2017 investment ideas are there any? · Labor intensity was the driver, but not any more 0,000...
20
2017 investment ideas – are there any? Andrey Movchan. 3/12/16.
Transcript of 2017 investment ideas are there any? · Labor intensity was the driver, but not any more 0,000...
2017 investment ideas – are there any?
Andrey Movchan. 3/12/16.
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Where is the cycle? - In commodities
0
1
2
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2
00
9
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10
2
01
1
20
12
2
01
3
20
14
2
01
5
Gold real prices Oil real prices platinum real prices
Inflation adjusted, normalized to 1 as of Y1968, prices of crude oil, gold and platinum in 1968 dollars
Back again
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Another cycle indicator
44000
46000
48000
50000
52000
54000
56000
58000
600001
98
4-0
1-0
1
19
85
-01
-01
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86
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87
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02
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10
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20
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20
14
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20
15
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real median household income, USD '000
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Monetary policy is inefficient – since 1997
-4,00%
-3,00%
-2,00%
-1,00%
0,00%
1,00%
2,00%
3,00%
4,00%
10
.1.8
7
2.1
.89
6.1
.90
10
.1.9
1
2.1
.93
6.1
.94
10
.1.9
5
2.1
.97
6.1
.98
10
.1.9
9
2.1
.01
6.1
.02
10
.1.0
3
2.1
.05
6.1
.06
10
.1.0
7
2.1
.09
6.1
.10
10
.1.1
1
2.1
.13
6.1
.14
10
.1.1
5
3 month real interest rates -15,00%
-10,00%
-5,00%
0,00%
5,00%
10,00%
15,00%
20,00%
10
.1.8
7
2.1
.89
6.1
.90
10
.1.9
1
2.1
.93
6.1
.94
10
.1.9
5
2.1
.97
6.1
.98
10
.1.9
9
2.1
.01
6.1
.02
10
.1.0
3
2.1
.05
6.1
.06
10
.1.0
7
2.1
.09
6.1
.10
10
.1.1
1
2.1
.13
6.1
.14
10
.1.1
5
real deposits growth rate
-2,0%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
10
.1.8
7
2.1
.89
6.1
.90
10
.1.9
1
2.1
.93
6.1
.94
10
.1.9
5
2.1
.97
6.1
.98
10
.1.9
9
2.1
.01
6.1
.02
10
.1.0
3
2.1
.05
6.1
.06
10
.1.0
7
2.1
.09
6.1
.10
10
.1.1
1
2.1
.13
6.1
.14
10
.1.1
5
M2 growth rate and CPI, the US
CPI consumer M2 growth rate
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
19
85
-10
-01
19
87
-03
-01
19
88
-08
-01
19
90
-01
-01
19
91
-06
-01
19
92
-11
-01
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94
-04
-01
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-09
-01
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97
-02
-01
19
98
-07
-01
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99
-12
-01
20
01
-05
-01
20
02
-10
-01
20
04
-03
-01
20
05
-08
-01
20
07
-01
-01
20
08
-06
-01
20
09
-11
-01
20
11
-04
-01
20
12
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-01
20
14
-02
-01
20
15
-07
-01
M2 velocity, the US
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Labor intensity was the driver, but not any more
0,000
0,050
0,100
0,150
0,200
0,250
0,300
0,350
0,400
Labor factor share in manufacturnig cost, the USA
0
20
40
60
80
100
120
140
Real output per hour, the US, manufacturing
70
72
74
76
78
80
82
84
86
19
84
-12
-01
19
86
-04
-01
19
87
-08
-01
19
88
-12
-01
19
90
-04
-01
19
91
-08
-01
19
92
-12
-01
19
94
-04
-01
19
95
-08
-01
19
96
-12
-01
19
98
-04
-01
19
99
-08
-01
20
00
-12
-01
20
02
-04
-01
20
03
-08
-01
20
04
-12
-01
20
06
-04
-01
20
07
-08
-01
20
08
-12
-01
20
10
-04
-01
20
11
-08
-01
20
12
-12
-01
20
14
-04
-01
20
15
-08
-01
The US industrial capacity utilization, %
75
80
85
90
95
100
105
