.5% APR and you probably have higher interest than you are paying for the mortgage.

If mortgage paid 650 euros a month (€ 7,800 per year) but we are two holders (my partner and I) we can deduct a maximum of 18,080 euros per year. That is, at the end of the fiscal year, in December, we'll add 10,280 euros to get the most and so will be like you have a deposit of 18,080 euros to 15% APR.

So much for the options to be financially profitable. But keep in mind that it is often better to pay a little more and have liquidity savings will run out sooner repay. I guess there are all kinds mentalities and before doing anything better inquire as to what may be the best option.

In case you want to ever repay mortgage amortized time and capital, since we got rid of shortening the time and lowering interest fee we will reduce some of the money to pay monthly but will also be paying interest to the bank.

Anyway people to purchase a residence from January 1, 2013 will no longer be tax deductible anything, so that 15% is canceled. In that scenario have the money saved to a good interest monetized over paid on the mortgage will be most profitable.

Equities vs. fixed income

We want to invest but do not know where to start. We heard that a neighbor buys shares, another has-bills ... but it sounds like Chinese. The most common among the ordinary people, not familiar with the investment world is to know the stock exchange. Equities bag not associated with on many occasions.

If we go a step further, on the other side of the sidewalk, no bonds. Four out of five people questioned in the street has never heard of the bonds, but the bonds of state and treasury bills.

There is a lack of knowledge of concepts and the association has to be clear that equity = stock exchange = buy / sell shares on an exchange.

And fixed income = letters / bonds / debentures, although in this case it is not so easy to explain as above.

I am often asked which is better, if the fixed or variable?, is an open question as it is not a duel to be the best way to invest, but every one of the options requires a plan or strategy determined and made ​​to measure.

By email I have received a comment on why equities RECOMMEND even. I have to say that I've never done, just position myself where best suits me and I adapt to the rules of the game on the fly. Who else who ever invested less in stock, if not he will have done so indirectly through your bank in a structured deposit or a mutual fund. Of all the people who have bought shares being aware of what they did, probably 8 out of 10 will have lost money, have won something and that ten will be made ​​in August. It's pure statistics. To earn a few most be missed.

The bag is fascinating. But never an individual investor may invest to a "higher level" because just as fascinating is equally manipulable. If I want to buy shares of Google I can do with a few mouse clicks. I can think that the company is "on fire" and that will go far. But managers may hedge funds, pension funds and large investment funds do not think the same and withdraw their positions. In that case the action begin letting down caught out if I have not heard before, either by choice or by the use of a stop loss (stop loss).

The strategy followed by these three groups of investors is quite simple in concept. They come in solid companies with good growth and the mere fact of having a reputation draws lots of people, and I do not mean people like you and me (also), but managers and smaller funds and large investors capital private. When the action is "hot" is said, the great go through the back door, by stealth, reaping the benefits and leaving others with an action that is devalued by simply taking away a part of its value . This happens every day, and is to blame for that 8 out of 10 of us lose money in stock market.

If you look at a recent case we can see if Apple / Google. The first was the world's most powerful company, shares more than 700 usd and bank account filled to the brim, to say nothing of the benefits you get. Until one day a great manager decides he has had enough and leaves, of course others are wary and follow him. There is no reason. Humans are like dogs when you shoot with a stick.

Source | Yahoo! Finance

So where has the money gone? Much of it directly to Google. In six months is up 40% to more than 900 usd per share, your business is going well or very well, but Apple is stronger and gets more benefits. And the box (cash money) is several times larger than that of the search engine block. But the funds are positioned in the search, making skyrocket while Apple already looks like 700 usd far and passes through a discrete (to be what it is) 400 usd.

Source | Yahoo! Finance

Until some lit, some other privileged information worldwide leading company, decides to abandon positions. The action will begin to lose because it is what makes the law of supply and demand. If a site is removed as there are less.

