The Rules of Investing: The virus that affects all assets

When a young Charlie Jamieson arrived at work in London on September 11^th, 2001, little did he know how much that day would affect his views on markets. At the time, he was trading US Dollar bonds from Merrill Lynch’s London office, having just left the New York office three weeks earlier. It was a harrowing time, but it wouldn’t be the last time that he faced a major catastrophe as an investor, later managing Euro portfolios through the GFC and the Euro Crisis. While many investors would remember the equity sell-offs that followed, these crises were often centred around debt markets. But it’s not just in times of crisis that rates matter. As Charlie explains in the full podcast, rates are the virus that affects all assets...

Topics discussed:

• The lessons learned from investing through major crises
• What the world would need to look like for Jamie Dimon’s prediction of 5% rates in the USA to come true
• The ‘bondcano’ scenario; the truths and misconceptions that underpin this narrative
• How interest rates affect the prices of all other asset classes
• What the credit cycle is, and where we are in the cycle today
• Why the Australian banks may raise rates ‘out of cycle’ (recorded before Westpac's recent announcement of a 14bps hike)
• What’s changed in markets recently that’s caused commentators to slash the forecasts for rate hikes in Australia
• What is “yield curve flatness” and what is it telling us right now?

Charts & books discussed:

Chart 1: Discussed at ~9 minutes

Source: JCB team analysis, based on data sourced from Bloomberg

Chart 2: Discussed at ~22 minutes

Source: JCB team analysis

Book: Discussed at ~45 mins 30 secs

• Reminiscences of a Stock Operator – Edwin Lefevre

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