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Credence
Independent Advisors Asian stocks show improvement, upbeat US corporate
earnings

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Credence
Independent Advisors Asian stocks show improvement, upbeat US corporate
earnings

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Monday saw Asian stocks showing some improvement and becoming a fraction firmer. The change came after investors started focusing on the upbeat flow of US corporate earnings, just before a host of results, which are due for this week.

The investors have set aside geopolitical concerns for the moment.

The volumes kept low, however with the Japanese markets on holiday. MSCI’s broadest index of Asia-Pacific shares outside Japan increased by 0.24%, showing small gains for most markets across Asia.

The results which are due for this week include the reporting of a number of US companies; including Apple Inc, Mc Donald’s Corp, Coca-Cola Co and Caterpillar Inc.

The data from Thomson Reuters showed that of 82 companies in the S&P 500 that had reported earnings through Friday morning, 68% beat Wall Street’s expectations, roughly in line with the 67% rate for the past four quarters and above the 63% rate since 1994. The last week ended with the Dow Jones up by 0.9%, S&P 500 up by 0.5% and the Nasdaq up by 0.4%.

The US treasuries and German debt have remained well underpinned amid geopolitical concerns. However, on Monday US 10 year yields were steady at 2.48%. Whereas, the German bunds were yielding at just 1.16%, having neared all-time lows.

The downing of the Malaysian passenger plan on Thursday has sparked speculations about rising tensions between the west and Russia. Later today the UN Security Council is due to vote on a resolution aimed at condemning the downing of a Malaysian passenger plane. John Kerry (US Secretary of State) on Sunday put forward what he said was overwhelming evidence of Russian complicity in the downing of the passenger plane.

On the other hand, the Gaza-Israeli conflict has intensified and the military offensive so far has killed hundreds of Palestinians and 13 Israeli soldiers. John Kerry will be travelling today to meet with Egyptian officials and discuss the crisis.

The major currencies have started becoming steady now. The dollar index is steady at 80.513 and has retreated from a one-month peak seen last Friday, when the euro bounced off a five-month trough of $1.3491.

According to traders, buying interest below $1.3500 helped squeeze the euro up to $1.3530. The common currency should see solid support at $1.3460/80, an area that had provided a floor on several occasions in the past 10 months or so.

The Euro was at 137.09 yen after a five-month through of 136.71 and the greenback was at 101.30.

Gold which was swinging between $1,292 and $1,339 in the last week was now idling at $1,310.95 an ounce.

About Us

Credence Independent Advisors
was born from a compelling opportunity in the financial services world. In the ever changing dynamic world of financial services, it is important for us to tailor advice and solutions to individual needs. Clients need solutions that make them money and preserve their capital and advisors need happy clients with increasing wealth under management. By harnessing the skills of top quality experienced professionals and cutting edge technology, we are able to bring what was previously only available for multi-million dollar clients to a wider reaching client range and we have done this independently.

Why Us

Our business was set up to be compelling for all its stakeholders; including clients, staff and owners of the business. We offer a compelling experience to our client that delivers what they desire. We strive to fully understand our clients’ financial requirements by remaining in close communication with them over the entire span of the relationship. We endeavor to provide our clients with a financial educational framework which supports them in their investment decision making process, helping them to achieve their financial goals. We align our interests along with those of our clients to ensure the development of a long and fruitful relationship.

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Global
shares push higher, bonds steady ahead of Fed at Credence Independent Advisors

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Global
shares push higher, bonds steady ahead of Fed at Credence Independent Advisors

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(Reuters) – World stocks inched up and U.S. bond yields steadied after almost three weeks of gains on Tuesday with Federal Reserve policy setters expected to end six years of aggressive monetary stimulus.

The Fed kicks off a two-day meeting later with markets betting on an announcement that it will stop its post-financial crisis high-intensity asset buying and reinforce that a softly-softly approach will be taken to raising rates.

With the euro zone running into turbulence again and China’s giant economy also struggling for pace, the prospect of a world without U.S. stimulus has troubled markets over the last couple of months, but they finally seem to be getting used to the idea.

European shares rose for the fourth time is six days, helped by better-than-expected results from pharmaceutical group Novartis and Swiss bank UBS, while the dollar, commodity markets and U.S. bond yields steadied.
​
“I think in the last few days we have had a reality check,” fund management group Hermes’ chief economist, Neil Williams, said. “The world is certainly not a happy place at the moment but it hasn’t got that much worse in recent weeks.”

“I’m expecting the Fed to re-assert its dovishness, they haven’t come this far including six years of QE (quantitative easing) to end it abruptly and leap towards a rate hike.”

London’s FTSE, Germany’s DAX and France’s CAC were up 0.5, 1.2 and 0.4 percent respectively and the euro, the pound and benchmark German government bonds all traded around recent levels.

Gold also recovered its footing after falling to its lowest in nearly two weeks, while emerging market stocks, which are also seen as vulnerable from reduced U.S. and global stimulus, rose 0.7 percent as hopes of more reforms of state-owned business saw Chinese stocks jump 2 percent.

CROWN SLIPS
Sweden’s crown slid to a four-year low against the dollar and a four-month trough against the euro after the country’s central bank, the Riksbank, surprised markets with a cut in interest rates to zero.

Most analysts had forecast that the bank would lower its main interest rate, the repo rate, to 0.1 percent from 0.25 percent to fight the risk of deflation. But it went a step further and forecast an even lower rate path for the future.

“Reading between the lines, it looks like Riksbank will keep rates low… This will weigh on the Swedish crown, with most losses likely to come against the dollar,” SEB’s chief currency strategist in Stockholm, Carl Hammer, said.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan added about 0.4 percent but Japan’s Nikkei dropped 0.4 percent after disappointing results from Canon offset positive retail sales data.

In the United States, data on Monday had been far from encouraging.

Services sector activity slowed in October to a six-month low, while manufacturing output in Texas decreased, providing more evidence that the Fed is likely to take things slowly in the coming months.

The dollar index, which tracks the U.S. unit against six major rivals, inched up about 0.15 percent in Europe to 85.629 as early Wall Street futures prices pointed to a solid 0.4-0.5 gain for stocks later.

Among commodities, U.S. crude was flat at $81.04 per barrel after dropping as low as $79.44 on Monday, its lowest level since June 2012, after Goldman Sachs cut price forecasts.

Brent crude shed 0.2 percent to $85.65, as concerns about weak global demand and ample supply kept a cloud over the market though growth-attuned metals — copper, nickel and aluminium — continued their recent rebound.

Any reference to Credence Independent Advisors in this material shall include Credence Ltd. and its subsidiaries.

This material does not constitute an offer or invitation to anyone in any jurisdiction to invest in any Credence Ltd. product or use any Credence Ltd. services where such offer or invitation is not lawful, or in which the person making such offer or invitation is not qualified to do so, nor has it been prepared in connection with any such offer or invitation. The material is not intended for distribution to retail clients.

Unless otherwise specified, Credence Ltd. is the source of all data. All information contained in this material is current at the time of issue and, to the best of our knowledge, accurate. Any opinion expressed is that of Credence Ltd., is not a statement of fact is subject to change and, unless it relates to a specified investment, does not constitute the regulated activity of “advising on investments”.

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Credence Independent
Advisors: China’s manufacturing growth witnesses a boost

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Credence Independent
Advisors: China’s manufacturing growth witnesses a boost

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China’s manufacturing output grew at its fastest pace in more than two years in July, pointing that China’s economy may be stabilizing.

The figures for July were promising. According to the National Bureau of Statistics; the official Purchasing Managers Index (PMI), which measures activity in bigger factories and is a key to measure sector’s health rose to 51.7 in July from 51 in June. The rise in figures meant an increase in the expansion.

The improvement and growth in the manufacturing sector is a direct result of a series of steps taken by China in the recent months to help boost its economic growth.

The HSBC PMI survey, which measures manufacturing activity in relatively smaller factories, gave a preliminary reading of 52 for July, which was an 18 month high.

China’s growth stabilizing:

China, which is also the world’s second largest economy, has recently witnessed a series of positive economic data along with the rise in PMI.

In June, China’s economy witnessed a 7.5% rise in the April to June quarter, from a year ago.

Other data also points to the positive developments taking place, with factory output, fixed asset investment and retail sales showing an increase in the recent weeks.

The positive outlook of China’s economy has encouraged policymakers to take steps to help further boost China’s growth.

Planning to cut taxes on smaller companies and speeding up the construction of railway lines across China are part of a series of steps taken by policymakers.

Other steps include China’s central bank making more cash available for banks engaged in lending to agriculture related businesses and smaller companies.

Furthermore, the central bank has also said that it will encourage banks to lend more to exporters in order to boost shipments.

Credence Independent Advisorsare expatriates living in favourable tax jurisdictions, but this will not be the case for all of them forever. Our advisors will always ensure that our clients are in the most favourable tax positions possible when returning to their homeland or their next overseas destination. We have a thorough understanding of how trust structures may benefit you and have access to estate planning tools to ensure that your money remains where you want it. We are experts in expatriate clients and will know or find the right solutions to ensure your financial planning puts you in the driving seat with your money.

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China’s manufacturing output grew at its fastest pace in more than two years in July, pointing that China’s economy may be stabilizing.

The figures for July were promising. According to the National Bureau of Statistics; the official Purchasing Managers Index (PMI), which measures activity in bigger factories and is a key to measure sector’s health rose to 51.7 in July from 51 in June. The rise in figures meant an increase in the expansion.

The improvement and growth in the manufacturing sector is a direct result of a series of steps taken by China in the recent months to help boost its economic growth.

The HSBC PMI survey, which measures manufacturing activity in relatively smaller factories, gave a preliminary reading of 52 for July, which was an 18 month high.

China’s growth stabilizing:

China, which is also the world’s second largest economy, has recently witnessed a series of positive economic data along with the rise in PMI.

In June, China’s economy witnessed a 7.5% rise in the April to June quarter, from a year ago.

Other data also points to the positive developments taking place, with factory output, fixed asset investment and retail sales showing an increase in the recent weeks.

