"you need to have a longer time horizon" roughly translates in my book in "Run for your lives !!".
For one, if you are a final saver... you rarely HAVE a time horizon, nor you need one. Incidentally that's proof of who wrote #MIFID.(/)
MIFID questionnaires have a mandatory section on time horizon. Why that measure? because while for an individual saver that concept is basically meaningless, for those meant to be KEPT from pushing unnecessary risk onto savers it's daily bread.(/)
Banks indeed have time horizons and time preferences well and truly planted into their brains since they have a teeny weeny share capital, and finance their assets through the issuance of debt. They indeed try to match maturities across assets and liabilities. (/)
Hence when regulators had to avoid them selling whole life monthly life policies to 82 year old grannies (been there, seen that), the regulators purposely put the concept in a way which is meaningless for people, but second nature to their flock of wild sheep. (/)
When I say that time horizons are meaningless for savers, I mean this: in debt and generally across asset classes, time to maturity is ONE of the risk aspects. (/)
Unless an individual has a future fixed liability like banks (i.e. mortgage, retirement in case it's not provided for by the state or the employer), asset maturity is a very weak aspect to consider. Raise your hands those who correctly predicted the present five years ago.(/)
See? people usually don't know within a reasonable accuracy range where they WERE ten years ago. Why should they know know if they prefer 3,5, 10 year time horizons?
The point is, the assumption is that they would bear stoically any loss before the picked horizon.(/)
Sorry, that's pixie dust carried to you personally by the tooth fairy. people will squeal like slaughtered pigs if they lose 30% irrespective of the time horizon. Ah, do you want to know the time horizon if the poor sod who manages your "long term opportunities fund"?(/)
One month, tops. if he or she screws up another monthly performance vs. Benchmark after the first monthly one, he is a goner, and your "long term view" be damned.@INArteCarloDoss @petunianelsole @AvidCommentator @AlessandroPonz4 @jeuasommenulle @CNBCJou @DavidBCollum

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More from @gbponz

Mar 12
Richard...sorry but I disagree on that. Deposit insurance is the most worthy and LESS costly of banking supervisory features, but it needs to have a maximum, and I will tell you why. (/) @INArteCarloDoss @Banqkys @MarketElf @GrayConnolly @jeuasommenulle @AlessandroPonz4
Deposit insurance is there to avoid runs on banks, where depositors all want to cash in all at once. But the key word is "cash", i.e. the number each of us sees at the #ATM machine or on the bank site as his own cash balance. However that's not cash. (/)
I have seen grandiose public plans about financial education, and deposit insurance is an ex post measure.. non one vaccinated citizens by telling them the truth: "when you deposit cash at a bank, you are LENDING them the money (which ceases to be yours). The bank invests it."(/)
Read 13 tweets
Mar 11
Eric, we've been through a decade of easy money, finance centric solutions of 2008 which was the key to the deindustrialization of the west. Now to some extent is better and to some is worse.(/)
The better part is that goods producing companies have NEVER returned to the blind trust in the banking system they had before. Less leverage, and slamming the door in bank salesmen's faces helped. (/)
Of course there is a whole section of equities which are more financial than Casino chips, but with #Zirp and #NIRP that couldn't be helped. I am not so pessimistic about the industrial base in the #US (#Europe is a different Bedlam). (/)
Read 7 tweets
Jan 5
piece 1: #Olkiluoto3 world-nuclear-news.org/Articles/Olkil…, with its yearly production specs, a brief history of its cost overruns etc... and its 60 year design life. (/)
Piece 2: an offshore wind farm big enough to have similar peak production, its attendant connections between individual windmills and the shore, plus all the attendant on-demand conventional production gas turbines on standby. plus expected life of the plant.(/)
Read 5 tweets
Jan 5
wsj.com/articles/exxon… People in the US have no clue at how effed up #EU legal system is. So allow me to tell you the nightmare scenario: (/) @INArteCarloDoss @CNBCJou @moutet @GemmaTognini @Jkylebass @ResearchRonin @eshow1969 @Halsrethink @DukeMarcude
It's not the first time that an #EU country imposes an extraordinary, TARGETED tax on energy companies profit. And as always, if there is a way to eff up, you can count on us Italians being the tip of the spear. One was imposed by then minister #Tremonti in June 2008. (/)
gazzettaufficiale.it/eli/id/2008/08… in it, there was a surtax on only energy companies, quite similar to what it is proposed here. That law was then declared unconstitutional in 2015... only for the future. (/)
Read 11 tweets
Jan 3
A mix of desperate need and marketing. It takes a willing suspension of disbelief to think that institutions the size of #Blackrock or #Vanguard actually manage money. To all practical purposes they are barges down a river, they depend on the current. (/)
As long as markets are reasonably favorable, that is not readily apparent. Amazingly, even events like 2022, with BOTH bonds and stocks falling more or less equally, are not a problem. That changes if one of two things happen:(/)
1. Bonds tank while equities lose small change:
2. For some reasons savers get rid of intermediaries and invest directly.

Both flavors of #MIFID work against 2. I won't even wonder if that's collateral damage or it was by design. (/)
Read 5 tweets
Nov 20, 2022
#Italy DECLARES, according to #Eurostat principles, an higher GDP etc.
Yet, as @michaelxpettis asserted today about #China;
1. Most of it is "directed" by the government;
2. "Government" GDP measures activity, not value added, and it's usually one for one with debt. (/)
As such, just google "Italian GDP and Debt to GDP" , and see what happens; #Italy has lost two decades vs. The rest of the #EU , in a "the tortoise and the SLOWER tortoise" parody of "the Tortoise and the hare". (/)
In fact, it could be construed that #Italy's business model is this: compressing sector growth from future years into the present one forcibly ( see the 110% house energy efficiency fiscal incentive), coupled with a "private success must be punished" bent.(/)
Read 7 tweets

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