With fixed income this can not happen in this measure. Market does not work like this. As much as the bond is not fixed for the purpose of this type of investment is not the same. In this market, commonly, it comes knowing what is going to win, and although we can speculate without any problem, large funds do not use this method. In this market, which we are most knowing the outcome. Knowing that the current uncertainty is no reason for you to lose money, and if all goes well I will recover the initial capital plus interest at maturity.

Clearly positioning myself for fixed income, but that does not mean they do not use the equity (if I use it) but I move into what best suits my investment method.

I see it like a business. Imagine you are the manager of a company and you have two possible scenarios for the end of year results. Think of your choice dependent jobs. On one side of the table is the aggressive option (the reference to equities), this option is as follows: if the thing goes well the company will earn a 25% in this fiscal year. If something goes wrong the company will lose 15% and you have to make a cut of 30% of the workforce.

Across the table is the most relaxed (relating to bonds), in that you will not lose in that year but the benefits will not 8%.

Which do you prefer?

Sure you reflect on this example you have decided that the bond is better. No, not better. It's different. It is used for different things. It depends on your plan and your ambition. Not the same winning by 8% to 25%, but it is the same to win by 8% to lose 15%.

Quite some time I am in favor of adding 8 at 8, and not from adding 25 +10 -15 -8. I hope you understand. I am more than convinced that long-term earning just over fixed income than equities.

Just to give an example, a well-known blog (I will not say the name), which have a public investment portfolio. Since 2008, have achieved 16% revalue. A 16% cumulative, then dividing by the years from the start date is plus or minus 3%.

  In fixed income, and without being a "master business" minimum multiply that number by two.

This is not to say it's easy and those who invest in equities fools. Not at all. Only that each tool is used to a certain way of working.

The role of hedge funds: inequality and financial instability

Hedge funds known as hedge funds or hedge funds, are a type of mutual funds that are not only subject to regulation, and that because of it have played a crucial role in virtually every financial crisis since the nineties . Due to its relative complexity are completely unknown to most people. A population that is, paradoxically, the main affected by the performance of these financial institutions. To prevent that remains so in this article I will try to shed enough light, of course following the usual teaching style, in the murky world of hedge funds.

The performance of mutual funds is collecting money from many sources (individuals, corporate savings or other funds) and investment thereof in any financial product (shares, for example). After a time, when there has been a benefit and money has appreciated, the fund returns to owners past the nominal (money) plus interest, keeping the bank with an important commission.
Origin
The first recognized hedge fund was established in 1949 in the U.S., but its most important expansion took place from the second half of the nineties. Hedge funds differ from other mutual funds precisely in their aggressiveness and risk exposure. On the one hand have no regulatory limitations of any kind, and on the other hand tend to maintain very high leverage positions (operations with borrowed funds, such loans). This means that any fund can perform operations with no money but with so much borrowed money as you want. In case of profit profitability is much higher, but in case of loss the problem is also serious and very contagious (defaults follow each other).
Hedge funds are also managed by professionals who largely turn their profits as investment in the same hedge funds, more intense commitment to the future of the fund. As a result of all these features hedge funds usually yield high levels of profitability.
How and where is made ​​a hedge fund
Hedge funds are managed by professionals and have very high entry barriers for investors, in many cases reaching the million dollars, but in any case depends on the specific regulation of the territory in which it is constituted. These barriers to entry are very high also precisely because of the high risk associated with financial transactions undertaken by hedge funds. Regulators seek to protect small investors and believe the best way is by raising the barriers, while more liberal from orbit is considered to be lower these barriers to involve the largest population possible benefit of hedge funds.
Hedge funds therefore have a minimum of stakeholders: investors, managers and companies that offer services. As investors are currently most other mutual funds (including other hedge funds), transnational corporations and millionaires course.
 

