Alternative Investments

Mon, 2017/07/31 - 2:42pm | Your editor
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Today we present a major report to our paid subscribers about how to invest in global bonds and alternative sectors like global infrastructure and real estate. My interest was piqued because Mohammed El-Arian, the former CEO of Pimco and the former investment chief of the Harvard Endowment is joining specialist alternative investment shop Investcorp's advisory board. Investcorp helps global fatcats and their fund managers, mostly from the Middle East, invest worldwide. El-Arian, an American, will help CEO Mohammed Alardhi, who is from Oman, find alternative investments suitable for the wealth funds, sheikhs, and royals of the region as well as other high-net individuals.

We can do it too, without the same level of fees and, so far, no man named Mohammed in my team.

 

But before discussing this technical report, here is news about my favorite central bank, that of Switzerland, which is quoted on the Zurich exchange. Every now and then a newsletter writes up the bank and tells its benighted readers to invest in it. But this is not a good tactic, because the Swiss version of the Fed invests to protect the interests of Switzerland, not its own shareholders. In the June quarter, the Eidgenossische Fed lost 6.7 mn francs, about $5.4 mn, because it buys dollars to support Swiss exports of cheese, watches, pharmaceuticals, and other goods. Buying dollars helps keep the franc from rising and hurting business outside the country.

It then rather mindlessly invests these dollars in a home-grown index of US securities, mostly stocks. As we have pointed out already based on reports on instutitional shareholders, the Swiss CB just tries to buy the entire US market, rather than selecting individual shares by any criterion used by analysts. And they often wind up owning non-US stocks (notably Israeli ones, but also ones from Euroland) because they are quoted on the NYSE. So the impact on the franc is being undermined by the CB.

In Q2 despite the official level of Wall Street having risen across the board, the Swiss managed to lose money because they bought the market rather than trying to buy winners, like the US tech stocks.

They also lost because they loaded up on Israel's leading blue chip,

 

So, nein, non, no, you don't want to be a shareholder in the Swissie CB. More about what this means for our own portfolio follows for paid subscribers along with news from Israel to Germany to Pakistan, Hong Kong to Mexico, Spain to Italy, and a couple of reports and one trading alert.

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