Special Guest: Tim Price is Director of Investment at PFP Wealth Management in the UK, an independent asset management and financial planning practice. He was formerly Chief Investment Officer - Global Strategies at Union Bancaire Privée in London, and previously Chief Investment Officer at private bank Ansbacher & Co.
Tim has 18 years experience of both institutional and private client wealth management. A graduate of Oxford University, his focus is absolute return investing using multiple asset classes, including so-called alternative investments. Working with his prior employers he has been shortlisted for five successive years in the Private Asset Managers Awards program and is a previous winner in the category of Defensive Investment Performance. He was also shortlisted in the inaugural Spear's Wealth Management Awards 2007 in the category of Asset Manager of the Year. An outspoken and sometimes irreverent commentator on financial markets and the asset management industry, Tim is also a regular columnist for Money Week magazine and maintains a weblog, The Price of Everything (http://thepriceofeverything.typepad.com/) and edits Price Value International.
PODCAST - 26 Minutes
Financial Repression
"Financial Repression is government stealing from savers and the future!"
"The single biggest problem of our times economically, is that for the last 40 years there has been an unsustainable buildup of credit expansion throughout the developed world ... and we have reached the end of the road new. Every policy by governments and their agents (the central banks) is too a) Kick the Can Down the Road and B) to steal from savers to keep this bandwagon rolling!"
Three Alternative Approaches to Attempt a Resolution
- Generate Sufficient Economic Growth to Keep Servicing the Debt,
- Repudiation or Debt Default,
- An Explicit Policy of State Sanctioned Inflationism.
Approach #1 and #2 or no longer realistically viable, leaving governments with only option #3. The last options has historically always been the option governments of fiat based systems have resorted to throughout the ages because of a lack of "political will and discipline".
Tim believes Japan is presently the 'dress rehearsal' and the rest of the world will be the main event.
A "Four Legged" Investment Approach
The pragmatic response - Ignore indices and concentrate on value.
"Investors do not make mistakes, or bad mistakes, in buying good stocks at fair prices. They make their serious mistakes by buying poor stocks, particularly the ones that are pushed for various reasons. And sometimes - in fact very frequently - they make mistakes by buying good stocks in the upper reaches of bull markets." - Benjamin Graham
- High Quality Debt,
- Deep Value Listed Equity,
- Uncorrelated Assets and Systematic Trend Following (CTA),
- Diversified Real Assets
Tim recalls the words we last heard in the dark days of 2008:
"When you're a distressed seller of an illiquid asset in a market panic, it's not even like being in a crowded theater that's on fire. It's like being in a crowded theater that's on fire and the only way you can get out is by persuading somebody outside to swap places with you."
This is precisely what occurs when the regulatory pressures and un-natural forces of FINANCIAL REPRESSION finally ends.
