Sunday, August 4, 2013
Sunday, July 28, 2013
MONEY LOOSING VALUE. REAL EURO INFLATION DURING LAST TEN YEARS WAS 20,8%.
The annual euro inflation rate exceeds 2%. CP - inflation rate, during the last 10 years it was 20,8%. CONSUMER PRICE INDEX (CPI) is the best measure. For comparison during period 2003-2012 The EURO STOXX 50 Index, Europe's leading Blue-chip, returned 4,98%. EURO STOXX 50 Index highest price was on 2007-05-29 with return of 82,1% from 01-01-2003. European government bonds, denominated in euro from 2003 till 2012 (ten years) returned 46%. Paradox is that passive long-term investment into blue chip stocks brought return lower than inflation; The 100 years observation golden rule is to buy stocks on 1st November, sell stocks on 1st May. With such rule during last 2012-2013 ten years period return was 1,21%; Last five years were global crisis years and even though during the same blue chip stock prices reached historical highs. The reason was economic stimulus programs in U.S.A., U.K. and EU, and economic activities in Far East emerging economies; During major market downturns traditional industries stock prices traded at Market Price/EBITDA ratios of 4, while on average same stock trade at prices with ratios of 8-10; During last few years most attractive investments were in corporate bonds. Lyxor ETF EURO Corporate Bond from April 2009 up to August 2013 returned 30,3%. For comparison during the same period EURO STOXX 50 Index returned 12,2%; European government bonds, denominated in euro - 18%; There is an article on Bloomberg, which illustrates that in volatile markets Humans Beating Robots Most Since ’08 as Trends Shift: Currencies.
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