Observing interest rates with Jim Grant
James Grant of Grant’s Interest Rate Observer famously observed that gold was “the refuge of idiots”.
James Grant founded Grant’s Interest Rate Observer in 1983 following a stint at Barron’s, where he originated the “Current Yield” column. James is also the author of “Bernard M. Baruch: The Adventures of a Wall Street Legend” (Simon & Schuster, 1983) and “Mr. Market Miscalculates” (Axios Press, 2008) among others.
If you think that lending money to the US government for 2.40% today means the Italian government shouldn’t also be able to borrow at 2.70%, then you will be very interested in spending half an hour watching this Forbes interview with James Grant.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Martin Finn
:
Required rate of return is part of your IV calculations.
Since publishing Value.Able in 2010, have you reduced the RRR that you would recommend to investos in the current market?
I note that 10 yr bond yields in Australia are now 200 basis points lower than in 2010. No-one seems to think rates will increase much for several years.
Investors tired of cash yields of 2.5% before tax ( and negative after inflation and tax) may yet push the likes of TLS and CBA a lot higher by reducing their RRR.
Roger Montgomery
:
Haven’t changed the methodology. Watch out for fat tales!!!
Dario Petkovic
:
Thanks for sharing this Roger good content as always. Jim is a huge proponent of ‘sound money’ that is gold
david maynard
:
hi Roger , this cuts through the fog of what the Fed are actually doing and gives us a cautionary tale of the long term consequences for the market of its actions.Beware of the lack of reward for credit risk and the too big to fail lie peddled by the bankers.