Academics and Bitcoin - a curious Mix

On a day when there is a report out about the confused approach of regulators regarding the $200 billion 'cryptocurrency' market another report caught my eye: Academics study the probability that bitcoin's price will fall to zero - in one day! But a similar calculation would be to find the probability that a meteor hits the earth and wipes out all life - interesting but pretty useless. Cryptocurrencies serve those in failed states quite well, in addition to criminals and tax cheats. Use your common sense!
How likely it is that bitcoin will become worthless? (CNBC)

Meagre Performance for Private Banking Clients

Private Banking clients find it notoriously difficult to obtain meaningful performance comparisons. Private Banks or Wealth Management departments are reluctant do showcase their performance. To some extent they are justified by arguing that each client requires a different approach as the risk tolerance or tax situation varies in each case. On the other hand, this can easily be used as a smokescreen to disguise poor performance before or after the client engages the firm. The solution for this dilemma should really be that fund management firms offer model portfolios that clients can choose if they are happy with the parameters that are set out in the investment rules for these model portfolios. Clients would then have a choice between a quasi-discretionary approach or a standardised formula that can be subjected to stringent performance evaluation. A look at this survey conducted by a magazine in Austria offers a shocking insight into the poor performance that clients experienced during the past 10 years. Most of the managers just were able to scrape together an annualised performance of around 3-4 per cent. Interestingly it made little difference whether to portfolio was deemed to be 'conservative' or 'dynamic'.

How much should you rely on a prospectus?

We always advise against excessive reliance on written marketing material. Glossy brochures can be deceiving and should not divert the investor's attention from the crucial aspects of safety and performance. The same can also be said for impressive premises, fancy conferences and well-tailored suits worn by your financial advisers. But some clients may think that a formal prospectus, seemingly approved by the regulators, may be in a different league and give an official stamp of approval on the investment product that is suggested to be put into a portfolio. A recent court judgement in Austria gives a warning in this respect. The regulatory authority there stated that while it checks the formal correctness of an investment prospectus it does not verify the actual facts that contained in it.

Slippery Slope to expropriation?

Reports that authorities in certain countries have begun to limit or control the purchase and sale of gold indicate that the political kleptocracies ruling in most countries will stop at nothing to keep their wasteful spending policies going. As always, the lame excuse of combatting money laundering provides a convenient fig leaf - when the whole world knows that ill-advised government policies are the real cause of most - if not all - major crimes.