Wednesday, March 12, 2014

Ukranian Market Madness

Chart from
Amazing how often investors just don't learn.

Catching back up on Ukraine we’d like to point out that on December 15 we posted our observations about the country’s spiking overnight interest rates. When banking systems destabilize the canary in the coal mine is almost always the lending rate between banks. The overnight rate spike foreshadowed that things in Ukraine were about to go from bad to worse. Fast forward to today and the whole world is aware of what has transpired and watching to see what happens next. Nonetheless, investors seem to be slow learners as evidenced by this chart of Ukranian bond prices. Zero Hedge who deserves credit for the story notes that Goldman Sachs actually recommended to clients that they buy Ukranian bonds.

Big bailed-out institutions are completely out of touch with reality. Clients that still invest through these firms should really think twice about the type of investment advice they are being given. Not only could your institution be completely botching their analysis they could actually be on the opposite side of the trades the recommend for you. Using an independent asset manager that takes the same risks as a client and thus only makes money when a client makes money is the best way to go. That's how we operate and we wouldn't have it any other way.

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