Crash

Here's Why Dumping Risk & Buying Cash Might Be The Smartest Move This Year

Here's Why Dumping Risk & Buying Cash Might Be The Smartest Move This Year

It's been an extremely busy first week of 2016 for Business Of Finance. Global markets are in a state of frenzied chaos, much like a chicken running around without its head.Only this time every risk asset has been sold with reckless abandon while liquidity is conversely bid to the moon. Anyone who shorted risk, went long volatility, and stayed in cash since Christmas week would be gleefully grinning at the poor folks who are trapped in 2015's outdated ideologue 

While we are hard pressed for time, we feel we need to put this piece out to give readers a first glance of what 2016 might be like for the markets all across the world. We have a feeling 2016 may be markedly different from the past 5 years where cash might actually be the best performing asset. Yes, being in cash is a position in and of itself.

In layman's speak, you ether go big or go home in 2016. At least that's what we think. You could make a hack a lot of profits or loose your shirt in the kind of markets we've been greeted with so far. So buckle up, sit tight, sell risk and buy cash.

Guest Post: China Is Not What It Seems

Guest Post: China Is Not What It Seems

On June 12, we saw carnage in the Chinese stock markets. The Shanghai composite has since tumbled in just three weeks, 30% from its seven-year high, wiping out more than $3 trillion worth of wealth.

What is even more curious is the stock market boom starting in June 2014, which saw the index surging up 110% to a seven-year high of 5166 points in June 2015, just before the crash.

Does this irrational exuberance in the Chinese stock markets make sense, especially with arguably ugly economic figures?

The fear of losing out in the great bull run has caused many young Chinese investors to employing excessive leverage. Over the past few months, margin finance has risen from a mere 1 trillion yuan to 1.46 trillion yuan in march 2015. 

And there we have it. The equation explaining the bull run in the Chinese market: Increase in retail investor participation + increase in leveraged stock trading.