Also, the location is usually territory other than the territory of management. Indeed, 60% of hedge funds in 2010 were located in tax havens (in fact 37% of all hedge funds are in the Cayman Islands and 27% in Delaware, ie United States). The constitution in a tax return also increases because it reduces transaction costs (interest, records, etc..). In terms of managing 80% is on American soil (ie 41% is in New York), and most of the rest is in London. Hedge funds have Anglo flavor.
But banks also have flavor. Because the managers of these funds are logically banks, plus they are also those who offer specialized services to hedge funds. And as all this is a business statistics increasingly concentrated, precisely because of the crisis.
 

In short, like any mutual fund, the purpose of a hedge fund is to highlight the money deposited by investors, and for that we go to all financial markets (stocks, corporate bonds, government bonds, futures, etc..) Seeking returns. The aim is to speculate, and that almost anything goes.
Hedge Fund Strategies
The strategies used by hedge funds can vary between each other, but all seek to "exploit" the opportunities of making profits in the financial markets. And all are, in a sense, gambling. They are usually complex strategies, but sometimes can be as simple as a bet that interest rates of private bonds and government bonds are converging [1]. The usual way of hedge funds bet is to alternate short positions with long positions.
Taking a short position (short) means that the bet is "to think that the price will go down." For example, a hedge fund may sell their shares today and buy tomorrow when they have fallen. As today sells more expensive than you buy tomorrow's benefit. A naked short position (naked short) is the same but in case you are selling something that does not have [2]. For example, we sell at today's prices to deliver after tomorrow and hope that tomorrow is worth much less. Bought and delivered tomorrow after tomorrow, making the profit.
A long position is betting that "the price will go up", which is what we are accustomed. If you combine both positions in different markets can increase profits. For example, the sale we did in the short position will receive money that we invest as a long position. Money Never Sleeps.
History: hedge funds, crises and speculation
The most famous case of a hedge fund is that of Long-Term Capital Management (LTCM), managed by a team of professionals that included two Nobel laureates in economics, and its investors had even central banks. The net returns were from 42.8% in 1995, from 40.8% in 1996 and 17'1% in 1997, and the leverage was 30-1 (Vilariño, 2000). In 1998 the risky and complex hedge fund operations clashed with the Russian debt default and the losses were very severe. Finally the action of the Federal Reserve Bank of New York, who pressed a set of large investors to save the bank, prevented greater evils.
But other cases are also spectacular and also reflect the sign of the times. The first thing worth pointing is that of George Soros, who used his hedge fund to speculate against sterling. First George Soros borrowed 15,000 million pounds, and stealthily changed dollars. The purpose of short-Soros was betting with pounds, ie bet that lose value. When he was all prepared and wanted to attack it managed to make it very sounded: summoned the media and announced that he was convinced that the pound would fall. Then sold off their pounds borrowed and sent the signal to the market and the pound fell really (indeed, the sell-off, coupled with the fear of the other holders of pounds, has laid). The British government responded with all its weapons of monetary policy, but after spending more than 50,000 million dollars had to surrender: speculators had expired. With the pound on the floor Soros bought 15,000 million pounds (now worth fewer dollars) and the back (it was a loan). The gains were huge, and teaching more: a speculator, one, could sink an entire country [3].
The Asian crisis of the nineties gives many more examples of this, and the recent debt crisis even more. It teaches us that a few speculators, counted on the fingers but managing huge amounts of money, can bring down countries and set economic policies themselves.
Profitability and current developments
For all, hedge funds receive higher returns in scrambled scenes, as there is nothing worse for a mutual fund that the non-existence of space to speculate. However, widespread uncertainty scenarios or collective crisis can also be its own grave. Also, as I said before, the spread can be huge losses due to the leverage situation. Therefore, depending on which sectors and financial markets suffer losses suffer much hedge funds.
And the crisis was primed with hedge funds in 2008, as many of them had participated in toxic financial assets or had investments in mutual funds that had done so. The case of the investment bank Bear Stearns is representative, since in 2008 he had to respond to losses in two hedge funds managed (offshore) and that made him finally sinking. It was sold at a bargain price to JP Morgan [4].
But bailouts hedge funds could breathe easy again. And again they make profits and continue their speculative activity. Just look at the chart I made with TheCityUK data.
 

