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Currency markets are showing us the the new world.

Clearinghouses had a lot to do with me deciding to give back capital. I had looked at them in detail, and come to the conclusion that if they followed the rules as set down by regulators, they were destined for disaster. When Covid happened, I expected clearinghouses to become big problems, but in the end nothing happened. What we have discovered with LME and now also with ICE, is that the rules are applied on a discretionary basis, or to put in another way, one rule for big boys, and another for everyone else. For me, this has been a relief. When clearinghouses did not blow up during Covid, I wondered if I was stupid, and had just not understood the system properly. But now I know I was not stupid, just naïve. Fortunately, while there is no cure for stupidity, there is a cure for naivety.

I have worked hard to cure my naivety, so I feel like I am in a place to start thinking about portfolio construction again. This is not financial advice, but a discussion on portfolio construction in a world that “rules” are enforced in a discretionary manner. The target audience for this is allocators and portfolio managers, not retail investors - so consider this a wealth warning. This is a paid post - but I am adding in a “try for free for 7 days” feature for anyone interested in having a look.

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Capital Flows and Asset Markets
Russell Clark