Real unit labor cost index, the US
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Fixed capital of little need
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CPI growth looks quite linear
0
50
100
150
200
250
300
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.1.8
6
8.1
.87
6.1
.88
4.1
.89
2.1
.90
12
.1.9
0
10
.1.9
1
8.1
.92
6.1
.93
4.1
.94
2.1
.95
12
.1.9
5
10
.1.9
6
8.1
.97
6.1
.98
4.1
.99
2.1
.00
12
.1.0
0
10
.1.0
1
8.1
.02
6.1
.03
4.1
.04
2.1
.05
12
.1.0
5
10
.1.0
6
8.1
.07
6.1
.08
4.1
.09
2.1
.10
12
.1.1
0
10
.1.1
1
8.1
.12
6.1
.13
4.1
.14
2.1
.15
12
.1.1
5
Consumer CPI, the US
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Although CPI per industry is not
0
20
40
60
80
100
120
19
88
-12
-01
19
90
-02
-01
19
91
-04
-01
19
92
-06
-01
19
93
-08
-01
19
94
-10
-01
19
95
-12
-01
19
97
-02
-01
19
98
-04
-01
19
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-06
-01
20
00
-08
-01
20
01
-10
-01
20
02
-12
-01
20
04
-02
-01
20
05
-04
-01
20
06
-06
-01
20
07
-08
-01
20
08
-10
-01
20
09
-12
-01
20
11
-02
-01
20
12
-04
-01
20
13
-06
-01
20
14
-08
-01
20
15
-10
-01
CPI high tech equipment, the US
0
100
200
300
400
500
600
700
800
19
85
-01
-01
19
86
-05
-01
19
87
-09
-01
19
89
-01
-01
19
90
-05
-01
19
91
-09
-01
19
93
-01
-01
19
94
-05
-01
19
95
-09
-01
19
97
-01
-01
19
98
-05
-01
19
99
-09
-01
20
01
-01
-01
20
02
-05
-01
20
03
-09
-01
20
05
-01
-01
20
06
-05
-01
20
07
-09
-01
20
09
-01
-01
20
10
-05
-01
20
11
-09
-01
20
13
-01
-01
20
14
-05
-01
20
15
-09
-01
CPI education, the US
0
50
100
150
200
250
300
350
400
450
500
19
85
-08
-01
19
86
-12
-01
19
88
-04
-01
19
89
-08
-01
19
90
-12
-01
19
92
-04
-01
19
93
-08
-01
19
94
-12
-01
19
96
-04
-01
19
97
-08
-01
19
98
-12
-01
20
00
-04
-01
20
01
-08
-01
20
02
-12
-01
20
04
-04
-01
20
05
-08
-01
20
06
-12
-01
20
08
-04
-01
20
09
-08
-01
20
10
-12
-01
20
12
-04
-01
20
13
-08
-01
20
14
-12
-01
20
16
-04
-01
CPI medical services, the US
0
50
100
150
200
250
300
19
85
-07
-01
19
86
-11
-01
19
88
-03
-01
19
89
-07
-01
19
90
-11
-01
19
92
-03
-01
19
93
-07
-01
19
94
-11
-01
19
96
-03
-01
19
97
-07
-01
19
98
-11
-01
20
00
-03
-01
20
01
-07
-01
20
02
-11
-01
20
04
-03
-01
20
05
-07
-01
20
06
-11
-01
20
08
-03
-01
20
09
-07
-01
20
10
-11
-01
20
12
-03
-01
20
13
-07
-01
20
14
-11
-01
20
16
-03
-01
CPI food and bev, the US
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And even sometimes flat
0
20
40
60
80
100
120
19
88
-12
-01
19
90
-02
-01
19
91
-04
-01
19
92
-06
-01
19
93
-08
-01
19
94
-10
-01
19
95
-12
-01
19
97
-02
-01
19
98
-04
-01
19
99
-06
-01
20
00
-08
-01
20
01
-10
-01
20
02
-12
-01
20
04
-02
-01
20
05
-04
-01
20
06
-06
-01
20
07
-08
-01
20
08
-10
-01
20
09
-12
-01
20
11
-02
-01
20
12
-04
-01
20
13
-06
-01
20
14
-08
-01
20
15
-10
-01
CPI high tech equipment, the US
0
100
200
300
400
500
600
700
800
19
85
-01
-01
19
86
-05
-01
19
87
-09
-01
19
89
-01
-01
19
90
-05
-01
19
91
-09
-01
19
93
-01
-01
19
94
-05
-01
19
95
-09
-01
19
97
-01
-01
19
98
-05
-01
19
99
-09
-01
20
01
-01
-01
20
02
-05
-01
20
03
-09
-01
20
05
-01
-01
20
06
-05
-01
20
07
-09
-01
20
09
-01
-01
20
10
-05
-01
20
11
-09
-01
20
13
-01
-01
20
14
-05
-01
20
15
-09
-01
CPI education, the US
0
50
100
150
200
250
300
350
400
450
500
19
85
-08
-01
19
86
-12
-01
19
88
-04
-01
19
89
-08
-01
19
90
-12
-01
19
92
-04
-01
19
93
-08
-01
19
94
-12
-01
19
96
-04
-01
19
97
-08
-01
19
98
-12
-01
20
00
-04
-01
20
01
-08
-01
20
02
-12
-01
20
04
-04
-01
20
05
-08
-01
20
06
-12
-01
20
08
-04
-01
20
09
-08
-01
20
10
-12
-01
20
12
-04
-01
20
13
-08
-01
20
14
-12
-01
20
16
-04
-01
CPI medical services, the US
0
50
100
150
200
250
300
19
85
-07
-01
19
86
-11
-01
19
88
-03
-01
19
89
-07
-01
19
90
-11
-01
19
92
-03
-01
19
93
-07
-01
19
94