The hedge fund business is back up, and that's precisely what the data show not only profitability but also the data of assets managed by it. Without reach even 2007 levels, pre-crisis levels, the hedge fund space have recovered rapidly.
 

And ultimately it seems that the entire financial system returns to normal gradually. Even the leverage is regaining 2007 levels. But that's the "normalcy" that led to the crisis, because although we can guess that the hedge funds are responsible for the crisis itself that it had an important role in the expansion of the bubbles and contagion from further damage. And is that as a society we do not learn.
 

 

Conclusions
But you back to this "normality" was expected. In economics there is a concept of "moral hazard" that has to do with the incentives that exist in the market and the beliefs of the agents. Today all financial actors (investors and managers especially) know the United saved from burning to entities that are in trouble and that endanger the system (and given the amount of money that move the hedge funds and banks could say that are nearly all), so this risk no actual loss. To put it another way: they know that the bill is paid by workers with adjustment plans and other measures, so they do not care not to repeat the same activities that have made them richer and richer before and after the crisis.
We can not forget that the phenomenon of hedge funds and promote financial instability and distort the market (because liberals tell me what benefits to society of naked short operations), increase inequality in several ways. On the one hand because as industry financial elites that manage these funds promote an institutional configuration such that brings in the States tax competition and prevents them from effectively control tax evasion. Following public finances are distorted and end the welfare state ends up being paid by the middle and lower classes, being the high payments outside the system. On the other hand because logically are the upper classes who benefit most from the business of collective investment funds (pension funds, mutual funds, hedge funds, etc..) And therefore grows exponentially the difference between those less by entering your salary and who increasingly enter their financial activities.
The fact is that we are headed to another huge financial crisis. And if not, at the same time

The 12 principles of value investing (Part 1)