The positive outlook of China’s economy has encouraged policymakers to take steps to help further boost China’s growth.

Planning to cut taxes on smaller companies and speeding up the construction of railway lines across China are part of a series of steps taken by policymakers.

Other steps include China’s central bank making more cash available for banks engaged in lending to agriculture related businesses and smaller companies.

Furthermore, the central bank has also said that it will encourage banks to lend more to exporters in order to boost shipments.

Credence Independent Advisorsare expatriates living in favourable tax jurisdictions, but this will not be the case for all of them forever. Our advisors will always ensure that our clients are in the most favourable tax positions possible when returning to their homeland or their next overseas destination. We have a thorough understanding of how trust structures may benefit you and have access to estate planning tools to ensure that your money remains where you want it. We are experts in expatriate clients and will know or find the right solutions to ensure your financial planning puts you in the driving seat with your money.

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China’s manufacturing output grew at its fastest pace in more than two years in July, pointing that China’s economy may be stabilizing.

The figures for July were promising. According to the National Bureau of Statistics; the official Purchasing Managers Index (PMI), which measures activity in bigger factories and is a key to measure sector’s health rose to 51.7 in July from 51 in June. The rise in figures meant an increase in the expansion.

The improvement and growth in the manufacturing sector is a direct result of a series of steps taken by China in the recent months to help boost its economic growth.

The HSBC PMI survey, which measures manufacturing activity in relatively smaller factories, gave a preliminary reading of 52 for July, which was an 18 month high.

China’s growth stabilizing:

China, which is also the world’s second largest economy, has recently witnessed a series of positive economic data along with the rise in PMI.

In June, China’s economy witnessed a 7.5% rise in the April to June quarter, from a year ago.

Other data also points to the positive developments taking place, with factory output, fixed asset investment and retail sales showing an increase in the recent weeks.

The positive outlook of China’s economy has encouraged policymakers to take steps to help further boost China’s growth.

Planning to cut taxes on smaller companies and speeding up the construction of railway lines across China are part of a series of steps taken by policymakers.

Other steps include China’s central bank making more cash available for banks engaged in lending to agriculture related businesses and smaller companies.

Furthermore, the central bank has also said that it will encourage banks to lend more to exporters in order to boost shipments.

Credence Independent Advisorsare expatriates living in favourable tax jurisdictions, but this will not be the case for all of them forever. Our advisors will always ensure that our clients are in the most favourable tax positions possible when returning to their homeland or their next overseas destination. We have a thorough understanding of how trust structures may benefit you and have access to estate planning tools to ensure that your money remains where you want it. We are experts in expatriate clients and will know or find the right solutions to ensure your financial planning puts you in the driving seat with your money.

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Credence Independent Advisors - US Federal Reserve to end
quantitative easing programme

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Credence Independent Advisors - US Federal Reserve to end
quantitative easing programme

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Central bank’s head, Janet Yellen, confirms cessation of buying bonds in October after injection of £4.5 trillion over five years.

The US Federal Reserve has called time on its $4.5 trillion (£2.8tn) quantitative easing programme, introduced more than five years ago to steer the world’s largest economy through the financial crisis.

The central bank, led by Janet Yellen, said it would cease buying bonds this month.

Announcing the decision made at its October policy meeting, the Fed said: “The committee judges that there has been a substantial improvement in the outlook for the labour market since the inception of its current asset purchase programme. Moreover, the committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability. Accordingly, the committee decided to conclude its asset purchase program this month.”

It brings to an end the programme which marked a radical departure for US monetary policy, hugely swelling the Fed’s balance sheet in a bid to prop up a battered financial system.

The Fed began to slow its purchase of Treasury bonds and mortgage-backed securities in January, but until now it had not confirmed an end date. The central bank has steadily reduced its monthly bond purchases from a peak of $85bn a month to $15bn a month.

Despite the end of its bond-buying programme, US monetary policy remains ultra-loose, with an interest rate range of between zero and 0.25% since December 2008.

Credence Independent Advisor was set up to be compelling for all its stakeholders; including clients, staff and owners of the business. We offer a compelling experience to our clients that delivers what they desire. We strive to fully understand our clients’ financial requirements by remaining in close communication with them over the entire span of the relationship. We endeavor to provide our clients with a financial educational framework which supports them in their investment decision making process, helping them to achieve their financial goals. We align our interests along with those of our clients to ensure the development of a long and fruitful relationship.

Contact us
Emaar Boulevard Plaza, Level 14,
Burj Khalifa Downtown,
P.O.Box 334155, Dubai, UAE
Telephone: +971 (0) 4439 4280
Email: info@credence-wealth.com
Website:http://credence-wealth.com/

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Credence
Independent Advisors Economic Review for the Last Week

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Credence
Independent Advisors Economic Review for the Last Week

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The European Central Bank took strong measures and dropped interest rates even more when they received growth and inflation rates that were weaker than their expectations.

They decreased their deposit rate to -0.20% and interest rate to 0.05% and declared two new programs through which they will buy asset backed securities and bonds. The news announced the dropping of the euro to 1.29 US dollars.

The purchasing managers’ index was also changed downwards. The total Markit PMI output went down to 52.5, which is lower than the expected 52.8 and the 53.8 that was July’s concluding output. In July Eurozone’s retail sales decreased by 0.4%, after witnessing an increase of 0.3% in June. The decline in July was more than expected.

In the United Kingdom, the Bank of England managed to keep up its asset purchase ceiling at £375 billion. It also managed to regulate its bank rate at 0.5%, which has been maintained since early 2009.

The finance minister of Germany, Wolfgang Schauble stated that they might miss their growth target of 1.8%, let alone exceed it, as he had expected two months earlier.

The economic status of US remained healthy, and the latest news pointed to a steady recovery. In August alone, employers made an addition of 142,000 jobs, which lowered the unemployment rate to 6.1%.

For the FOMC meeting that will take place in the mid-September, the Fed issued their Beige Book. The spending rate of consumers and residential real estate happenings are positive, but reserved. Almost all of the districts have reported a lacking of skilled labor, and the price pressures stay low.

The pending home sales in July also increased more than expected. The trade gap in the US was also shortened by 0.6% in July to US$ 40.5 billion because of the increase in imports and exports. The official increasing rates were 0.7% for imports and 0.9% for exports.

The Brent price decreased lower than $100 last week, due to which energy stocks struggled.

The decrease in Chinese demand for iron-ore led to prices falling under $85/ton which is a record decrease in 5 years.

The Fed will set a rate during a period of full employment and steady inflation of 2%, this is defined as the neutral Fed rate. This Fed rate, even though it is just an estimate, still has a lot of significance, since it will act as a determinant for long-term bond yields.

Credence Independent Advisors News was born from compelling opportunity in the financial services world. In the ever changing dynamic world of financial services it is important for us to tailor advice and solutions to individual needs. Clients need solutions that make them money and preserve their capital and advisors need happy clients with increasing wealth under management. By harnessing the skills of top quality experienced professionals and cutting edge technology, we are able to bring what was previously only available for multi-million dollar clients to a wider reaching client range and we have done this independently.

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Credence
Independent Advisors: Will Interest Rate Rise? As Inflation Touches Five Months
High

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Credence
Independent Advisors: Will Interest Rate Rise? As Inflation Touches Five Months
High

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Recently the inflation rate in the United Kingdom has gone up with June seeing an increase in the prices of food and clothes. The consumer price index rose to 1.9% in the month of June from 1.5% in May.
The expectation of an increase in the interest rate, following the increase in inflation has also raised the pound to a record six year high against the US dollar at $1.7192.

Due to the warmer climate this year, the high street clothes retailers have delayed their sales promotions. This has resulted in a price increase between May and June, compared to the same period last year, where prices saw a decline. Food prices have also risen in the same period compared to the last year, where they saw a decline. Furniture and airfare prices also saw a comparatively higher increase than the last year. All these factors have led to inflation rates reaching a five month high in the month of June, well above forecasts; however, the inflation rise is still below the Bank of England’s 2% target and has been so for the last six months. At the same time, wage increases are expected to still lag behind inflation.

According to Chris Williamson, Chief Economist at data specialists Markit; the increase in inflation has further raised expectations that the Bank of England will raise the interest rates sooner rather than later. This has also pressurized the Bank of England to decide when to increase interest rates.

However, the economists remain divided as to when the increase in interest rate will come about. There is a speculation that there might be an increase in November or early 2015. However, investors are betting on an interest rate rise before the end of 2014. At the same time, markets have priced a rate increase from 0.5% by the end of the year. Markets becoming more confident that the Bank of England may raise interest rates before the end of the year, has led to the British Government’s bond prices tumbling following the rise in data and sterling.

Given the positive economic outlook of UK, Rob Wood, the chief UK economist at Berenberg, predicts a 60% chance that the Bank of England will begin increasing interest rates in November this year.

Important to note is that since last year, the consumer price index had been falling, which has helped the Bank of England to hold off on raising interest rates, despite UK’s strong economic recovery. However, now the stage is completely set for an increase in interest rates, as the UK economy along with an increase in inflation is growing strongly, there is also a boom in the housing market with house prices increasing and unemployment is also going down.

According to former Bank of England Policy maker, Andrew Sentence, this raise in inflation also points to the fact that the economy is strong enough to withstand a rise in interest rates. He further said that the rate rise should take place later this year rather than in 2015, because in 2015, MPC could be “tempted to postpone a rise beyond the general election, which would be too late”.

On the other hand, Mark Carney (Governor of the Bank of England) has rebuffed the Bank for International Settlements’ call to raise interest rates faster, commenting that the recommendation was “outside political and economic reality”. According to Carney, the timing of the first rise in interest rates would be “driven by data”. He further added: “The only guidance that the new Monetary Policy Committee is now giving is around the expected medium-term path of interest rates, not the timing of the first rate rise.”

