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.