Bestinver has published a book that summarizes the 12 principles of management by value, with phrases and ideas of legendary managers who follow this philosophy, such as Peter Lynch, Warren Buffett, Mario Gabelli, Charlie Munger, John Templeton, John Neff, Jim Rogers, Christopher H. Browne, Walter Schloss or Francisco Garcia Paramés own. Joining them are two prominent figures Friedrich A. Von Hayek, Nobel laureate in economics and Benjamin Graham driver of investment value.
I put a short summary has been published weekly funds people, each one of these ideas:
1) The active equity is more profitable in the long term: Peter Lynch (1944), Magellan fund manager, once said that "the great advantage of investing in stocks, for those who accept the uncertainty, is the extraordinary reward for having reason. " From 1871-1992 and in spite of all bankruptcies, recessions and crises, stocks outperformed bonds in 80% of periods of 10 years and 100% of 30-year periods. Moreover, equities has resulted thirty times more profitable than bonds. The explanation is that when you buy shares you are buying a part of a business and is therefore part of its growth and expansion. "The bond investor is only the nearest source of money and the best we can hope for is to get it back with interest," says Bestinver AM on publication.
Real estate assets also increase the purchasing power of long-term investor, but not as consistent as stocks. As for raw materials, possibly the worst real asset returns over the long term due to its high cyclicality.
2) active equity is less risky in the long term: Indeed, and although it may seem paradoxical, the target equity is less risky to invest long-term, since its evolution is linked to economic growth and corporate profits . Instead government bonds depend on economic policies governments adopt q ue corresponding, often inflationary and therefore destructive of value to those "nominal assets" that do not incorporate price inflation. As an example, draws Bestinver Argentine investors. The investor in Argentine government bonds in 2001 lost 70% of their savings and have not since recovered, while the initial equity investor lost 60% in the same year and then not only recover quickly, but multiply by nine investment in five years. Moreover, the Argentine bond is approximately the same price as marked at the outset of the crisis. And, according to the manager, history is full of examples of very damaging inflationary periods for investors in all types of bonds (Argentina in 2002 and in the 80s and 90s; Russia in the 90s, Spain in the early 70, just as the U.S., or Germany in the 20s).
3) Few managers get beat market indices in the long run: Get an average annual return of over 10% that offers long-term stock market is not easy. In fact only 9% of American managers has managed to outperform the S & P 500 over 16 years (1981-1997). The fundamental reason is Bestinver is "the lack of discipline and the continuous changes of strategy they incur most fund managers", who often succumb to fads and phobias of each moment. Be true to the investment philosophy both in good and in bad times is one of the keys to obtaining a satisfactory long-term performance. History shows that the average fund manager tends to go wrong with your investment decisions and guided heavily by short-term economic forecasts. Thus, the different minima of the bag have been coinciding with maximum liquidity positions equity funds: 1970, 1974, 1982, 1987 and 1990.
4) Investment in setting produces higher returns than the indices in the long run: "All intelligent investing is value investing: buy something for less than it's worth," said Charlie Munger once (1924), vice chairman of Berkshire Hathaway . Among the different schools of management, "value investing" is the only one that brings together a group of managers who manage to beat the stock market long term and consistently. According to investment firm Ibbotson Associates, value investing has overtaken from a differential growth rate of 5% since 1932.
It is estimated that the investment value concentrates only between 5% and 10% of world capitalization by 200 managers, especially in North America and investors have achieved this common philosophy beat the market long term, although each with its own strategy.
5) The volatility and liquidity of an action are not representative of the risk: Friedrich A. Von Hayek (1899-1992), once said that "Wall Street used the CAPM model and other ways to reduce the uncertainty to a quantifiable risk. But only measure what is measurable, no matter what. " Thus, the risk that an investor takes when investing in shares is not determined by the volatility that has been in the past, but by the possibility of a permanent loss of value associated with the business of the company. Thus a volatile trading does not make a firm more risky but allows the investor to buy it at a time when the alteration between value and price is higher.
Neither the size or liquidity risk is representative, because in principle it is always easier to find major differences between value and price in small companies than in blue chips, as they are less analyzed. In fact, it has been shown that small caps are more profitable than large firms in the long run, but not necessarily more risky.
6) The stock market crises are inevitable and allow a significant value creation: As John Templeton (1912-2007), philanthropist and founder of Templeton Funds Financial, "the four most dangerous words in investment history to have been: this time is different. " Although the long-term actions are most profitable assets and secure, the history of the stock market is full of dramatic episodes. The value investor has to understand that uncertainty will always be present when investing in stocks, as strong or scilaciones are inherent to the market and investment strategy based on these oscillations is a mistake in the long term. However, staying true to the investment strategy during such episodes allows a significant value creation.
In the past 40 years the equity markets have faced several oil crises, many armed conflicts, various financial scandals, bankruptcies thousand and four major stock market crash. And despite everything, the S & P has provided an average annual rate of 9.3% since. Even from the crisis of 29, in less than four years an investor would have earned a higher return than investing in Treasury bills.
In my next article I will comment the last 6 value principles.
A greeting.