According to Mark Carney, the biggest risk to the economic recovery is over-heating in the housing market. Particularly, the high levels of mortgage debt taken on by households. This is because when debt levels get too high, British people “economize” everything else in order to pay their mortgages. This leads to a major macroeconomic impact, if many people are highly indebted. Thus, leading the economy back in to recession.

Since the recent rise in inflation was due to retailers’ decision of postponing sales, according to Samuel Tombs of Capital Economics, the inflation will ease again by the end of this year, which shall remove the pressure to raise interest rates immediately.

Credence Independent Advisors
Emaar Boulevard Plaza, Level 14,
Burj Khalifa Downtown,
P.O.Box 334155, Dubai, UAE
Email: info@credence-wealth.com
Telephone: +971 (0) 4439 4280
Website:http://credence-wealth.com/
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Recently the inflation rate in the United Kingdom has gone up with June seeing an increase in the prices of food and clothes. The consumer price index rose to 1.9% in the month of June from 1.5% in May.

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Credence Independent Advisors: Will Interest Rate Rise? As Inflation Touches Five Months High

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Recently the inflation rate in the United Kingdom has gone up with June seeing an increase in the prices of food and clothes. The consumer price index rose to 1.9% in the month of June from 1.5% in May.

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Credence Independent Advisors: US unemployment rate falls to lowest
level since 2008

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Credence Independent Advisors: US unemployment rate falls to lowest
level since 2008

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The US unemployment rate fell to its lowest level since 2008 on Friday, in a move hailed as a sign of progress by economists despite 9 million people remaining out of work.

The Bureau of Labor Statistics (BLS) said that the unemployment rate fell to 5.8%, as employers added 214,000 jobs in October. The average monthly gain in the past year was 222,000. The industries that added the most jobs were “food services and drinking places, retail trade, and health care” the BLS said.

In its report, the BLS said that the number of unemployed has fallen by 1.2 million this year and the number of long-term unemployed has fallen by 1.1 million.

Long-term unemployment is a persistent problem in the US that has vexed even top economists. “There is debate about why long-term unemployment remains so high,” Federal Reserve chair Janet Yellen said in a speech in April.

The October jobs report says 2.9 million Americans have been without jobs for 27 weeks or more, which accounts for 32% of all the unemployed people in the country.

Justin Wolfers, a fellow at the Peterson Institute for international economics, called the jobs numbers “a great report” and publicly hailed one of the BLS’s data points, the household survey, which suggested that 683,000 people found new jobs in October.

Others were sceptical of the household survey. “These data, remember, are much less reliable than the payroll numbers, and can’t be taken seriously month-to-month,” wrote Ian Shepherdson of Pantheon Macroeconomics.

Others warned about embracing too much optimism.

“While this is a sign that the economy is slowly moving in the right direction, if you look below the headline numbers, it’s obvious that today’s labor market is still far from normal,” the Economic Policy Institute said. “The economy may be growing, but not enough for workers to feel the effects in their paychecks.”

The National Women’s Law Center, similarly, objected that most of the gains were jobs gains were in low-paying minimum-wage jobs.

“Although job growth continued last month, it’s troubling that half of the 214,000 jobs added were low-wage. The largest job gains were in the restaurant industry, where most of the workforce relies on tips—and the federal minimum cash wage is just $2.13 an hour. Finding a job that pays poverty-level wages doesn’t feel like a recovery,” the NWLC said.

Peter Morici, an outspoken professor at the Robert H Smith School of Business at the University of Maryland, who has been critical of the Obama administration’s jobs policies, put his objection vividly: “One in six men between ages 25 and 64 – too old for college and too young to retire – are jobless. Many are simply sitting at home watching ESPN and often relying on friends and relatives for support.”

There are indicators that the economic recovery is slower than many would like.

While the so-called topline numbers – the number of jobs added and the unemployment rate–- are often cited in discussions, they have their flaws. The jobless rate, for instance, has been dropping in part because it only measures people who have been actively looking for jobs; when people stop looking; they are no longer counted as “unemployed” according to the government figures. In addition, the number of jobs added is frequently revised, often by large margin; the BLS reserves a margin of error of 100,000 jobs.

There are several other statistics that economists look for to gauge the health of the labor market.

One is the number of people who are “part-time for economic reasons,” which the BLS classifies as those “who would have preferred full-time employment, [and] were working part-time because their hours had been cut back or because they were unable to find a full-time job.” There are 7 million Americans in that category.

Another measure is “discouraged workers” who have given up looking for jobs because they believe there are none available. There are 770,000 Americans who fit that description – essentially unchanged from the same time last year.

One of these telling statistics is the “U-6 unemployment rate,” a more expansive measure that counts the “total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force.” That means all people who are unemployed as well as those who have taken jobs they don’t want out of financial desperation.

That U-6 number remains elevated, suggesting that 11.5% of the country is unemployed – in contrast to the milder 5.8% top-line unemployment rate. The U-6 rate has dropped in October, however, from 11.8% in September.

Another measure that economists put emphasis on is the “labor force participation rate,” which measures how many Americans are working as a percentage of the overall labor force. That percentage, a very low 62.8%, is nearly the lowest since the recession of 1978.

Joblessness also shows stark differences by ethnic group. The black unemployment rate, at 10.9%, is more than double the white unemployment rate of 4.8%.

Credence Independent Advisors was set up to be compelling for all its stakeholders; including clients, staff and owners of the business. We offer a compelling experience to our clients that deliver what they desire. We strive to fully understand our clients’ financial requirements by remaining in close communication with them over the entire span of the relationship. We endeavor to provide our clients with a financial educational framework which supports them in their investment decision making process, helping them to achieve their financial goals. We align our interests along with those of our clients to ensure the development of a long and fruitful relationship. Provided a video to watch for our clients.

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Credence
Independent Advisors: Why interest rates won’t rise anytime soon?

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Credence
Independent Advisors: Why interest rates won’t rise anytime soon?

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Economists expect Bank of England’s quarterly health check of the UK economy to rubber stamp expectations that interest rates will remain low for longer.

Interest rates will remain on hold beyond next year’s general election; the Bank of England is expected to signal this week, in an environment of lower inflation, weak wage growth and increasing eurozone headwinds.

Economists expect the Bank’s latest Inflation Report to highlight a risk that price rises, as measured by the consumer prices index (CPI) could fall below 1pc at the beginning of 2015, from September’s five-year low of 1.2pc.

According to the Centre for Economics and Business Research (CEBR), the recent decline in oil prices to $83 a barrel from $115 in June will push CPI inflation down to 0.5pc by next June. Douglas McWilliams, chief executive of the CEBR, said if prices fell to $60 a barrel, headline inflation could turn negative.

If inflation dips below 1pc, Mark Carney, the Governor of the Bank of England, will have to write an open letter to the Chancellor explaining the fall and how policymakers will ensure that inflation returns to the Bank’s 2pc target.

Alan Clarke, a strategist at Scotiabank, said it was very likely this could happen before the end of this year. “Last December, we had a 6.5pc increase in gas and electricity prices, that’s not being repeated this year, so that will push inflation down by 0.3 percentage points.

Coupled with that you’ve got Sainsbury’s recent decision to cut 1,200 prices and mild autumn weather pushing down on clothing prices. All in all, if they forecast sub-1pc inflation they’re conceding that Carney’s going to have to write a letter and the market will push back the first hike even more than it already has done.”

In June, Mr. Carney said the decision surrounding the timing of the first rate increase “could happen sooner than markets expect”, prompting traders to price in a November rate hike. However, an oil glut, the slowdown in the eurozone and falling inflation means markets now expect the Bank to raise rates in August 2015, well after May’s election.

Andrew Haldane, the Bank of England’s chief economist, said in a speech last month that a “gloomier” global outlook and lower inflation suggested that policymakers could afford to keep interest rates lower for longer.

Official data show pay growth still catching up with price rises
​
The Deputy Governor, Sir Jon Cunliffe, said in a separate speech that with interest rates already at a record low of 0.5pc, dealing with an inflation spike would be “more manageable” than raising rates too early and having to change course.

However, Martin Weale, an external rate setter who has voted to tighten monetary policy for the past three months, has argued that the Bank should “look through” the current drop in inflation because it is driven by forces that are beyond the Bank’s control, as the Monetary Policy Committee did in 2008, when price rises spiked to 5.2pc.

Simon Wells, chief UK economist at HSBC and a former Bank economist, said pay growth would remain in focus for the nine rate-setters. “The first quarter of 2015 is an important time for pay settlements, and if pay surveys continue to suggest starting salaries for new recruits and vacancies are rising and we start to see wages pick up, that would be the signal for me that this economy can withstand a rate rise”.

The Confederation of Business Industry expects the UK economy to expand this year at the fastest pace since before the financial crisis. Britain’s biggest business lobby group expects growth of 3pc in 2014, which would match the expansion in 2006. Growth is then expected to slow to 2.5pc in 2015.

The forecasts were unchanged from its September forecasts, despite renewed fears of a triple dip recession in the eurozone. “The recovery is on firm ground and is becoming more ingrained,” said John Cridland, the CBI’s director general.

Credence Independent Advisors are always on the lookout for top quality professionals that want a long term career in financial services. Whether from Investment banking, Wealth Management or financial planning background if you would like to be with a firm with a compelling client and advisor proposition.

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Credence Independent Advisors: A look in to the
pension changes

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Credence Independent Advisors: A look in to the
pension changes

# data[].attributes.body
After the end of the budget consultation on 11th June, the Treasury issued its response on the 21st July on pension shake-up, explaining pension changes, which offer a greater deal of freedom for both pension holders and providers.

These pension changes are generally all positive and the biggest for more than 100 years. Some of the changes are discussed here.

In order to ensure that all defined contribution schemes are able to offer greater flexibility to their members a permissive statutory override shall be introduced. The benefit of permissive statutory override is that it allows schemes to ignore their scheme rules and follow the tax rules instead; in order to make payments flexibly or to provide a drawdown facility.

According to the government mandating these schemes provide flexible payments, which would be disproportionate. Even though some schemes would like to offer flexibility to their members but due to the legal and administrative costs involved, they would prefer not to amend their schemes. The government under these situations would prefer that the schemes were in a position to provide flexibility without amending their rules.