-11
-01
19
96
-03
-01
19
97
-07
-01
19
98
-11
-01
20
00
-03
-01
20
01
-07
-01
20
02
-11
-01
20
04
-03
-01
20
05
-07
-01
20
06
-11
-01
20
08
-03
-01
20
09
-07
-01
20
10
-11
-01
20
12
-03
-01
20
13
-07
-01
20
14
-11
-01
20
16
-03
-01
CPI food and bev, the US 0
20
40
60
80
100
120
140
160
19
84
-04
-01
19
85
-09
-01
19
87
-02
-01
19
88
-07
-01
19
89
-12
-01
19
91
-05
-01
19
92
-10
-01
19
94
-03
-01
19
95
-08
-01
19
97
-01
-01
19
98
-06
-01
19
99
-11
-01
20
01
-04
-01
20
02
-09
-01
20
04
-02
-01
20
05
-07
-01
20
06
-12
-01
20
08
-05
-01
20
09
-10
-01
20
11
-03
-01
20
12
-08
-01
20
14
-01
-01
20
15
-06
-01
CPI apparel, the US
|
Oil consumption is driven by population size
y = 1156,8x + 66272 R² = 0,978
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
WORLD OIL CONSUMPTION IN 000 BBL A DAY
12,29 12,68 12,99 12,56 12,25
2013 2010 2005 2000 1995
World oil consumption per capita bbl a day
|
And the price driven by rather small changes in consumption
65000
70000
75000
80000
85000
90000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
WORLD OIL CONSUMPTION IN 000 BBL A DAY
Below trend – price falls
Follows the trend – price
stable
Over the trend – price grows
Below trend – price falls
|
Four major trends that persist through cycle
-
5,00
10,00
15,00
20,00
25,00
30,00
35,00
19
60
19
63
19
66
19
69
19
72
19
75
19
78
19
81
19
84
19
87
19
90
19
93
19
96
19
99
20
02
20
05
20
08
20
11
20
14
SHARE OF IMPORTS IN GDP, WORLD, %
0
5
10
15
20
25
30
35
40
45
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
POVERTY RATE IN %%, WORLD
15,0000000000000
20,0000000000000
25,0000000000000
30,0000000000000
35,0000000000000
40,0000000000000
19
60
-01
-01
19
64
-01
-01
19
68
-01
-01
19
72
-01
-01
19
76
-01
-01
19
80
-01
-01
19
84
-01
-01
19
88
-01
-01
19
92
-01
-01
19
96
-01
-01
20
00
-01
-01
20
04
-01
-01
20
08
-01
-01
20
12
-01
-01
CRUDE BIRTH RATE, WORLD, PER '000
$4 000
$5 000
$6 000
$7 000
$8 000
$9 000
$10 000
$11 000
19
69
19
71
19
73
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13
REAL GDP PER CAPITA IN 2010 USD, WORLD
|
The composition of value chain has changed dramatically
parameter 1990 2015 change
trade as %% of GDP 38 59 55%
imports as %% of GDP 19,3 28,1 46%
gross savings as %% of GDP 22,3 19,9 -11%
government consumption as %% of GDP 16,8 18,6 11%
household consumption as %% of GDP 60 61,6 3%
fixed capital formation as %% of GDP 22,6 19,4 -14%
agriculture AV %% of GDP 5,4 2,8 -48%
manufacturing AV %% of GDP 18,8 16,7 -11%
non manufacturing industry AV %% of GDP 14,4 9,6 -33%
services AV %% of GDP 61,4 70,9 15%
|
Great internal consumers/producers loss is ahead
Migration per year The EU ~ 2 mln MENA ~ 0 SSA ~ - 1 mln The US ~ 0,5 mln LatAm ~ - 0,5 mln EMEA ~ 0 Russia ~ 0
|
And in almost all countries
0
5
10
15
20
25
30
35
40
45
50
19
60
-01
-01
19
63
-01
-01
19
66
-01
-01
19
69
-01
-01
19
72
-01
-01
19
75
-01
-01
19
78
-01
-01
19
81
-01
-01
19
84
-01
-01
19
87
-01
-01
19
90
-01
-01
19
93
-01
-01
19
96
-01
-01
19
99
-01
-01
20
02
-01
-01
20
05
-01
-01
20
08
-01
-01
20
11
-01
-01
20
14
-01
-01
Crude birth rate, Turkey, per '000
0
10
20
30
40
50
60
19
60
-01
-01
19
63
-01
-01
19
66
-01
-01
19
69
-01
-01
19
72
-01
-01
19
75
-01
-01
19
78
-01
-01
19
81
-01
-01
19
84
-01
-01
19
87
-01
-01
19
90
-01
-01
19
93
-01
-01
19
96
-01
-01
19
99
-01
-01
20
02
-01
-01
20
05
-01
-01
20
08
-01
-01
20
11
-01
-01
20
14
-01
-01
Crude birth rate, MENA, per '000
0
5
10
15
20
25
30
35
40
45
50
Crude birth rate, China, per '000
0,0000000000000
5,0000000000000
10,0000000000000
15,0000000000000
20,0000000000000
25,0000000000000
30,0000000000000
35,0000000000000
40,0000000000000
45,0000000000000
19
60
-01
-01
19
63
-01
-01
19
66
-01
-01
19
69
-01
-01
19
72
-01
