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Sell stocks, ditch gold: why buying bankers is the safest investment
http://www.telegraph.co.uk/finance/c...nvestment.html
These are difficult times for savers, with interest rates low, stock prices frothy and gold at historic highs. Luckily, I have a foolproof investment plan: I intend to buy a banker.
I admit that investing in individuals, rather than securities or commodities, sounds unconventional; there are a few complexities, which I will address later. First, though, consider the concept.
As an investment, the banker has demonstrated its ability to hold its value (sorry if that 'its' sounds impersonal, but I'm treating the banker purely as a financial asset here) in periods of crisis and downturn as well as in booms. Yet it does not share the low-yielding characteristics of most defensive instruments.
. . .
In the US, where, I would argue, the modern banker product was first developed, Morgan Stanley made only $1.7bn in 2008, yet the bank nevertheless paid out $4.5bn in bonuses. The Citigroup banker performed even better, in relative terms, accruing bonuses of $5.3bn in aggregate, even though the institution was $27.7bn in the red. In other words, bonuses accounted for nearly 20pc of Citigroup's losses. (Obviously, in this example, the low-yielding retail banker is to be avoided at all costs.)
. . .
In fact, exposure to individual bankers is inherently risky. The undoubted strain of the job may get to them. A heart attack could prove disastrous, but even a decision to pursue a less pressurised career as a fund manager means a nasty hit on yield. As so often in these situations, the answer is a spot of financial innovation. Rather than buying an individual banker, the best plan is to club together and securitise a bunch of them. A bond issue of 100 units, backed by a pool of 110 bankers (please note the highly conservative 10pc over-collateralisation) should, according to my complex mathematical modelling, ensure that even if the natural attrition of bankers is twice the historic level recorded since 1979, the investment will still be highly profitable.
. . .
http://www.telegraph.co.uk/finance/c...nvestment.html
These are difficult times for savers, with interest rates low, stock prices frothy and gold at historic highs. Luckily, I have a foolproof investment plan: I intend to buy a banker.
I admit that investing in individuals, rather than securities or commodities, sounds unconventional; there are a few complexities, which I will address later. First, though, consider the concept.
As an investment, the banker has demonstrated its ability to hold its value (sorry if that 'its' sounds impersonal, but I'm treating the banker purely as a financial asset here) in periods of crisis and downturn as well as in booms. Yet it does not share the low-yielding characteristics of most defensive instruments.
. . .
In the US, where, I would argue, the modern banker product was first developed, Morgan Stanley made only $1.7bn in 2008, yet the bank nevertheless paid out $4.5bn in bonuses. The Citigroup banker performed even better, in relative terms, accruing bonuses of $5.3bn in aggregate, even though the institution was $27.7bn in the red. In other words, bonuses accounted for nearly 20pc of Citigroup's losses. (Obviously, in this example, the low-yielding retail banker is to be avoided at all costs.)
. . .
In fact, exposure to individual bankers is inherently risky. The undoubted strain of the job may get to them. A heart attack could prove disastrous, but even a decision to pursue a less pressurised career as a fund manager means a nasty hit on yield. As so often in these situations, the answer is a spot of financial innovation. Rather than buying an individual banker, the best plan is to club together and securitise a bunch of them. A bond issue of 100 units, backed by a pool of 110 bankers (please note the highly conservative 10pc over-collateralisation) should, according to my complex mathematical modelling, ensure that even if the natural attrition of bankers is twice the historic level recorded since 1979, the investment will still be highly profitable.
. . .