Author Archive

Bubbleology – The Science of Bubble Money

 

On the 12th November 2014 – some 10 years after it was launched – lander module Philae which accompanied the Rosetta spacecraft touched down on Comet 67P/Churyumov-Gerasimenko (67P) to begin extra-terrestrial scientific observations. The on-board telemetry communicated back to Earth some 28 light-minutes away revealed that the lander had bounced twice off the surface of 67P. The first bounce may have lasted two hours and over 1 kilometre and is considered the largest space bounce in history which we would put it on a par with the incredible bounces in the US and Japanese stock markets this past month!

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Dividends – Back to the Future

 

SG Hinde UK Dynamic Equity ETN (50% Hedge) – HALF.L

 

We are delighted to announce that Hinde Capital has joined forces with Societe Generale (SG) to launch a next generation, ‘Smart Beta’ Exchange Traded Product (ETN) for professional and sophisticated retail investors.

 

HALF.L  is now listed on the LSE and has been trading LIVE since 16th May.

 

The SG Hinde UK Dynamic Equity ETN (50% Hedge) is an actively managed Exchange Traded Note (The ETN), which aims to accelerate the total return generated by a dynamic portfolio of high yielding UK stocks, whilst providing partial protection against market falls.

 

Unlike a regular ETN or tracker, this next generation Smart Beta product has a dynamic portfolio of equities that is actively managed by Hinde Capital according to our Hinde Dividend Value MatrixTM  (HDVMTM). Each quarter we will define a portfolio of 20 equally weighted UK stocks from the FTSE 350, which according to the HDVMTM offer the highest total return potential for the next quarter.

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Equities – A Rarefied ‘APP’mosphere

It’s getting hot up here! Equities are toast. We are ringing the bell on the global equity markets on the first day of TWTR: NYSE listing.    

 

We love the Internet, Social Media, Gaming, and software applications designed to run ‘ideas’ on smartphones and tablets.  We love their creativity and productivity but we don’t love the public valuations of their stocks. They have entered into the ‘APP’mosphere.  

 

What has driven these stocks higher – the power law of internet adoption rates, corporate debt growth, and credit availability are the first factors that spring to mind.  

 

Markets are where buyers and sellers simultaneously agree on price but disagree on value. There is subjective value and then there is objective value. Subjectively we object to these values.   This is an excerpt for the coming HindeSight Investor Letter November 2013 Equities – A Rarefied ‘APP’mosphere.

 

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Cyprus – Oh the Irony!?

In history seemingly innocuous events portend more serious outcomes – albeit we recognise them in hind(e)sight. This is the dramatic irony of history. Just as a single shot in Sarajevo, took out a largely unknown European aristocrat, Archduke Franz Ferdinand, who would have known then that the world would plunge into World War I. The Cypriot savers must have thought the authorities were being highly ironic, of the Socratic kind, when they were told they were receiving a bail-out, except it was a “bail-in”. I don’t know the Greek/Turkish for – you are having a laugh, but I bet that’s what they are saying. So what is a bail-in?

 

A bail-in takes place before a bankruptcy, and involves losses being imposed on bondholders, something that has rarely taken place throughout the GFC and euro crisis. In fact taxpayers (the government) have consistently bailed-out the private sector in full. The Cypriot bank rescue is no exception, except this time there is a bail-in and ironically again not of bondholders but of the depositors first. This is a direct contravention to the usual legal claims on the capital structure.

 

So there you have it – on Friday 14th March Cyprus became the 5th country to receive an EU bail-out (in), except this one was a bail-in but one with a significant and severe twist of fate. The Cypriot government in Nicosia is scheduled to vote on a EU bail-out plan which calls to extract a “tax” on bank depositors (savers) some €5.8 billion: 6.75 per cent for anyone with less than €100,000 in a Cypriot bank account, 9.9 per cent for anyone with more than that.

 

This is an unprecedented assault on individual property rights and every individual in the developed world should take notice, and far from stabilising the eurozone, the bail-out likely heightens contagion risk across the EU.

 

Why bother holding a bank account when your government can expropriate your savings? Far from containing a bank run in Cyprus it will exacerbate it, absent capital controls, and likely begin significant depositor flights across the European periphery.

 

These events I believe signify one of the most alarming developments in the Eurozone crisis and by dint the global economy since the financial crisis began.

 

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