On the other hand, if the schemes do not offer flexible access, the individuals would be able to transfer between defined contributions schemes up to the point of retirement.

It is also expected that the government would make various changes to the tax laws, in order to allow more freedom to providers to create new and innovative products, which meet the needs of the consumers more closely. These include; allowing lump sums to be taken from lifetime annuities, allowing payments from guaranteed annuities to beneficiaries as a lump sum, where they are under £30,000, removing the 10-year guarantee period for guaranteed annuities and decreasing lifetime annuities.

The real intention behind the new tax rules is to provide people with a greater access to their retirement savings. However, they also ensure that individuals do not use these new flexibilities to avoid tax on their current earnings by diverting their salary into their pension with tax relief and then immediately withdrawing 25 percent tax-free.

Those who choose to draw down more than their tax-free lump sum from a defined contribution pension will be able to benefit from further tax-relieved pension saving, and make further tax-free contributions to a defined contribution pension of up to £10,000 a year.

Under the current rules, those who are currently in ‘flexible drawdown’ are not able to make further pension contributions, having an annual allowance of £0. However, from April 2015 they will be subject to a new annual allowance limit of £10,000. This would allow individuals accessing a defined contribution pension worth more than £10,000 to contribute up to £10,000 a year with tax relief to a defined contribution pension, after their first flexible withdrawal.

Without being subject to a £10,000 annual allowance on subsequent contribution, individuals can make withdrawals from three smallpension pots and unlimited small occupational pots worth less than £10,000.

Other proposed changes under the new tax rules include the increasing of minimum age at which people can access their private pension from 55 to 57 in 2028 for all pension schemes. However, this change will not be applicable to those in the public sector; which includes police, armed services and firefighters.

According to the government, when the new system is established in 2015; the 55 percent tax charge on pension savings in a drawdown account at death will be too high. As a result, in this year’s autumn statement; the government has intentions to announce the changes.

The government will introduce two new safeguards to protect individuals and pension schemes, but will continue allowing transfers from private sector defined benefit to defined contribution schemes, apart from pensions that are already in payment.

Prior to accepting a transfer; an individual would be required to take advice from a professional advisor, authorized by FCA and independentfrom the defined benefit scheme.

Currently, if the interests of the members of the pension fund trustee or the scheme are prejudiced by making the payments within the usual period, than they can ask the regulators for a longer time to make transfer payments. However, now there will be new rules for delaying the transfer payments for trustees and the scheme funding levels when deciding on transfer levels will also be taken in to consideration.

For those defined members who wish to access their savings flexible, the government has intentions to consult on removing the requirement to transfer first to defined contribution schemes.

Since, there is no money involved in transfers from unfunded public service defined benefit schemes; therefore, the government intends to consult on removing it. However, transfers from funded defined benefit to defined contribution schemes will be allowed, and safeguards similar to those in the private sector will be introduced where appropriate.

Under the trivial communication and small-pot rules, individuals are allowed to take up to £30,000 of total pension savings as a lump sum, or a £10,000 small pot as a lump sum regardless of total pension wealth. The age at which an individual can make use of these rules will also be lowered from 60 to 55.

Credence Independent Advisors was born from compelling opportunity in the financial services world. In the ever changing dynamic world of financial services it is important for us to tailor advice and solutions to individual needs.

Contact us at:
Emaar Boulevard Plaza, Level 14,
Burj Khalifa Downtown,
P.O.Box 334155, Dubai, UAE
Email: info@credence-wealth.com
Telephone: +971 (0) 4439 4280
Website:http://credence-wealth.com/

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Credence Independent Advisors Strong dollar squeezes commodities,
BOJ puts onus on ECB

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Credence Independent Advisors Strong dollar squeezes commodities,
BOJ puts onus on ECB

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Source: http://credence-wealth.com/strong-dollar-squeezes-commodities-boj-puts-onus-on-ecb/

(Reuters) – The U.S. dollar powered to seven-year peaks against the yen on Monday and a two-year high on the euro, a punishing trend for commodities priced in dollars as gold, silver and oil all fell.
​
Disappointing surveys out of China’s manufacturing and services sectors highlighted the relative health of the U.S. economy, and piled pressure on other countries to ease monetary policy yet further.

The dollar came within a whisker of 113.00 yen in early trade, before taking a breather at 112.72. It has climbed over 3 percent since the Bank of Japan stunned markets by doubling down on its already massive stimulus programme.

The bold move has raised expectations the European Central Bank will eventually have to bite the bullet on quantitative easing, even if not at its meeting on Thursday.

“In this environment of subdued growth and long-term low-flation, we expect the ECB to announce the purchase of government bonds of euro area member states by early next year at the latest,” said Apolline Menut, an analyst at Barclays.

That outlook is one reason the euro caved to a fresh two-year trough of $1.2444, and why the dollar reached levels not seen since mid-2010 against a basket of currencies.

While Tokyo stocks were enjoying a holiday after Friday’s 4.8 percent surge in the Nikkei, shares across Asia were consolidating their gains.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.5 percent from a five-week high, but most regional markets were a shade firmer.

In Europe, the FTSE, DAX and CAC 40 were all seen opening with minor changes.

On Wall Street, both the Dow Jones industrial average and the S&P 500 index had notched record closing highs on Friday. The Dow gained 1.13 percent and the S&P 500 1.17 percent.

CHINA DATA UNDERWHELMS
Sentiment in Asia was somewhat tempered by a survey showing China’s services sector grew at its slowest pace in nine months in October as a cooling property sector weighed on demand.

That followed an unexpected dip in China’s factory activity to a five-month low in October, underlining the uncertain outlook for world’s second biggest economy.

Still, the prospect of further policy stimulus helped support stocks and Shanghai gained 0.5 percent.

The soft data knocked almost a full cent off the Australian dollar, which is often used by investors as a liquid proxy for bets on China.

Yet the allure of Australia’s relatively high yields has only been burnished by the BOJ’s actions and lifted the Aussie to its highest on the yen since May last year.

Indeed, by announcing it would buy more longer-dated bonds and thus push down already threadbare yields, the BOJ is clearly trying to force Japanese investors to seek higher returns in riskier assets, both at home and abroad.

The rush out of yen was given more impetus by news that Japan’s $1.2 trillion (751.54 billion pounds) Government Pension Investment Fund will raise its holdings of foreign stocks to 25 percent, well above some analysts’ expectations.

In contrast, U.S. Treasury yields ended higher last week after the Federal Reserve wound down its bond buying campaign against a generally improving economic background.

In a data-packed week, the US’s ISM index of manufacturing activity due later o Monday is expected to hold at a relatively healthy 56.2 in October. The October payrolls report on Friday is forecast to show a solid increase of around 231,000 new hires.

In commodity markets, gold was pinned near its lowest since 2010 at $1,168 an ounce, as was silver at $15.87.

Brent oil slipped another 23 cents to $85.63 a barrel, while U.S. crude lost 36 cents to $80.18.

Credence Independent Advisors was born from a compelling opportunity in the financial services world. In the ever changing dynamic world of financial services, it is important for us to tailor advice and solutions to individual needs. Our business was set up to be compelling for all its stakeholders; including clients, staff and owners of the business. Please visit us our News site at credenceadvisors-news.com and to our Blog site at credenceadvisors-blog.com

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Credence
Independent Advisors: The economic recovery of the United Kingdom during the
first half of 2014

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Credence
Independent Advisors: The economic recovery of the United Kingdom during the
first half of 2014

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The economic growth of a country comprises of a large number of different factors and a combined effect of all the factors makes the final impact.

(Credence Independent Advisors) - Similarly, in order to understand the economic growth of United Kingdom, it is important to identify the performance of various factors regarding the economy such as unemployment, investments, gross domestic product, inflation, productivity, consumption and many more.

Overall, it has been observed that the economic factors have been moving in a strong and positive direction for the economic conditions of the United Kingdom, with the United Kingdom economy starting to flourish once again and recovering from recession. According to a recent report from the Bank of England, the strong performance of United Kingdom’s economy has proceeded. The results for the first quarter of the year show an increase of 0.8% economic growth with production increasing drastically, unemployment falling further and inflation nearing the 2% target.

The United Kingdom’s production is assessed to have grown by 3.1% up to the first quarter of 2014, with a few pointers indicating significantly stronger growth. The Purchasing Managers Index survey has pointed out that the manufacturing sector has started to flourish with the manufacturing output increasing for continuously over a year now, according to Markit. This increase has led to the creation of jobs at a speedy rate in the manufacturing sector for over three years now.

Employment has also increased rapidly. The labour source survey shows the unemployment rate falling beneath the Marginal Propensity to Consume 7% threshold in February. This is now considered to be the lowest recorded in the period of the previous five years. As a result, Goldman Sachs has predicted a fall in unemployment from 6.8 to 6.5% for the current year.

Goldman Sachs has predicted a fall in the Consumer Price Index inflation forecast for the current year from 1.7% to 1.5 %.

Housing market restoration is in process with transactions up by a third over the previous year. Housing costs are up around 10% higher broadly underpinned by strong growth in housing investment.

Having been exceptionally frail over the last three years, private sector pay growth has started to grow, in spite of the fact that it stays well beneath the predicted standards.

Lastly, Sterling has reached its highest level against the United States dollar in the six year period at $1.7149, with 10% appreciation over the previous year.

The economy of United Kingdom has done exceptionally well in the first half of 2014. As a result of which even the analysts at Goldman Sachs have upgraded the United Kingdom economic growth forecast. Analysts have now predicted that Gross Domestic Product will grow by 3.4% this year instead of 3%.

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Credence
Independent Advisors: Active or passive what’s for you?

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Credence
Independent Advisors: Active or passive what’s for you?

