John Cameron's personal blog

Serious discussion about your financial position now - and in the future.

The Missing Link In Macroeconomics

Ever since the GFC, economists have struggled to explain events, to direct policy, or to accurately predict trends.

Could it be that their models (theories?) are missing something vital?

According to Richard Koo, economist with Nomura Research Institute, the answer is definitely, “yes”.

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Is Brexit A Tale Of Foxes, Hedgehogs And Forecasters?

Remember the Brexit crash? Probably not, as it was all over in a flash, and markets are now well above their pre Brexit level.

All of this happened despite predictions of woe by high profile “experts” who looked and sounded good in short grabs on the television and in the press. They had the ability (or more accurately “seemed” to have the ability) to cut through all the complexities and bundle everything into a few well turned phrases.

However, these forecasts of doom have joined the long list of failed forecasts.

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Brexit – Much Ado About Nothing.

Remember Brexit? That was the event a couple of weeks back, when the Brits voted to leave the European Union (or at least those living outside London, Scotland and Northern Island so voted).

I found the most remarkable part of the whole event to be some of the exaggerated claims of doom, scaremongering and outright rants of some forecasters and commentators. The stockmarket took a quick fall, but has since recovered to levels above where it was before. 

So much for the doom and gloom merchants. 

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How Big Is Your Buffer?

One of the issues that repeatedly crops up when dealing with clients is, “How well placed are you to deal with unforeseen expenses?” 

The expenses can range from relatively minor things such as an appliance suddenly failing, a minor car accident or a leaky roof, through to things far more catastrophic – a major illness, death of your partner, loss of job, marriage breakdown or any of a whole host of other things.

I started thinking along these lines, on reading a story in the Financial Review on 1st July. The story reported a survey carried out by the US Federal Reserve, to assess the resilience of American households if some financial shock occurred.

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Elections, Brexits and forecasts – making investment decisions in the real world

In Australia today, we must all make important investment decisions for our future wellbeing.

We have an age pension system that acts as an important safety net, but our superannuation system is lump sum, with individuals being ultimately responsible for how their money is invested.

When making those decisions, it is essential (but often difficult) to try to separate the “noise” from the “information”. So, what exactly is the difference.

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