donderdag 18 oktober 2018

Pilots of Fortune

Dear Reader

The “reach for yield” – where investors take on more risk to scrape ever smaller returns – continues, despite the Federal Reserve and the Bank of England raising rates. It’ll take many more rate hikes without something breaking before we reach any kind of “normality” in markets – if that’s even possible any more.

And so our journey through abnormal markets continues. One of the strangest (and bravest) reaches for yield that I’ve observed, are investors crowding into leasing aircraft to make money. Asian sovereign wealth funds got to the new aircraft leases first, so private investors have been forced to reach even further – to the aged commercial aircraft market.

Here they lease “end of life” planes (17-25 years old) to make returns. As each plane has its own flight history, each lease pays different rates: the less landings the lower the rate, as it’s the landings which really age an aircraft.

Such risky strategies are of course only embarked upon by the large investors. What yield can smaller investors reach for?

Well, despite the recent volatility rollercoaster we’re seeing in markets recently, some trades that have made money since 2000 continue to yield returns…

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Spread betting carries a high level of risk to your capital. It is not suitable for everyone. Tax treatment may be subject to change in the future. Forecasts are not a reliable indicator of future results. Forecast based on betting £10 per point. Always seek personal advice if you're unsure about the suitability of any investment.


I live beneath a flight path that leads to Heathrow. I’ve access to the roof of the building I’m in, and I’ll often go up there to watch the sunset with a beer.

On a clear evening you can always see four airliners on the path. As soon as one plane disappears on to the horizon, another will have appeared on the other side of the sky.

Although the planes approach the path from different directions, they all converge on to the same path. It’s a perpetual stream of planes, funnelling into the horizon hour after hour. You could bet on the path continuing, and only lose money in the event of adverse weather, or a terrorist attack.

This actually forms the premise to Eoin Treacy’s Reflex Trader. There are flows of money that reliably and perpetually enter markets that follow a certain “flightplan”. You can bet on these flows having a reflexive response in the market, and yield a return every couple of weeks from it. Adverse market weather and terrorist attacks will also disturb this flightplan – the strategy isn’t risk free.

But even through the mayhem in markets last week, these flights of capital made it through to the horizon – and the strategy made a significant profit.

If you’re interested in becoming a “Pilot of Fortune”, you can learn more here. But remember the risks before you climb into the cockpit.

All the best,

Boaz Shoshan
Editor, Southbank Investment Research

How Trump’s “Right-Hand Man” Drove Sears Into the Ground

Time alone – oh, time will tell
You think you are in heaven, but you living in hell

– “Time Will Tell,” Bob Marley
HAMILTON, BERMUDA – Where are we? Heaven or Hell?

Bermuda feels like Heaven. The sea is a bright, vivid blue, with clear water in coves and harbors. The sky is a lighter blue, with wispy clouds here and there.

The weather here seems to be much like that of Florida or the Carolina coast, but moderated by the surrounding ocean. Not so hot. Not so cold.

But the Florida coast is flat… In order to have any view at all, you either have to be right on the water or up in a high-rise. And even then, the Atlantic beach is like a ribbon running straight down the shore, with a line of houses and apartment buildings hard up against it.

Here in Bermuda, the beaches are flanked by rocks and cliffs, with rose-colored sand… gentle hills… islands… bays… and inlets. And there are views from almost everywhere… out over the harbors, the lighthouse, and the sparkling seas.

A view of Bermuda from our editor’s hotel room
Read full article

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