# data[].attributes.body
What do active investors do?

Active investors believe that markets are “inefficient”. They believe that, at any point in time, there are always some securities that are mis-priced, enabling them to buy or sell making a profit. Professionalactive investors devote unbelievable amounts of time and resource towards trying to find that extra edge. They will then trade in and out of those securities to try and generate profits above the benchmark. They pour over company financials, visit with competitors, study all the latest economic releases, and try to predict everything from corporate earnings to the direction of interest rates and currency movements.

What do passive investors do?

Passive investors believe that markets are “efficient.” They believe that, over the long run, the price of stocks and bonds reflect the true underlying value of those securities. As such, they do not seek to beat the market, but rather to “be” the market. They do this by using index funds and ETF (exchange traded funds) that mimic various components of the market. For example, rather than try to find that “next Apple or Google,” you can purchase (nearly) all large US stocks or (nearly) all small emerging market stocks in one go by buying the index in its cheapest form. Then, using the right asset allocation, they can create portfolio that has an appropriate risk exposure for the client.

Which style of investing performs better?

Passive investors outperform active investors more often than not. In the past 5 years, 75% of US Large Cap funds, 90% of US Mid Cap funds and 83% of Small Cap funds failed to beat their comparable indices. One reason for this may be the fact market surges (up or down) are unpredictable missing just the top 25 days of market performance over the last 40 years would result in you having 3.6% less per year than if you had just stayed the course.

Which style should you use?

Investing in both active and passive investments makes sense. In smaller more specialist areas of investment it can sometimes be difficult to find the right passive investment. In larger markets ETF’s and indexes can be cheaper and more efficient. There are a variety of measures to make the right decision. Consult with a professional to show you the options. If they aren’t clear then be passive with them.

https://www.behance.net/credence-wealth

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Credence Independent
Advisors Eurozone needs an unconventional approach to its economic crisis

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Credence Independent
Advisors Eurozone needs an unconventional approach to its economic crisis

# data[].attributes.body
Mario Draghi, the head of ECB calls for more unconventional and growth friendly policies to end eurozone crisis. Within the Eurozone, it has been a long-time since the living standards were at peak.

For instance, the living standards were last at their peak in 1997 in Italy, 2000 in Cyprus and Portugal, 2001 in Greece, 2003 in Spain and Ireland and 2006 in France. Out of all the eurozone countries bailed out since eurozone debt crisis, Italy has been the only country to witness the worst performance and is now in the final stages of its two lost decades.

Last Friday, at his speech at the Jackson Hole symposium, Mario Draghi, the Italian in charge of the European Central Bank emphasized on the need for more growth-friendly policies. He further went on to make an unfavorable contrast between the eurozone and the US. For instance, during the great recession of 2008-2009, both the US and eurozone witnessed a rise of five percentage points in unemployment. However, unemployment has since fallen by four percentage points in the US, but is still more than four points higher for the eurozone. Furthermore, the US is witnessing an increase in the growth this year after being affected by weather in the winter season, whereas in the eurozone, the growth is at a standstill, along with growing deflationary pressures.

The most vulnerable threats to the eurozone currently are both economic and social.

The economic threat is that prolonged stagnation along with outright deflation or very low inflation puts pressure on the already stretched public finances. This is because inflation decreases the burden of debt, whereas deflation increases it. When it comes to countries like Italy, where the national debt is more than 100% of the annual national output, keeping interest rates high could eventually become unsustainable.

When it comes to social threat; high unemployment leads to social unrest in the society, such as the one seen in Ferguson, Missouri recently. Currently the inequality levels are not as high in Europe as in the US. However, they might become so over time. Therefore, stagnation in the economy, very high levels of unemployment and increased concentration of wealth are the main causes of social unrest and prevent achieving social harmony.

One of the reasons for the slower growth rate of eurozone compared to the US is that the US has a rising population whereas Europe doesn’t. Therefore, one option is to sort out Europe’s structural problems.

On the other hand, eurozone has a lot of laws, which prevent the full implementation of the single market and eventually act as a hurdle for growth. These include over-restrictive labour laws, too many protectionist tendencies and too much bureaucracy.

Austerity has been used by Germany as an important tool to force unwilling governments in Southern Europe to embrace structural reforms. Currently Germany would want to impose austerity on France. However, Draghi’s comments at Jackson Hole suggest that austerity is not helping structural reforms, instead Germany is becoming isolated. Furthermore, according to economist Vicky Pryce, austerity is turning Europe into a big debtor’s prison.

Even the ECB has now accepted that it would have been better to have followed the American approach to recover from the recession without worrying too much about how much money the Federal Reserve was printing or the size of budget deficit.

When we compare the economic recovery of the US and the eurozone, it is important to note that the eurozone is not lagging behind just because of the difference in the population size and growth, but because of tighter fiscal policy for too long, the ECB being slow and unwilling to try something different just like the Fed, Bank of England and Bank of Japan.

As seen previously, Europe won’t be taking a bolder approach; rather it will be taking small steps. Things such as state finances will be utilized for growth, such as for infrastructure building. Budget rules might be temporarily relaxed to allow countries to run deficits of more than 3% of the GDP (gross domestic product) without facing possibility of sanctions. When the Germans agree, the ECB will announce a modest quantitative easing programme; to buy bonds in exchange for money from the banks to help increase flows of credit around the eurozone economy.

We don’t know whether this will resolve the problem or not. However, this certainly won’t do any harm. For sure it is not the complete solution. The European banks are badly run and were even worse than their British and American counterparts, even years before the crisis. As a result they are slow to raise capital and repair their balance sheets.

As for QE, since it has not worked well, especially in the US or UK, where the banks are in a better shape. Therefore, an ECB QE will be less effective given the current status of the European banks.

Eric Lonergan (a London based hedge-fund manager) and Mark Blyth (economics professor at Brown University) have proposed an alternative of printing money and handing it straight to the people and cutting the middleman. To curb growing inequality, Lonergan and Blyth propose that the central banks should directly give a cheque to every household instead of pursuing policies that ramp up asset prices and make the financial system less stable. The benefit of this is that the people would spend rather than store, like the banks. As for the inflationary pressure, higher interest rates can be used to counter them.

It is important to note that Germany wouldn’t allow any such plan because Angela Merkel considers a reminiscent of the 1923 hyperinflation.

Draghi himself is aware of the need for a new different approach and is preparing more unconventional measures.

Credence Independent Advisors

Emaar Boulevard Plaza, Level 14,

Burj Khalifa Downtown,

P.O.Box 334155, Dubai, UAE

Email: info@credence-wealth.com

Telephone: +971 (0) 4439 4280

Website: http://credence-wealth.com/

Twitter Page: https://twitter.com/Credencewealth

Facebook Page: https://www.facebook.com/credenceindependentadvisors

Behance Page: https://www.behance.net/credence-wealth/

# data[].attributes.headline
Mario Draghi, the head of ECB calls for more unconventional and growth friendly policies to end eurozone crisis. Within the Eurozone, it has been a long-time since the living standards were at peak.For instance, the living standards were last at their peak in 1997 in Italy, 2000 in Cyprus and Portugal, 2001 in Greece, 2003 in Spain and Ireland and 2006 in France. Out of all the eurozone countries bailed out since eurozone debt crisis, Italy has been the only country to witness the worst performance and is now in the final stages of its two lost decades.Last Friday, at his speech at the Jackson Hole symposium, Mario Draghi, the Italian in charge of the European Central Bank emphasized on the need for more growth-friendly policies. He further went on to make an unfavorable contrast between the eurozone and the US. For instance, during the great recession of 2008-2009, both the US and eurozone witnessed a rise of five percentage points in unemployment. However, unemployment has since fallen by four percentage points in the US, but is still more than four points higher for the eurozone. Furthermore, the US is witnessing an increase in the growth this year after being affected by weather in the winter season, whereas in the eurozone, the growth is at a standstill, along with growing deflationary pressures.The most vulnerable threats to the eurozone currently are both economic and social.The economic threat is that prolonged stagnation along with outright deflation or very low inflation puts pressure on the already stretched public finances. This is because inflation decreases the burden of debt, whereas deflation increases it. When it comes to countries like Italy, where the national debt is more than 100% of the annual national output, keeping interest rates high could eventually become unsustainable.When it comes to social threat; high unemployment leads to social unrest in the society, such as the one seen in Ferguson, Missouri recently. Currently the inequality levels are not as high in Europe as in the US. However, they might become so over time. Therefore, stagnation in the economy, very high levels of unemployment and increased concentration of wealth are the main causes of social unrest and prevent achieving social harmony.One of the reasons for the slower growth rate of eurozone compared to the US is that the US has a rising population whereas Europe doesn’t. Therefore, one option is to sort out Europe’s structural problems. On the other hand, eurozone has a lot of laws, which prevent the full implementation of the single market and eventually act as a hurdle for growth. These include over-restrictive labour laws, too many protectionist tendencies and too much bureaucracy.Austerity has been used by Germany as an important tool to force unwilling governments in Southern Europe to embrace structural reforms. Currently Germany would want to impose austerity on France. However, Draghi’s comments at Jackson Hole suggest that austerity is not helping structural reforms, instead Germany is becoming isolated. Furthermore, according to economist Vicky Pryce, austerity is turning Europe into a big debtor’s prison.Even the ECB has now accepted that it would have been better to have followed the American approach to recover from the recession without worrying too much about how much money the Federal Reserve was printing or the size of budget deficit. When we compare the economic recovery of the US and the eurozone, it is important to note that the eurozone is not lagging behind just because of the difference in the population size and growth, but because of tighter fiscal policy for too long, the ECB being slow and unwilling to try something different just like the Fed, Bank of England and Bank of Japan.As seen previously, Europe won’t be taking a bolder approach; rather it will be taking small steps. Things such as state finances will be utilized for growth, such as for infrastructure building. Budget rules might be temporarily relaxed to allow countries to run deficits of more than 3% of the GDP (gross domestic product) without facing possibility of sanctions. When the Germans agree, the ECB will announce a modest quantitative easing programme; to buy bonds in exchange for money from the banks to help increase flows of credit around the eurozone economy.We don’t know whether this will resolve the problem or not. However, this certainly won’t do any harm. For sure it is not the complete solution. The European banks are badly run and were even worse than their British and American counterparts, even years before the crisis. As a result they are slow to raise capital and repair their balance sheets.As for QE, since it has not worked well, especially in the US or UK, where the banks are in a better shape. Therefore, an ECB QE will be less effective given the current status of the European banks.Eric Lonergan (a London based hedge-fund manager) and Mark Blyth (economics professor at Brown University) have proposed an alternative of printing money and handing it straight to the people and cutting the middleman. To curb growing inequality, Lonergan and Blyth propose that the central banks should directly give a cheque to every household instead of pursuing policies that ramp up asset prices and make the financial system less stable. The benefit of this is that the people would spend rather than store, like the banks. As for the inflationary pressure, higher interest rates can be used to counter them.It is important to note that Germany wouldn’t allow any such plan because Angela Merkel considers a reminiscent of the 1923 hyperinflation.Draghi himself is aware of the need for a new different approach and is preparing more unconventional measures.Credence Independent AdvisorsEmaar Boulevard Plaza, Level 14,Burj Khalifa Downtown,P.O.Box 334155, Dubai, UAEEmail: info@credence-wealth.comTelephone: +971 (0) 4439 4280Website: http://credence-wealth.com/Twitter Page: https://twitter.com/CredencewealthFacebook Page: https://www.facebook.com/credenceindependentadvisorsBehance Page: https://www.behance.net/credence-wealth/