IMF cuts growth forecast for China and warns of the credit problem

The Fund, which last month had placed the growth prospects for the Republic at 8% this year and 8.2% next, now estimates that the economy of this country will only increase by 7.75% this year and in 2014.
The IMF has doubts about the quality of Chinese investment by the rapid increase créditoEn a press conference in Beijing at the end of their annual mission to evaluate the progress of the Chinese economy, the Fund Deputy Managing Director David Lipton, attributed the cut in estimates of the weakness of the global economy, which has reduced the appetite for Chinese exports.
Lipton said the rapid growth of social financing, an indicator of credit available has grown very quickly, which "raises concerns about the quality of investments and their impact on the ability to repay the loans."
In particular, concerns increase while the increase represents "a rapidly growing part of the credit flows through parts unless supervised financial system."
The financial and monetary policy developed by Beijing is "appropriate" in this sense, Lipton found that one of the risks is that the loans are intended for investments "that are not sufficiently useful for the country."
In his view, control the overall growth of social finance is a "priority" will require greater oversight and accountability of investors for the decisions they make.
These policies may slow growth in the short term, he admitted, but stressed at the same time support the transition to a more sustainable model of growth.
However, Lipton insisted that financial and monetary policy developed by Beijing is "appropriate".
If this year's growth were to fall below the targets? Chinese government has set a target of 7.5 percent for this year?, The Fund recommends using a fiscal stimulus that favors income and domestic consumption.
The new Chinese government which took office in March is preparing a series of economic reforms that intends to present in October and which may include, among other things, greater openness to private investment and measures to promote the development.
Growth has become too dependent on the continued expansion of inversionesEntre detected problems are international financial institution which growth [...]

How the International Monetary Fund work

To get in history, the International Monetary Fund was created in 1945 in the United States, and its main objectives are to promote international monetary cooperation, facilitate international trade, and reduce, ultimately, poverty. It also conducts economic policies international regulatory and conciliatory. It is part of the United Nations being an intergovernmental organization made up of 187 members. Headquartered in Washington DC, but has several offices around the world.

IMF Performance

• The main objective of the International Monetary Fund is to ensure the stability of the international monetary system that allows member countries, and therefore its citizens transact with each other, which makes maintaining a stable financial system, sustainable and balanced.
• For this, the International Monetary Fund provides funding to member countries to improve the margin of maneuver of each country in relation to its balance of payments. Between national authorities and the International Monetary Fund made an action plan, ensuring effective both for its compliance.
• It also provides technical support and does a great job as a consultant to member countries to develop effective economic policies, for example on tax administration, monetary and exchange rate policy, supervision and regulation of banking systems and the regulations governing them.

IMF Resources

• Currently, the countries to become members of the International Monetary Fund, quotas must deposit called "subscription fees", which are directly related to the economic capacity of the country.
• These assessments determine the economic aid that the Fund will provide each country as well as their right to vote in decisions about regulations. Thus, the higher the contribution of a country, the more power on joint decisions and have more financial aid when tackling a crisis.
• When a country needs financial aid, IMF gives 25% of its shares, with the country's commitment to return within a period ranging from 3 to 5 years. It is expected that the country must repay the loan as soon as possible to not leave without credit to other member countries.
• In the past, obtaining resources from the International Monetary Fund was made by obtaining the interest on loans outstanding, which made it less effective and solvent, then opting for the model that is currently running .

What are the criteria of banks to lend

Unlike what banks and preach the good credit history of a customer is the most important when lending to this, but taking into account factors that are related to the ability to repay the loan voluntarily or necessity, and that should be very clear.

The ability to pay

The business of a credit institution not sue their debtors and keep their property in the event of default, which also usually results in losses, but to collect the amount borrowed and the interest and fees on time.
For this reason, the main criterion for granting loans is that the applicant can meet the periodic installments. Generally, in the case of mortgages, the monthly fee should not exceed 35% of the borrower's monthly income and your household.
If it is a loan in the medium or long term, banks and fixing the type of employment contract that the customer has, in addition to the strength of the employer. If this does not convince them, may require hiring a payment protection insurance, for example.

The warranty

Second, to ensure that in case of default can recover the borrowed capital and interest, the guarantee granted is very important. If it comes to purchasing a home, precisely the mortgage on the property is essential because the loan shall not exceed 80% of the valuation of this.
In other cases, especially whether to grant loans for amounts higher or long periods, you may require the financial institution, for example, the guarantor, that is, someone other than the client is committed to your estate to pay the debt if it does not comply.
It is also usual for the agency credit loans is fixed in current assets of the applicant, that is, both money and other personal property such as stocks or jewelry that may eventually be left with the first, as a garment, and use it to collect the debt.