-01
19
75
-01
-01
19
78
-01
-01
19
81
-01
-01
19
84
-01
-01
19
87
-01
-01
19
90
-01
-01
19
93
-01
-01
19
96
-01
-01
19
99
-01
-01
20
02
-01
-01
20
05
-01
-01
20
08
-01
-01
20
11
-01
-01
20
14
-01
-01
Crude birth rate, LatAm, per '000
|
End of cycle ideas
• Three major facts determine the mid term future of the global economy:
– The number of active consumers will decrease;
– There will be no brand new growth trigger;
– The number of passive consumers will increase.
• Oil price, migration, current account disbalances – are false agenda
• Through next years the oversupply of money will persist;
– Do not confuse it with budget revenues!
• We are in the best times for borrowing ever
• Added value migrates into marketing and R&D, but more into marketing
• Trade share of GDP grows – barriers become problems for the builders
• For all countries domestic markets become insufficient
• Medicine and education are to be watched after
|
No surprise many years were disappointing
• Investment is rarely set for success in current world
• It is more luck than method
• Unless you agree for getting less and working more
• Or – you have an advantage
Indices 10 years average performance
10 years average annual volatility
MSCI World 3,1% 13,0%
RTS 2,1% 27,5%
DJIA (S&P500) 4,2% (4,5%) 13.3% (16.8%)
JPM MBI Global TRI 6,2% 12,4%
CASAM CTA Index 3,5% 40,9%
BBG NA REIT index 3,1% 3,4%
HFRI Index 2,3% 7,1%
0
1
2
3
4
5
6
36
,00
%3
4,0
0%
32
,00
%3
0,0
0%
28
,00
%2
6,0
0%
24
,00
%2
2,0
0%
20
,00
%1
8,0
0%
16
,00
%1
4,0
0%
12
,00
%1
0,0
0%
8,0
0%
6,0
0%
4,0
0%
2,0
0%
0,0
0%
-2,0
0%-4
,00%
-6,0
0%-8
,00
%-1
0,0
0%
-12
,00
%
Realizations of returns in 5-year investment in MSCI EM (1979 - 2013)
15 16
|
Certain and uncertain 2017
• Certain
– Rates will grow; but not much
– Debt will become more expensive; but not all and not much
– GDP will not skyrocket
– Inflation will not follow rates
• Uncertain
– Equity: no clear trigger for growth apart from money inflows
– China: huge imbalances but reality is not evident
– Europe: who is next?
– Russia – greenmail is dangerous
– Commodities: seem to stabilize?
– Sensitivity grew dramatically – what triggers to expect?
|
2017 investment ideas
• When money is in oversupply, everything becomes a lottery; good news – while money is in oversupply, there is always someone to purchase your ticket at a premium
• Three drivers of investment success remain in place: information; access; technology
• Do not invest in securities – invest in skills, in advantages, in abilities
• Complicated strategies may deliver; however they have much more risks embedded; the largest one is fraud; the second one is unprofessionalism; third one – black swans
• Global Diversification does not diversify anything anymore, correlations change rapidly: look not for uncorrelated, but for totally independent investments
|
Goals and potential champions
• There is nothing bad in “inflation +” returns; there is much bad in higher ones
• Short term debt proves to be safer than anything
• USD proves to be stronger over time, than any currency, however Fridman equation is against it currently
• Arbitrage works wherever the volatility exists; to exploit it you need huge infrastructure and talent
• Asymmetry plays may be efficient, especially in hedging instruments (selling puts as example); however one needs specific skills
• Remember: there is a great difference between a rule and an exception.
– As a rule, private equity as well as equity markets require a strong trigger for good returns – either a growth in demand, or new technologies, or major shortage. We’ve got none of that any more.
– Exceptions require nothing. Finding them is a matter of luck and skill together