# data[].attributes.subject
Mario Draghi, the head of ECB calls for more unconventional and growth friendly policies to end eurozone crisis. Within the Eurozone, it has been a long-time since the living standards were at peak.For instance, the living standards were last at their peak in 1997 in Italy, 2000 in Cyprus and Portugal, 2001 in Greece, 2003 in Spain and Ireland and 2006 in France. Out of all the eurozone countries bailed out since eurozone debt crisis, Italy has been the only country to witness the worst performance and is now in the final stages of its two lost decades.Last Friday, at his speech at the Jackson Hole symposium, Mario Draghi, the Italian in charge of the European Central Bank emphasized on the need for more growth-friendly policies. He further went on to make an unfavorable contrast between the eurozone and the US. For instance, during the great recession of 2008-2009, both the US and eurozone witnessed a rise of five percentage points in unemployment. However, unemployment has since fallen by four percentage points in the US, but is still more than four points higher for the eurozone. Furthermore, the US is witnessing an increase in the growth this year after being affected by weather in the winter season, whereas in the eurozone, the growth is at a standstill, along with growing deflationary pressures.The most vulnerable threats to the eurozone currently are both economic and social.The economic threat is that prolonged stagnation along with outright deflation or very low inflation puts pressure on the already stretched public finances. This is because inflation decreases the burden of debt, whereas deflation increases it. When it comes to countries like Italy, where the national debt is more than 100% of the annual national output, keeping interest rates high could eventually become unsustainable.When it comes to social threat; high unemployment leads to social unrest in the society, such as the one seen in Ferguson, Missouri recently. Currently the inequality levels are not as high in Europe as in the US. However, they might become so over time. Therefore, stagnation in the economy, very high levels of unemployment and increased concentration of wealth are the main causes of social unrest and prevent achieving social harmony.One of the reasons for the slower growth rate of eurozone compared to the US is that the US has a rising population whereas Europe doesn’t. Therefore, one option is to sort out Europe’s structural problems. On the other hand, eurozone has a lot of laws, which prevent the full implementation of the single market and eventually act as a hurdle for growth. These include over-restrictive labour laws, too many protectionist tendencies and too much bureaucracy.Austerity has been used by Germany as an important tool to force unwilling governments in Southern Europe to embrace structural reforms. Currently Germany would want to impose austerity on France. However, Draghi’s comments at Jackson Hole suggest that austerity is not helping structural reforms, instead Germany is becoming isolated. Furthermore, according to economist Vicky Pryce, austerity is turning Europe into a big debtor’s prison.Even the ECB has now accepted that it would have been better to have followed the American approach to recover from the recession without worrying too much about how much money the Federal Reserve was printing or the size of budget deficit. When we compare the economic recovery of the US and the eurozone, it is important to note that the eurozone is not lagging behind just because of the difference in the population size and growth, but because of tighter fiscal policy for too long, the ECB being slow and unwilling to try something different just like the Fed, Bank of England and Bank of Japan.As seen previously, Europe won’t be taking a bolder approach; rather it will be taking small steps. Things such as state finances will be utilized for growth, such as for infrastructure building. Budget rules might be temporarily relaxed to allow countries to run deficits of more than 3% of the GDP (gross domestic product) without facing possibility of sanctions. When the Germans agree, the ECB will announce a modest quantitative easing programme; to buy bonds in exchange for money from the banks to help increase flows of credit around the eurozone economy.We don’t know whether this will resolve the problem or not. However, this certainly won’t do any harm. For sure it is not the complete solution. The European banks are badly run and were even worse than their British and American counterparts, even years before the crisis. As a result they are slow to raise capital and repair their balance sheets.As for QE, since it has not worked well, especially in the US or UK, where the banks are in a better shape. Therefore, an ECB QE will be less effective given the current status of the European banks.Eric Lonergan (a London based hedge-fund manager) and Mark Blyth (economics professor at Brown University) have proposed an alternative of printing money and handing it straight to the people and cutting the middleman. To curb growing inequality, Lonergan and Blyth propose that the central banks should directly give a cheque to every household instead of pursuing policies that ramp up asset prices and make the financial system less stable. The benefit of this is that the people would spend rather than store, like the banks. As for the inflationary pressure, higher interest rates can be used to counter them.It is important to note that Germany wouldn’t allow any such plan because Angela Merkel considers a reminiscent of the 1923 hyperinflation.Draghi himself is aware of the need for a new different approach and is preparing more unconventional measures.Credence Independent AdvisorsEmaar Boulevard Plaza, Level 14,Burj Khalifa Downtown,P.O.Box 334155, Dubai, UAEEmail: info@credence-wealth.comTelephone: +971 (0) 4439 4280Website: http://credence-wealth.com/Twitter Page: https://twitter.com/CredencewealthFacebook Page: https://www.facebook.com/credenceindependentadvisorsBehance Page: https://www.behance.net/credence-wealth/

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Careers at Credence Independent Advisors

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Careers at Credence Independent Advisors

# data[].attributes.body
We are always on the lookout for top quality professionals that want a long termcareer in financial services. Whether from Investment banking, Wealth Management or financial planning background if you would like to be with a firm with a compelling client and advisor proposition please emails us atcareers@credence-wealth.com.

About Us

Credence Independent Advisors was born from a compelling opportunity in thefinancial servicesworld. In the ever changing dynamic world of financial services, it is important for us to tailor advice and solutions to individual needs. Clients need solutions that make them money and preserve their capital and advisors need happy clients with increasing wealth under management. By harnessing the skills of top quality experienced professionalsand cutting edge technology, we are able to bring what was previously only available for multi-million dollar clients to a wider reaching client range and we have done this independently.

Why Us

Our business was set up to be compelling for all its stakeholders; including clients, staff and owners of the business. We offer a compelling experience to our clients that deliver what they desire. We strive to fully understand our clients’ financial requirements by remaining in close communication with them over the entire span of the relationship. We endeavor to provide our clients with a financial educational framework which supports them in their investment decision making process, helping them to achieve their financial goals. We align our interests along with those of our clients to ensure the development of a long and fruitful relationship.

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Credence Independent Advisors Britain’s
top spending tourists are Middle East Visitors

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Credence Independent Advisors Britain’s
top spending tourists are Middle East Visitors

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According to ‘Visit Britain’, the national tourism agency of Britain; tourists from the Middle East are Britain’s top spending international shoppers.

The survey shows that tourists from the Middle East are twice as likely as typical visitors to buy clothes and shoes. Kuwaiti visitors rank number one in terms of spending on shopping in the UK, followed by Nigerians in second place and Saudi Arabians in third place. A visitor from Kuwait on average delivers £4,000 to the UK economy, whereas a visitor from France delivers an average of £343 to the UK economy.

According to Global Blue, which tracks spending by overseas visitors, the lead-up to Ramadan is traditionally a key holiday period for luxury retailers and hotels as tourists from the Middle East come to the UK for their annual spending spree, escaping soaring temperatures at home. As a result of which London witnessed an increase in visitors from the Middle East, just before Ramadan this year.

According to Global Blue, wealthy Middle Eastern shoppers favour luxury brands, with more than half claiming shopping to be their favourite activity when visiting the UK. This is evident from the fact that the average transaction value of Middle Eastern shoppers in 2013 was £795.

The high spending of Middle Eastern shoppers has influenced the UK luxury retailers also, with some luxury retailers, including Smythson and Temperley, offering special experiences and bespoke products designed for Middle Eastern shoppers this year.

The pre-Ramadan influx of Middle Eastern visitors has also changed the way that luxury stores do business. With Ramadan starting earlier, luxury stores now tend to start their summer discounting earlier, and opt for short, sharp, sales periods, so that new season styles are in stores when visitors from the Middle East arrive.

Even though Middle Eastern visitors spend the most when it comes to cutting edge fashion, Visit Britain found out that they don’t spend much on British food and drink.

When it comes to spending on British food and drinks; 34% of Belgians, 32% of French and 32% of Japanese visitors are most likely to buy British food and drink to take home.

In 2012 alone, international visitors spent £4.5bn in British shops, which was a quarter of total expenditure by foreign tourists that year.

Credence Independent Advisors was born from compelling opportunity in the financial services world. In the ever changing dynamic world of financial services it is important for us to tailor advice and solutions to individual needs. We are always on the lookout for top quality professionals that want a long term career in financial services. Whether from Investment banking, Wealth Management or financial planning background if you would like to be with a firm with a compelling client and advisor proposition.

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Credence
Independent Advisors: A Look at FATCA (Foreign Account Tax Compliance Act)

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Credence
Independent Advisors: A Look at FATCA (Foreign Account Tax Compliance Act)

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The United States global tax law; Foreign Account Tax Compliance Act (FATCA), came into effect on 1st July 2014.

