Interview with a senior analyst: Is it time to invest?
"Never in global financial history has the economy been shut down for such a long time and in such a profound way. Not even in cases of war," says Tom Shmilovich, a former team member at Synapses Research, a global fintech company from Tel Aviv that dealt in the cryptocurrency markets.
Whoever is talking today about the impressive recovery of the stock market as a kind of "toto form", in which investors are betting on a smooth exit from the unprecedented crisis. Apart from his knowledge of the world of financial theory, Shmilovich often deals with the history of economics.
"Already profit margins are high for those who entered the market two weeks ago, for example, when the Dow was at 30,000 there were similar multipliers, in simple words, it means the market is pricing recovery already at the current level, so to profit the investor needs to believe in an even more impressive recovery. The real one is in the bond markets.
Still, this is one of the fastest recovery in history, compared to past years, how do you explain it?
"The most likely explanation is the amounts of new dollars that came into the world at a good time."
And speaking of the dollar, some are looking at the virtual currency market, the same market that claimed to replace the dollar, I ask Tom, which is one of his areas of expertise, what are the chances that we will see a takeover of the digital currencies.
"In the long run this must happen. Because, among other things, the dollars can be printed out of thin air, and they are controlled by a small group with centralized power whose goals are not necessarily aligned with the good of all dollar users worldwide," despite his fondness and belief in the digital currency market. Underestimates the steps taken in Washington in trying to stop the drift.
"This is a move that was particularly predictable in light of the 2008 crisis, which also included the European debt crisis, and the new rise in the interbank interest rate market in September 2019. In each of these cases whenever there was a market problem, it was covered in piles of money. "Therefore, I dare say that this is an expected move."
"Optimists will point to all the cases and say that those who hold the helm are responsible and know how to deal with such crises.
The pessimists will say that this time the intervention will erode the value of the dollar, because unlike recent times this time some of the money will also reach the general public, in the form of direct donors, what we call "helicopter money" that can cause inflation, because once the money is mainly in the financial elite. "That they are at the peak of consumption anyway, the money remains in financial assets like bonds, real estate, stocks, (which can also cause a bubble) but now that the money is in real hands, which may look for real goods of ordinary people, the value of the currency may dive."
I add "and there has been a decline in the power of the dollar in recent years", Tom nods in agreement but wants to mention that since 1970 the dollar has traded against other printed currencies and not against gold and explains that because America maintains high production levels Others, but mainly in commodity prices in America, such as health, real estate and education.
"We are actually facing two economic philosophies, one of bulls and the other of bears, bulls are optimistic and believe the system is strong and in the long run will win any systemic crisis it faces. And bears believe in paradigm shifts, and they point out that since 2008 interest rates are near zero, "That crisis was only apparent. They attribute the increases in the stock market to the amounts of money printed."
"Even those who believe in the monetary philosophy of Milton Friedman, who plays a key role in private banking in economic navigation, and those who give a more important place to the government philosophy of John Maynard Keynes, who believes in the important role of governments in economic navigation, can agree on the Federal Reserve's policy." the last one".
But according to Tom, this agreement is largely indicative of intellectual embarrassment among economists who find it difficult to cope with the special circumstances and understand them in a theoretical context.
"Look, in a recent interview with the Governor of the Bank of Israel, for example, Governor Amir Yaron said that 'we will have to rewrite the book.'
And finally, do you recommend entering the market today?
Maybe to emerging markets and corporate bonds.
There is no such provision as a directive, recommendation, or advice for investing or buying any securities, certificates, funds, currencies, shares or any financial or physical or other financial asset or asset.
Pictured: Stephen Menuchin Minister of Finance and his wife.
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