Lee C. Buchheit published a paper on walking back from Cyprus, found interesting to share some his thoughts:
Cyprus imposes losses –euphemistically dubbed a “solidarity levy” — on insured depositors with Cypriot banks as a condition to receiving EU/IMF bailout assistance.
They have 4 options on last Friday March 15th 2013:
(i) Give Cyprus a complete bailout (estimated to cost €18 billion).
(ii) Restructure the outstanding Cypriot bonds, €4.4 billion of which are governed by Cypriot law and €3.8 billion by English law.
(iii) Haircut excess deposits in the Cypriot banking system; that is, deposits in excess of the €100,000 minimum covered by the local deposit insurance scheme. These represent about half of the total deposit base. Continue reading “CYPRUS – Bailout and Alternatives”
It’s no secret that throughout history common stock has outperformed most financial instruments. If an investor plans to have an investment for a long period of time, then their portfolio should be comprised mostly of stocks; however, investors who don’t have this kind of time should diversify their portfolios, i.e. include investments other than the stocks.
For this reason, the concept of “asset allocation” was developed. Asset allocation is an investment portfolio technique that aims to balance risk and create diversification by Continue reading “Asset Allocation”