The FATCA is at last here after a period of 4 years, initially developed in 2010 as an approach to make America’s corporations and private individuals stop evading America’s taxes by depositing their money into their accounts in foreign countries.

The act requires foreign banks and foreign financial institutions to inform about every American who owns an account and even to hold back money from those particular clients who are suspected of tax evasion to the Internal Revenue Service (IRS) in the United States.

The IRS and Treasury have important FATCA projects to complete. The IRS still has to bring up to date its withholding agreements for Withholding Foreign Trusts and Withholding Foreign Partnerships to depict FATCA, which it has guaranteed for July. In addition, there are numerous areas where the IRS and Treasury still have to make alterations as promised to the FATCA policies.

For over a year, America has been busy negotiating; information sharing policy with countries around the globe, and up till now, 77,000 financial institutions and 86 countries has registered for FACTA. The countries which have already reached official or opening agreements with America also include China and Russia.

In spite of the alteration period rules, United States and Foreign Financial Institutions withholding agents have yet to put up efforts to put the FATCA rules as of July 1, 2014 into practice. The efforts consist of training sessions with employees, instruction manuals and modifications to policy manuals that would make the workforce aware of the requirement to file customers’ FATCA status on opening accounts. Furthermore, the withholding agents of Foreign Financial Institutions and United States will be made to keep an account of the efforts made in a file for trouble-free access. As the IRS agents may ask for evidence of a party’s efforts in good faith to operate in accordance with FATCA.

Lastly, provided that a withholding agent selects not to be indulgent regarding FATCA documentation, parties should in general consider to be required to give the documentation to the mediator.

Collecting tax is one of the most common ways of increasing revenue for a nation. FATCA grew out of a contentious rule; that the citizens of America, even if they are permanent residents abroad are taxed on their all-inclusive, global income despite of where they live. It also helps a country to keep check on spending and saving capabilities of their citizens.

Hence, it could be highly important for the economic survival of a nation and for the better living standards of their citizens. If not financially sound, a country risks its citizens living in an unsecure environment. Therefore, it is important for governments to properly manage their tax processes in order to avoid any lack of management.

Credence Independent Advisors was born from a compelling opportunity in the financial services world. In the ever changing dynamic world of financial services, it is important for us to tailor advice and solutions to individual needs. Clients need solutions that make them money and preserve their capital and advisors need happy clients with increasing wealth under management. By harnessing the skills of top quality experienced professionals and cutting edge technology, we are able to bring what was previously only available for multi-million dollar clients to a wider reaching client range and we have done this independently. You can like us at our Facebook Page, join us at Linkedin Page, follow us atPinterest and gather more info at Etsy Page

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Credence
Independent Advisors: 209,000 jobs added by US economy in July

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Credence
Independent Advisors: 209,000 jobs added by US economy in July

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July witnessed an addition of 209,000 jobs by US, showing that the US is on its course of economic recovery

The manufacturing and professional business services sector witnessed the biggest job gains.

There has also been a slight increase in the US labour market, which will encourage workers who have given up job hunt to enter the job market once again.

According to the Commerce Department, during the period April to June, the US economy grew by a better than expected 4 percent.

However, the latest data from the Bureau of Labour Statistic has shown that the unemployment rate has slightly increased to 6.2 percent.

The job data for May and June was also revised upwards to show that the US economy added 15,000 more jobs for May and June.

Variations along the way:

Even though some economists had been expecting higher figures, the  US stock markets were below the less than expected gains.

Following steep losses the day before, the Dow Jones 100 Index fell down by almost 80 points.

Most analysts were of the view that there was nothing negative about the report. Jefferies, the US investment bank, in a note to clients stated; "The downward trend [in the unemployment rate] remains intact, but there will be bumps along the way to normalcy."

One of the possible reasons for the increase in the unemployment rate could be the fact that July is often one of the weaker months in terms of job growth. Nonetheless, the job figures for July are indeed encouraging, because the US economy just needs to add at least 150,000 jobs each month in order to keep up with the population growth. Furthermore, July is the sixth month in a row when the US economy has added more than 200,000 jobs.

This shows that the US is indeed on its course of economic recovery.

The need to still push on:

Janet Yellen, the US Federal Reserve chair, recently expressed that even though employment data is better than the one witnessed after the 2008-2009 recession. However, there are still some issues and challenges remaining. For instance, the wage growth still remains flat. Similarly, the number of long-term unemployed (people who are out of work for longer than six months) is also the same at 3.2 million (one-third of those looking for work).

In a recent interview with the New Yorker magazine, Janet said “Imagine I've got my hands on your shoulders and I'm pushing you."

"In the aftermath of the financial crisis, I was pushing you so hard; you couldn't get to where you wanted to go. Now that the economy is recovering I'm pushing you a little less hard, so you're able to make some forward movement. But I'm still pushing you."

A recent job fair in Boston, Massachusetts witnessed this sort of tension, where only a handful of employers had to deal with an overwhelmingly huge number of resumes.

According to an unemployed job seeker, Dwayne Burgess; "It is very tough out there - employers now have a ton of people to search through and they're looking for that perfect person and you really have to be competitive with that next person in front of you.”

Credence Independent Advisors was born from a compelling opportunity in the financial services world. In the ever changing dynamic world of financial services, it is important for us to tailor advice and solutions to individual needs. Clients need solutions that make them money and preserve their capital and advisors need happy clients with increasing wealth under management. By harnessing the skills of top quality experienced professionals and cutting edge technology, we are able to bring what was previously only available for multi-million dollar clients to a wider reaching client range and we have done this independently. Like us to our Facebook Page and more about us at our twitter @Credencewealth.

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Most of our clients are expatriates living in favourable tax jurisdictions, but this will not be the case for all of them forever. Our advisors will always ensure that our clients are in the most favourable tax positions possible when returning to their homeland or their next overseas destination. We have a thorough understanding of how trust structures may benefit you and have access to estate planning tools to ensure that your money remains where you want it. We are experts in expatriate clients and will know or find the right solutions to ensure your financial planning puts you in the driving seat with your money.

Join us to our Linkedin Group and give your tip at our Foursquare

Watch our Video

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Credence Independent Advisors June witnessed a rise in UK mortgage approvals for the first time in four months

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Credence Independent Advisors June witnessed a rise in UK mortgage approvals for the first time in four months

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The UK mortgage approvals did see an increase in June, after four months, but were still 12 percent lower than January highs.

The UK mortgage approvals saw a rise in June, after declining from February to May; amid new stricter lending rules imposed by banks.

According to the Bank of England, after a four month decline and witnessing an 11-month low of 62,007 in May, the mortgage approvals rose to a four month high of 67,196 in June.

The implementation of tighter lending policy at the start of the year by high street banks and building societies was responsible for the changes witnessed in the mortgage approvals over the first two quarters of the year. The introduction of the Mortgage Market Review in April, which was designed to curb the excessive lending seen in the run up to the last housing market crash, further compounded the situation.

Mark Carney’s view of the hot housing market being the biggest threat to the UK’s economic recovery has further frightened buyers and lenders. Even though there has been an increase in the mortgage approvals for June, the approvals are still well below the 74-month high of 76,214 seen in January. This points out that the demand has declined because of record prices and the fact that under the new rules fewer people are managing to secure a mortgage.

The housing market has also witnessed some changes, with Right move reporting the first asking price falls of the year at the start of July and Home track announcing that it is now taking twice as long to sell your house in London as it did in March.

Howard Archer, chief economist at IHS Global Insight says “Nevertheless, the appreciable rise in mortgage approvals reported by the Bank of England in June fuels uncertainty as to whether the recent loss of momentum in housing market activity is likely to be lasting or just a temporary development related to changing mortgage regulations, and whether there will be a significant easing back in house price growth."

Archer further adds on that "We take the view that while house prices will highly likely keep on rising over the coming months, it is probable that the gains will be more restrained compared to the recent peak levels."

Follow us at @Credencewealth and at our Pinterest

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Credence Independent Advisors Wealth Management

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Credence Independent Advisors Wealth Management

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Acquisition of wealth is one process; management of that wealth is a different story. It is very important to look at all future milestones, prioritize the importance of each event and ensure they are planned for carefully. Differentfinancial milestones will be planned for with a different attitude towards risk and return. We can help you assess your own attitude towards risk and ensure your investment decisions are aligned with this. Our expert advisors will guide you to the right solutions for all of your wealth management requirements.

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Credence Independent Advisors Global Equity markets
at their best in August, after five months

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Credence Independent Advisors Global Equity markets
at their best in August, after five months

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The trading for the month of August ended on Friday the 29th, witnessing a rise in the global equity markets, reaching their peak in five months, since February.

The rise was attributed to the strong U.S. data and German bond yields rising up from their record lows, amid expectations that the European Central Bank (ECB) would ease monetary policy next week, fading away.

The S&P 500 index; which is the U.S. benchmark, ended on Friday above the 2,000 milestone for the third time, setting a new closing high. The rise in the S&P for August is the best since February.

The euro-zone inflation fell down to its five-year low, which initially caused European shares to decline. However, the improvement of the U.S. economy caused the European shares to bounce back again. According to analysts, the decline in the euro-zone inflation was unlikely to lead ECB in to taking any action any time soon.

The U.S consumer spending also rose to a seven-year high in August, after witnessing a decline in July for the first time in six months; suggesting that the decline was most likely temporary. There was also a rapid rise in the factory activity in the Midwest, emphasizing the U.S. economy’s relatively strong fundamentals.

According to Andre Bakhos, the managing director of Janlyn Capital LLC  "Economic numbers have been positive for the most part, people are drawing comfort from these numbers, using them as a justification for optimism."

Wall Street and European stocks closed higher, with .MIWD00000PUS (MSCI's gauge of worldwide stock performance) rising 1.9 percent in August, its best monthly performance since February. However, Wall Street outperformed European stocks by closing higher in August. For instance, the Nasdaq Composite .IXIC rose by 4.8 percent, the S&P 500 .SPX gained 3.8 percent and the Dow Jones industrial average .DJI climbed 3.2 percent.

The index of top European shares; the FTSEurofirst 300 .FTEU3 index closed up 0.33 percent at 1,373.82 points. The Euro STOXX 50 .STOXX50E rose 1.8 percent in August, its biggest monthly gain since February.

The start of the week witnessed a sharp decline in the European bond yields across the euro zone after Mario Draghi (President of ECB) highlighted a significant drop in inflation expectations. His comments also raised expectations that the ECB would deploy quantitative easing (QE), which is large-scale purchase of assets. These expectations helped in boosting enthusiasm for stocks, both in the euro zone and the U.S. and also weakened the Euro.

However, according to Wouter Sturkenboom, investment strategist at Russell Investments "What people realize is that for the ECB to engage in public-sector QE ... the ECB has to see the whites of the eyes of deflation."

After the report on euro zone inflation, the Euro rose to $1.3195. However it later retreated and fell down to $1.3139.

The benchmark 10-year U.S. Treasury notes US10YT=RR seesawed, falling 2/32 in price to push its yield up 2.3431 percent.

The benchmark for euro zone borrowing costs; the German 10-year Bund yields DE10YT=TWEB, rose half a basis point to 0.891 percent, having hit a record low of 0.86 percent on Thursday.

With the Midwest manufacturing data pointing to a stronger demand, the U.S. crude oil rose for a fourth straight day.

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Investor’s Visa of Credence Independent Advisors

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Investor’s Visa of Credence Independent Advisors

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Tier 1 (Investor) Visa Portfolio Management

The UK Border Agency offers the opportunity to apply for a Tier 1 (Investor) Visa which can lead to British Citizenship for those who want to make a substantial financial investment in the UK.

When you invest with our Tier 1 (Investor) Visa Service, we will manage an investment portfolio for you, within the investment restrictions of the program, in line with your investment objectives. This is a discretionary service which allows you to concentrate on your other priorities while we have the responsibility for the day-to-day management of your investment portfolio.

You can meet and liaise with your own investment manager to build your personal investment strategy and create and monitor a portfolio to accommodate your specific needs that reflect your objectives and risk profile, while complying with the investment restrictions of the visa program.

Kareem Sattar joined Credence in 2014 as Investment Director and brings with him over 10 years of experience within the financial services industry. All of which have been spent in developing wealth management strategies for high net worth individuals and families.

Kareem advises on a broad range of financial matters including, Investment, sophisticated tax planning, pensions and retirement, financial protection, inheritance tax mitigation and investor visa portfolio management.

Prior to joining Credence, Kareem held positions with Walker Crips Stockbrokers, HSBC and Lloyds Banking Group. As a holder of the Chartered Wealth Manager designation from the Chartered Institute for Securities & Investment, Kareem is recognised as being at the pinnacle of his profession. His numerous qualifications include the Private Client Investment Advice and Management (PCIAM) qualification from the CISI and the Chartered Insurance Institutes Diploma in Financial Planning (DipPFS.)

Kareem can be contacted at:
Phone: +971 56 659 1934
Email: kareem.sattar@credence-wealth.com

Jamil Al Maani is a Investment Director at Credence and has over 10 years of investment specialist knowledge within the wealth management sector. He holds the prestigious Investment Management Certificate from the Chartered Financial Analyst Society UK & also holds full Financial Planning Certificates awarded by the Chartered Insurance Institute in London.

Prior to joining Credence, Jamil was a Senior Wealth Manager at HSBC Bank Middle East where he worked closely with HNW individuals and families. Advising on an array of matters including, Investments, Taxation, legacy planning and Philanthropy.

Jamil can be contacted at:
Phone: +971 56 392 3680
Email: Jamil.al-maani@credence-wealth.com

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About Us

Credence was born from a compelling opportunity in the financial servicesworld. In the ever changing dynamic world of financial services, it is important for us to tailor advice and solutions to individual needs. Clients need solutions that make them money and preserve their capital and advisors need happy clients with increasing wealth under management. By harnessing the skills of top quality experienced professionals and cutting edge technology, we are able to bring what was previously only available for multi-million dollar clients to a wider reaching client range and we have done this independently.

Why Us

Our business was set up to be compelling for all its stakeholders; including clients, staff and owners of the business. We offer a compelling experience to our clients that delivers what they desire. We strive to fully understand our clients’ financial requirements by remaining in close communication with them over the entire span of the relationship. We endeavor to provide our clients with a financial educational framework which supports them in their investment decision making process, helping them to achieve their financial goals. We align our interests along with those of our clients to ensure the development of a long and fruitful relationship.

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Credence
Independent Advisors Key Considerations of Behavioral Finance

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Credence
Independent Advisors Key Considerations of Behavioral Finance

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The central issue in behavioral finance is explaining why market participants make systematic errors contrary to the assumption of rational market participants.

Such errors affect prices and returns, creating market inefficiencies. It also investigates how other participants take advantage (arbitrage) of such market inefficiencies.

Some of the following traits, knows as heuristics follow.

Psychology concepts that affect the way you manage your investments.

In psychology and more specifically Behavioral Finance, heuristics are simple, efficient rules of thumb which people often use to form judgments and make decisions. They are mental shortcuts that usually involve focusing on one aspect of a complex problem and ignoring others. These rules work well under most circumstances, but they can lead to systematic deviations from logic, probability or rational choice theory.

The resulting errors are called “cognitive biases” and many different types have been documented. These have been shown to affect people’s choices in situations like valuing a house or deciding the outcome of a legal case and in making financial decisions. Heuristics usually govern automatic, intuitive judgments but can also be used as deliberate mental strategies when working from limited information.

“Investors are ‘normal,’ not rational.” Behavioral finance reconciles the discrepancy between rational valuation and irrational market pricing. It’s a booming field of study. Top behavioral finance gurus include Yale’s Robert Shiller and GMO’s James Montier.

There are several common behavioral biases that drive investor decisions.

Availability Bias is the ease with which a particular idea can be brought to mind. When people estimate how likely or how frequent an event is on the basis of its availability, they are using the availability heuristic. When an infrequent event can be brought easily and vividly to mind, this heuristic overestimates its likelihood. For example, people overestimate their likelihood of dying in a dramatic event such as a tornado or terrorism. Dramatic, violent deaths are usually more highly publicised and therefore have a higher availability. On the other hand, common but mundane events are hard to bring to mind, so their likelihoods tend to be underestimated. These include deaths from suicides, strokes, and diabetes. This heuristic is one of the reasons why people are more easily swayed by a single, vivid story than by a large body of statistical evidence. It may also play a role in the appeal of lotteries: to someone buying a ticket, the well-publicised, jubilant winners are more available than the millions of people who have won nothing.

When people judge whether more English words begin with T or with K, the availability heuristic gives a quick way to answer the question. Words that begin with T come more readily to mind and so subjects give a correct answer without counting out large numbers of words. However, this heuristic can also produce errors. When people are asked whether there are more English words with K in the first position or with K in the third position, they use the same process. It is easy to think of words that begin with K, such as kangaroo, kitchen, or kept. It is harder to think of words with K as the third letter, such as lake, or acknowledge, although objectively these are three times more common. This leads people to the incorrect conclusion that K is more common at the start of words.

Investors believe they are awesome at investing

Overconfidence may be the most obvious behavioral finance concept. This is when you place too much confidence in your ability to predict the outcomes of your investment decisions. Overconfident investors are often under diversified and thus more susceptible volatility.

Investors are bad at processing new information.

Being poor and processing new information is known as Anchoring and is related to overconfidence. For example, you make your initial investment decision based on the information available to you at the time. Later, you get news that materially affects any forecasts you initially made. But rather than conduct new analysis, you just revise your old analysis. Because you are anchored, your revised analysis won’t fully reflect the new information.

Investors connect the wrong things to each other.

Representativeness – A company might announce a string of great quarterly earnings. As a result, you assume the next earnings announcement will probably be great too. This error falls under a broad behavioral finance concept called “heard investing.” A lot of investors incorrectly think one thing means something else. Another example of representativeness is assuming a good company is a good stock.

Investors absolutely hate losing money.

Loss aversion, or the reluctance to accept a loss, can be deadly. For example, one of your investments may be down 20% for good reason. The best decision may be to just book the loss and move on. However, you can’t help but think that the stock might comeback.

This latter thinking is dangerous because it often results in you increasing your position in the money losing investment. This behavior is similar to the gambler who makes a series of larger bets in hopes of breaking even. This Heuristic leads largely into another heuristic known as gamblers Fallacy, which can be best described as flipping a coin 100 times and the first 99 flips have all been tales. Gamblers fallacy indicates that most of us would bet on the fact the next flip has to be heads. Even though the odds have not changed and as a standalone flip of a coin, the odds are still 50/50.

Investors have trouble forgetting bad memories.

How you invest your money in the future is often affected by the outcomes of your previous experience. For example, you may have sold a stock at a 20% gain, only to watch the stock continue to rise after your sale. And you think to yourself, “If only I had waited.” Or perhaps one of your investments fall in value, and you dwell on the time when you could’ve sold it while in the money. These all lead to unpleasant feelings of regret.

Regret minimization (Fear of regret) occurs when you avoid investing altogether or invests conservatively because you don’t want to feel that regret. This is the human psyches was of protecting ourselves from unwanted emotions.

Investors are great at coming up with excuses.

Sometimes your investments lose money. Of course, it’s not your fault, right? Defense mechanisms in the form of excuses are related to overconfidence. Here are some common excuses:

•’If-only’: If only that one thing hadn’t happened, then I would’ve been right. Unfortunately, you can’t prove the counter-factual.

•’Almost right’: But sometimes, being close isn’t good enough.

•’It hasn’t happened yet’: Unfortunately, “markets can remain irrational longer than you and I can remain solvent.”

•’Single predictor’: Just because you were wrong about one thing doesn’t mean you’re going to be wrong about everything else.